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Judgment
Markandey Katju, C.J.—These writ appeals have been filed against the impugned order of the learned single Judge dated 11.04.2005,
passed in W.P.Nos. 5700 to 570 3 of 2005.
Writ Appeal No. 832 of 2005 has been filed against the order passed in W.P.No. 5700 of 2005 for the issuance of a writ of mandamus
directing respondents therein to permit the petitioner to draw samples for analysis of goods for a test report by an independent agency in respect of
the goods under detention pertaining to Bill of Entry Nos. 7020 63 and 702064 dated 20.10.2004. The other three writ appeals namely.,
W.A.Nos. 833, 834 and 835 of 2005 have been filed against the common order passed in W.P.Nos. 5701, 5702 and 5703 of 2005 for a writ of
mandamus to direct provisional assessment of the goods u/s 18 of the Customs Act, 1962 while releasing the goods pertaining to Bill of Entry Nos.
695193 dated 07.10.2004, 702063 dated 20.10.2004 and 70 2064 dated 20.10.2004.
The appellant is a manufacturing unit engaged in the manufacture of iron and steel products at Chennai. For the use in the said unit the appellant
imported non-alloy steel of 431.700 MT which was cleared under Bill of Entry No. 692343 dated 01.10.2004 with a duty concession under
notification No. 24/2004 dated 01.03.2002. However, when another consignment was imported against Bill of Entry No. 695193 dated 07
.10.2004, and Bills of Entry Nos. 702063 and 702064 dated 20.10.2004 with a concessional duty relief under the aforesaid notification No. 24
/2002 dated 02.03.2002 the goods were detained by the Customs Department.
There is a controversy between the appellant and the department as to whether the imported goods are eligible for concessional duty or not. It
may be mentioned that ""seconds and defective goods"" are ineligible for the concessional duty, vide Government of India Customs Notification No.
21/02 dated 01.03.2002 as amended.
According to the appellant the imported goods were not ""seconds or defective goods"" whereas according to the department they were such
goods.
When the goods were seized by the Customs Department a Mahazar was drawn on 13.10.2004 in which there was a reference to ""factory
seconds and defectives"". Consequently, the goods were handed over to the Container Corporation of India for safe custody. On 14.10.2004, the
appellant requested for provisional assessment and release of the consignment. The appellant has written a letter dated 18.10.2004 to the national
Metallurgical Laboratory, Madras Centre. The appellant also addressed letters to the 2nd respondent for release of the detained goods.
Meanwhile, a show cause notice dated 04.01.2005 for 708.310 MT has been issued by the Commissioner of Customs (Port) - Import, inter alia
alleging that the goods were not entitled to the concessional duty and liable to be subjected for higher rate of duty, apart from alleging
misclassification of the goods by the appellant.
The appellant alleged that it is entitled to secure an experts opinion on the goods detained and to have an independent test report from
independent reputed 3rd parties. The appellant has prayed that it should be allowed to take samples of the detained goods for use in the
adjudication proceedings, but this prayer had not been accepted.
In paragraph - 5 of the counter affidavit filed by the department it is stated that as per the investigations and based on the National Metallurgical
Laboratory''s opinion the goods mentioned in the Bill Nos. 702063 and 702064 dated 20.10.2004 were found to be non-alloy steel slabs seconds
which attracts duty at the rate of 40% + 12% + 2% Education Cess, whereas the rate of duty as claimed by the petitioner is 5% + 12% CVD +
2% Educational Cess. Thus, it was alleged that there was a willful mis-declaration of description of the goods by the appellants to evade higher
rate of duty. Pending further investigation by the Director of Revenue Intelligence, the goods of 408.31 MTS have been released provisionally
detaining 300 MTS of the goods out of 708 .31 MTS goods as security to safeguard the differential duty amount and adjudication liabilities as per
request of the appellant in its letter dated 18.11.2004. The matter is pending for adjudication. The differential duty works out to Rs. 45.13 lakhs.
Similarly, the goods mentioned in Bill of Entry No. 695193 dated 07.10.2004 were found to be non-alloy Steel Slabs Seconds which attracts duty
at 40% + 12% + 2% Education Cess.
It is further alleged in the counter affidavit that pending investigation by the Director of Revenue Intelligence, the goods of 485.11 MTS have
been released provisionally detaining 325 MTS goods as security to safe guard the differential duty amount and adjudication liabilities as per the
request of the petitioner. The differential duty comes approximately to Rs. 50 lakhs.
