NORTHERN PLASTICS LTD. (NOW MERGED WITH A CONSOLIDATED PHOTO AND FINVEST LTD.)versusCOLLECTOR OF CUSTOMS AND CENTRAL EXCISE

                    NORTHERN PLASTICS LTD. (NOW MERGED WITH                                 A
                      CONSOLIDATED PHOTO AND FINVEST LTD.)                                      ,.
   ·,                                            v.
                    COLLECTOR OF CUSTOMS AND CENTRAL EXCISE

                                     SEPTEMBER 17, 1999
                                                                                            B
    ~·
   .;:'
                          (G.T. NANAVATI AND S.N. PHUKAN, JJ.]


                 Customs:

 .......
    '.            Customs authorities-Liability to refund value of goods confiscated        c
           and sold-Import of goods-Confiscation-Pending appeal before Supreme
           Court customs authorities selling the goods-Order of confiscation held
           illegal-Application filed by importer seeking direction to customs authorities
           to return to the applicant value of the· goods with interest-Held, applicant
           is entitled to value of goods, less the duty payable thereon-Applicant is also
   • .r    entitled tO 12% interest-Plea that importer should file an action in tort if D
           it suffered loss and this Court cannot order payment, rejected-Constitution
           of India-Article 142 r!w Rule 6 of Order 47 of Supreme Court Rules, 1966.

                 The applicant imported certain goods and, on 11.1.1989, filed a bill of
~
 I         entry for their clearance. The customs authorities were of the opinion that
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           the goods were not correctly classified and were not entitled to exemption
           from excise duty and countervailing duty. By an interim order dated 27.4.1989
           the Gujarat High Court ordered release of the goods, but as the said order
           was challenged before this Court, the goods could not be released. On
           14.9.1989 the Collector of Customs ordered confiscation of the goods. The
           applicant after unsuccessfully challenging the order before the Customs,         F
           Excise and Gold (Control) Appellate Tribunal, filed an appeal before this
           Court.

                 Meanwhile the customs authorities sold the goods. This Court
           ultimately set aside the order dated 14.9.1989 passed by the Collector as also
           that passed by the CEGAT, holding that the goods were not misdeclared and        G
           were eligible for import under OGL. It further held that the goods were not
           liable to confiscation.
- '·
  ·;.

                 Since the customs authorities had sold the goods, the applicant filed
           the present applications for a direction under Article 142 of the Constitution
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                                                 679
     680                     SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.
                                                                                          !
 A read with Order 47 Rule 6 of the Supreme Court Rules, 1966 to the                  1/
     respondent to return the value of the goods with interest.

             It was contented for the applicants that during the pendency of the
     appeals, the respondents should not have sold the goods without obtaining
     orders of this Court; that the respondents had wrongly prevented clearance
 B   of the goods for consumption of the applicants and wrongfully confiscated
     and sold them away; and that since the order of confiscation had been set
     aside, the respondents were liable to return the value of the goods with 21 %
     interest from 21.12.1988 till payment thereof. The respondents, on the other
     hand, contended that the goods had specific expiry date and were required
C    to be stored in an airconditioned place; that on failure of the applicant to
     clear the goods inspite of the time having been given to it, the goods were
     sold by negotiations for Rs. 48.50 Lacs; that the customs duty payable on the
     goods was assessed at Rs. 48.50 lacs, which was to be paid by the applicants,
     besides Rs. 2,52,244 to be paid to the Central Warehousing Corporation as
     storage charges; and, therefore, the applicant was not entitled to any amount
D    at all.
                                                                                     I-
           Allowing the application, the Court

