Allowed

Naseer Chittethukudy Majeed v. Union of India

Telangana HC8 Feb 2023WP/46508/2022

Case brief

AI extract

What is this about?

The High Court quashed an order refusing release of seized goods after the applicant paid the redemption fine. The court held subordinate officials must follow the appellate authority's order directing release unless stayed by a superior court, enforcing judicial discipline against arbitrary refusal based on pending departmental appeals.

What did the court decide?

Order dated 15.12.2022 set aside; respondents directed to release goods upon verification of payment of redemption fine.

Naseer Chittethukudy Majeed Vs Union of India — Customs and Excise | Telangana HC (2023)

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THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAO (Special Original Jurisdiction)

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WEDNESDAY,THE EIGHTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND

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THE HONOURABLE SRI JUSTICE N,TUKARAMJI

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WRIT PETITION NO: 46508 OF 2022

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Between:

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Naseer Chittethukudy lt/ajeed, R/o Chittethukudy House, Ponjaserry P.O, Ernakulam, Kerala-683547. (Rep.by his General Power of Attorney Sanjay Sankar 4,4 S/o. lr4ohan Das N R/o Calicut-673019)

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...PETITIONER

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AND

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1 Union of lndia, Through Joint Secretary. Department of Revenue, Ministry of Finance, At North Block, New Delhi - 1 10001 .

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2 The Central Board of lndirect Taxes and Customs, At North Block, New Delhi - 110001.

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The Principal Commissioner of Customs, Hyderabad Customs Commissionerate. LB Stadium Road, Basheerbagh, Hyderabad-500001 .

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4 The Joint Commissioner of Customs, Hyderabad Customs Commissionerate. LB Stadium Road, Basheerbagh, Hyderabad-500001.

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5 The Deputy/Assistant Commissioner of Customs, lnland Container Depot 1160/5-7 Thimmapur. Rangareddy District, Telangana State-509325.

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..RESPONDENTS

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Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or direction, more particularly one in the nature of writ of mandamus, quashing the impugned proceedings daled 15.12.2022 in C. No.5/56/30712021- 1CD T, issued by Respondent No.5, refusing release of the goods of the Petitioner, by declaring the issue of the impugned proceedings by Respondent No.s, dated 15.12.2022 as illegal, arbitrary and violative of Articles t O(t ) (g), 20 and 21 of the Constitution of lndia.

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./-

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IANO:1O^{F 2022}

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Petition under Section 151 CPC^praying that in the circumstances stated in the affidavit filed in support of the^petition, the High Court may be^pleased to pass orders directing the Respondent No.5 to release the goods of the Petitioner.

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Counsel for the Petitioner: SRI SRINIVAS CHATURVEDULA

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Counsel for the Respondent 1 : MR. B MUKHERJEE FOR MR.cADl PRAVEEN KUMAR (Dy. SoLlclToR GENERAL oF INDIA)

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Counsel for the Respondent 2 TO 5: MS. SAPNA REDDY

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The Court made the following: ORDER

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THE HON'BLE THE CHIEF JUSTICE UJJAL BHTIYAN

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AND

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THE HON'BLE SRI JUSTICE N. TUKARAMJI

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WRIT PETITION No.465OB of 2022

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ORDER: eer tte ! lon'bte th. d:.ief Justice Ujjat Btlugan)

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IJcard Mr. Srinivas Chaturvedula, learned counsel for the petitioncr; Mr. B.Mukherjee, iearned counsel rcpresenting Mr. Clndi Praveen Kumar, learned Deputy Solicitor^(leneral of lndia appearing for respondent No.1; and Ms. Saprra Reddl', learned counsel for respondents No.2 to 5

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'2. B.r liling this petition under Article 226 of the Constitution of lnclizr, petitioner seeks quashing of order dated 15.12.2022 pzrssed by respondent No.5 refusing to release the goods of the petitioner

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Before we advert to the order dated 15.12.2022, v',e m i.rl brieflr' nirrrato the facts relevart for adjudication ol tlrc 1i.s

