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M/s.Shree Ganesh Steel v. The Assistant - W.A.No.832 of 2005  RD-TN 495 (22 July 2005)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
THE HON'BLE MR.MARKANDEY KATJU, CHIEF JUSTICE and
THE HON'BLE MR.JUSTICE F.M.IBRAHIM KALIFULLA W.A.No.832 of 2005
and W.A.Nos. 833 to 835 of 2005
W.A.M.P.Nos.1576 to 1582 of 2005
M/s.Shree Ganesh Steel
Rolling Mills Ltd.,
14-A, Ennore High Road,
Chennai - 600 019. ..Appellant in all the W.As. -Vs-
1. The Assistant
Commissioner of Customs,
(Sea Port - Appraising Group)
Chennai - 600 001.
2. The Additional Director-General,
Directorate of Revenue Intelligence,
No.25, Gopalakrishna Iyer Road,
Chennai - 600 017.
3. The Commissioner of Customs,
No.60, Rajaji Salai,
Chennai - 600 001. ..Respondents in all the W.As. Appeals filed against the common order of the learned single Judge dated 11.04.2005, passed in W.P.Nos.5700 to 5703 of 2005. For Appellant :: Mr.C.Natarajan, Senior Counsel For Mr.P.Rajkumar
For Respondents :: Mr.V.T.Gopalan,
Additional Solicitor General
For Mr.R.Thirugnanam, SCGSC
:J U D G M E N T
THE HON'BLE THE CHIEF JUSTICE
These writ appeals have been filed against the impugned order of the learned single Judge dated 11.04.2005, passed in W.P.Nos.5700 to 570 3 of 2005.
2. Writ Appeal No.832 of 2005 has been filed against the order passed in W.P.No.5700 of 2005 for the issuance of a writ of mandamus directing respondents therein to permit the petitioner to draw samples for analysis of goods for a test report by an independent agency in respect of the goods under detention pertaining to Bill of Entry Nos.7020 63 and 702064 dated 20.10.2004. The other three writ appeals namely., W.A.Nos.833, 834 and 835 of 2005 have been filed against the common order passed in W.P.Nos.5701, 5702 and 5703 of 2005 for a writ of mandamus to direct provisional assessment of the goods under Section 18 of the Customs Act, 1962 while releasing the goods pertaining to Bill of Entry Nos.695193 dated 07.10.2004, 702063 dated 20.10.2004 and 70 2064 dated 20.10.2004.
3. The appellant is a manufacturing unit engaged in the manufacture of iron and steel products at Chennai. For the use in the said unit the appellant imported non-alloy steel of 431.700 MT which was cleared under Bill of Entry No.692343 dated 01.10.2004 with a duty concession under notification No.24/2004 dated 01.03.2002. However, when another consignment was imported against Bill of Entry No. 695193 dated 07 .10.2004, and Bills of Entry Nos.702063 and 702064 dated 20.10.2004 with a concessional duty relief under the aforesaid notification No.24 /2002 dated 02.03.2002 the goods were detained by the Customs Department.
4. There is a controversy between the appellant and the department as to whether the imported goods are eligible for concessional duty or not. It may be mentioned that "seconds and defective goods" are ineligible for the concessional duty, vide Government of India Customs Notification No.21/02 dated 01.03.2002 as amended.
5. According to the appellant the imported goods were not "seconds or defective goods" whereas according to the department they were such goods.
6. When the goods were seized by the Customs Department a Mahazar was drawn on 13.10.2004 in which there was a reference to "factory seconds and defectives". Consequently, the goods were handed over to the Container Corporation of India for safe custody. On 14.10.2004, the appellant requested for provisional assessment and release of the consignment. The appellant has written a letter dated 18.10.2004 to the national Metallurgical Laboratory, Madras Centre. The appellant also addressed letters to the 2nd respondent for release of the detained goods. Meanwhile, a show cause notice dated 04.01.2005 for 708.310 MT has been issued by the Commissioner of Customs (Port) - Import, inter alia alleging that the goods were not entitled to the concessional duty and liable to be subjected for higher rate of duty, apart from alleging misclassification of the goods by the appellant.
