Dipal Kumar Sen, J.
1. The dispute before us arises out of an import of a consignment of palm stearine by 3ain Exports Private Limited, a registered Export House, under a licence issued against three registered export contracts. The said licence was acquired by the importer on the 27th July, 1982.
2. The import which was from Malaysia was arranged for sometime in January, 1984 and the shipment was to be effected during the first half of March, 1984 subject to availability of vessel.
3. Port workers, all over India, struck work from the 15th March, 1984 for an indefinite period. The strike however continued only till the 15th April, 1984. In view of the said strike which was announced in advance the consignment was not shipped as arranged.
4. The importer moved a writ application on the 12th April, 1984 when a Rule nisi was issued. An interim order was passed as follows :
'An interim order directing respondent No. 3 by itself, through its employees, officials, servants to clear the petitioner's goods within 3 days of their arrival which have been shipped within 4 weeks from the date of the lifting of the ports strike under contract of 4th January, 1984.'
'An interim order directing respondent No. 2 from issuing any direction to respondent No. 3 not to release the goods or issuing any notice under Clause 10C of the Import (Control) Order, 1955.'
Liberty is given to the petitioner to have the same extended or to apply for further interim order on the same application with notice to the respondents. Liberty is also given to the respondents to apply for vacating or varying the interim order. This matter will appear as an 'application' on 26.4.1984.
In the event the petitioners clear the goods by paying full customs duty applicable before this application comes up for extension of interim order the petitioner must keep the goods in a bonded ware- house.
5. On the 2nd May, 1984 learned Advocate appeared for the Customs and the Import Control Authorities and obtained directions for filing of affidavits. On that date, the interim order passed earlier was modified as follows :-
'The interim order dated 12th April, 1984 shall continue till the disposal of the Rule subject to the modification that after clearance of the goods the petitioners shall no longer be required to keep them in Bonded Warehouse and subject further to the modification that the petitioners will be allowed the benefit of non-debit facility.'
6. The consignment arrived at the Port of Calcutta in or about the third week of May, 1984 during the pendency of the proceeding but could not be discharged at Calcutta. The vessel left Calcutta for Kandla and the consignment was discharged at the Port of Kandla.
7. By an order passed on the 30th May, 1984, the Collector of Customs, Kandla Part; the Assistant Collector of Customs, Kandla and the Deputy Collector of Customs, Kandla were impleaded in the writ proceedings as respondents. The interim orders passed earlier were continued.
8. It is on record that the authorities at Kandla provisionally assessed the consignment on the 29th June, 1984. Levying Customs duty at the rate of 15% and obtained from the importer a Bank guarantee for 20% of the differential amount of duty. This appears to have been done on the basis of an earlier decision of the authorities in a similar case. The duty as assessed has been paid by the importer, which has also furnished the Bond.
9. Thereafter, on or about the 9th of July, 1984 an oral application was made on behalf of the Customs Authorities before the first Court for vacating the interim orders. By an order passed on the 17th 3uly, 1984 the said prayer was refused. The present appeal has been preferred from the said order.
10. The contentions of the authorities in this appeal are, inter alia, that -
(a) the goods imported were not covered by the licence;
(b) Palm stearine was a canalised item which could be imported only through the State Trading Corporation. As such the same were prohibited goods and the importer was not entitled to import the said goods or have the same released.
(c) The licence on the basis of which the goods were imported had expired at the material time.
11. The contentions of the importer on the other hand are, inter alia, that -
(a) the licence was extended for six months, taking into account the grace period it did not expire when the consignment was shipped.
(b) Palm stearine was validly imported as it was an item under the OGL when the licence was originally issued. Successive Import Policies have kept alive the right to import of OGL items under the said licence. Similar canalised items under similar licences have been released by the authority at Calcutta in favour of the same imported on similar terms.
(c) The goods could not be shipped within the prescribed time because of unavoidable circumstances.
(d) The present appeal was misconceived as the successive interim orders passed in the writ proceeding in the presence of the Advocate of the Union of India were not opposed nor any appeal preferred therefrom. No affidavit-in-opposition to the writ petition was filed by the authorities though leave was taken for filing the same.
12. At the instance of the parties the application and the appeal have been heard together and have been argued at same length before us.