           HELD: 1. The order of confIScation of goods having been held to be bad,
     the goods were required to be returned to the owner thereof. But, since the
E    goods have been sold away by the respondents, they are liable to return to
     the appellant the money value of the said goods. Having made all attempts to
     prevent the release of the goods in favour of the applicant, the respondents
     cannot now contend that the applicant, and not they, was really responsible
     for deterioration of the goods and the consequent less realisation of price.
                                                                     [683-D-E, GJ
F
           2. Since the import of the goods was by the applicants, as soon as the
     goods landed on the land oiass of India, proper amount of duty became payable
   thereon. The applicant has become entitled to the value of the goods as on
  the date or time when the goods ought to have been cleared by the respondents
G for home consumption. Though the value of the goods as shown in the import
  documents was only Rs. 33.04 lacs-, it would be reasonable to presume that
  an importer would have imported the goods of the value of Rs. 33.04 lacs if
  its value in Indian Market at the relevant time was more than the value of
  the goods plus the duty payable thereon (i.e. Rs. 33.04 lacs+ Rs. 47.07 lacs , .
  =Rs. 80.11 lacs). As the applicant has been deprived of the use of the goods
H it is the obligation of the respondents to return at least Rs. 80.11 lacs less
      NORTHERN PLASTICS MERGED CONSOLIDATED PHOTO 1•. C.C.E. [G.T. NANA VAT!, J.)   681

    Rs. 47.07 lacs, the amount of duty payable thereon i.e. Rs. 33.04 lacs to the         A
    applicant. [684-D, F-G]

          3. It cannot be said that if the applicant has suffered any loss as a
    result of the wrongful act of the respondents then it should file an action in
    tort and this Court cannot order payment of any amount in these applications.
    No doubt it would be open to the applicant to initiate such an action if it feels     B
    that the loss suffered by it is more than Rs. 33.04 lacs but it would not be
    just and proper to refuse the claim made in these applications, as, in any
    case, the applicant is entitled to the money value of the goods which were
    illegally confiscated by the respondents. Considering the facts and
    circumstances, the respondent is directed to return to the applicant the              C
    amount of Rs. 33.04 lacs with 12% interest thereon from 1.2.1989 till the
    date of payment. [685-B-C]

        CIVIL APPELLATE JURISDICTION: I.A. Nos. 3 and 4 in Civil
    Appeal Nos. 4 I 96/89 and 3325 of I 990.
                                                                                          D
•        From the Judgment and Order dated 14.8.89 of the Central Excise Customs
    and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 2092/89-C
    (Order No. 388/89-C)

         Dushyant Dave, Parag Tripathi, A.T. Patra and Gautam Khaitan for
    Mis. Khaitan & Co., for the Appellants.                                               E
          C.S. Vaidyanathan ASG, P. Parmeswaran, Ms. Shobha and S.K. Mehta
    for the Respondents .
            /
            .


          The Judgment of the Court was delivered by

           G. T. NANA VA TI, J. The applicant in both these applications is Northern
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    Plastic Limited (now merged with Consolidated Photo and Finvest Ltd.). It
    was the appellant in the above civil appeals which have been allowed by this
    Court by its decision dated 14.7. I 998. These applications have been filed for
    direction under Article 142 of the Constitution read with Order 47 Rule 6 of
    the Supreme Court Rules, 1966.                                                        G
           The applicant had imported 59 jumbo rolls of Photographic Colour Films
    (Unexposed) Positive in January, 1989. He filed the bill of entry on 11.1.1989
    for clearance of the said goods. The goods were not cleared by the customs
    authorities as they had some doubt regarding its correct classification and
    entitlement to the benefit of exemption of customs duty and countervailing            H
    682                     SUPREME COURT REPORTS [1999) SUPP. 2 S.. C.R.

A duty under the notifications mentioned in the bill of entry. That ultimately led
    to issuance of show cause notice on 14.8.1989 for confiscation of the said
    goods on the grounds that there was misdeclaration of description in the bill
    of entry for the purpose of classification and availing of exemption and the
    goods were not eligible for import under the O.G.L. By an order dated 14.9.1989
    the Collector of Customs ordered confiscation of those goods. However,
B   taking into account the entire facts and circumstances of the case he gave
    the applicant an option to redeem those goods on payment of redemption fine
    of Rs. 5,00,000. H~ also imposed a penalty of Rs. l 0,00,000.

