(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Rule.
2. For the interim relief that we propose to grant, we prefer to record our short reasons. 2.1 The petitioner is a proprietary concern engaged in the business of operating bonded warehouses at Gandhidham Customs area. It enjoys a licence issued by the Customs Department for such purpose since 1998. The petitioner imports various consumables such as Page 1 of 10 C/SCA/15936/2012 ORDER alcohol, beer, cigarettes, food items, juice etc. duty free, stores such goods in its bonded warehouses and reexports in different consignments to ships as per requisition.
2.2 On or around 14.8.2012, Customs Officials carried out a surprise visit at the warehouse site. Panchnama was drawn sealing the godowns. On 16.8.2012, further Panchnama was drawn. Physical stock was verified. On 15.9.2012, Customs Authorities drew a Supratnama and segregated certain goods in three rooms of the warehouse, which according to the authorities, were found in excess to the Stock Register and other documents. At that stage, the case of the Customs authorities was that as regards liquor bottles as many as 79000 odd bottles were found in excess, likewise around 1000 boxes of beer were also found in excess. The petitioner had also failed to maintain stock register.
2.3 On the basis of such discrepancy and on the allegation that the petitioner had not maintained the register, the licence came to be suspended by an order dated 17.9.2012. When the petitioner approached this Court in the earlier round of litigation by filing Page 2 of 10 C/SCA/15936/2012 ORDER Special Civil Application No.12746 of 2012, the Court required Customs Department to expeditiously complete the investigation and also at the end of completion of such exercise to review the situation and examine whether the suspension of licence should be continued. On 5.11.2012 the Assistant Commissioner of Customs passed the impugned order and decided to continue the suspension of the licence. On 5.11.2012, he also sent a communication to the petitioner indicating that there was discrepancy in the stock and further that the petitioner had failed to maintain Register, which was statutory in nature.
2.4 We may, however, notice that upon completion of the detailed stock taking and matching it with the available documents, the discrepancy had narrowed down to 225 bottles of liquor and three boxes of beer. There are, of course, certain other stray items, where the discrepancy is quite negligible. Be that as it may, the Customs Authorities, did not lift the suspension. Hence, this petition.
3. The case of the petitioner is that the discrepancy now verified by the Customs Authority in the physical stock is extremely small. The Page 3 of 10 C/SCA/15936/2012 ORDER petitioner's warehouse stores as many as 2 lakh bottles in the godown. Its yearly turn over is approximately 80,000 bottles. Discrepancy of 225 liquor bottles thus is a small fraction of its total stock. It is also the case of the petitioner that though, admittedly, the stock register was not maintained, the same may, at best, be technical breach and would not justify extreme step of suspension of licence. Counsel for the petitioner also submitted that the Customs Authorities had sufficient time to verify full facts. Having done so, now that the controversy is narrowed down to such a minuscule level, continuation of suspension would act rather harshly against the petitioner who, for 14 years, since the licence was granted, had not been involved in any such incident in the past. It was also submitted that the imports and exports are strictly supervised by the Customs Officers. There is, therefore, no possibility of any mischief.
4. Learned Senior Counsel Shri R.J. Oza for the Customs Department highlighted the discrepancies and submitted that the order of suspension was continued on valid grounds. In any case, such order is Page 4 of 10 C/SCA/15936/2012 ORDER appealable under Section 128 of the Customs Act. Investigation is yet to result into issuance of show cause notice. At this stage, therefore, no interference is called for.
5. In this case, there is yet another angle to the whole episode. The police authorities of the State carry,a prima facie, belief that the excess stock was meant for being sold in the local market. The same would, in addition to the breach of Customs laws, also breach prohibition laws of the State. They have registered two FIRs, one against the petitioner and unnamed Customs officials and another against some named and unnamed Customs officials. Their stand is that even the Customs officials are conniving with the petitioner in the clandestine design.
