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Gangadhar Narsingdas Agarwal Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtDelhi High Court
Decided On
Case NumberWrit Petition No. 36 of 1972
Judge
Reported in1986(26)ELT918(Del)
ActsIndian Partnership Act, 1932; Customs Act, 1962 - Sections 12, 18 and 18(1); Indian Tariff Act; Constitution of India - Article 226; Minerals and Ores-Group (I) (Inspection) Rules, 1965
AppellantGangadhar Narsingdas Agarwal
RespondentUnion of India (Uoi) and ors.
Appellant Advocate Anil B. Dewan, Sr. Adv. and; Ashok Sangar, Adv
Respondent Advocate C.L. Chaudhry, Adv.
DispositionPetition allowed
Cases ReferredGangadhar Narsingdas v. A.C. Martines and Ors.
Excerpt:
- - a provisional assessment of duty can be made under section 18 of the customs act, 1962. under sub-section (1)(a) of section 18 provisional assessment can be made where the proper officer is satisfied that an exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the exported goods. 1 and in accordance with the export of minerals & ores-group (i) (inspection) rules, 1965. the italab limited's certificate annexed along with ,the petition also clearly shows the methods adopted while taking the sample and doing the analysis......the respondent no. 3 however rejected the application made by the petitioners for refund of customs duty on 7th july, 1967 and held that the duty was rightly assessed on the goods as in the shipping bills itself they were declared as lumoy iron ore. being aggrieved by the order of respondent no. 3 dated 7th july, 1967 the petitioners preferred an appeal against the same before respondent no. 2. the appeal of the petitioners was also rejected on 27th april, 1968 by respondent no. 2. being aggrieved by these orders the petitioners filed a revision petition before respondent no. 1. the respondent no. 1 however rejected the revision application on 20th november, 1970. these three orders passed by respondents nos. 1, 2 and 3 are challenged in this writ petition.2. it is contended by.....
Judgment:

Sunanda Bhandare, J.

1. The petitioners, a Hindu undivided family firm registered under the Indian Partnership Act, 1932 carry on the business as exporters of iron ore at Margao, Goa. The facts of the case as stated in the petition lie in a very narrow compass. The petitioners entered into a contract on 26th May, 1966 with a Japanese company for sale of Goan iron ore on the terms and conditions mentioned in the contract. The total quantity to be sold was 2 lacs dry metric tonnes of iron ore. The petitioners shipped from Marmagoa Harbour eight consignments of 1.56,421 metric tonnes of Goan iron ore by certain steamers. The relevant sniping bills were presented to the Customs authorities at Marmagoa in respect of these, consignments. Major part of the iron ore fines allowed in each of the shipment was authorised by the Directorate Mines, Government of Goa who had issued permits authorising export of said iron ore fines. The case of the petitioners is that the description of these goods in the shipping bills was made as Goan iron ore in accordance with the description given in the said contract. However, since Customs authorities at Margao, Goa insisted they also added the word 'Lumpy' in the description of the goods. The duty paid by the petitioners in respect of the said export was recovered from the petitioners on provisional basis on the footing that the entire quantity was Lumpy iron ore in dry condition. This was subject to the final analysis to be made by Italab (Goa) Private Limited (hereinafter referred to as 'Italab Limited'). The said Italab Limited after an analytical study pursuant to the said inspection issued certificate of inspection and gave the percentage of the iron ore fines in the goods in question and, thereforee, the petitioners applied to the Assistant Collector of Customs at Central Excise, Goa for refund of the excess amount of duty recovered. The respondent No. 3 however rejected the application made by the petitioners for refund of customs duty on 7th July, 1967 and held that the duty was rightly assessed on the goods as in the shipping bills itself they were declared as Lumoy iron ore. Being aggrieved by the order of respondent No. 3 dated 7th July, 1967 the petitioners preferred an appeal against the same before respondent No. 2. The appeal of the petitioners was also rejected on 27th April, 1968 by respondent No. 2. Being aggrieved by these orders the petitioners filed a revision petition before respondent No. 1. The respondent No. 1 however rejected the revision application on 20th November, 1970. These three orders passed by respondents Nos. 1, 2 and 3 are challenged in this writ petition.

2. It is contended by the learned counsel for the petitioners that the goods were exported in terms of the contract between the petitioners and the Japanese company and they comprised of certain quantities of iron ore fines. Since the petitioners had produced a certificate of a recognised Chemical analyst, the report should have been accepted and duty on iron ore fines and not on Lumpy iron ore should have been charged in respect of the quantity of iron ore fines found. Reference was also made to the judgment of the Bombay High Court in : Gangadhar Narsingdas v. A.C. Martines and Ors.-CW 1220/74, decided on 4-10-79. to show that the Customs authorities themselves have been accepting the analysis reports given by Italab Limited. It is further submitted that (though) respondent No. 1 had observed that the shipment included a percentage of iron ore fines, however dismissed the revision petition by accepting the decision of respondents Nos. 2 and 3 on the basis of alleged declaration made in the shipping bills. The learned counsel further contended that though a personal hearing was fixed by respondent No. 1 for 11th May, 1970, actually no hearing could take place, since the counsel who was to appear before respondent No. 1 to argue the case could not get an air ticket. A telegram was sent requesting for an adjournment but respondent No. 1 while refusing the prayer for adjournment almost after six months passed the impugned order without affording an opportunity of being heard. It was submitted that if opportunity was given it would have been possible to explain why provisional assessment was made and what was the declaration in the shipping bills. It was contended that respondent No. 1 ought to have adjourned the case since a proper ground was given particularly when the decision was not given on the date the case was fixed, but on 20-11-1970 which was six months thereafter.