7. The appellant alleged that it is entitled to secure an experts opinion on the goods detained and to have an independent test report from independent reputed 3rd parties. The appellant has prayed that it should be allowed to take samples of the detained goods for use in the adjudication proceedings, but this prayer had not been accepted.
8. In paragraph - 5 of the counter affidavit filed by the department it is stated that as per the investigations and based on the National Metallurgical Laboratory's opinion the goods mentioned in the Bill Nos.702063 and 702064 dated 20.10.2004 were found to be non-alloy steel slabs seconds which attracts duty at the rate of 40 + 12% + 2% Education Cess, whereas the rate of duty as claimed by the petitioner is 5 + 12% CVD + 2% Educational Cess. Thus, it was alleged that there was a willful mis-declaration of description of the goods by the appellants to evade higher rate of duty. Pending further investigation by the Director of Revenue Intelligence, the goods of 408.31 MTS have been released provisionally detaining 300 MTS of the goods out of 708 .31 MTS goods as security to safeguard the differential duty amount and adjudication liabilities as per request of the appellant in its letter dated 18.11.2004. The matter is pending for adjudication. The differential duty works out to Rs.45.13 lakhs. Similarly, the goods mentioned in Bill of Entry No.695193 dated 07.10.2004 were found to be non-alloy Steel Slabs Seconds which attracts duty at 40 + 12% + 2% Education Cess.
9. It is further alleged in the counter affidavit that pending investigation by the Director of Revenue Intelligence, the goods of 485.11 MTS have been released provisionally detaining 325 MTS goods as security to safe guard the differential duty amount and adjudication liabilities as per the request of the petitioner. The differential duty comes approximately to Rs.50 lakhs.
10. It is alleged by the department that it this is a case of blatant mis-declaration of description of the goods with a view to evade huge amount of duty at higher rate. A show cause notice has been issued proposing to take action under Section 111(m) and 112(a) of the Customs Act, 1962 in connection with the above imports and the appellant has to face the adjudication proceedings. It is alleged that the request for the re-test by a different agency is not permissible. It is further alleged that there is no provision entitling the appellant t get samples of the detained goods. It is further alleged that both the department as well as the trade are accepting the opinion furnished by the National Metallurgical Agency, which is a Government Agency. It is alleged that the writ petitions are premature, as they have been filed at a show cause notice stage.
11. In paragraph - 8 of the counter affidavit filed by the department it is stated that the petitioner has imported the aforesaid goods describing them as non-alloy steel slabs, whereas on examination by the National Metallurgical Laboratory, Chennai the goods were found to be non-alloy steel slabs seconds. It thus alleged that the petitioner has mis-declared the description of the goods to avoid payment of higher rate of duty.
12. On the facts of the case, we find no merit in these writ appeals and we agree with the order of the learned single judge. At present, only a show cause notice has been issued to the appellant and it should face adjudication proceedings. The writ petition is premature at this stage.
13. In N.Kailasam Vs. Bar Council of India, 2005 (2) MLJ 44 (1) a Division Bench of this Court held that ordinarily no writ will lie against a show cause notice. The Division Bench followed the decisions of the Supreme Court in Special Director Vs. Mohammed Ghulam Ghouse, AIR 2004 SC 1467 and Executive Engineer, Bihar State Housing Board Vs. Ramesh Kumar Singh, JT (1995) 8 SC 331.
14. A copy of the report of the National Metallurgical Laboratory, Chennai had been furnished to the appellant, and if it is so advised it can apply for cross-examination of the experts from the National Metallurgical Laboratory who gave that report. However, there is no provision entitling the appellant to draw samples as prayed for. It may be mentioned that the National Metallurgical Laboratory is a neutral body and we see no reason why its report should be biased against the appellant. We cannot understand the apprehension of the appellant in this connection. At any event, the department has stated that it is prepared to give an opportunity to the appellant to cross-examine the chemical examiner of the National Metallurgical Laboratory who tested the samples. We cannot understand what more the appellant want. It seems that the appellant only wants to protract and delay the adjudication proceedings.
