Dismissed

M/S Wadhawan Mill Store v. Union of India and Ors.

Punjab & Haryana HC29 Aug 2012CWP/13511/2012

Case brief

AI extract

What is this about?

The High Court of Punjab & Haryana dismissed a writ petition challenging a provisional customs assessment order. The court held that since an alternative remedy under Section 128 of the Customs Act was available and disputed questions of fact existed regarding goods valuation and examination, it was not appropriate to interfere in the writ jurisdiction.

What did the court decide?

Writ petition dismissed with liberty to the petitioner to avail the alternative remedy of appeal within 4 weeks.

M/S Wadhawan Mill Store Vs Union of India and… — Banking and Recovery | Punjab & Haryana HC (2012)

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CWP No. 13511 of 2012

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IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH

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CWP No. 13511 of 2012 Date of Decision:- August 29, 2012

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M/s. Wadhawan Mill Store

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..............PETITIONER(S)

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vs.

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Union of India and others

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...........RESPONDENT(S)

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CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE G.S. SANDHAWALIA

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Present:Mr. Jagmohan Bansal, Advocate, for the petitioner.

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Mr. D.D. Sharma, Advocate, for the respondents.

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G.S. SANDHAWALIA, J.

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The present writ petition has been filed under Articles 226 and 227 of the Constitution of India for issuance of a writ in the nature of certiorari for quashing provisional assessment order dated 25.06.2012 (Annexure P-8) passed by respondent no. 2-Assistant Commissioner of Customs.

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The pleaded case of the petitioner is that it is engaged in importing and trading pipe fittings. The pipe fittings can be imported by general license. Import of pipe fittings is subject to basic customs duty, countervailing duty and special additional duty. The petitioner, in the month of June, 2012, imported four containers of M.S. B/W Elbow and reducer and had placed the purchase order on a trader of China on 09.02.2012. The goods were imported through CFS, Ludhiana and the port

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CWP No. 13511 of 2012

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of discharge was Ludhiana. The bill of entry dated 05.06.2012 was filed through Customs House Agent (CHA) namely M/s. Emee Logistics (P) Ltd., in which value, description, quantity, country of origin etc. was mentioned. However, by mistake, the word “stock lot” was not mentioned which in common parlance pertains to different size, and design of all items is not found identical because material is left over quantity of different lots. The price of “stock lot” is lower than the price of non-stock lot material and the declared weight of the consignment was 100.045 MT. The goods were cleared on the basis of Risk Management System (RMS) but the Superintendent (Import), on 07.06.2012, physically examined all the four containers of the petitioner without getting prior approval of the jurisdictional Commissioner of Customs. The opinion of the Chartered Engineer was also called for, who submitted his report dated 11.06.2012. The respondents intimated to the petitioner that their Clearing House Agent was not co-operating in the examination and they also examined the goods and found that the actual weight was only 85.1657 MT instead of 100.045 MT and accordingly, the petitioner asked for re-assessment of the bill of entry. The petitioner submitted a representation dated 19.06.2012 that the consignment had passed through the RMS and the officer below the rank of Commissioner of Customs could not direct physical examination and without any order, the goods had been subjected to examination and the word “stock lot” was not mentioned in the bill of entry. The petitioner had represented the respondents to release the goods but they had the option of provisional assessment under Section 18(1) of the Customs Act, 1962 (hereinafter referred to as 'The Act') or get the goods warehoused under Section 49 of the Act. Thereafter, on 25.06.2012, the provisional

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CWP No. 13511 of 2012

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assessment order was passed without hearing the petitioner, which is the subject matter of challenge. The goods were held to be of assessable value of 1.09 crores approximately on which the duty liability came to 31.69 lac and the petitioner was directed to furnish bank guarantee of `20.5 lac and the representation dated 19.06.2012 was not considered. The respondents, in identical case, had passed a provisional assessment order while applying valuation rules whereas in the present case, the same had not been done. Accordingly, the said order has been challenged.

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The respondents, in their written statement, took the plea that the order passed was appealable since duty was assessed provisionally in terms of Section 18 of the Act as the petitioner had failed to produce the documents in support of the price declared by it. The petitioner had been asked to furnish manufacturer's invoice, record including e-mails regarding negotiation of price and other documents in terms of Rule 11(b) of the Customs Valuation Rules, 2007. The petitioner had been given an opportunity to seek provisional assessment and get the goods released but the petitioner failed to produce the requisite documents. Accordingly, the department was left with no option but to assess the goods provisionally. The bill of entry dated 05.06.2012 was processed through RMS and directly moved to the queue of the concerned import examination staff. The goods and the documents produced by the importer were examined and scrutinized and it was concluded that the description of goods given in the bill of entry did not match with the description given in the invoice. It is further mentioned that “stock lot” nature of goods was suppressed from the RMS and the goods were assumed to be “prime goods”. The “stock lot” imports of any goods were not facilitated by RMS and were invariably assessed to

