M. Nazir Hussain and Company vs The Assistant Collector of Customs, Appraising Dept, Custom House, Madras and Others

Veeraswami, J.—The writ appeal is directed against an order of Kailasam, J. declining to quash an order of the Assistant Collector of

Customs calling upon the appellant to pay a sum of Rs. 52,768-98 as customs duty under S. 28 (1) of the Customs Act. It appears that the

demand was subsequently reduced to Rs. 25,837-88. The appellant exported goat hair in 4 consignments which were covered by shipping bills

dated 8th and 9th June and 2nd July, 1966. The proper officer gave clearance certificates in respect of the consignments on 9th Jane, 1966 and

2nd July, 1966 on the view that the goat hair exported was not raw wool within the meaning of item 12 of Sch. II to the Indian Customs Tariff.

Later, on receipt of a communication from the Government of India, the proper officer apparently changed his view, and acting under S. 28 (1) of

the Customs Act, 1962, made the demand. In fact in the notices served upon the appellant by which he was called upon to pay the duty, reference

was made to the communication of the Government of India. That communication sought to clarify for purposes of export duty that raw wool

included goat hair also. This order was impugned before Kailasam, J. on the ground (i) that the entry did not include goat hair; and (ii) that is any

case, the proper officer having once taken a contrary view, and permitted export without duty, he had no further authority to revise his view later

and impose duty. The learned Judge rejected the grounds and dismissed the petition. He was of the view that the clarification by the Government

of India had not been shown to be wrong. The other objection was disposed of by reference to the powers of the proper officer under S. 28(1).

The appellant has taken a fresh ground in the appeal not dealt with by the learned Judge but said to have been argued before him, that the

proper officer''s order having been solely guided by the direction of the Government of Indian as to the scope of item 12 of Sch. II is, by that very

fact, vitiated. This ground is undoubtedly well founded. A similar point was considered by the Supreme Court in C.A. Nos. 659 to 664 of 1965

and was held to vitiate an order of a Central Excise Officer acting in his quasi judicial capacity. The actual issue was whether M.G. Poster paper

manufactured by the appellant in that case could be classified as printing and writing paper chargeable to duty under item 17 (3) or chargeable to

duty as packing and wrapping paper under item 17 (4) of the first Schedule to the Central Excise and Salt Act, 1944. Initially the department

treated M.G. poster and printing and writing paper but subsequently as packing and wrapping paper. This shift would appear to have been due to

a clarificatory direction issued by the Central Board of Revenue, which formed the basis of the demand for duty under item 17 (4) and rejection of

the appeal and revision arising thereout. The Supreme Court allowed the appeals by special leave against the orders solely on the ground that

where administrative officers were vested with quasi judicial powers, they should function and exercise those powers by application of their own

minds entirely uncontrolled and unguided by any direction issued by any superior officer up in the hierarchy of the administrative set up, and

therefore, where it is shown that an order of a quasi-judicial authority was rested solely on such direction from higher administrative authority, it

would be illegal. The Supreme Court observed :

It is true that the assessing authorities as well as the appellate authorities are judges in their own cause; yet, when they are called upon to decide

disputes arising under the Act they must act independently and impartially. They cannot be said to act independently if their judgment is controlled

by the directions given by others; than it is a misnomer to call their orders as their judgments; they would essentially be the judgments of the

authority that gave the directions and which authority had given those judgments without hearing the aggrieved party.

There is no doubt ex facie the order of the proper officer in this case that he considered the clarification of item 12 by the Central Board of

Revenue as decisive. That being the case, the principle of the judgment of the Supreme Court directly applies. On that ground the impugned order

should be quashed.

On the scope of item 12, we should not be taken as agreeing with the view of the learned Judge. The proper officer should be left free to decide

its scope. But we find that in W.P. No. 868 of 1960 reference has been made by this court to considerable literature which would bear on the

interpretation of item 12 which may well serve as a guide. We would refrain from expressing anything further as to the scope of item 12. The writ

appeal is allowed. It follows that the Writ Petitions too should succeed. No costs in any of them.