13. As the consignment is of substantial value and has remained frozen for a considerable time, we enquired of the authorities the procedure which has been followed in similar cases.
14. It appears that on the aftermath of the strike the Central Board of Direct Taxes has from time to time given instruction in like matters. One of such directions issued to the Customs Authorities at Rajkot was as follows s-
'You may permit clearance of the goods against ITC Bond with 20% Bank guarantee after being satisfied that the goods do not have any tallow of animal origin.'
15. Directed by us, the authorities, sought further directions from the Central Board and in the instant case and instructions were obtained during the pendency of this appeal as follows :-
'Considering the very large hold up of imported consignments causing shortage in the internal market the Board would be prepared to accept any compromise formula permitting the customs to proceed with the application in each case and pending adjudication to allow provisional clearance on payment in cash of full Customs Duty and on execution of a Bond for compliance with the ITC formalities,. Such Bonds should be backed by a cash security of 50% of the FOB value of the consignment or the margin of profit for the goods plus 10% for possible penalty on adjudication whichever is lower. Wherever the importers are agreeable to this proposition you may go for out of court settlement or for compromise orders passed by the High Court. Please intimate further developments.'
16. On the basis of the aforesaid the parties however could not come to a consensus as to the quantum of security to be furnished. It was contended by the authorities that the margin of profit should be calculated on the basis of the price obtainable for the item in the free market. The importer contended that item being canalised and having been brought for actual use on the basis of which bonds have been furnished the same could not be sold in the free market.
17. We suggested that the goods should be sold by a Receiver to be appointed by the Court in the manner as permitted by law and that the money should be held by the Receiver till the disposal of the application. The parties did not accept the suggestion. Surprisingly learned Advocate for the appellant authorities opposed the appointment of a Receiver strenuously.
18. Ultimately the learned Advocates appearing suggested that the following order should be passed :-
'The Bank guarantee of 20% shall be discharged and shall be substituted by a fresh bank guarantee on the same terms for a sum equivalent to 10% of the F.O.B. value.
The writ petitioner shall deposit in cash with the Collector of Customs, Kandla a further sum equivalent to 10% of the F.O.B. value.
Save as aforesaid the order dated 17th July, 1984 shall remain in force. Upon such bank guarantee and cash being furnished as aforesaid the appellants shall forthwith deliver the goods in question to the writ petitioners.
The application and appeal is disposed of on these terms. All interim orders granted in this application are vacated on these terms. No order as to costs.
All parties to act on a signed copy of the minutes of the order.'
19. Learned Advocate for the appellant submitted that the order in the above terms should be passed by the Court inasmuch as no formal consent of the authorities could be recorded but there would be no objection to such an order being passed.
20. In facts and circumstances we felt that the above order with further modification may be passed. The modifications introduced were in favour of the appellant and were not objected to by the respondent. We make it clear that the order passed by us will be without prejudice to the rights and contentions of the parties in the pending writ petition. '
21. For the reasons as aforesaid we dispose of the application and the appeal by the following order :-
'Upon the respondents furnishing a Bank guarantee for 30% of the F.O.B. value of the goods after taking into account the amount of 20% Bank guarantee already furnished by the respondents in favour of the Collector of Customs and depositing in cash with the Collector of Customs 10% of the F.O.B. value, to be kept by the Collector of Customs in a suitable Fixed Deposit account in any nationalised bank, subject to further orders in these proceedings, and further upon the respondents paying the full customs duty, if payable in accordance with the law, if not already paid, the goods will be released for delivery to the respondents.
Costs cost in the writ petition.'
22. The Collector of Customs will ensure that the Bank guarantee is kept renewed till the final disposal of the proceedings and the respondent company through its Director, Sushil Goenka, who is present in Court today, undertakes to keep the said Bank guarantee renewed. The respondent company further undertake to pay to Customs Authorities the amount which may be finally determined on the adjudication proceedings, payable in respect of the goods.
23. The Customs Authorities are directed to initiate adjudication proceedings within three weeks from the date and complete the same as expeditiously as possible.
24. In the event the adjudication proceedings are not initiated within the said time, the respondents will be at liberty to apply for release of all the securities furnished.
25. Save as aforesaid all interim orders passed by this Division Bench are vacated.
26. All parties to act on a signed copy of the minutes of this order.