3. On the other hand, learned counsel for the respondent contended that what the petitioners had exported was Lumpy iron ore as mentioned in the orders made by respondents Nos. 2 and 3 and not iron ore fines. Since in the bills of shipment itself a declaration was made by the petitioners that the goods which were being exported were Lumpy iron ore, they were rightly charged duty on that basis. It was submitted that this Court would not interfere in a question of fact while deciding a writ under Article 226 of the Constitution of India.

4. While dealing with a writ under Article 226 of the Constitution of India, this Court is not sitting in appeal over the decision of the Customs authorities and does not interfere in disputed questions of fact but it appears from the orders of respondents Nos. 1, 2 and 3 that, no attempt was made to ascertain the real nature and character of the goods before the application for refund was rejected, If the Customs authorities have realised the duty in contravention of law without application of mind this Court is fully competent to allow the refund of excess amount of duty under Article 226 of the Constitution of India.

5. The duty levied under Section 12 of the Customs Act, 1962 read with the Indian Tariff Act is Rs. 10/- per metric tonne in respect of Lumpy iron ore and Rs. 5/- per metric tonne in respect of iron ore fines. A provisional assessment of duty can be made under Section 18 of the Customs Act, 1962. Under Sub-section (1)(a) of Section 18 provisional assessment can be made where the proper officer is satisfied that an exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the exported goods. Sub-section (b) of Section 18(1) provides that if any goods to be exported are to be subjected to Chemical or other tests for the purposes of assessment of duty, provisional assessment can be made. The petitioners have stated in the petition that under the terms of the continuity bond executed by the petitioners in favor of the Customs authorities at Marmagoa all' the assessments are provisional. It is also stated that the petitioners had notified to the Customs authorities that Italab Limited would be doing the analysis indicating the percentage of fines and moisture. When goods are loaded the analysis is not available and, thereforee, it seems to be a normal practice that provisional assessment is made till the analysis report both at the time of loading and destination is made available. The analysis report by Italab Limited, Goa indicates that goods tested contained iron ore fines. In the order dated 20th November, 1970 respondent No. 1 has observed that in the very nature of things there must be certain amount of fines associated with export of Lumpy iron ore. The respondent No. 1 did not accept the certificate of analysis given by Italab Limited on the ground that it is not known what method was adopted in obtaining the representative sample. It is stated in the petition that the goods in question were inspected at the time of export by Italab Limited in accordance with the procedure and instructions laid down by respondent No. 1 and in accordance with the export of Minerals & Ores-Group (I) (Inspection) Rules, 1965. The Italab Limited's certificate annexed along with ,the petition also clearly shows the methods adopted while taking the sample and doing the analysis. From the judgment of the Bombay High Court cited by. the learned counsel for the petitioner, it is clear that, Italab Limited certificates are accepted by the Customs authorities while making the assessment of customs duty. As per the continuity bond executed by the petitioner in favor of the Customs authorities all the assessments were provisional till the final analysis was made available.

6. The Supreme Court has repeatedly held that it is the legal obligation on the part of the Government to return excess duty if really the excess duty was not payable by the party under the law and it is the legal right of the party to recover the excess amount paid.

7. In my judgment the petitioner-company has established that the normal trade procedure in such cases is to make provisional assessment at the time the goods are loaded for export and make the final assessment after the analysis was made available. There is no force in the argument of the learned counsel for the respondent that provisional assessment is made only when there is a dispute and since the petitioners had themselves declared the goods as Lumpy iron ore they are not entitled to the refund. The petitioners were liable to pay export duty only on the goods actually exported by them as per the contract and the report, and the excess duty has to be refunded.

8. All-the authorities below have rejected the application for refund of the excess duty on the ground that -the declaration made by the petitioners itself showed that what was exported was Lumpy iron ore. There is no discussion, in any of the three impugned orders regarding the normal practice followed by the trade. No counter-affidavit is filed and there is also no denial by the respondents to the averments made by the petitioners in the petition regarding the practice normally followed. There is ample material on record to show that the goods exported contained iron ore fines. The analysis at the time of loading and destination also shows that the goods the petitioners actually exported contained iron ore fines. There is a power under the Customs Act to make provisional assessment and this practice was agreed upon.

9. The writ petition, thereforee, succeeds and is allowed. The orders dated 7-7-1967, 27-4-1968 and 20-11-1970 passed by respondents Nos. 3 2 and 1 respectively are quashed and a mandamus is issued directing the respondents to refund to the petitioners the amount which may be found on verification to be due. Since the refund applications were made as far back as in the year 1967 the refund amount will be paid within a period of four months from today. There will be no order as to costs.


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