By TIOL News Service

PATNA, JAN 11, 2016: PETITIONERS are before the Patna High Court seeking release of seized goods viz. Split betel nuts imported on 28.01.2013 despite the proceedings initiated against the petitioners in respect of the said goods for the charge of its illegal import had been dropped by the Adjudicating authority and there is a specific direction for release of the seized goods vide order dated 28.03.2013.

Burning example of red-tapism in the Customs department; layman explanation; not sparing any effort in hoodwinking this court; trying to shield not only the other erring officials of the Custom Department but also himself; Court in fact is amazed with the approach; petitioners were made to run around the corridors of the office of the Custom Department; highhandedness and arbitrary exercise of power by the officials of the Custom Department - some phrases used by the High Court in its 87-paragraph order while castigating the department.

Facts of the case:

+ The petitioners had imported 15.470 MT of processed betel nuts from Bangladesh through Land Customs Station, Petrapole under a valid bill of entry dated 28.01.2013. Upon clearance on payment of the prescribed amount of import duty, the goods imported by the petitioners were examined and after assessment and clearance of the goods, they were loaded in West Bengal registered vehicles and were brought to a place Bangaon by these trucks from where the goods were transferred/loaded to the trucks provided by the Transporter M/s SRC India Movers enroute to their business premises at New Delhi. The betel nuts imported by them were also got tested and nothing spurious was found in the test report of the Export Inspection Agency at Kolkata.

+ While transporting the betel nuts from Bangaon to its destination at New Delhi, its one of the consignment by Truck was intercepted on 16.02.2013 and seized by the officers of the Customs (Preventive), Patna for alleged violation of Sections 45, 46 and 47 of the Act read with Section 11 of the Foreign Trade (Development & Regulation) Act, 1992 on the allegation that the recovered consignment split betel nuts were illegally imported to India from Bangladesh and were liable for confiscation under Section 111 of the Act. Such seized articles thereafter were brought to Patna where it was weighed and found to be 15.470 MT. The Custom officials, while seizing the goods, had also valued the same at Rs. 14,69,650/- apart from the value of the truck at Rs 12,00,000/-.

+ On acquiring knowledge of such seizure, the petitioner appeared before the Additional Commissioner (Prev.), Patna on 06.03.2013 and had filed application for release of the said goods. The prayer for provisional release of the seized goods, in terms of Section 110 of the Act, was also allowed by the Additional Commissioner of the Customs vide his order dated 28.03.2013.

+ However, the same was not released by the authorities of the Custom Department who, on 2.4.2013, had sent the sample of goods (betel nuts) for testing to Central Food Laboratory, Kolkata Camp, Raxaul which on 03.04.2014 had submitted a report that the sample was found to be adulterated and unsafe as per the Food Safety & Standards Act, 2006 .

+ Petitioners were subjected to confiscation proceedings. The petitioners thereafter filed their reply dated 8.5.2013 to the show cause notice dated 08.04.2013 in which they had categorically denied the allegation made in the show cause notice.

+ During pendency of the confiscation proceedings pending before the Additional Commissioner (Adjn.) Customs, Patna, they had again sent a notice dated 12.09.2013 to the Additional Commissioner, Customs Headquarters, Patna for compliance of the provisional order of release dated 28.03.2013, but no action was taken by the officials of the Custom Department even in response to such notice. The petitioners had also informed the Commissioner of Customs, Patna both with regard to non-compliance of the order of the provisional release of the betel nuts dated 28.03.2013 as also the continued deterioration of the seized goods due to lack of its proper storage and preservation but even then their seized goods were not released.

+ The proceeding was decided in their favour by the final order of Additional Commissioner (Adjn.) Customs, Patna dated 29.11.2013 by dropping the confiscation proceedings.

+ Again they requested the Superintendent, Customs to release the seized goods but the authorities of the Custom Department, vide letter dated 7.12.2013, informed the petitioners that the request for release of the goods cannot be considered in view of the case being presently pending for departmental review before the reviewing authority .