15. It may be mentioned that the National Metallurgical Laboratory had inspected the materials on 12th and 13th of October, 2004 and has submitted a report (which was communicated to the appellant) that the materials in question were "non-alloy steel slabs seconds". The appellant made two objections to the said report. Firstly, that the thickness of the material was not measured in the right way, and secondly it was only based on visual inspection.
16. In our opinion, the appellant can cross-examine the chemical examiner of the National Metallurgical Laboratory in connection with these two objections, but he cannot claim any right to draw samples from the detained goods, since there is no provision in law permitting taking of such samples.
17. The learned counsel for the appellant relied on the decision of the Supreme Court in Commissioner of Customs, New Delhi Vs. Punjab Stainless Steel Industries, 2001 (132) E.L.T. 10 in support of his contention that the petitioner has a right to take samples. We have carefully perused the said decision. In paragraph - 5 of the said decision the Supreme Court has observed:-
"The demand of the respondent for retesting of samples was declined but in order to obviate any unfair treatment to the respondent, the Commissioner gave option to the respondent to cross-examine the Chemical Examiner who had tested the samples. The respondent, however, did not avail that option and declined to cross-examine the Chemical Examiner. Regarding the objection of the respondent that copies of shipping bills were not supplied, the Commissioner observed that so long as the report of the test conducted on the samples drawn from the respective consignments establishing that the grade of material used in the utensils exported under these consignments was substandard, was supplied to the respondent, it was immaterial whether copy of the shipping bills was supplied or not. After detailed examination of the record, the Commissioner held that the charge of mis-statement and suppressing the correct quality and grade of the input under claim of duty exemption entitlement under quantity based advance licence and DEEC Book in violation of the standard input-output and value addition norms mentioned therein stood established in respect of 67 out of 68 consignments. The Commissioner of Customs by order dated 3rd November, 199 7 held that the goods amounting to Rs.6,74,43,408/- are liable to confiscation under Section 113(n) and (j) of the Customs Act, 1962 (for short, 'the Act'). Further, the bank guarantee of Rs.10,00,000/- was ordered to be appropriated against the liability of confiscation as the goods had already been exported. The respondent was also denied the benefit of the amount of Rs.4,68,78,932/- under DEEC Scheme and duty drawback in respect of these consignments directing that if these concessions have already availed by the respondent, the same shall be reversed. Further, a penalty of Rs.25,00,000/- was imposed on the respondent under Section 114 of the Act read with Section 11 of the Foreign Trade (Development and Regulation) Act, 1962.
The Order of the Commissioner was challenged by the respondent by preferring appeal before the Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal by the impugned order has set aside the order of the Commissioner of Customs. Under these circumstances, appeal under Section 130E of the Act has been filed by the Commissioner of Customs. Shri Mohta, learned Senior Counsel appearing for the respondent has raised objection about the maintainability of the appeal contending that since the present case does not involve determination of any question having a relation to the rate of duty of customs or to the value of the goods for the assessment and, therefore, appeal under Section 130E of the Act is not competent. Learned counsel contends that if the appellant was aggrieved by the order of the Tribunal, it ought to have taken recourse to the remedy of reference as provided in Section 130 of the Act and further if aggrieved from the order made on reference, it could approach this Court by filing a petition under Article 136 for grant of leave. Learned Attorney General, without going into the question of maintainability, submits that the present appeal may be treated as a special leave petition and in support placed reliance upon Commissioner of Central Excise and Customs Vs. Venus Castings (P) Ltd. (2000 (117) E.L.T. 273 (SC)=2000 (4) SCC 206) where rejecting the similar objection about the maintainability of the appeals under the Central Excise Act, the appeals were directed to be converted into special leave petitions and dealt with on merits. In the circumstances of this case, and also considering that this matter has been pending in this Court for nearly two years, we convert this appeal into special leave petition, grant leave and proceed to decide the appeal on merits.
