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2020 (12) TMI 329 - BOMBAY HIGH COURT

Detention of goods - Seeking Unconditional clearance of imported goods - Primary contention of the petitioner is that the imported goods were detained for more than six months but without issuing show-cause notice under section 124 of the Customs Act though there is no seizure of the goods under section 110 of the Customs Act - HELD THAT:- A conjoint reading of sections 110(2) and 124 of the Customs Act would make it clear that a show-cause notice has to be issued to the person from whom the goods were seized within six months of seizure failing which the goods shall be returned to the person from whose possession the goods were seized. However, it is provided under the first proviso that the said period of six months can be extended for a further period not exceeding six months by the higher authority for reasons to be recorded in writing with intimation to the person concerned within the extended period.

There is no provision in the Customs Act authorizing detention of goods. Secondly, even if the understanding of the customs department is accepted, then also detention would be at a stage after seizure. Detention and seizure therefore cannot be used interchangeably meaning one and the same thing. Detention cannot be taken resort to or the customs authorities cannot take the plea of detention to avoid consequences of seizure under sub section (2) of section 110 of the Customs Act. If no show-cause notice under section 124(a) is issued, customs authorities cannot retain the seized goods for more than six months though the aforesaid period of six months can at best be extended for a further period not exceeding six months. Therefore beyond the period of one year at the maximum, there cannot be any detention of goods even in the case of seizure without issuing show-cause notice under section 124(a) of the Customs Act.

It is glaring to the naked eye that the respondents have committed two illegalities. First illegality is they have detained the goods without affecting seizure. Secondly, they have exceeded the time limit for detention of the goods even if it is construed to be a case of seizure. In such circumstances, the impugned action cannot at all be justified and is liable to be appropriately interfered with.

Respondents are directed to forthwith release the imported goods of the petitioner - petition allowed.
2020 (12) TMI 328 - BOMBAY HIGH COURT

Principles of Natural Justice - Withdrawal of Customs Broker License - Direction to the respondent to allow the petitioner to resume its customs business on customs broker license - petition has been filed primarily on the ground that no notice or hearing was granted before such withdrawal of license - Validity of public notice No.28/2020-21 dated 07.09.2020 - HELD THAT:- Petitioner in the present case is identically placed with M/S. S.K. FREIGHT LINES PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [2020 (11) TMI 196 - BOMBAY HIGH COURT] where it was held that Since the impugned order withdrawing customs brokerage license of the petitioners would admittedly lead to adverse civil consequences upon the petitioners, the same ought to have been preceded by a notice and a reasonable opportunity of hearing and, therefore, the decision would be applicable to the facts of the present case as well.

The public notice No.28/2020-21 issued on 07.09.2020 is set aside - matter remanded back to the respondent who shall give an opportunity of hearing to the petitioner and thereafter pass an appropriate order in accordance with law within a period of three weeks from the date of receipt of a copy of this order.
2020 (12) TMI 327 - CESTAT AHMEDABAD

Maintainability of appeal - appropriate Forum - section 129A of Customs Act - Entitlement to DFIA benefits - import of “Wheat Gluten” against the input product description “Wheat Flour” - DFIA’s issued by DGFT gives the description of Wheat Flour with ITC (HS) classification shown as 11010000 whereas, the importer has imported all wheat gluten of having classification as 11090000 and declared the same in the Bill of Entry - case of Revenue is that DGFT Circular No.13 dated 31.01.2011 clarified that import of wheat gluten as alternative inputs against import item No. 1 of SION E-5 is not to be allowed under DFIA.

Maintainability of appeal - HELD THAT:- The contention of the revenue that there is no legal obligation to follow the decision of higher authorities while discharging the quasi judicial powers vested in the Act is incorrect. In the present case, the Commissioner has decided to reject the claim of DFIA benefits by giving reasons in writing. It is also a fact on record that the appellant has been directed to pay applicable customs duty for clearance of goods - the appeal is maintainable and not premature.

Merits of the case - HELD THAT:- In the present case, the DFIAs produced by the appellant are post export entitlements. The DFIA’s are issued for import of wheat flour against Export of Biscuits as per SION E5. As per the provision of Para 4.27 (ii) of FTP- 2015-20, DFIA is issued for products for which Standard Input output Norms are notified - It is settled law that a DFIA is governed by SION which is notified for the relevant export product. There is no provision either in the Policy or in the Hand book to say that DFIA benefits can be claimed on the basis of ITC (HS) numbers. Even SION does not prescribe any ITC (HS) Numbers.

Under post transferability DFIA’s, there is no actual user condition exists in the DFIA license issued under Custom Notification No. 19/2015-cus dated 01.04.2015. The issue is squarely covered by the Hon’ble Bombay High Court (Nagpur Bench) in SHAH NANJI NAGSI EXPORTS PVT. LTD. VERSUS UNION OF INDIA, MINISTRY OF COMMERCE & INDUSTRY, DIRECTORATE GENERAL OF FOREIGN TRADE AND JOINT DIRECTOR GENERAL OF FOREIGN TRADE [2019 (4) TMI 146 - BOMBAY HIGH COURT] In the said judgement it was held that so long as the export goods and the import items corresponds to the description given in the SION, it cannot be held to be invalid by adding something else which is not in the policy.