+ Nothing more was communicated to them and the department consumed a period of almost four months in filing its appeal on 25.3.2014 against the final order of adjudication dated 29.11.2013.

+ On 09.04.2014, the sample of the betel nuts was again sent to C.F.L, Raxaul for its being tested and when on 24.04.2014 a negative test report of betel nuts was received by the Custom Department from the C.F.L., Raxaul, the authorities of the Custom Department had still not released the seized betel nuts of the petitioners whereafter they filed this writ application on 05.08.2014.

+ Court, by its order dated 06.08.2014, had directed the counsel for the Custom Department to take instructions and file counter affidavit disclosing reasons for not releasing the seized articles.

+ On 22.08.2014, a counter affidavit had been filed wherein an order of release dated 09.08.2014 had been enclosed directing for the provisional release of the split betel nuts of the petitioners and a plea was taken in such counter affidavit that since the goods had already been released in favour of the petitioners on 09.08.2014 on furnishing of the bank guarantee of Rs. 14,69,650/- as well as another bank guarantee for a sum of Rs. 9,28,200/-, the grievance of the petitioners, as raised in this writ application, had stood redressed.

+ Apart from the aforesaid explanation in the counter affidavit, it was claimed by the Custom Department that the seized betel nuts were not those for which the petitioners had obtained the test report of Export Inspection Agency, Kolkata dated 28.01.2013.

+ In para-5 of the counter affidavit the authorities of the Custom Department accepted that the Additional Commissioner (Adjn.), Customs Hqrs., Patna, vide order dated 28.03.2013, had directed for release of the seized goods in favour of the petitioners, but the test report of the said betel nuts dated 3.4.2013 was received from the C.F.L., Raxaul stating that the sample of betel nuts does not conform to the standard laid down under Regulation No. 212 and 2.3.47(5) of Food Safety and Standard (FSS Act, 2006).

+ The petitioners submitted that Court should look into the aspect as to why such goods were not released in favour of the petitioners for a period of more than sixteen months despite an order of provisional release dated 28.03.2013; that in the period of almost one and half year, since the date of seizure to the date of release, the quality of the seized split betel nuts had deteriorated to such an extent that it became wholly useless and thus causing huge financial loss to the petitioner.

High Court directions:

++ The High Court, on 02.12.2014, directed the authorities of the Custom Department to disclose the reasons for such an enormous delay in the release of the seized articles of the petitioners and the Commissioner of the Customs (Prev.) in person was directed to file an affidavit giving explanation as to why it had taken almost one and half year to act upon the provisional order of release dated 28.03.2013 and whether for such laches on the part of the concerned officers/employees any action had been taken against them or was proposed to be taken.

Inquiry ordered:

+ As the Court was not at all satisfied with the explanation in the supplementary counter affidavit filed by the Commissioner of Customs, an assurance was given in person to the Court that he (Commissioner) had instituted an inquiry to be conducted by Mr. K.Ramamurti, Additional Commissioner, Customs for fixing responsibility on the concerned officials who had caused abnormal delay in the release of the consignment of the petitioners.

Inquiry report:

+ On 19.12.2014, a 3rd supplementary counter affidavit was filed enclosing the copy of the inquiry report dated 18.12.2014.

Observations:

+ It appears that after the direction for provisional release by the competent authority was already issued the specimen of the goods were sent on 2.4.2013 to the Central Food Laboratory (C.F.L.), Kolkata having its extension center at Raxaul and on 3.4.2013, the report was submitted by the C.F.L. Raxaul stating that the split betel nut was found to be adulterated.

+ A prayer was made for release of betel nuts on furnishing security and in this application, the petitioner had again emphasized on the aspect that the seized goods were perishable in nature and as per the various instructions of the Government of India should be released without delay failing which the Department could become liable to pay the seizure value to the petitioners.

+ Thereafter, specimen of seized articles were sent to the Food Analyst, Bihar, P.H. Lab, MADA, Dhanbad on 7.5.2013 for submitting the test report and even a reminder was sent for submission of such report on 21.5.2013.

