Case Note & Summary
The petitioners, M/s Santogen Silk Mills Ltd. and its shareholder, imported 41 second-hand Sulzer looms in March 1994. Prior to import, the customs department had issued a detention order dated 31.5.1993 for recovery of Rs. 94,29,840.86 in duty arrears, of which only Rs. 47,14,920.54 was paid. Upon arrival of the goods at JN Port, the detention order was clamped, preventing clearance of the remaining 9 looms. The petitioners challenged the detention order before the Delhi High Court in Writ Petition No. 2153/95. The Delhi High Court, by interim order dated 15.12.1995, allowed clearance on furnishing a bank guarantee of Rs. 50 lakhs, which the petitioners furnished, but the customs did not release the goods. Subsequently, on 19.3.1997, the Delhi High Court finally held that the petitioners were not liable to pay the amount for which the detention order was issued and directed refund of Rs. 41,19,071.29 with interest at 17.5% p.a. Despite this, the petitioners did not clear the goods. They made repeated requests for clearance without payment of demurrage, but no action was taken. On 11.7.1998, the petitioners learned that respondent No.5 (Central Warehousing Corporation) had auctioned the 9 looms on 10.7.1998. The petitioners protested but then filed the present writ petition under Article 226 before the Bombay High Court seeking setting aside of the auction and issuance of a detention certificate. The court noted that the goods had already been auctioned and the petitioners had failed to clear them despite court orders. The court held that after auction, no detention certificate could be issued and the auction was valid. The petition was dismissed as infructuous.
Headnote
A) Customs Law - Detention Certificate - Issuance of detention certificate - Petitioners sought detention certificate for period goods were detained by customs under detention order dated 31.5.1993 - Delhi High Court had already held detention illegal and directed refund - However, goods were not cleared by petitioners despite court orders and were subsequently auctioned by warehousing corporation - Held that after auction, no detention certificate can be issued as goods are no longer available for clearance (Paras 1-6). B) Customs Law - Auction of Goods - Validity of auction - Goods detained by customs were lying in warehouse - Petitioners failed to clear goods despite interim orders of Delhi High Court - Warehousing corporation auctioned goods after expiry of free period - Held that auction was valid and cannot be set aside as petitioners did not take steps to clear goods (Paras 5-6). C) Constitutional Law - Writ Jurisdiction - Article 226 of Constitution of India - Relief after auction - Petitioners challenged auction and sought detention certificate - Since goods had already been auctioned, no effective relief could be granted - Held that petition is dismissed as infructuous (Para 6).
Issue of Consideration
Whether the petitioners are entitled to a detention certificate and setting aside of auction of goods detained by customs for recovery of duty arrears, after the Delhi High Court had already held the detention illegal and directed refund.
Final Decision
The Bombay High Court dismissed the writ petition as infructuous, holding that since the goods had already been auctioned, no detention certificate could be issued and the auction could not be set aside.
Law Points
- Detention certificate not issuable after auction
- Auction of goods by warehousing corporation valid after expiry of free period
- No direction to waive demurrage after auction
- Writ petition under Article 226 not maintainable for relief after goods auctioned