As regard the description of the goods in the said case the license was issued for input namely ‘Maize’ against export product of Maize Starch Powder, whereas, the importer had imported Popcorn Maize. The revenue’s contention was that the popcorn maize is not used for manufacture of Maize starch powder. The Hon’ble court has decided that even though the popcorn maize is not used for manufacture of maize starch powder but since it is capable of being used, it’s import is permitted under DFIA.

The present case is on a better footing that the ‘Wheat Gluten’ is not only capable of being used but invariably used for manufacture of biscuits. Moreover, as per various technical opinions, the Wheat Gluten is used in the manufacture of biscuits. Therefore, there is no dispute that Wheat Gluten is correctly covered under the description of goods i.e, Wheat Flour as mentioned in the annexures annexed along with DFIA Scheme as well as specified in SION.

It cannot be said that if the specific name of input in the present case ‘Wheat Gluten’ is not mentioned in the licence or in the export shipping bill, benefit of DFIA cannot be extended particularly when the broad description as wheat flour is specified in SION as well as in the annexure to the DFIA licence - The import goods “ Wheat Gluten ” or “Wheat Flour” are not specified under Sensitive items under Para 4.30 of FTP- (2015-2020) of DFIA’s. Therefore the exporter is not required to give a declaration of the technical specification, quality and characteristics of inputs used in the resultant product.

The appellant is entitle for the benefit of DFIA for import clearance of Wheat Gluten - Appeal allowed - decided in favor of appellant.
2020 (12) TMI 326 - CESTAT AHMEDABAD

Maintainability of appeal before this Tribunal - Entitlement to DFIA benefit - import of Inshell Walnut covered under the description of Fruit/Food Flavour/Dietary Fibre - benefit in terms of Custom Notification No. 19/2015-Cus. dated 01.04.2015 denied on the ground that appellant has not produced evidence to show that Inshell Walnut is actually used in export product and the import goods Inshell Walnut is not mentioned in the DFIA against input item description ‘Fruit /Food Flavour/Dietary Fibre - According to the revenue, only those inputs which are actually used in export product shall be allowed exemption from payment of customs duty in terms of Custom Notification No. 19/2015-cus.

Maintainability of appeal before this Tribunal - HELD THAT:- The decision against which this appeal was filed, was admittedly taken by the Principal Commissioner of Customs which was merely communicated by the lower officer. As per the Ld. Commissioner’s decision it was categorically decided that the appellant is not entitled to clear import goods against the DFIA Licences and also directed to pay applicable custom duty. In this undisputed position, in our clear view the only remedy left with the appellant is to file appeal before this Tribunal - The appeal is maintainable in terms of Section 129 (1) of the Customs Act, 1962.

The contention of the revenue that there is no legal obligation to follow the decision of higher authorities while discharging the quasi judicial powers vested in the Act is incorrect. In the present case, the Commissioner has decided to reject the claim of DFIA benefits by giving reasons in writing. It is also a fact on record that the appellant has been directed to pay applicable customs duty for clearance of goods - the appeal is maintainable and not premature.

Merits of the case - HELD THAT:- The DFIA’s produced by the appellant are post export entitlements . The DFIA’s are issued against Export of Biscuits as per SION E-5. As per the provision of Para 4.27 (ii) of FTP- 2015-20, DFIA is issued for products for which Standard Input output Norms are notified - It is settled law that a DFIA is governed by SION which is notified for the relevant export product. There is no provision either in the Policy or in the Hand book to say that DFIA benefits can be claimed on the basis of ITC (HS) numbers. Even SION does not prescribe any ITC (HS) Numbers.

Chapter Heading 08020000 is the main chapter heading which covers the items of import under the said heading. Therefore the input item Inshell Walnut is correctly covered under the description of goods under Fruit/Flavour/Dietary Fibre as mentioned in the annexures annexed alongwith the DFIA’s in question.

Expert Technical Opinion given by technical qualified person from a reputed Institute like IIT cannot be brushed aside unless such technical opinion is displaced by specific and cogent evidence. The respondent has not provided any cogent evidence to show on the contrary in the instant case. The Hon’ble Gujarat High Court in the case of Inter-Continental (India) Vs. Union of India, [2002 (2) TMI 129 - HIGH COURT OF GUJARAT AT AHMEDABAD] is squarely covered in the present case.

The revenue contended that vide notification no. 21 dated 05.12.2017, Central Government has notified FTP- (2015-20) and revised FTP by inserting the stipulations of Para 4.12 (i) and (ii) under Para 4.29 (iv) & (v) which deals with validity and transferability of DFIA. Therefore it was contended that DGFT vide above amendment in FTP, has clearly spelled out that only specific inputs alongwith quantity will be permitted to be imported under DFIA Scheme - said Para 4.29 (iv) & (v) refers to Para 4.12 of FTP while incorporating the provisions therein - However, the Hon’ble Bombay High Court in the case of Shah Nanji Nagsi Exports Pvt. Ltd., Vs. UOI [2019 (4) TMI 146 - BOMBAY HIGH COURT](Bom) has already considered the provision of Para 4.12 for transferred DFIA and held that even though the popcorn maize is not used for manufacture of maize starch powder but since it is capable of being used, its import is permitted under DFIA.