+ The Officer in-charge of C.F.L., Raxaul Extension Center, Raxaul, in his letter dated 2.8.2013, informed the Superintendent, Preventive that certifying the fitness of betel nuts for human consumption was beyond the scope of activities of C.F.L .

+ The petitioners once sent a legal notice dated 29.3.2014 asking the Assistant Commissioner, Custom to release betel nuts and in the aforesaid legal notice, it was made clear that the seized betel nuts were in fact to be used for manufacturing of mosquito repellent coils and not for the human consumption and thus the betel nut should be released so as to protect them from perishing.

+ This Courtis fully satisfied that there is no justifiable reason for not releasing the seized betel nuts of the petitioner and in fact, it is a classic case of highhandedness and arbitrary exercise of power by the officials of the Custom Department at Patna.

Observations on the Inquiry report:

+ It must be kept in mind that, that report of Mr. x x x, who himself was a party to the decision either in reviewing or in filing appeal against the final order of adjudication in confiscation proceedings dated 29.11.2013, should in fact not have been associated with such enquiry by Mr. x x x, the Commissioner, Custom because somewhere for part of the delay in releasing of the consignment at least from the date of 29.11.2013 to the date of filing of the appeal i.e. 23.4.2014 he also being instrumental in causing delay in the eventual release of the seized articles of the petitioners could not have been fair and impartial in fixing the responsibility on erring officials of the Custom Department.

+ This Court is thoroughly disappointed with the conclusions arrived by Mr. x x x in his inquiry report. His all three conclusions is bereft of his awareness of the provisions of the Customs Act. The help taken by him of the provisions of Prevention of Food Adulteration Act, 1954 in no view of the matter could have become a factor after the order of the provisional release dated 28.03.2013 was passed and unless such order was set aside by the higher authority the same had to be essentially acted upon.

+ It is also apparent that Mr. x x x either in ignorance or deliberately had lost sight of the fact that … a statutory order in terms of section 110A of the Customs Act for provisional release had been passed on 28.3.2013. As against such statutory order if the department had not filed any appeal it could not have taken a shortcut by sending the seized articles, namely, betel nuts for its test report by the CFL. Raxaul and in fact such recourse itself smacks of malafide on the part of officials of Custom Department.

+ The second reasoning of Mr. x x x in his conclusion of enquiry report is equally bad. Such recourse of mere pendency of a review or filing of an appeal amounting to staying the final order of confiscation proceeding is at least not contemplated under the provisions of the Customs Act.

+ It is in fact here that Mr. x x x has become judge of his own cause because he too was a party in obstructing release of seized articles of the petitioners on the ground of pendency of alleged review of the final order of confiscation proceedings dated 29.11.2013 as well as in filing of the appeal after a period of nearly four months and thus had become responsible with other officers in not releasing the seized articles despite the final order of adjudication in the confiscation proceedings dated 29.11.2013 in favour of the petitioners.

+ This Court in fact is amazed with the approach of Mr. x x x when he describes in his conclusion in the Enquiry Report that there was a bonafide intention on the part of the Custom Department in releasing of the goods because it was awaiting the verification of the sample report for a period over one year. This Court, therefore, will have no difficulty in coming to the conclusion that Mr. x x x was also trying to shield not only the other erring officials of the Custom Department but also himself.

+ That seems to be a layman explanation and in fact a burning example of red tapism prevailing in the office of the Custom Department.

+ There was no order of either confiscation or paying fine by the petitioners and, in fact, the proceedings itself was dropped, the authorities, in any view of the matter, whether in the name of the pendency of the report of the C.F.L. or otherwise, could not have kept the seized consignment of the petitioners in their possession even for a day.

+ This Court, in fact, has amazed with the approach of the authorities of the Custom Department, which, in the name of obtaining the report from the C.F.L., had kept the matter relating to release of seized goods of the petitioners pending from 03.04.2013 to 24.04.2014 despite both the provisional order of release dated 28.03.2013 and the adjudicatory order dated 29.11.2013 to be in favour of the petitioners.