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Petitioner works for gain at Dubai. While on his visit to India on 25.O1.2021 he had made a baggage declaraLion on 13.08.202 I in the office of respondent No.5 in respecl of goods consigned to India by sea vide container No.MSCU 9553955 under Non Transfer of Residence^(NTR) c:rtr:gorr' dcclarir-rg the value of the goods at Rs.3,65,000.00 I?espondents took the view that the goods imported bl thc: pctitioner did not constitute bona fide baggage. ln tl-ris corrnection, shorv cause notice dated 1B .10 .2O21^r.r':r s issued as to why the declaration made by the petitroner shouid not be rejected and the goods conliscated, besides imposition of penalty under various p; ovisions ol ll'rcr Customs Acl, 1962 (briefly, 'the Customs Act' hereinafter)

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Ultimately, order-in-original dated 21. 10.202,1 r.i'as passed by respondent No.4 rejecting the declaration of the: petitioner dated 13.08.2O2I and determining the r.alue of the goods at Rs.20,35,39 1.00 under Rule 9 ol the Customs Valuation (Determination of Value of lmportcd Goods) Rules, 2007. That apart, certain more amoLlnts r,l,c re levied

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on the petitioner besides ordering for conliscation of the goods. However, respondent No.4 gave an option for redemption of the goods on payment of redemption line under Section 125(1) of the Customs Act within a period of 30 days. Relevant portion ol the order-in-original dated 21 .lO.2021 reads as follows:

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In view of the foregoing facts, circumst:inces, discussions and hndings, I pass the lollowing order:

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ORDER

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(i) I order that the goods importcd by Shri Nasccr Chittethukudy Majeed vide Container No.MSCU 9553955 and under Baggage Declaration No.3 lB35O dated 13.08.2021, as non-bonafide baggage undcr the provisions of Customs Act, 1962 read with Baggage Rules, 2016; and I reject the value of Rs. 3,65,000,/declared in the subject Baggage Dcclaration for thc consignment arrd I re-determine the value at Rs.20,35,391/- as per Rule 9 of the Customs Valuation (Determination of Value of Importecl Goods) Rules, 2007:

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(ir) I order classification of the ncll' al-td unusecl goods" mentioned in the Annexure Vl to the notice at'rd valued at Rs.11,52,050/- and^"old and usecl goocls virlued at Rs.2,l3,O76l- as detailed in Alncxurc VIi to thc notice, as^"dutiable goods importcd lor personal usr:"

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a-\

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)

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under Chapter sub heading No.9804 90 OO ol the Customs Tariff Act, 1975;

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(iii) I order' confiscation of the^"new ar-rd unused goods" flguring in Annexure-Vl to the noticc valued at Rs.11,52,050/-, under Section lilld), 111(l). 111(m) and 111(o) ofthe Customs Acl, 1962 rcad $,ith Foreign Trade Po1icy 2Ol5-2O, Foreign Trade (Development & Regulation) Act, 1992 and Baggage ftulcs, 20 16, being non-bonafide baggage: Hou'cver, I gir,,e an option for redemption of the goods on payment of re'ricmptron hne amounting to Rs.2,30,000/- under Se ction l2a)(1) ol the Customs Act, 1962, within a pcriocl of 30 cla-u"s frorn tl-re date of ttris order; The confiscated goods uhich have been given an option for redcmptior.r on payment of redemption fme are to bc rcleased on p.u ment of Redemption Fine zu-rd on paymcnt o[ custr:ms dlrtics, as applicable, and penalty as imposcd;

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(iv) I order for confiscation of the Olcl and Used goods frguring in Annexure-Vll to the notice vallred at Rs.2,13,076l-, under Section 111(d), l l i(l), 111{rn) and 111(o) of the Customs Act, 1962 read u'ith Forcign'lrade Policy 2Ol5-2O, Foreign^'lrade (Development & Regulation) Act, 1992 and Baggagc Rulcs. .20 l(r. as nonbonalide baggage. However, I givc an option for redemption of the goods on pavmcnt of rcdemption fine amounting to Rs.2 1,00O/- uncier Scctror.r 125(1) of the Customs Act, 1962, withrn a pcricld o[ 30 d:rvs from the date of this order: thc confisctrtcd goods r.r,hich lrave been given an optiorr lbr rcclt:mirtior) on pa-yrncllt^()f

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redemption fine are to be released on payment of Redemption Fine and on payment of customs duties as applicable and penalty as imposed;

