1. Sri Nityananda Kundu of No. 212 Maharshi Debendar Road, Calcutta-7, imported crude drugs under a valid import licence from Singapore by vessel S.S. Rajula. The petitioner herein acted as custom house clearing agents on behalf of the importer and filed the bill of entry and cleared the consignment which consisted of 175 cases. The customs officials opened and examined 18 cases at random and being satisfied that the contents were crude drugs as declared, allowed clearance on payment of the import duty at 100% and surcharge of 10% under I.C.T. item No. 9(3) on the G.I.F. value which altogether came to Rs. 6403.18.
2. Subsequently on 29-4-1964, the Deputy Superintendent, Customs House, Nagapattinam, issued .a demand notice for a sum of Rs. 17486.63 from the. importer as differential duty on the ground that the goods cleared are assessable at the tariff value of Rs. 350 per quintal under item 9(3) of the Indian Customs Tariff at 100% ad valorem. The importer sent a reply on 18-7-1964, stating that the goods imported by him have correctly been assessed tinder item 9(3) of the I.C.T. on the G.I.F. value and that the same cannot be assessed on the tariff value of Rs. 350 per quintal as re-assessed after clearance. After receipt of the reply from the importer no action has been taken to recover the said differential duty. However, on 26-3-1968, a show cause notice was issued by the Assistant Collector of Central Excise, Nagapattinam, to show cause why action should not be taken against him under the provisions of the Customs Act, 1962, read with Section 3(2) of the Import and Export (Control) Act, 1947 and a penalty levied OB him under Section 112 of the said Customs Act. As the importer did not respond to the said show cause notice the Assistant Collector, by his order dated 24-7-1968, confirmed the demand dated 29-4-1964 for Rs. 17486.63, claimed as differential duty.
3. Thereafter the importer filed an appeal, to the Appellate Collector. I hat appeal was, however, dismissed on 4-7-1970. Then the importer preferred a revision to the Government of India. That revision petition was allowed by the Government of India on the ground that the assurance of the demand dated 29-4-1964. without issuing a show cause notice to the importer cannot be sustained and therefore the initial authority has to proceed afresh to recover the differential duty by issuing a fresh show cause notice.
4. In pursuance of the remit order passed by the Government of India, the revisional authority, a show cause notice was issued on 6-7-1972, under Section 28(1) of the Customs Act to the importer. A copy of the said notice addressed to the importer was also sent to the petitioners as persons who cleared the goods on behalf of the importer on 19-8-1972. The importer did not again respond to the show cause notice but the petitioner sent a reply on 9-9-1972, denying his liability. Subsquently a final order was passed on 24-10-1972, holding the importer liable to pay a sum of Rs. 17486.63, being the differential duty. But as the importer did not pay the amount demanded till 1977, a demand for the same sum was served on the petitioner on 30-5-1977, invoking Section 147 of -the. Customs. Act. Aggrieved against the said demand, the petitioner has approached this court seeking a writ of certiorari to quash the said demand.
5. The validity of the said demand served on the petitioner on 30-5-1977 has been challenged on two grounds - (1) that the differential duty even if it is leviable in spite of the clearance of the goods imported from the importer, as no show cause notice had been issued prior to the issue of the demand within six months as contemplated by Section 28 of the said Act, recovery of the amount as against the importer himself is time barred and therefore the amount could not be recovered from the petitioners who arc merely clearing agents. (2) In any event the liability of the importer cannot be passed on to the petitioners under Section 147 of the Act unless the conditions referred to therein are strictly complied with 'and that in this case there is in fact no finding given by the Assistant Collector that the amount of differential duty is not possible of realisation from the importer and therefore the amount has to be recovered from the clearing agents.
6. In the counter affidavit filed by the respondent it is asserted that a demand having been issued against the importer within the period of six months from the date of the clearance of the goods, there is no question of the claim being barred under Section 28 as against the importer and so long as the liability is kept alive the same can be passed on to the petitioners who are the clearing agents in respect of the consignment in question. With reference to the petitioner's contention based on the non-applicability of Section 147 of the Customs Act, the respondent has stated in his counter affidavit that since the importer could not be served by post, the liability can be fasted on the clearing agents. The question therefore arises as to whether Section 147 of the Customs Act can be invoked in this case so as to fasten the liability of the importer on the clearing agent. The relevant portion of Section 147 is in the following terms --
'Proviso to Section 147(3): Provided that where any duty is not levied or is short-levied or erroneously refunded on account of any reason other than any wilful act, negligence or default of the agent such duty shall not be recovered from the agent unless in the opinion of the Assistant Collector of Customs the same cannot be recovered from the owner, importer or exporter'.
7. Admittedly the primary liability to pay the differential duty is on the importer under Section 28. But that liability can be fastened on the clearing agent as a result of the special provision contained in Section 147. Therefore, unless the condition in Section 147 is satisfied, the clearing agent will not be liable for the duty. The proviso to Section 147(3) which has been extracted above says that the differential duty payable by the importer shall not be recovered from the agent unless in the opinion of the Assistant Collector the same cannot be recovered from the owner, importer or exporter. In this case the demand made on the petitioner on 30-5-1977 indicates that as the amount has not been collected from the importer the same is sought to be recovered from the agent. This stand has however been given up when we come to the stage of the counter affidavit. In the counter affidavit the respondent has stated that as the importer could not be served by post the demand is made as against the petitioners. Even assuming that the amount has not been factually collected from the importer or that the importer cannot be contacted by post, those circumstances will not be sufficient to attract the proviso to Section 147(3). The proviso seems to suggest that the liability of the importer can be passed on to his agent only if in the opinion of the Assistant Collector of Customs the same cannot be recovered from the owner. The expression 'cannot be recovered from the owner' would indicate that all steps for realisation of the differential duty should have been taken against the importer but it could not be recovered for some reason or other. It is clear from the expression used in the proviso that all possible steps for recovery of the differential duty have to be taken as against the importer and only when it is not possible to realise any amount from the importer the same cannot be recovered from the agent. But in this case the respondent has not averred that all steps to recover the amount from the importer had failed and they are left with only the agent. The fact that there is some difficulty in contacting the importer by post will not, in any sense, mean that the amount could not be realised from him. According to the learned counsel for the petitioner, the importer continues to be in the import business even in the identical place where he was living at the time of import. In support of this statement, the learned counsel has produced a registered letter sent by them to the importer on 30-11-1977, which appears to have been refused by the importer and the registered cover contains endorsements 'always absent' and 'not claimed'. In view of the circumstances explained above, I am clearly of the view that it cannot be said that it has been shown that the amount cannot be recovered from the importer. As I am upholding the contention of the petitioners that Section 147 cannot be invoked as against them unless and until it is clearly shown that the amount could not be recovered from the importer, the impugned demand issued against the petitioners has to be quashed.
8. As I have upheld the point based on Section 147 of the Customs Act, it is unnecessary to consider the point as to limitation. Hence without expressing any opinion on the question of limitation, the demand is quashed.
9. The result is the writ petition is allowed and the impugned order is quashed. There will however be no order as to costs.