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CWP No. 13511 of 2012

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duty after thorough examination of consignment on first check basis as the quality and nature of every “stock lot” is different from another and unless the goods are examined, their valuation could not be determined. It was pleaded that the matter was brought to the knowledge of the Joint Commissioner, who is the proper authority to intercept RMS consignment in terms of Para 9 of Standing Order 04/Cus/2007 and the requisite permission was obtained and the Joint Commissioner had informed the matter to his Commissioner on 06.06.2012 and a letter was sent to the Commissioner informing him about the interception of the consignment on the next day. The goods were interdicted only after an officer duly authorized by Commissioner had approved the same. It was stated that the “stock lot” was not mentioned on the bill of entry whereas the description was required to be there viz. the description shown in the invoice as per Section 46(4) of the Act and the “stock lot” nature of goods was deliberately suppressed in the bill of entry with a motive to get the bill of entry facilitated through RMS. Accordingly, it was pleaded that the goods had been mis-declared. The “stock lot” imports of any goods were invariably assessed on the basis of thorough examination of consignment on first check basis as the quality and nature of every “stock lot” is different from another and unless the goods were examined, their valuation could not be determined. The CHA was not co-operating and was requested to destuff and warehouse the goods in order to avoid shipping line charges as obtaining of expert opinion would have taken some time. The petitioners were informed and despite repeated requests to come personally to get the goods examined and verified in their presence, only the G-Card holder of CHA came and the goods were examined on 13.06.2012 and 14.06.2012.

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CWP No. 13511 of 2012

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The value of the goods was not affected by the weight as the value of the goods was calculated in the invoice only on the basis of the price per piece. The averment that an importer had imported identical goods which had been cleared, was denied and it was pleaded that the goods were imported from Hongkong in that case from a different agency and the goods covered by both the bills were not identical. The bill of entry therein was more than a year old and the thickness of the goods was neither given in the invoice nor on the bill of entry and, therefore, the goods could not be treated as identical or comparable. The value of the invoice was given on the basis of piece and not on the basis of weight and the petitioner had admitted that it had failed to disclose “stock lot” nature of goods in the bill of entry and on findings that the goods had been mis-declared, they were subjected to physical examination.

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In view of the above pleadings, counsel for the petitioner argued that since the goods had passed the RMS and the consignment had been cleared, therefore, physical examination of the containers was bad. Resultantly, the provisional order of assessment dated 25.06.2012, wherein the respondent no. 2 had ordered assessment at the value declared by the importer pending the outcome of the enquiry and requiring the petitioner to furnish test bond, provisional duty bond for the full value of the goods alongwith security in the form of bank guarantee, automatically renewable every year of an amount equivalent to the differential of duty leviable on the value declared by the importer and that of the duty calculated in paragraph 12.11 i.e. `31,69,545, was not justified.

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The submission of the learned counsel for the petitioner cannot be accepted. Admittedly, the order of provisional assessment has been

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CWP No. 13511 of 2012

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passed under Section 18 of the Act and the officer had deemed it necessary to subject the imported goods to test. The said order is appealable to the Commissioner (Appeals) under Section 128 of the Act. The issue as to whether the consent of the jurisdictional Commissioner of Customs has been taken or not and whether the respondent-authorities had the right for physical inspection of the goods imported which are stated to be misdeclared, are questions of fact which shall be determined by the authorities. The respondent-authorities have categorically stated that permission was taken and the Commissioner, vide order dated 20.06.2012, had directed that the goods had been substantially under valued and documents had been called for which were to be furnished to the Assistant Commissioner, CFS, Ludhiana. Accordingly, it had been directed that the provisional assessment be made and the goods be released or warehoused so as to avoid demurrage. In pursuance to such directions, the provisional assessment order was passed. Once the petitioner has an alternative and efficacious remedy available to it by way of appeal, this Court would be loath to interfere in the exercise of its discretionary jurisdiction under Articles 226 and 227 of the Constitution of India specially as disputed questions of fact arise regarding the quality of goods and the testing of the goods done by the Engineer and also whether they were of “prime nature” or “stock lot”. The adjudication by the authorities under the circumstances would be appropriate. Considering the issue regarding alternative remedy, a Division Bench of this court in T.L. Verma and Company Pvt. Ltd. vs. Union of India, 2009 (234) Excise Law Times, 203 has held as under:-

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“10. The stand of the respondents that the goods have

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been undervalued, is in fact, a subject matter of adjudication

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CWP No. 13511 of 2012

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process. It is open to the petitioner to establish before the adjudicating authority that the goods have been properly valued and appropriate customs duty paid thereon. However, in exercise of the writ jurisdiction of this Court, it is not possible for us to go into the question of the nature of goods imported and the extent of duty payable thereon. Such questions are questions of fact and therefore, the same are required to be determined by the departmental authorities in accordance with law.”

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Accordingly, in view of the above, the writ petition is disposed of with liberty to the petitioner to avail the alternate remedy in accordance with law. The petitioner shall be entitled to file an appeal before the competent authority within a period of 4 weeks from the date of receipt of certified copy of the order, who shall decide the same within a period of next 6 weeks from the date of its filing. Nothing said herein shall prejudice the appellate authority, who shall decide the appeal in accordance with law.

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(G.S. Sandhawalia) Judge

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29.08.2012 shivani

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(Ajay Kumar Mittal) Judge

M/S Wadhawan Mill Store v. Union of India and Ors.

Case brief

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M/S Wadhawan Mill Store v. Union of India and Ors.

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