It is alleged by the department that it this is a case of blatant mis-declaration of description of the goods with a view to evade huge amount of
duty at higher rate. A show cause notice has been issued proposing to take action u/s 111(m) and 112(a) of the Customs Act, 1962 in connection
with the above imports and the appellant has to face the adjudication proceedings. It is alleged that the request for the re-test by a different agency
is not permissible. It is further alleged that there is no provision entitling the appellant t get samples of the detained goods. It is further alleged that
both the department as well as the trade are accepting the opinion furnished by the National Metallurgical Agency, which is a Government Agency.
It is alleged that the writ petitions are premature, as they have been filed at a show cause notice stage.
In paragraph - 8 of the counter affidavit filed by the department it is stated that the petitioner has imported the aforesaid goods describing them
as non-alloy steel slabs, whereas on examination by the National Metallurgical Laboratory, Chennai the goods were found to be non-alloy steel
slabs seconds. It thus alleged that the petitioner has mis-declared the description of the goods to avoid payment of higher rate of duty.
On the facts of the case, we find no merit in these writ appeals and we agree with the order of the learned single judge. At present, only a
show cause notice has been issued to the appellant and it should face adjudication proceedings. The writ petition is premature at this stage.
In N.Kailasam v. Bar Council of India 2005 (2) MLJ 44 (1) a Division Bench of this Court held that ordinarily no writ will lie against a show
cause notice. The Division Bench followed the decisions of the Supreme Court in The Special Director and Another Vs. Mohd. Ghulam Ghouse
and Another, and Executive Engineer, Bihar State Housing Board Vs. Ramesh Kumar Singh and others, .
A copy of the report of the National Metallurgical Laboratory, Chennai had been furnished to the appellant, and if it is so advised it can apply
for cross-examination of the experts from the National Metallurgical Laboratory who gave that report. However, there is no provision entitling the
appellant to draw samples as prayed for. It may be mentioned that the National Metallurgical Laboratory is a neutral body and we see no reason
why its report should be biased against the appellant. We cannot understand the apprehension of the appellant in this connection. At any event, the
department has stated that it is prepared to give an opportunity to the appellant to cross-examine the chemical examiner of the National
Metallurgical Laboratory who tested the samples. We cannot understand what more the appellant want. It seems that the appellant only wants to
protract and delay the adjudication proceedings.
It may be mentioned that the National Metallurgical Laboratory had inspected the materials on 12th and 13th of October, 2004 and has
submitted a report (which was communicated to the appellant) that the materials in question were ""non-alloy steel slabs seconds"". The appellant
made two objections to the said report. Firstly, that the thickness of the material was not measured in the right way, and secondly it was only
based on visual inspection.
In our opinion, the appellant can cross-examine the chemical examiner of the National Metallurgical Laboratory in connection with these two
objections, but he cannot claim any right to draw samples from the detained goods, since there is no provision in law permitting taking of such
samples.
The learned counsel for the appellant relied on the decision of the Supreme Court in Commissioner of Customs, New Delhi Vs. M/s. Punjab
Stainless Steel Industries, in support of his contention that the petitioner has a right to take samples. We have carefully perused the said decision. In
paragraph - 5 of the said decision the Supreme Court has observed:-
The demand of the respondent for retesting of samples was declined but in order to obviate any unfair treatment to the respondent, the
Commissioner gave option to the respondent to cross-examine the Chemical Examiner who had tested the samples. The respondent, however, did
not avail that option and declined to cross-examine the Chemical Examiner. Regarding the objection of the respondent that copies of shipping bills
were not supplied, the Commissioner observed that so long as the report of the test conducted on the samples drawn from the respective
consignments establishing that the grade of material used in the utensils exported under these consignments was substandard, was supplied to the
respondent, it was immaterial whether copy of the shipping bills was supplied or not. After detailed examination of the record, the Commissioner
held that the charge of mis-statement and suppressing the correct quality and grade of the input under claim of duty exemption entitlement under
quantity based advance licence and DEEC Book in violation of the standard input-output and value addition norms mentioned therein stood
established in respect of 67 out of 68 consignments. The Commissioner of Customs by order dated 3rd November, 199 7 held that the goods
amounting to Rs. 6,74,43,408/- are liable to confiscation u/s 113(n) and (j) of the Customs Act, 1962 (for short, ''the Act''). Further, the bank
guarantee of Rs. 10,00,000/- was ordered to be appropriated against the liability of confiscation as the goods had already been exported. The
respondent was also denied the benefit of the amount of Rs. 4,68,78,932/- under DEEC Scheme and duty drawback in respect of these
consignments directing that if these concessions have already availed by the respondent, the same shall be reversed. Further, a penalty of Rs.