6. When the previous quantity of unmatched physical stock has been, according to the Customs authorities themselves, scaled down to a level which is negligible, in our opinion, any further continuation of suspension would not be justified. Secondly, there may be a case of nonmaintenance of certain Registers. However, in every case where such defect or default is noticed, it may not automatically result into Page 5 of 10 C/SCA/15936/2012 ORDER suspension of the licence. We are conscious that under Section 58(3) of the Customs Act, 1962, Assistant Commissioner has the power to cancel the licence either by giving one month's notice in writing or if the licencee has contravened the provisions of the Act, Rules or Regulations or committed breach of any of the conditions of the licence. Before cancelling licence for contravention of any of the provisions of the Act etc, a hearing is envisaged. We are also conscious that under subSection (3) of Section 58, pending inquiry, where licence is liable to be cancelled for contravention of the provisions of the Act etc, the Assistant Commissioner or Deputy Commissioner of Customs, has such power to suspend the licence. However, such powers are required to be exercised in appropriate cases and not without full application of mind. May be previously, when the first Panchnama was drawn and large scale discrepancy was noticed, which may perhaps be attributed to the petitioners not maintaining records properly, suspension of licence initially made, was justifiable. However, when on its own, Customs Authorities have scaled down the level of discrepancy, which has come Page 6 of 10 C/SCA/15936/2012 ORDER to such a minuscule level, that it may even be possible due to either breakage, human error, theft or some such other factors, in our view, the order of suspension ought to have been reviewed. If the non maintenance of the stock register was coupled with significant discrepancy in the physical stock either in positive or in the negative, we might have been persuaded to take a different view.
8. Under the circumstances, on the basis of our above noted prima facie opinion, operation of the impugned order dated 5.11.2012 is stayed. In other words, the petitioner will be free to operate its bonded warehouses pending further orders that may be passed by the Customs Authorities. This, however, cannot be done unconditionally. Though, it was emphatically contended before us that police authorities have absolutely no jurisdiction to inquire or investigate into any of the alleged irregularities, we are of the opinion that such issues cannot be gone into by us in this petition. The petitioner and the Customs Authorities have independently challenged the FIR's and prayed for quashing of the Criminal proceedings.
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C/SCA/15936/2012 ORDER
9. We notice that in Criminal Miscellaneous Application No. 13841 of 2012 filed by the petitioner for quashing, the learned Single Judge has while issuing notice, granted stay directing not to take coercive steps qua the petitioner. We also notice that FIR, insofar as the same pertains to the Customs Authorities, is concerned, is challenged by the Department in Criminal Miscellaneous Application No. 14654 of 2012. In such petition, learned Single Judge granted ad interim relief, in terms of para 8(C) of the petition, which reads as under: "(C) Pending admission, hearing and final disposal of this petition, YOUR LORDSHIPS may be pleased to stay and suspend all the criminal proceedings arising out of the FIR registered at A Division Police Station, Gandhidham by the respondent No.2 against the officers of the Customs, including the petitioners, being Prohi./CR No.5449/12 dated 19.09.2012 for the offences punishable under Sections 66[1][b], 65[a][e] and 81 Prohibition Act."
10. Thus, in the quashing petition filed by the Customs Department the investigation is stayed, qua the Customs Authorities only. Thus, in so far as the petitioner is concerned, there is only limited interim relief of not to take any coercive steps against the petitioner complete investigation is not stayed.
11. In order to see that eventually if the Page 8 of 10 C/SCA/15936/2012 ORDER investigation is freely and fully permitted to the police authorities, the same may not get destroyed by the time this petition is heard and decided, it is provided that whenever, the petitioner makes export, it would be open for the police, not below the rank of Police Inspector, to remain present and verify the actual exports being made. This arrangement is subject to outcome of the quashing petition. The petitioner shall also notify to the police authorities any future imports, which the petitioner makes at every time.
Before concluding we would like to clarify few points:
1) That the permission to the petitioner to carry on the business is subject to fulfilling other requirements under the rules including validity of the licence.
2) The petitioner shall maintain proper Registers.
3) For the purpose of enabling the police authorities to remain present at the time of actual exports, petitioner shall, as soon as permission to access the ship for export is granted by the Customs Authorities, intimate the same to Kandla port police station so that in any case, the police authorities Page 9 of 10 C/SCA/15936/2012 ORDER will have a minimum of 30 minutes time before the actual exports.
4) Nothing stated above, should be seen as our expression of the powers of the police authorities and such issues obviously would be gone into by the learned Single Judge, who is seized of the quashing petitions.
5) The seizure order passed by the authorities shall not be allowed to frustrate this order.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) SUDHIR Page 10 of 10