Cus - Circular 50/2005 referred by petitioner pertains to auction by custodians and in present case Circular applicable is 12/2006 as auction is by customs directly - Petitioner has no locus standi - Petition dismissed: High Court
By TIOL News Service
NEW DELHI, MAR 20, 2015: THE matter concerns auction of time-expired goods disposed of in accordance with Section 48 of the Customs Act, 1962.
It is the case of the petitioner that in the fourth auction, which was conducted in respect of the said goods, the petitioner's bid was the highest and, therefore,they should have been given the said goods.
However, the Customs department put the said goods to a fifth auction.
The holding of the fifth auction has been challenged by the petitioner in the present petition.
The petitioner has placed reliance on the Board Circular No. 50/2005-CUS dated 01.12.2005 which para 3(vi) is extracted below -
(vi) The disposal of the goods shall be made by public auction/ E-auction/tender. The date of the public auction/ E-auction/tender should be adequately publicized in advance through national newspapers (both in English and Hindi), departmental website as well as in at least one newspaper in the local language. The values assessed by the approved valuers appointed by the custodians shall form the "reserve price". The maximum number of auctions/tenders to which a lot is subjected should be four, with the goods to be necessarily sold for the highest bid in the last auction/tender regardless of the reserve price fixed. Reserve price fixed would not be applicable case of fourth auction/tender. In the event of the goods not being disposed of in the first auction, subsequent auctions/ tender should be conducted in time bound manner.
It is submitted that in terms of paragraph 3(vi) the maximum number of auctions has been specified to be "four" and the highest bidder has to be sold the goods irrespective of the reserve price.
Consequently, it is prayed that the fifth auction be cancelled and goods be sold to the petitioner at the price offered in the fourth auction.
The Counsel for the Revenue submitted that the Circular No. 50/2005 is applicable only where the disposal of the time barred cargo is being done by the custodians and not by the customs directly.
Inasmuch as the Circular applicable for disposal of goods by the Customs is Circular No. 12/2006-CUS dated 20.02.2006 which provides a different mode of conducting the sale of such goods. Clause 3.10 of the said Circular reads -
"3.10 The highest bid in the auction-cum-tender shall be accepted by the JPC(Joint Pricing Committee) if the bid is more than, or equal to or close (not less than the Fair Price by 5% to 10%) to the Fair Price. Otherwise, the goods shall be put up for auction-cum-tender the second time. In the event of the goods not being sold in the first two auction-cum-tenders, the goods shall be sold at the highest bid obtained in the third auction-cum-tender. If any lots still remain unsold after the third offer for sale, the Commissioner should ascertain whether the JPC has good reason for the goods remaining unsold."
The High Court observed -
4. In terms of Clause 3.10 of the Circular No. 12/2006, it is evident that the goods have to be sold to the highest bidder obtained in the third auction. In the present case, the difficulty is that the petitioner did not participate in the third auction. Therefore, even if the Circular No. 12/2006 were to be strictly adhered to, the petitioner would have no case. Moreover, we are clear that it is Circular No. 12/2006 which would be applicable in the present case and not Circular No. 50/2005 because the latter circular pertains to auctions by the custodians and the former circular applies to auctions by the customs directly. The present case is one of an auction by the customs and not by any of the custodians. Therefore, the petitioner does not have any locus standi in the present matter."
The High Court also noted that the petitioner had, in fact, participated in the fifth auction, and the petitioner's bid was not the highest.
It was further observed -
"The petitioner, having lost out in the fifth auction, cannot be permitted, after it has participated in the same, to challenge the said fifth auction. We are also informed that the highest bid obtained in the fifth auction is about Rs. 80 lacs more than what the petitioner had offered in the fourth auction."
Holding that there is no merit in the Writ Petition, the same was dismissed.
(See 2015-TIOL-685-HC-DEL-CUS)