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(v) I order for confiscation ol the goods mentioned in Annexure-Il to Annexure V to the noticc valued at Rs.6,70,265l-, under Section 111(d), I l1(l), 111(m) and 1i 1(o) of the Customs Act, 1962. r'cad with Foreign Trade Policy 2O\5-2O, Foreign 1'radc {Development & Relation Act, 1992, Baggage Rulcs, 2016, Import Sanitary Permit issued by thc Department of Animal Husbandry and Dairying. Food Satct,"' and Standards Act, 2OO6 as amendcd; Druqs turd Cosmetics Rules, 1945 read with Drugs and Cosmetics Act, I94O as amended, and for non- registration under Bureau of Indian Staldards (BIS), r,vhcrever applicable; However, I give an option for redemption t.rf the goods on payment of redemption fine amounting to Rs. 1.68,000/- under Section 125(1) of the Customs Act, 19(i2, within a period of 30 days from the date of this order; The confiscated goods which have becn given an option for redemption on payment of reclempl-ion hnc are to be released on payment of Rcdemption Fine and on payment of customs duti.es as applicable and penarltl' as imposed;

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(vt) I impose a pcnalty of Rs. il,l4,00O/- on Shri Naseer Chittethukucly Majecd, under Scction i l2(a) & 112(b) of the Custonrs .\cL. I962;

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(vii) The proceedings initiated in the impugned notice against M/s,'7 Zone Shipping Line India Pvt.

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Ltd., Shri Mohd. Ebrahim Abdul Rahim and Shri Salman Barees, the co-noticees, are kept in abeyance a and would be taken up separately in supplementary order.

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According to the petitioner, he had paid the redemption fine ol Rs.20,89,493.00, inclusive of basic customs dut1,-, social $'elfare cess, integrated goods and services tax (IGST) ancl penalt.v vide challan No.367 12021 on 30.06.2022. After pa-r'ment of the redemption fine, petitioner made a request for ciearance of the container baggage vide lerrer dated O3.OA.2O22. By the communication dzrtccl 03.O8.2022, respondent No.5 declined the request. Adverting to Section 125(3) of the Customs Act, it \'.1s pointcd out that the option to redeem the confiscated goods had r-rot been exercised within the maxrmum period of 120 days from the date of the adjudication order. Thus, the option extended to redeem the goods had becomc void in terms of the above provision Therefore, request ol the petitioner was rejected.

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In the meanri'hi1e, petitioner filed appeal under Section 128 ol the^(lustoms Act before the Commissioner of Customs and Central Tax, Appeals-1, Hyderabad, against the aforesaid decisior-r ol respondent No.5. By the order-inappcal dated 12.O9.2022, Commissioner of Appeals set aside the communicartion dated 03.O8.2022 to the extent of rejection of claim lor redemption of goods and ordered lor allorving redemption of the goods on payment of applicable duties, penaltv and redemption fine. A corrigendum to the order-in-appcarl cl:rtccl 12.O9.2022 was issued by the appellatc authorit-r on 28.09.2022 whereby the operative portion of the ordc'r dated 12.09.2022 was clarified by holding that older passed by respondent No.S was set aside to the e.rtent of rcjection of petitioner's request on the ground of delar' t seeking redemption beyond the prescribed pc'riod arncl the goods were directed to be relezrsed as per the statute on payment of applicable dutics, penaltr iurcl reclcrnption firte.

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B. Notr.vithstanding the above decision of the appellate authority, respondent No.5 issued the impugned order datcd 15.12.2022. Petitioner has been inlorr.nec] that Customs Department has reviewed the order-in-appeal and thercafter has preferred an appeal against the szrid ordcr. ln vies, of the Customs Department's appeal against the order-ir-r-appeal, request for clearance of the goods has not bcen considered by respondent No.3. Accordingi-1', permission for clearance of goods has not been accorded

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Aggrieved, present writ petition has been filed scckir-rg the reliel as indicated above.

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O r-r 30.12.2022, while directing learned Standing Counsel representing the Customs Departmer-rt to obtain instruction, s'e had passed the follou,ing order:

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Petitioner is aggrieved by communication datcd 15.12.2022 rssued by the Sth respondent declining to rclcase the confiscated goods of the petitioner.

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Commissioner (Appeals) had allowed the appeal filcd by the petitioner against such order of confiscation and directed clearance of the goods.