The present case is on a better footing that the ‘Inshell Walnut’ is not only capable of being used but invariably used for manufacture of biscuits as fruit/flavor/dietary fibre - Moreover, as per the custom’s lab report dated 08.08.2018 and various technical opinions, the Inshell Walnut is used as flavor or fruit/nut or dietary fibre in the manufacture of biscuits/cookies and confectionary. Therefore, there is no dispute that inshell walnut is correctly covered under the description of goods i.e, fruit/flavour/dietary fibre as mentioned in the annexures annexed along with DFIA Scheme as well as specified in SION.

The imported goods “In shell Walnuts” are not specified under Sensitive items under Para 4.30 of FTP- (2015-2020) of DFIA’s. Therefore the exporter is not required to give a declaration of the technical specification, quality and characteristics of inputs used in the resultant product. The Central Board of Excise & Customs vide Circular No. 46 of 2007 had earlier clarified the above provisions which existed under the previous policy period under Para 4.55.3 of HBP) - It is settled law that Board Circulars are bindings on customs authorities - As per Policy Circular No. 72/2008 dated 24.03.2009, flexibility has been given to import alternative inputs or goods which are capable of using in the export product. Therefore inputs which are covered under the description are entitled for DFIA exemption for claiming DFIA benefits by either exporter or transferee or the importer under the Transferable DFIA Scheme. As per Policy Circular No. 22, even a transferee of the license can apply for amendments in ITC (HS) Numbers of the inputs from the regional licensing authorities.

Therefore it cannot be said that if the specific name of input in the present case ‘In shell Walnut’ is not mentioned in the licence or in the export shipping bill, benefit of DFIA cannot be extended particularly when the broad description is specified in SION as well as in the annexure to the DFIA licence - he appellant is entitle for the benefit of DFIA for import clearance of in shell walnut - appeal allowed - decided in favor of appellant.
2020 (12) TMI 250 - CESTAT MUMBAI

Reexport of the confiscated goods - imports of ‘old and used goods’ - appellant concedes that there is no cavil with confiscation under section 111(d) of Customs Act, 1962 arising from non-production of ‘authorisation’ required for effecting imports of ‘old and used goods’ as prescribed in paragraph no. 2.31 of Foreign Trade Policy (2015-20) notified under the Foreign Trade (Development & Regulation) Act, 1992 - HELD THAT:- The order of the original authority had restricted the options to that of re-export on redemption or of destruction at the cost of the appellants herein. In determining the fate of the cross-appeals filed against that order, the first appellate authority was required to decide the competing claims for permitting clearance for home consumption or absolute confiscation as the exhaustive options available under the law. Neither the reviewing authority nor the importer had favoured reexport. It is, indeed, moot if, in the absence of request from an importer and of authority conferred under Customs Act, 1962 or any other law, the proper officer of customs was empowered to insist on such and in the proceedings leading to this appeal, it is only Customs Act, 1962 that has been invoked - in affording the option to redeem goods, absolute confiscation is the consequence of default thereof. From section 125 of Customs Act, 1962, it is seen that confiscated goods vest with the Central Government and, in the absence of authority under law, or by delegation, to destroy, the adjudicating authority is required to protect such goods till appropriate disposition as prescribed by the Central Government.

Learned Counsel submits that the goods have been pending for a substantially long period of time; this, undoubtedly, is a matter of concern and we concur that needless prolonging of detention is to be avoided. Accordingly, we direct that the de novo proceedings be completed within eight weeks from the date of receipt of this order by the original authority.

Matter remanded to the original authority for deciding afresh on the scope for stipulating reexport in circumstances of plea for clearance for home consumption with the direction that the time limit specified supra be adhered to.
2020 (12) TMI 204 - MADRAS HIGH COURT

Non renewal /extension of the Warehouse License - Demand of customs duty - goods were moved from one warehouse to another - injunction sought against the third respondent/defendant from interfering with the peaceful possession during the period of the lease - HELD THAT:- Section 58 enjoins upon the licensee a duty to clear off the goods after cancellation of the license within seven days. There is no case of extension of period under Sub-section (4) of Section 58B of the Act in the present case. Therefore, in the eye of law, the possession of the vacant licensed warehouse, after seven days of the impugned order passed by the Customs Authority on 29.05.2020, should be deemed to be with its owner only. Even assuming for argument sake that this observation may affect the right of the appellant/petitioner in the pending suit before the Civil Court, it is the appellant/petitioner who is to be blamed for this, because it is the appellant/petitioner who has invoked the extraordinary jurisdiction of this Court based upon an interim order passed by the trial Court.

The said suit was filed much before the expiry of the lease period on 31.03.2020 and the interim order of status quo granted by the trial Court on 26.04.2019 also cannot extend beyond the extent of the period of lease itself nor it can validate the possession of the licensee beyond the period of lease. We do not see any reason to extend the scope of the civil suit, which may be so if the contention of the appellant/petitioner before us is to be accepted.

There are no reason for the appellant/ petitioner to have invoked the writ jurisdiction of this Court on the basis of a status quo order granted by the trial Court in a civil Suit in which Customs Department was not at all a party. Nothing prevented him to even implead Customs Department also as Defendant in that very suit, so that all related issues could be adjudicated by one Court. This is what, the abuse of process of law is and if an observation of a learned single Judge in this process is given against the appellant/petitioner, he cannot be permitted to raise a plea against that in the intra court appeal.