The order of the Commissioner of Customs has been set aside by the Tribunal holding that there was violation of principles of natural justice on account of two reasons, namely, (1) Rejection of the request of the respondent for retesting the samples on the ground that there is no such provision in the Act and (2) Non-supply of the copy of the shipping bills. Regarding the first reason, noticing the contention urged on behalf of the Revenue that there is no provision which permits retesting of samples, the Tribunal states that there is also no provision under the Customs Act which prohibits retesting of the samples, and accordingly holding that the denial of opportunity to retest the sample was violative of principles of natural justice. No specific provision has been brought to our notice which permits retesting of samples, but, for the present case, without going into that aspect, we would assume that there was no bar in granting opportunity to retest the samples. At the same time, however, it has to be borne in mind that the purpose of retesting the samples was to demolish the report of the Chemical Examiner on consideration whereof the charge of mis-statement and suppression regarding quality and grade of the input had been established against the respondent. In this regard, the Tribunal failed to notice the main aspect of the case that option was granted to the respondent to cross-examine the Chemical Examiner who after taking the samples had given the report. The respondent had, thus, ample opportunity to demolish his report. The respondent did not avail that opportunity. It stands established that the adjudicating officer had given an offer to the respondent to cross-examine the Chemical Examiner. The respondent did not dispute that such an offer was made. The only objection of the respondent was that such an offer was made suo motu and the respondent had not asked for it. The objection was frivolous and misconceived. Therefore, we fail to understand, how the respondent having failed to avail the opportunity to cross examine the Chemical Examiner could urge that there was violation of principles of natural justice by non-grant of request of the respondent for retesting of the samples. Unfortunately, in the order of the Tribunal there is not even a whisper about the offer given to the respondent to cross-examine the Chemical Examiner. Thus, the first reason given by the Tribunal for coming to the conclusion that there has been violation of the principles of natural justice is not sustainable".
18. A careful perusal of the paragraph - 5 of the said decision of the Supreme Court shows that it does support the case of the appellant, rather paragraph - 5 negatives the claim of the appellant. It has been stated in paragraph - 5 of the said decision that the assessee can cross examine the chemical examiner if it is aggrieved against his findings. There is nothing in paragraph - 5 which states that the petitioner has a right to take samples. The Supreme Court has clearly negatived the allegation that there is violation of principles of natural justice in such a situation. In the present case also the department has stated that it is willing to give the appellant an opportunity to cross-examine the chemical engineer. Hence, there is no question of violation of principles of natural justice in the present case. 19. The learned counsel for the appellant then relied on the decision of the Supreme Court in Bombay Oil Industries Pvt. Ltd. Vs. Union of India, 1995 (77) E.L.T. 32 in which it has been observed in paragraph - 9:- "If the appellants felt that the findings of the Customs House were not correct it was open to them to get the samples cross tested through their experts and to lay evidence in that connection before the authorities as the burden was entirely on them to show that they satisfied all the conditions of Notification with a view to earning the exemption to the extent of 30 per cent of import duty on their imported tallow. They did nothing of the mind".
20. In our opinion, the above observation does not lay down any principle of law that the assessee has a right to take samples. No statutory rule or notification has been mentioned in the aforesaid observation that the assessee has any right to take samples.
21. It is well settled that a decision is a precedent for the principle of law which it lays down, vide Goodyear India Ltd. Vs. State of Haryana, AIR 1990 SC 781. It is only the statement of law in a decision which is binding, vide Municipal Committee, Amritsar Vs. Hazara Singh, AIR 1975 SC 1087. Thus, in State of Punjab Vs. Baldev Singh, 199 9 (6) SCC 172 the Supreme Court observed that everything in a decision is not a precedent. In Delhi Administration Vs. Manoharlal, AIR 200 2 SC 3088 the Supreme Court observed that a mere direction without laying down any principle of law is not a precedent.