          The goods were earlier ord~red to be released by an interim order dated
C 27.4.1989 passed by the Gujarat High Court. 13ut as the said order was
    challenged both by the Union of India and by Hindustan Photo Films in this
    Court by filing S.L.P.© Nos. 8225 of 1989 and 9012 of 1989 they were not
    released. Meanwhile on 16.8.1989 D.elhi High Court had also P<!.Ssed an order
    restraining the applicant to deal with or sell the said goods in any manner
    even if released in their favour by the customs authorities. The goods thus
D   could not be obtained by the appellant and they came to be sold by the
    customs authorities even while the above appeals were still pending in this
    Court. Against the orderof Collector dated 14.9.1989 the applicant had preferred
    an appeal to CEGA T. The appeal was virtually dismissed except that the fine
    of Rs. 10,00,000 was reduced to Rs. 5,00,000; Aggrieved by the Collector's
E   order dated 14.9.89 as confirmed by CEGAT the applicant had filed Civil
    Appeal No. 3325 of 1990. Civil Appeal No. 4196 of 1989 was filed against the
    earlier order of the C.ollector.

          Setting aside the order dated 14.9.89 and the order passed by CEGAT
    this Court held that the goods were not misdeclared by the appellant and they
F   were also eligible for import under OGL. This Court further held that for these
    reasons the goods imported by the appellant were not liable to confiscation
    and the impugned orders passed by the Collector and CEGAT were illegal.
    Both the appeals were therefore allowed.

G          What is now contended by learned senior Counsel Mr. Dave in these
    applications is that the order of confiscation having been set aside the
    respondent is liable to return the goods to the applicant. He also submitted
    that the respondent should not have without obtaining the order of this Court
    sold away the goods during the pendency of the appeals. Since the respondent
    had wrongfully prevented clearance of the goods for consumption by the
H   applicant and as the respondent had wrongfully confiscated the goods and
              NORTHERN PLASTICS MERGED CONSOLIDATED PHOTO v. C.C.E. [G.T. NANA VAT!, J.]   683

            sold them away he should be held liable to return the value of the said goods        A
~           with 21 % interest from December 21, 1988 till payment thereof.

                   In the counter affidavit filed on behalf of the respondent by the Under
             Secretary to the Government of India, Ministry of Finance, opposing these
             applications it is stated that as the goods had specific expiry date and were
             also required to be stored in an air conditioned place, the Collector of            B
             Customs had informed the applicant on 28.5.1990 to clear the goods within
            seven days. As the applicant did not clear the goods they were sold by
            negotiations to Mis Hindustan Photo Films for Rs. 48.50 lacs. It is further
            stated therein that the Central Warehousing Corporation was also required to
            be paid Rs. 2,52,244 as storage charges. The customs duty payable on the
            goods was assessed at Rs. 48.50 lacs. The applicant is, therefore, not entitled
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            to any amount at all.

                   As the order of confiscation of goods was held to be bad the goods
            were required to be returned to the owner thereof. As the order of confiscation
            was declared as illegal by this Court on the ground that there was no mis-           D
             declaration of the goods and that the applicant was entitled to import those
             goods on the O.G.L., the confiscated goods, if they had not been disposed
             of, would have been required to be released in favour of the applicant and
            the applicant could have claimed damages for the damage to the goods and
            loss caused to it as a result of illegal retention of the goods by the respondent.
            We have referred to above how the applicant was prevented by the respondent
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            and the Hindustan Photo Films from redeeming/obtaining those goods. The
            goods having been sold away the respondent is now not in .a position to
            return the goods to the applicant. As this situation has been brought about
            by the respondent by his own acts he cannot now escape from the liability
            of returning to the applicant the money value of the said goods. If without          F
            challenging the first order passed on 3 1.1.1989 and the interim order passed
            by the Gujarat High Court in favour of the applicant on 27.4.1989 the respondent
            had returned the goods on the terms and conditions imposed by the Gujarat
            High Court then he would not have landed himself in this situation. It should
            have been realised by the respondent while challenging the said orders and
            retaining the goods in his possession that ·the goods were of perishable
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            nature and that they required air conditioned accommodation. Having made
"-.......   all attempts to prevent the release of goods in favour of the applicant the
 ~



            respondent cannot now contend that the applicant and not he was really
            responsible for deterioration of the goods and the consequent less realisation
            of price.                                                                            H
     684                     SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

 A          Rightly the re~pndent in the counter affidavit has not disputed the
     liability to return mon'ey value of the goods in view of the order passed by
                                                                                     ..
                                                                                     ~
     this Court. What is contended therein is that as the goods were of perishable
     nature and were required to be kept in an air conditioned storage place they
     had to be sold even though the appeals were pending in this Court. It is
 B   further stated that the duty payable comes to Rs. 47.07 lacs and Rs. 2,52,244
     were required to be paid to the Central Wareshousing Corporation as storage
     charges and as only Rs. 48.50 lacs were realised by sale of the goods nothing
     remains payable to the applicant.