Appeal dismissed.
2020 (12) TMI 203 - TELANGANA HIGH COURT

Refusal to issue Certificate of Origin to the petitioner for export of red sanders - permission to petitioner to export the same after obtaining permission/export licence for such export from the Directorate General of Foreign Trade, Ministry of Commerce and Industry, Union of India - HELD THAT:- In the instant case, the Principal Chief Conservator of Forests of both States had certified in para-18 of the impugned order dt.06.12.2019 itself that the Red Sanders wood stacked in the Depot of the petitioner is genuine and the permits through which the said logs were transported by the petitioner to his Depot are also genuine - There is no dispute thus about how the petitioner procured the stock in its custody and its genuineness. So they cannot now create new grounds, not within their purview, for refusing to issue the Certificate of Origin.

It is not within the jurisdiction of the Principal Chief Conservator of Forests of both States to decide whether or not petitioner, who seeks such Certificate of Origin, when the stock is in log form, would get an export licence from the DGFT/Union of India.

Neither the State of Telangana nor the State of Andhra Pradesh have any business to intrude into the field occupied by the Union of India in relation to foreign trade and interfere with exercise of discretionary power by the Union of India and the Director General of Foreign Trade in matters of export policy.

The issuance of Certificate of Origin to another business entity by the Principal Chief Conservator of Forests of State of Telangana, who also, like the petitioner,wanted to export in log form after allotment on condition of export in value added form – the discriminatory treatment given to petitioner.

Thus notwithstanding that the applicant M/s.Rocky Red Sanders Wood Musical Instruments Exports Limited had also been allotted Red Sanders for export in value added products form, its application for Certificate of Origin of stock in log form was approved and was issued by the Principal Chief Conservator of Forests, State of Telangana - We are unable to understand why the Principal Chief Conservator of Forests of the States of Telangana and the State of Andhra Pradesh have applied a different standard when it comes to the request of the petitioner for issuance of a Certificate of Origin by insisting that they will consider such request only after the petitioner agrees to convert the logs into value added product form. They cannot discriminate against the petitioner and apply a different rule to the petitioner, which was not applied by them to M/s.Rocky Red Sanders Wood Musical Instruments Exports Limited.

Since the export is to take place from the State of Telangana, where the stock of Red Sanders purchased by the petitioner is stored, it has to issue the Certificate of Origin - Other than that, when the stock is genuine, its transport to the State of Telangana is validly made (as is admitted in para 18 of the impugned order dt.06.12.2019 by the Principal Chief Conservator of Forests of both States), the State of Telangana has no choice but to issue the Certificate of Origin - It cannot raise irrelevant objections about conversion into value added product form because the stock was not purchased from the said State at all.

The attitude of the Principal Chief Conservator of Forests, Telangana at Hyderabad to be wholly vexatious considering the above background and arbitrary too having regard to her decision to grant Certificate of Origin to M/s. Rocky Red Sandal Wood Musical Instruments Exports vide Proceedings R.C.No.63/2020/PROD.1 dt.13.11.2020, who had also purchased Red Sanders Wood for export in value added product form and had retained it in log form and had applied for the said Certificate of Origin without changing the same into value added product form, mentioned above. No valid explanation is offered by the Government Pleader for Forest, State of Telangana for the conduct while showing discrimination to the petitioner, who is also similarly placed.

The Writ Petition is allowed with costs of ₹ 10,000/- each to be paid to the petitioner by respondent nos.3 and 4; proceedings jointly issued by respondent nos.3 and 4 is declared as arbitrary and violative of Article 14 of the Constitution of India; and a consequential direction is issued to respondent nos.3 and 4 to forthwith issue Certificate of Origin to the petitioner in respect of stock of Red Sanders Wood of 1067.751 M.T. stored in the licensed godown - petition closed.
2020 (12) TMI 202 - MADRAS HIGH COURT

Refund of the Extra Duty Deposit (EDD) - Provisional Assessment not finalised - no justifiable cause to delay the refund for all these years merely on the ground that some investigation is pending - HELD THAT:- There is absolutely no merit in the present Writ Appeal and we fail to understand the bona fide of the Customs Department to challenge even this kind of innocuous direction of the learned Single Judge while disposing of the Writ Petition and why the Department should file intra-court Appeals just for the sake of litigation. It is not at all justified and strong action deserves to be taken in this regard as the Government Department cannot be permitted to be a voluntary litigant in the Constitutional Courts especially to challenge the orders of the learned Single Judge without any valid rhyme or reason.

The alleged reason assigned by the Department that there was some investigation pending of which no details are placed on record, is not at all a justifiable reason in the light of Board's own Circular as quoted by the learned Single Judge. No such material has been placed before this court to justify the action of the Customs Department not to finalise the Provisional Assessment for 16 years and even by now to keep the EDD a mere Security Deposit by Importer/Petitioner with them like this.