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However, it appears that Customs Department has preferred an appeal against the said ordcr of the Commissioner (Appeals). Therefore, clearancc of the goods has been declined.

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We find that the communication dated 15.12.2022 is devoid of any specifics. Nothing has bcen mcntioned as to when the appeal was hled and what rs thc prcsent status of the appeal. Unless there is a sta]of the order of the Commissioner (Appeals), it is not open to respondent Nos.3 to 5 to withhold clearancc of thc goods.

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1 1. Though respondents have not filed counter afficla.,it, Ms. Serpna Reddy, Iearned counsel representing resl;onclents No.2 to 5 submits that Customs Del)artlnellt has preferred a revision application before the rc\risional IS authorit-v on 17 .11.2022. The revision applicatiorl pending. There is no power on the revisional ar,rthoritv to griilrt stit'. Therefore, there is no sta)' of thc o|cler rn appc.rl. Hou,ever, adverting to Section 125(3) ol the Customs Act., she submits that if the redemption line is not

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paid wlthin a period of 12O da-r's, the option to exercise redemption would no longer be available unless an appeal is pending against the order-in -original. Therefore, order of the appellate authority rs errolr e oLl s

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In Union of India v. Kamlakshi Finance

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Corporation Ltd.1, Supreme Court helci and rciterated that the principles of judicial disciplirrc require that thc orders of the higher appellate autl-roritics shoulcl bc [ollor'r,ed unreservedly by the subordinate authorities. The mere fact that the order of the appellate aLlthorit-' is not acceptable to the department, which ir-r itself is an objectionable phrase, and is the subject mattcr of an apircal can be no ground for not following the eippellate order unless its operation has been suspended bv a competcnt court. if this healthy rule is not follor.r'ed. thc result u,ill only be undue harassment to tl're .rssessec and chaos in administration of the tax lau's

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'^{1992 Supp(1)SCC443}

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Supreme Court agair-r in Collector of Customs v Krishna Sales (P) Ltd.2, reiterarted tl-re proposition that mere filing of an appeal does not operate as a stay or suspension of the order appcarlccl against. It rvas pointed out that if the authorities r.vere of the opinion that the goods ought not to be released pencling the appeal, the straight-forward course for tl-rem is to obtain an order of stay or other appropriate clirection ll-orn the Tribunal or the Supreme Court, as the case ma-r bc'. Without obtaining such an order they cannot refuse to implement the order under appeal.

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Following the abovc dccrsions of tl-rc Supreme Court, a Division Bench ol the Bombal lJrgh Court in Ganesh Benzoplast Limited v. Union of India3 hcld that noncompliance of orders of the appellate authority by the subordinate original authorit-r,is disti,rrllir-rg to saJ/ the least as it strikes at the ven root of erdministrative discipline and may have the effcct ol severel-r undermining the

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, 1994 Supp (3) SCC 73 \ 2O2O 1374) ELT 552

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eflicacy of the appellate remedy provided to a litigant under the statute. Principles of judicial discipline require that the orders of the higher appellate authorlties should be follon ed unreservedl,r, b.r the subordinate authorities.

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This principle has been reiterated by the Bombay High Cor-rrt in Himgiri Buildcon & Industries Limited v. Union of India, Writ Pctition (ST) Nos. 97994 of 2020 & 97997 of 2020, decided on Irebruary Oa,2O2l.

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in Mylan Laboratories Limited v. National Faceless Assessment Centrea. a Dir.isron Bench of this Court was considering challenge to er draft assessment order passed by the assessing officer under Sectlon l44C of the Income Ta-r Act, 196 i. ln the seud order, depreciation claimed by the assessee on good u'i11 n as disa11ov,,ed, though in the previous assessment .'ealr i.e 2014-LS Income Tax Appellate Tribunal had allorve d such claim of the assessee. Assessing officer took the stand that Income Tax Department had not acceptecl the said decision of the o (2o22j 146I'rR 73,1 : 2022 l1l ALD 520 ('r's) (Dri)

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Income Ta-x Appellate Tribunal as the views of the Income Tax Appellate Tribunal urere not acceptable to the Income Ta-x Department. Accordingly, the decision of the Income Ta-x Appellate Tnbunal rvas appealed before the High Court. Therefore. the issue ol depreciation claimed on goodr,vill had not att.iincd finality. Deprecating the stand taken bl the assessing officer, this Court held as follows:

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Wc arc ali-zrirl such a view taken by the Assessing Ofhcer can be lustiliccl. Rather, it is highly objectionable lor an Asscssirrg Officcr to say that decision of the Income Tax Appc)Jatc Tribunal is not acceptable; ald thart since it l.ras bccn appezrled against, the issue of allou'abilitv of deprccizrtion on goodwill has not attained finalit-'. Unlcss thcrc is a sta,:, order / decision of the jurisdictional lncorne Tax Appellate Tribunal is binding on all income ta.\ authoritics wrthin its jurisdiction.

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17 . This Court held that it is highly objectionable for an assessing officer to sal that decision of the Income Tax Appellatc l'ribunal rs not acceptable and that since it has bcen appealed against, the issue of allowability of depreciation on goods'il1 had not attained finality. It has been clarific-cl that i-rnlcss there is a stay, decision of the

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jurisdrctional Income Tax Appellate Tribunai is binding on all income tax authorities within its^jurisdiction

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The reafter. this Court held as follows:

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Therefore, the stand taken by the Assessing Ofhcer that since the decision of the Income Tax Appellate Tribunal in the case of the petitioner itself for the assessment year 2014-15 has been appealed against the issue in qucstion has not attained finality, is not only wrong but is required to be deprecated in strong terms being highly objectionable.

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1 B. Ach,erting to the facts of the present case, once Lhc appellate authority has passed the order-in-appeal and direcled release of the goods on payment of redempt;on finc, it is not open to respondent No.5 to decline releasc ol' such goods despite payment of redemption fine bv tl-rc petitioner. Respondent No.5, being an officer lorver in hicrarchl' than the Commissioner of Appeals. is bound to complv lr'ith the order of the higher appellate authorit] , nr-rle ss the order of the higher appellate authority is sta.r cd by a still l-righer forum. As has been observed bv thrl Supreme Court, unless Lhere is adherence to the principir:

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of judicial discipline, there would be chaos in administration of the tax laws. Such a situation cannot be permitted.

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1c) Therefore and having regarding to the above, .e set asirle the order dated 15.12.2022 passed by respor-rdent No.5 and ciirect the respondents to release the goods dcrclared by the petitioner on 13.08.202 I forthu.ith upon clrrc verification of payment of redemption fine.

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)O. Accordingly, the writ petition is allowed

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Miscellaneous applications pending, if an-t., shall sIand closed. However, there shall be no order as to co].

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SD/. N. CHANDRA SEKHAR RAO ASSISTANT REGISTRA

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//TRUE COPY//

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SECTION FICER

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One fair copy to the Hon'ble THE CHIEF JUSTICE UJJAL BHUYAN (for His Lordships Kind Perusal)

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One fair copy to SRI JUSTICE N. TUKARAMJI (for His Lordships Kind Perusal)

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Union of lndia, Through Joint Secretary. Department of Revenue, lVinistry of Finance, At North Block, New Delhi - 1 10001.

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The Central Board of lndirect Taxes and Customs, At North Block, New Delhi -^'1 10001

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The Principal Commissioner of Customs, Hyderabad Customs

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Commissionerate. LB Stadium Road, Basheerbagh, Hyderabad-500001 .

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The Joint Commissioner of Customs, Hyderabad Customs Commissionerate. LB Stadium Road, Basheerbagh, Hyderabad-500001 .

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The Deputy/Assistant Commissioner of Customs, lnland Container Depot 1 1- 60/5-7 Thimmapur. Rangareddy District, Telangana State-509325.

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The Under Secretary, Union of lndia, lvlinistry of Law, Justice and Company Affairs, New Delhi

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The Secretary, Advocates' Assocration Library, High Court Buildings, Hyderabad.

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B. One CC to SRI SRINIVAS CHATURVEDULA Advocate [OPUC] 9. One CC to Dy. SOLICITOR GENERAL OF INDIA Advocate [OPUCI 10.One CC to MS. SAPNA REDDY,Advocate[OPUC] '1 1.Two CD Copies 12. 1 1 LR.Copies

EDS CJI P

HIGH COURT

DATED:0810212023

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ORDER