22. In Divisional Controller, KSRTC Vs. Mahadeva Shetty, (2003) 7 SCC 197 the Supreme Court observed as follows: "?The decision ordinarily is a decision on the case before the Court, while the principle underlying the decision would be binding as a precedent in a case which comes up for decision subsequently?The scope and authority of a precedent should never be expanded unnecessarily beyond the needs of a given situation. The only thing binding as an authority upon a subsequent Judge is the principle upon which the case was decided?."
23. In Bharat Petroleum Corporation Ltd. Vs. N.R.Vairamani, 2005-1LW 209 the Supreme Court observed:-
"Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statue and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes.
In London Graving Dock Co. Ltd. Vs. Horton (1951 AC 737 at page 761), Lord Mac Dermot observed:
'The matter cannot, of course, be settled merely by treating the ipsissima vertra of Willes, J. as though they were part of an Act of parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge'.
In Home Office Vs. Dorset Yacht Co. (1970 (2) All ER 294) Lord Reid said, 'Lord Atkin's speech ?. Is not to be treated as if it was a statute definition it will require qualification in new circumstances'. Megarry, J. in (1971) 1 WLR 1062 observed: 'One must not, of course, construe even a reserved judgment of Russell L.J. as if it were an Act of Parliament'. And, in Herrington Vs. British Railways Board (1972 (2) WLR 537) Lord Morris said: 'There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case'."
24. In view of the above decision, it cannot be said that the observation of the Supreme Court in paragraph - 9 in Bombay Oil Industries Pvt. Ltd. Vs. Union of India, 1995 (77) E.L.T. 32 (supra) lays down any principle of law that the appellant has a right to take samples, particularly, since there is no mention of any statutory rule or notification which entitles it to do so.
25. In Arunodaya Mills Ltd. Vs. Union of India, 1985 (21) ELT 390 the Gujarat High Court held that the assessee can cross-examine the Chemical Examiner, but it was not held that the assessee has any right to take samples.
26. It is well settled that the rules of natural justice are not a straight jacket formula and cannot be stretched too far vide, Bar Council of India Vs. High Court of Kerala,(2004) 6 SCC 311, Chairman, Kendriya Vidyalaya Sangathan Vs. Girdharilal Yadav, (2004) 6 SCC 325, The Maharashtra State Financial Corporation Vs. M/s.Suvarna Board Mills, J.T. (1994) 5 SC 280, Bar Council of India Vs. High Court of Kerala, J.T. (2004) 11 SC (Supp) 428 (para-47), Union of India Vs. Tulsiram Patel, AIR 1985 SC 1416. Natural Justice is not an unruly horse vide, Kumaon Mandal Vikas Nigam Limited Vs. Girija Shankar Pant, (2001) 1 SCC 182, Board of Mining Examination Vs. Ramjee, AIR 1977 SC 965, Channabasappa Vs. State of Mysore, AIR 1972 SC 32, etc.
27. As regards the appellant's prayer for a direction to the first respondent to make a provisional assessment under Section 18 of the Customs Act while releasing the goods detained, it may be mentioned that part of the goods seized have already been released provisionally, detaining a certain amount as security to safeguard the differential duty amount and adjudication liabilities as per the request of the appellant in its letter dated 18.11.2004. Thus, the authorities have acted in a fair manner.
28. It may be mentioned that Section 18(1) of the Customs Act does not make it mandatory on the Customs Officer to make a provisional assessment. The use of the word "may" in Section 18(1) indicates that it is the discretion of the Customs Officer to make a provisional assessment or not, and he is not bound to do so. Of course, he cannot exercise such discretion arbitrarily, but in this case we are of the opinion that the Customs Officer has acted fairly and not arbitrarily, as he has already released part of the goods and detained the other part as security to safeguard the interest of the Revenue.
29. Thus, there is no force in these appeals, and they are dismissed accordingly. However, we direct that the adjudication proceedings be completed by the authorities concerned expeditiously. No costs. Consequently, connected W.A.M.Ps are also dismissed. sm
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