Refund is directed alongwith interest - appeal of Revenue dismissed.
2020 (12) TMI 201 - MADRAS HIGH COURT

Release of confiscated goods - condition of re-export imposed on the importer while redeeming the goods - demand of demurrage from the Assessee/importer - Section 125 of Customs Act - HELD THAT:- An apologetic Affidavit has been filed by the said authority and the learned Additional Solicitor General Mr. Sankaranarayanan has appeared in the matter. The learned ASG fairly submitted that there seems to be no merit in the contention of the Revenue that demurrage charges were so leviable in the present case and therefore, the Court may set aside the levy of demurrage charges and the goods in question may be released to the importer without any condition. However, a lenient view with regard to the conduct of the said officer may be taken by the Court, in view of Court order dated 24.09.2020

Upon a fair request made by the learned ASG, we dismiss the present appeal of the Revenue and taking a lenient view of the matter against the officer concerned, we do not take any further action against him in the matter. We hold that the imposition of condition of re-export under Section 125 of the Act was not justified and the imposition of such a condition is not envisaged in law and therefore, the order imposing such condition is liable to be set aside. The same is accordingly set aside.

Appeal of Revenue dismissed.
2020 (12) TMI 200 - CESTAT CHENNAI

Classification of imported goods - ‘catalytic converter assembly’ which is attached with an inlet and an outlet pipe - classified under tariff item 8421 3990 or not - benefit of concessional rate of duty - extended period of limitation - HELD THAT:- As per the impugned Notification, the concessional rate of duty is for a particular item/goods; a perusal of the Bills-of-Entry placed along with the Appeal Memorandum reflects ‘piece price’ for the relevant item under ‘description’ column which would only mean that the price charged was for the described assembly and other than this, we do not see any breakup and nor is it relevant for us now.

Further, we also do not dispute the classification of the disputed item under CTH 8421 duly supported by GIR 2 (b), but however, mere classification ipso facto does not decide the eligibility or otherwise to a beneficial Notification since Notification No. 21/2002(supra) does not grant concession based on a mere classification, rather on individual items.

A perusal of the Show Cause Notice reveals that the DRI had entertained a doubt that the appellant was claiming ineligible concession of duty under Customs Notification No. 21/2002 dated 01.03.2002. In this background, the Revenue considered Bills-of-Entry No. 5747602, 5747715 and 5749760 all dated 17.01.2012 and conducted a thorough verification of the goods described in the above Bills-of-Entry. These are the invoices furnished by the appellant. From the Bills-of-Entry it is seen that for the goods imported and declared as “Catalytic Converter Asy” vide said three Bills-of-Entry all dated 17.01.2012, the appellant has claimed benefit of concessional rate of duty vide Notification ibid. and has paid Basic Customs Duty at 5% as against tariff rate of 7.5% Basic Customs Duty: the benefit is apparently claimed on the amount reflected which represents the cumulative value for “Catalytic Converter Asy”.

Extended period of limitation - HELD THAT:- The appellant has wilfully suppressed as well as mis-stated the actual/complete description of the impugned goods under import, etc., thereby claiming the benefit of concessional rate of duty, to justify the invoking of extended period of limitation in terms of Section 28 (1) / 28 (4) of the Customs Act, 1962, as applicable during the period.

Matter remitted back to the file of the Original Authority to pass a de novo Order-in-Original, giving a logical finding on the allegations raised in the Show Cause Notice after considering the plea of the appellant, on merits - appeal is treated as partly allowed by way of remand on merits, but however, partly dismissed on the ground of limitation.
2020 (12) TMI 138 - BOMBAY HIGH COURT

Legality and validity of such seizure of goods - Provisional release of goods - allegation is that impugned seizure memo does not comply with the requirements of section 110 of the Customs Act, 1962 - petitioner is also prejudiced as it is incurring heavy detention and demurrage charges every day since the seizure - HELD THAT:- What is relevant here is the parent or main provision of sub-section (1). Sub-section (1) makes it abundantly clear that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. Thus, it is the proper officer who must have reason to believe that the goods in question are liable to confiscation under the Customs Act. Once he forms such a belief then he i.e., the proper officer who has formed the belief may seize such goods - Therefore, formation of reason to believe by the proper officer that the goods in question are liable to confiscation under the Customs Act is the condition precedent for invoking the jurisdiction under section 110 to seize such goods. Having reason to believe by the proper officer that any goods are liable to confiscation is the sine qua non for exercise of the power of seizure. The expression 'reason to believe' is an expression of considerable import and in the context of the Customs Act, confers jurisdiction upon the proper officer to seize goods.

It cannot be that seizure is made by one officer and the reasons to believe are recorded by another officer. Secondly, the proper officer who made the seizure must have reasons to believe that the seized goods are liable to confiscation. Seizure of goods is not an end in itself. It is a discretionary power vested upon the proper officer who has reasons to believe that the goods to be seized are liable to confiscation. No such reasons to believe is discernible in the panchnama, not to speak of in the seizure memo.

It is apparent that on the date of seizure, the bills of entry were in the name of the petitioner and the petitioner had not (and still has not) claimed any benefit under the Notification No.25/99Customs dated 28.02.1999. It may be mentioned that office of the Commissioner of Customs had informed DRI authorities that the amendments were allowed because NOC was submitted by both the parties i.e., buyer and seller of the high seas sale. It was also mentioned that amendment was allowed as there was no change in the original bills of lading and IGM. At this stage, we may refer to Standing Order No.10 of 2017 dated 03.05.2017 issued by the Commissioner of Customs, Nhava Sheva-IV which has been placed on record by respondent No.3 as Exhibit-E to his affidavit. This Standing Order prescribes the essential documents necessary for registration of high seas sale contract / transaction - there could not have been any reason to believe that the said imported goods had contravened any of the provisions of section 111 dealing with confiscation and hence liable to seizure under section 110. That apart, all the developments mentioned above are post seizure developments which could have no bearing on the validity or invalidity of the impugned seizure.