25,00,000/- was imposed on the respondent u/s 114 of the Act read with Section 11 of the Foreign Trade (Development and Regulation) Act,
1962. The Order of the Commissioner was challenged by the respondent by preferring appeal before the Customs, Excise and Gold (Control)
Appellate Tribunal. The Tribunal by the impugned order has set aside the order of the Commissioner of Customs. Under these circumstances,
appeal u/s 130E of the Act has been filed by the Commissioner of Customs. Shri Mohta, learned Senior Counsel appearing for the respondent has
raised objection about the maintainability of the appeal contending that since the present case does not involve determination of any question having
a relation to the rate of duty of customs or to the value of the goods for the assessment and, therefore, appeal u/s 130E of the Act is not
competent. Learned counsel contends that if the appellant was aggrieved by the order of the Tribunal, it ought to have taken recourse to the
remedy of reference as provided in Section 130 of the Act and further if aggrieved from the order made on reference, it could approach this Court
by filing a petition under Article 136 for grant of leave. Learned Attorney General, without going into the question of maintainability, submits that
the present appeal may be treated as a SLP and in support placed reliance upon Commissioner of Central Excise and Customs Vs. M/s. Venus
Castings (P) Ltd., where rejecting the similar objection about the maintainability of the appeals under the Central Excise Act, the appeals were
directed to be converted into special leave petitions and dealt with on merits. In the circumstances of this case, and also considering that this matter
has been pending in this Court for nearly two years, we convert this appeal into special leave petition, grant leave and proceed to decide the
appeal on merits. The order of the Commissioner of Customs has been set aside by the Tribunal holding that there was violation of principles of
natural justice on account of two reasons, namely, (1) Rejection of the request of the respondent for retesting the samples on the ground that there
is no such provision in the Act and (2) Non-supply of the copy of the shipping bills. Regarding the first reason, noticing the contention urged on
behalf of the Revenue that there is no provision which permits retesting of samples, the Tribunal states that there is also no provision under the
Customs Act which prohibits retesting of the samples, and accordingly holding that the denial of opportunity to retest the sample was violative of
principles of natural justice. No specific provision has been brought to our notice which permits retesting of samples, but, for the present case,
without going into that aspect, we would assume that there was no bar in granting opportunity to retest the samples. At the same time, however, it
has to be borne in mind that the purpose of retesting the samples was to demolish the report of the Chemical Examiner on consideration whereof
the charge of mis-statement and suppression regarding quality and grade of the input had been established against the respondent. In this regard,
the Tribunal failed to notice the main aspect of the case that option was granted to the respondent to cross-examine the Chemical Examiner who
after taking the samples had given the report. The respondent had, thus, ample opportunity to demolish his report. The respondent did not avail
that opportunity. It stands established that the adjudicating officer had given an offer to the respondent to cross-examine the Chemical Examiner.
The respondent did not dispute that such an offer was made. The only objection of the respondent was that such an offer was made suo motu and
the respondent had not asked for it. The objection was frivolous and misconceived. Therefore, we fail to understand, how the respondent having
failed to avail the opportunity to cross examine the Chemical Examiner could urge that there was violation of principles of natural justice by non-
grant of request of the respondent for retesting of the samples. Unfortunately, in the order of the Tribunal there is not even a whisper about the
offer given to the respondent to cross-examine the Chemical Examiner. Thus, the first reason given by the Tribunal for coming to the conclusion
that there has been violation of the principles of natural justice is not sustainable"".
A careful perusal of the paragraph - 5 of the said decision of the Supreme Court shows that it does support the case of the appellant, rather
paragraph - 5 negatives the claim of the appellant. It has been stated in paragraph - 5 of the said decision that the assessee can cross examine the
chemical examiner if it is aggrieved against his findings. There is nothing in paragraph - 5 which states that the petitioner has a right to take samples.
The Supreme Court has clearly negatived the allegation that there is violation of principles of natural justice in such a situation. In the present case
also the department has stated that it is willing to give the appellant an opportunity to cross-examine the chemical engineer. Hence, there is no
question of violation of principles of natural justice in the present case.
The learned counsel for the appellant then relied on the decision of the Supreme Court in Bombay Oil Industries Pvt. Ltd. Vs. Union of India
(UOI) and Others, in which it has been observed in paragraph - 9:- ""If the appellants felt that the findings of the Customs House were not correct it
was open to them to get the samples cross tested through their experts and to lay evidence in that connection before the authorities as the burden
was entirely on them to show that they satisfied all the conditions of Notification with a view to earning the exemption to the extent of 30 per cent
of import duty on their imported tallow. They did nothing of the mind"".
In our opinion, the above observation does not lay down any principle of law that the assessee has a right to take samples. No statutory rule or
notification has been mentioned in the aforesaid observation that the assessee has any right to take samples.