+ This Court would find it difficult to accept any of the plea of Custom Department with regard to non-release of the seized articles of the petitioners for a period of nearly one and half year commencing from 28.03.2013 till 09.08.2014.

+ In any event after 24.04.2014, when a negative test report of the cut betel nuts of CFL, Raxaul dated 16.4.2014 was received by the department from C.F.L, Raxaul there was no valid reason whatsoever for not releasing the goods in question in favour of the petitioners.

+ The reason for not releasing the goods on account of pendency of the appeal is also a mere hoax and not permissible in law. The manner in which the authorities have in fact sought to keep the petitioners deprived of the seized goods for a period of almost one and a half year, therefore, cannot be approved by this Court.

+ In such a situation, when no plausible much less acceptable explanation has come forward on behalf of the authorities of the Custom Department, it has to be essentially held that there was gross unreasonable delay in release of the seized articles of the petitioners, which has resultantly caused immense loss to the quality of the seized betel nuts of the petitioners and eventually has become absolutely of no use for the petitioners. The petitioners, in fact, were made to run around the corridors of the office of the Custom Department since 28.03.2013 for getting release of their seized articles and … it was on account of abnormal delay caused in releasing of the seized betel nuts of the petitioners that its utility value had been virtually reduced to Zero.

Strictures, Punitive action: The High Court also did not mince words while making some harsh observations against the Commissioner Customs (P), Patna.

The High Court further observed -

+ Thus, having an overall picture this court will have no difficulty in coming to the ultimate conclusion that the petitioners on account of abnormal delay of almost 1½ years caused in release of its seized betel nuts have been put to a perennial loss. Since the authorities themselves had valued and quantified the price of the seized articles, namely, split betel nuts weighing 15.470 M.T. to the tune of Rs.14,69,650/- on 17.2.2013, the petitioners would become at least entitled to recover this amount from the officials of the Custom Department.

+ The law is well settled that the public officers have to be also held accountable for their acts of omission and commission.

+ Thus, when this Court has found that the petitioners have been put to a loss of at least Rs.14,69,650/- on account of complete deterioration of quality of split betel nuts solely on account of deliberate laches on the part of the officials of the Custom Department it would direct respondent no.2 to pay a sum of Rs.14,69,650/- along with interest at the rate of 9% per annum for the period 28.3.2013, the date on which the order of provisional release of the seized article was passed by the competent authority to the order directing release of the seized articles dated 9.8.2014 within a period of three months from today.

+ It is, however, made clear that such amount, which has to be paid by way of compensation for the loss caused to the petitioners on account of delay of nearly 1½ years in release of the seized articles, shall be recovered from the erring officials and for the purposes of fixing individual responsibility on such erring officials this Court would direct the Chairman of Central Board of Excise and Customs Department of Revenue, New Delhi to get an enquiry conducted by an Officer not below in the rank of Chief Commissioner of Customs who must not be posted and/or associated in any manner with Patna Zone of the Custom Department.

+ This whole exercise must be completed within a period of six months from the date of receipt of this judgment by the Chairman of the Central Board of Excise and Customs, New Delhi, who having taken his action as directed above shall also submit his action taken report to the registry of this Court on or before 30th of June, 2016.

Conclusion:

+ Writ application is allowed with a cost of Rs. 25,000/- for coercing and compelling the petitioners to file this writ petition for release of their seized betel nuts to be paid by the Respondents to the petitioners within a period of three months from today.

+ It ismade clear that irrespective of initiation and conclusion of the aforesaid proceedings against the erring officials of Customs department of Patna Zone by the Chairman of Central Board of Excise and Customs, the payment of the amount of Rs.14,69,650/- alongwith interest at the rate of 9% per annum from 28.3.2013 to 9.8.2014 must be made to the petitioners within a period of three months from today, failing which the amount of interest on the amount of Rs. 14,69,650/- shall stand enhanced from 9% per annum to 18% per annum from 28.3.2013 till the date of its actual payment.

(See 2016-TIOL-63-HC-PATNA-CUS)