It is evident from the seizure memo as well as the materials as on that date i.e., 09.01.2020 that there could not have been any reason to believe by the proper officer that the goods seized were liable to confiscation. Therefore, the very action of seizure is devoid of jurisdiction and hence illegal. If the very act of seizure is illegal, all consequential actions would have no legal sanction - Also, subsequent cancellation of the amendments to the two bills of entry would make no material difference at all to the illegality of the seizure.

Petition allowed.
2020 (12) TMI 131 - KERALA HIGH COURT

Provisional release of seized goods - contention of the Department, is that the bills of entry and the invoice value shown therein were grossly undervalued - HELD THAT:- The Managing Partner in his voluntary statement agreed to produce the parallel invoices with respect to the 25 invoices referred to in the other 25 bills of entry. The same having not been produced, a computation was made of the probable undervaluation based on the average undervaluation; practiced by the appellant in the recovered parallel invoices. On a rough computation, the liability to duty with interest would come to ₹ 18,11,000/-. There would also be penalty payable, in which circumstances a further amount of ₹ 25,00,000/- has been provisionally assessed, which demand was raised in Exhibit P8 for provisional release.

Considering the prima facie proof of undervaluation practiced, we do not see any infirmity in the provisional release order. ₹ 25,00,000/- demanded therein is not a replication of the ₹ 20,72,000/- already paid by the appellant. The differential duty already paid is with respect to the recovered parallel invoices and the demand now raised in Exhibit P8 is based on the computation of probable undervaluation with respect to the other bills of entry, which also disclosed only lesser invoice value as admitted by the Managing Partner of the appellant.

Appeal dismissed.
2020 (12) TMI 129 - MADRAS HIGH COURT

Maintainability of petition - order not appealed, instead this petition filed beyond time limitation - HELD THAT:- There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute.

Hon'ble Supreme Court of India in ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [1984 (11) TMI 63 - SUPREME COURT] has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction and held that It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute.

Thus, this Court does not express any view on the correctness or otherwise on the merits of the controversy involved in the matter - petition dismissed.
2020 (12) TMI 128 - MADRAS HIGH COURT

Maintainability of petition - order not appealed, instead this petition filed beyond time limitation - HELD THAT:- There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute.

Hon'ble Supreme Court of India in ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [1984 (11) TMI 63 - SUPREME COURT] has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction and held that It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute.

Thus, this Court does not express any view on the correctness or otherwise on the merits of the controversy involved in the matter - petition dismissed.
2020 (12) TMI 126 - MADRAS HIGH COURT

Maintainability of petition - order not appealed, instead this petition filed beyond time limitation - HELD THAT:- There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute.

Hon'ble Supreme Court of India in ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [1984 (11) TMI 63 - SUPREME COURT] has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction and held that It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute.

Thus, this Court does not express any view on the correctness or otherwise on the merits of the controversy involved in the matter - petition dismissed.
2020 (12) TMI 125 - MADHYA PRADESH HIGH COURT

Review of Order - error apparent on the face of record - non-fulfilment of mandatory requirement of pre-deposit - Section 129(3) of the Customs Act, 1962 - HELD THAT:- The Apex Court in the case of HARIDAS DAS VERSUS SMT. USHA RANI BANIK & ORS [2006 (3) TMI 686 - SUPREME COURT] has held that rehearing of a case can be done on account of some mistake or an error apparent on the face of the record or for any other sufficient reason.

In the present case, there is no error apparent on the face of the record and the petitioner in fact under the guise of review is challenging the order passed by this Court, which is under review.

Review petition dismissed.
2020 (12) TMI 66 - MADRAS HIGH COURT

Restraint from dealing of imported goods - import of 35,900 kilograms (kgs.) of Inositol NF 12 (Not for Medicinal Use) - restraint from selling, distributing and disposing of the said stock in their possession - it is stated that the petitioner was intimated that the respondents 1 and 2 had reason to believe that the said goods in the possession of the petitioner concern had contravened the provisions under the DC Act - applicability of Rule 43 of the DC Rules.

HELD THAT:- A perusal of Schedule D at Sl.No.1 mentions that the "substance not intended for medicinal use" are exempt from all provisions of Chapter III and Rules thereunder, subject to the condition that if the substance is imported in bulk, the importer shall certify that the substance is imported for non-medicinal use, and if imported otherwise than in bulk, each container shall bear a label indicating that the substance is not intended for medicinal use or is intended for some other purposes other than medicinal use or is of commercial quality - If rule 43 read with Schedule D exempting the substance not intended for medical use are applied to the instant case, it is clear that the fourth respondent had imported the above quantity of Inositol NF 12 mentioning that it is "Not for Medicinal Use" from the Overseas supplier and their sale in favour of the petitioner also indicates that it was not intended for medicinal use. Thus, a reading of Rule 43 of the DC Rules along with Schedule D shows that where the substance is not intended for medicinal use, which was imported in bulk, the importer shall certify that the substance is imported for non-medicinal use.

