1. This is a petition by an entrepreneur who, because of the unreasonable attitude adopted by the public authorities has come to suffer considerably and perhaps beyond repairs.
2. In order to known how the above remark is justified, we would set out the facts that would show the extremely unreasonable and untenable stand adopted by the Customs authorities. The petitioner had established a factory to manufacture clothes for the purpose of export. It was in the Kandla Free Trade Zone (hereinafter referred to as KFTZ for brevity's sake). The policy of the Government is to allow import of duty-free goods to such people for the purpose of export. The petitioner had started his factory, had imported goods time and again. In the year 1969 when his factory was going on, he had imported two consignments - one of 39 cases and another of 9 cases - which were landed at Bombay. They were to be transhipped to Kandla and road transport was permitted. When the goods reached Kandla, the authorities found that the goods did not conform to the bill of entry in certain respects. A Certificate about the safe arrival of the goods was also not issued, with the result that the Bombay Customs Authorities initiated proceedings for levy of customs duty on those consignments, and intimated the Assistant Collector of Customs, Kandla and the Development Commissioner, KFTZ, not only to retain those goods but all goods whatsoever, whether manufactured, lying in the factory of the petitioner. A notice was issued by the Collector of Customs in respect of attachment of those 39 cases of two consignments. The matter had gone to the Bombay High Court where a compromise was entered into by the petitioner on the one hand and the customs authorities on the other. As per those consent terms, the goods of those 39 Cases were to be auctioned by the Customs authorities within six weeks and the sale proceeds were to be retained by them towards their claim for custom duty and for the remainder the petitioner was to furnish bank guarantee within nine months, thereafter. Now it so happened that instead of six weeks, these public authorities at Bombay took six months' time to auction those goods. The petitioner's grievance is that because of this belated action sale he had suffered heavy loss. We are not much concerned with it, because the petitioner will deal with the same separately. But he has made a clear statement before us that in final analysis whatsoever duty is to be paid by him, he will pay.
3. Now on this side the petitioner's manufactured goods and other raw materials were retained by the Customs authorities. They did not allow him to export those goods and or manufacture the goods for export, and this situation continued. Mr. Shah initially contended that there was no retention, i.e. seizure of goods, but when his attention was drawn to pp. 46, 79, 97, etc., he did not pursue his contention. Ultimately, the petitioner was given a notice by the authorities under Section 111(c) as to why those goods which were not exported within six months of the entry be not confiscated. As a matter of fact, there was no notification of the Government upto 25th May, 1968, laying down any period for export, but the petitioner was told that whatever goods that were lying in his factory, either in the manufactured of unmanufactured condition, were liable to confiscation under the said Section. The petitioner contested the claim saying that he could not export because those goods were put under seizure by the Customs authorities at KFTZ, as per reqisition of the Bombay Customs authorities. His contention fell on deaf ears and the order of confiscation came to be passed and, unfortunately for this petitioner, even the Central Board of Revenue confirmed that order, with this relaxation that some more time was given to him to export those goods. However, the export could not be done because all the while the authorities of the Customs Department set light on those goods, as per the requisition of the Collector of Customs, Bombay. The petitioner was on the horns of a dilemma. On the one side, the petitioner could not manufacture the goods because of this seizure and, on the other, because of this act of the authorities he could not export the manufactured goods and could not manufacture the other goods for the purpose of export. There was held against him the bayonet of confiscation. This has given rise to this petition in which the petitioner has challenged the order of confiscation confirmed by the Central Board of Revenue.
4. The narration of facts above by itself is sufficient to show that the order of confiscation is ex-facie bad and untenable. Any wilful non-compliance with the cent-per-cent-export obligation would certainly give rise to the liability to incur confiscation under Section 111(c) of the Act. But where the situation is created by the very Customs authorities in which a citizen is not able to carry out that export obligation, it cannot be said by any stretch of imagination that there is wilful default on the part of the would be exporter of the goods. If there is no wilful default, there cannot be any confiscation. Here, curiously enough, the petitioner was completely helpless. By the act of the officers of the Customs Department, he was prevented from manufacturing and/or exporting the goods, and that consequential inability of the petitioner to export the goods has been now made a ground of his being visited with the order of confiscation. Two things cannot stand together, and the only legal outcome would be that the order of confiscation of the petitioner's goods is ex-facie bad and the order is absolutely unsustainable. We, therefore, quash the orders at annexures K and L. Right from 1968 to 1985 much water has flown beneath the bridge and the situation has totally changed. In the period of sixteen years, the goods must have qualitatively deteriorated considerably and must have become totally unfit for export. It is truism to state that the Export Board would never permit export of such Stale goods. So, the only course left open to the Customs authorities is to release the goods for the domestic use, of course by charging the requisite duty as it may be leviable, which the petitioner is willing to pay. We, therefore, direct the authorities, as the inevitable outcome of their unreasonable stand taken all these years, that they shall not now insist on the export obligation undertaken by this petitioner and, as a consequence, permit the petitioner to utilise these goods for the domestic market subject, of course, to his paying the reasonable duty. Rule is accordingly made absolute with no order as to costs.