           It was contended by Mr. Dave that the applicants are not liable to pay
 C  any duty as the goods were not cleared by the respondent and they were
    subsequently confiscated and· sold by the respondent and, therefore, the
   applicants cannot be said to have imported the goods. On the other hand,
    it was contended by Mr. C.S. Vaidyanathan, learned Additional Solicitor
   General that the import of the goods was by the applicants and as soon as
   the said goods landed on the land mass of India proper amount of duty
D became payable thereon. In our opinion, Mr. Vaidyanathan is right in his
   submission particularly when full impact has to be given to the order passed
   by us declaring retention and confiscation of the goods to be illegal. Mr. C.S.
   Vaidynathan, learned Additional Solicitor General, however, further submitted
   that value of the goods as shown in the import documents was only Rs. 33.04
E lacs and as the duty and the Warehousing charges payable are more than
   the said amount the applicant is not entitled to recover anything from the
   respondent. What is over-looked by the learned counsel is the consequence
   of setting aside the order of confiscation on the ground that it was illegal.
   The applicant has become entitled to the value of the goods ~s on the date
   or time when the goods ought to have been cleared by the respondent for
F home consumption. If the value of the goods in India after importation and
  payment of duty, in January 1989, was Rs. 33.04 lacs only then the applicant,
  and for that matter any sensible person would not have imported the goods
  at all. It would be reasonable to presume that an importer would have imported
  the goods of the value of Rs. 33.04 lacs if its value in Indian market at the
G relevant time was more than CIS value of the goods plus the duty payable
  thereon (Rs. 33.04 lacs+ 47.07 lacs= Rs. 80.11 lacs). It is also not the stand
  of the respondent that such goods were available in the Indian market at that
  time at a lesser price. Therefore, it is now the obligation of the r~spondent
  to return at least Rs. 80.11 lacs - 47 .07 lacs, the amount of duty payable
  thereon. As the applicant has been deprived of the use of the goods worth
H Rs. 33.04 lacs the respondent is under a legal obligation now to refund that
     NORTHERN PLASTICS MERGED CON SO LIDA TED PHOTO''· C.C.E. [G.T. NANA VA TI, J.]   685
    amount to the applicant. The respondent cannot now be permitted to take the A
    advantage of his own wrong and contend that the value of the goods should
    be determined only are Rs. 48.50 lacs inclusive of its value and the amount
    of duty payable thereon because they could be sold at that price only. We
    also cannot accept the contention of the learned counsel for the respondent .
    that if the applicant has suffered any loss as a result of the wrongful act of B
    the respondent then he should file an action in tort and this Court cannot
    order payment of any amount in these applications. No doubt it would be
    open to the applicant to initiate such an action if it feels that the loss suffered
    by it is more than Rs. 33.04 lacs. Merely because it is open to the applicant
    to initiate such an action it would not be just and proper to refuse the claim
    made in these applications as in any case the applicant is entitled to return C
    of the money value of the goods which were illegally confiscated by the
    respondent. Even though the applicant has claimed interest @ 21 % we do not
    think it proper to award interest at such a high rate and considering the facts
    and circumstances of the case it would be in the interest of justice if the
    respondent is directed to return the amount of Rs. 33.04 lacs with interest at
    the rate of 12% from l .2. l 989 till the date of payment as the Collector by its D
    order dated 3 l. l.l 989 had held that the goods were properly described and
    the import was legal.

          In the result the applications are allowed. The respondent is directed to
    return the amount of Rs. 33.04 lacs with 12% interest from l.2.1989 till the date       E
    of payment. No order as to costs.

    R.P.                                                                  I.As allowed.




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