The requirement of an import licence in Form 10-A assumes importance depending on the usage for which the imported item is intended for. In the instant case, after this Form 15 was issued to the petitioner, the fourth respondent also had applied to the Drug Authorities seeking Form 10-A exemption. However, the same was rejected as the fourth respondent had already parted with the imported goods or sold the goods to the petitioner, without mentioning whether the import of Inositol NF 12 is exempted or not - Considering the fact that the even the test reports indicated that the samples of standard as defined under the DC Act and the Rules framed thereunder stating that the samples conform the USP and when the provisions and the rules of the DC Act and Rules provide for efficient protection in the matters of import, obtaining of Form 10-A in terms of Rule 23 need not be insisted upon.

The petitioner was constrained to move this Court even for getting the reports of the lab test conducted in this regard, as he was issued with Form 15. When the fourth respondent is entitled for import without a licence by reason of exemption granted under the Rules and the DC Act, the import being one for manufacture and use of non-medicinal substances, by way of retaining the same for the purpose of penalty on the ground that the import is not supported by licence under Form 10A is unsustainable - the plea of the respondents that the fourth respondent had imported Inositol NF 12 without Form 10A licence and consequently, retaining the goods in the premises of the petitioner, who is a subsequent purchaser, is patently erroneous cannot be accepted.

The respondents 1 and 2 are directed to release the goods, which were locally procured by the petitioner, namely, Inositol NF 12 (Not for Medicinal Use), after obtaining necessary undertaking, within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off.
2020 (12) TMI 40 - KERALA HIGH COURT

Adjustment / Appropriation of sale proceeds from sale of stored goods in auction sale - Priority of claim - interest on customs duty - precedence over the claims of the warehouse keeper - quantification of customs duty - cum duty method - CBEC Circular No. 71/2001, dated November 28, 2001 -

Whether the warehouse keeper is the custodian of goods under Chapter IX of the Customs Act, 1962? - HELD THAT:- Section 73A(1), when it says that all warehoused goods shall remain in the custody of the person who has been granted a licence under section 57 or 58 or section 58A until they are cleared for home consumption, clearly speaks about the period of custody. The said section, even though it was inserted only on May 14, 2016, clarifies the position that the warehouse keeper has custody of the goods which are warehoused - Decided in favour of the respondent and against the appellant.

Whether the proceeds of auction sale conducted as ordered by the District Court under section 72 are to be appropriated as provided in section 150 of the Customs Act? - HELD THAT:- The section clearly provides for sale by public auction or by tender or with the consent of the owner in any other manner, of any goods not being confiscated goods and that too under any provision of the Act. section 72 deals with sale of goods which are warehoused. As such, sale of goods by invoking section 72 comes within the ambit of section 150 since it is not a sale of confiscated goods. Confiscation of goods and its consequences are dealt with in Chapter XIV of the Act - answered against the appellant and in favour of the respondent.

Whether the quantification of customs duty is to be made by following cum-duty method? - HELD THAT:- As clearly stated by the Department itself, there can be no further doubt regarding the manner in which the customs duty has to be arrived at in case of sale of uncleared goods. In the case on hand, admittedly, the customs duty has not been arrived by following the cum-duty method. The finding of the Tribunal on the above question cannot be faulted in any manner - answered against the appellant and in favour of the respondent.

Whether interest on customs duty can have precedence over the claims of the warehouse keeper? - HELD THAT:- The order of precedence contained in section 150(2) does not leave any room for doubt. Since the amount is received as a result of a public sale, the first priority is given as per section 150(2)(a) to the expenses for sale. The second priority is given, as per section 150(2)(b) to the expenses that were incurred prior to the goods coming into the custody of the warehouse keeper, i. e., freight, etc. The third priority is to the State for its claim towards customs duty as can be seen from section 150(2)(c). The fourth priority is for the dues to the warehouse keeper in the form of rent and charges as is seen from section 150(2)(d). What is most relevant is section 150(2)(e), which says that after the claim under sub-section (2)(d), the next priority is for the payment of any amount due from the owner of the goods to the Central Government under the provisions of this Act or any other law relating to customs. Any claim other than customs duty, which comes under sub-section (2)(c), under the Act, can be settled only after the claim under section 150(2)(d) is settled - the claim for interest can come only under section 150(2)(e).

Even without the aid of the above clarification, section 150 can be understood only to mean that interest on customs duty cannot have precedence over the charges and rent due to the warehouse keeper. The clarification dated May 22, 1990 can be treated as a contemporaneous exposition - thus, interest on customs duty does not have precedence over the warehousing charges and rent - answered against the appellant and in favour of the respondent.

Appeal dismissed.
2020 (12) TMI 4 - DELHI HIGH COURT

Smuggling - detention of the petitioner - COFEPOSA Act - delay of 14 months in passing the detention order - stand of the respondents is that the Deputy Commissioner of Police, Rohini, Delhi informed the respondents vide his letter dated 3rdMarch, 2016 that several visits were made at the address of the petitioner in Rohini to execute the detention order but no one could be found - HELD THAT:- The material placed before the Detaining Authority should be sufficient and the Detaining Authority ought to have scrutinized the same to reach a reasonable conclusion by due application of mind, so as to find grounds for issuing the preventive detention order stands satisfied in the present case and we do not find any blatant malice in issuance of the subject detention order dated 30th December, 2015.