It is well settled that a decision is a precedent for the principle of law which it lays down, vide Goodyear India Ltd., Gedore (India) Pvt. Ltd.,
Kelvinator of India Ltd. and the Food Corporation of India and Another Vs. State of Haryana and Another, . It is only the statement of law in a
decision which is binding, vide Municipal Committee, Amritsar Vs. Hazara Singh, . Thus, in State of Punjab Vs. Baldev Singh, the Supreme Court
observed that everything in a decision is not a precedent. In Delhi Administration (Now N.C.T. of Delhi) Vs. Manohar Lal, the Supreme Court
observed that a mere direction without laying down any principle of law is not a precedent. 22. In The Divisional Controller, KSRTC Vs.
Mahadeva Shetty and Another, the Supreme Court observed as follows: ""?The decision ordinarily is a decision on the case before the Court, while
the principle underlying the decision would be binding as a precedent in a case which comes up for decision subsequently?The scope and authority
of a precedent should never be expanded unnecessarily beyond the needs of a given situation. The only thing binding as an authority upon a
subsequent Judge is the principle upon which the case was decided?.
In Bharat Petroleum Corporation Ltd. v. N.R. Vairamani 2005 1LW 209 the Supreme Court observed:- ""Courts should not place reliance on
decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of
Courts are neither to be read as Euclid''s theorems nor as provisions of the statue and that too taken out of their context. These observations must
be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words,
phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain
and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted
as statutes. In London Graving Dock Co. Ltd. v. Horton 1951 AC 737 Lord Mac Dermot observed: ''The matter cannot, of course, be settled
merely by treating the ipsissima vertra of Willes, J. as though they were part of an Act of parliament and applying the rules of interpretation
appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge''. In
Home Office v. Dorset Yacht Co. 1970 (2) All ER 294 Lord Reid said, ''Lord Atkin''s speech ?. Is not to be treated as if it was a statute
definition it will require qualification in new circumstances''. Megarry, J. in (1971) 1 WLR 1062 observed: ''One must not, of course, construe even
a reserved judgment of Russell L.J. as if it were an Act of Parliament''. And, in Herrington v. British Railways Board 1972 (2) WLR 537 Lord
Morris said: ''There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be
remembered that judicial utterances made in the setting of the facts of a particular case''.
In view of the above decision, it cannot be said that the observation of the Supreme Court in paragraph - 9 in Bombay Oil Industries Pvt. Ltd.
v. Union of India 1995 (77) E.L.T. 32 (supra) lays down any principle of law that the appellant has a right to take samples, particularly, since there
is no mention of any statutory rule or notification which entitles it to do so.
In Arunodaya Mills Ltd. and Another Vs. Union of India and Another, the Gujarat High Court held that the assessee can cross-examine the
Chemical Examiner, but it was not held that the assessee has any right to take samples.
It is well settled that the rules of natural justice are not a straight jacket formula and cannot be stretched too far vide, Bar Council of India Vs.
High Court of Kerala, , Chairman, Kendriya Vidyalaya Sangathan v. Girdharilal Yadav, : (2004)6SCC325 , The Maharashtra State Financial
Corporation Vs. M/s. Suvarna Board Mills and another, , Bar Council of India v. High Court of Kerala J.T. (2004) 11 SC (Supp) 42, Union of
India and Another Vs. Tulsiram Patel and Others, . Natural Justice is not an unruly horse vide, Kumaon Mandal Vikas Nigam Limited v. Girija
Shankar Pant (2001) 1 SCC 182 The Chairman, Board of Mining Examination and Chief Inspector of Mines and Another Vs. Ramjee, ,
Channabasappa Basappa Happali Vs. The State of Mysore, , etc.
As regards the appellant''s prayer for a direction to the first respondent to make a provisional assessment u/s 18 of the Customs Act while
releasing the goods detained, it may be mentioned that part of the goods seized have already been released provisionally, detaining a certain
amount as security to safeguard the differential duty amount and adjudication liabilities as per the request of the appellant in its letter dated
18.11.2004. Thus, the authorities have acted in a fair manner.
It may be mentioned that Section 18(1) of the Customs Act does not make it mandatory on the Customs Officer to make a provisional
assessment. The use of the word ""may"" in Section 18(1) indicates that it is the discretion of the Customs Officer to make a provisional assessment
or not, and he is not bound to do so. Of course, he cannot exercise such discretion arbitrarily, but in this case we are of the opinion that the
Customs Officer has acted fairly and not arbitrarily, as he has already released part of the goods and detained the other part as security to
safeguard the interest of the Revenue.
Thus, there is no force in these appeals, and they are dismissed accordingly. However, we direct that the adjudication proceedings be
completed by the authorities concerned expeditiously. No costs. Consequently, connected W.A.M.Ps are also dismissed.