The next ground to challenge the impugned detention order is that there has been a long delay of 14 months in passing the detention order - HELD THAT:- It is pertinent to mention here that the link between the illegal and detrimental activities of the detenue and the detention order did not break at that stage as he never deterred from indulging in the said activities even after passing of the said detention order and in being full knowledge of the same. Hence, the live link remains always active and the respondents have been able to satisfactorily explain that there was no inordinate delay in passing of the detention order which might have resulted in snapping the link between the illegal and detrimental activities of the detenue and the detention order.

The next ground agitated on behalf of the petitioner is that there is variance in the subjective satisfaction of the Detaining Authority - HELD THAT:- As per the respondents, there is no variance so as to confuse the detenue. All the grounds which lead to issuance of impugned detention order have been specifically laid down in the grounds of detention served upon the petitioner - In view of this and the details given in the grounds of detention, there cannot be any confusion in the mind of the petitioner/detenue, which might have deprived him of his legal right to submit his detailed representation.

The next ground raised on behalf of the petitioner/detenue is that vital documents were not placed before the Detaining Authority - HELD THAT:- The relevant documents which were required for subjective satisfaction of the Detaining Authority wereduly placed before the Detaining Authority for consideration and on the basis of those documents, the Detaining Authority came to a conclusion that the detention order is necessary to be issued for preventive detention of the petitioner, so as to ensure that he does not indulge in illegal and detrimental activities and copies of the said documents have been supplied to the petitioner running into more than 600 pages as stated by the learned counsel for the respondent. However, each and every document referred to but not relied upon by the Detaining Authority to reach to its subjective satisfaction is not required to be supplied to the petitioner/detenue.

Learned counsel for the petitioner has also argued that there was mechanical rejection of his representation dated 20th February, 2020 whereas the contention of the learned counsel for the respondent is that the said representation made to Detaining Authority was duly considered and rejected as the said documents were neither relied upon nor there was a basis of the subjective satisfaction of the Detaining Authority - HELD THAT:- When the documents asked for by the petitioner/detenue were not relied upon or are not the basis of the subjective satisfaction of the Detaining Authority, the detention order cannot be quashed on the ground that the said documents were not supplied and the representation for the supply of the said documents was rejected.

Learned counsel for the petitioner has also argued that till date no prosecution has been launched in the case in hand, so his detention is vitiated - HELD THAT:- Where the petitioner/detenue himself has absconded for a considerable number of years and his son, who is a co-accused, is not traceable even on date, mere fact that the hearings in the case has not started, cannot be a ground for quashing of the preventive detention order which has got no direct connection with the proceedings to be launched by DRI before Court.

Ground of oral undertaking by DRI of not taking any coercive action under Customs Act, 1962 - HELD THAT:- We do not agree with the learned counsel for the petitioner as mere moving an application for recall of the warrant cannot be a substitute of his personal presence before the Court on the basis of the bond executed by him before the Jail Superintendent at Vishakhapatnam. It is reiterated that the detenue has not surrendered before a Court in Delhi, where he was declared as a proclaimed offender and he failed to appear despite his undertaking, so these judgments are of no help to his cause.

One last ground taken is that due to the pandemic and deteriorating medical condition of the detenue, he being a senior citizen and patient of diabetes and hypertension, he may be ordered to be released by this Court. In this regard, it is to be noted that although, the petitioner had made a representation before the High-Power Committee appointed by the High Court of Delhi for his release and has taken other steps before the Authorities, but it was not found to be a fit case for his interim release. Similar is our considered view.

This Court arrives at a considered conclusion that the preventive detention order passed by the Joint Secretary, COFEPOSA under Section 3 (1) of COFEPOSA does not suffer from any illegality and is not liable to be quashed - Petition dismissed.
2020 (11) TMI 1044 - CESTAT CHENNAI

Revocation of Customs Broker License - forfeiture of security deposit - it is alleged that customs broker had filed the said documents without identifying the importer on record - consignments imported were, upon examination, found to contain ‘imitation raw material glass beads weighing 28,490 kgs.’ and ‘crystal bowl valued at ₹ 81,000’ without corresponding declarations - proper opportunity of being heard not provided - principles of natural justice - HELD THAT:- The plea of the customs broker to the effect that the importer on record, having appeared before the investigating authorities, could not be non-existent is tenable. There are merits in the contention that, with the existence of the importer thus being without doubt, the obligation devolving on the broker could not be alleged to have been breached in substance. The objective of the said obligation could only be established the antecedents of the said persons. Had the customs broker carried out necessary checks as warranted by the Regulations, the facts would not alter in any manner and nor would the importability of goods.

The non-consideration of the first aspect and the insinuation of the second do not advance the propriety of detriment visited upon the appellant by the Commissioner of Customs. This is more so, as the inquiry was conducted ex parte even if that be the fault of the appellant. We cannot also but take note that the intimation letters sent by inquiry authority are dated 23rd October, 2017, 1st November, 2017 and 7th November, 2017 with just a week elapsing between the said communications and the dates, scheduled for hearing, not separated by even the same lapse of time. The notice for adjournments were, therefore, not appropriately phased as to facilitate a proper hearing but merely for technical compliance.

The process initiated cannot be brought to a conclusion in favour of the appellant without proper evidence being placed - matter remanded back to the Commissioner of Customs for conduct of a fresh inquiry and for arriving at conclusion thereto without being influenced by extraneous facts and circumstances - appeal allowed by way of remand.