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M/s Chalissery Kirana Merchant, M/s. Kay Kay Enterprises, M/s Ali-Shabib Trading Company Versus Union of India And Others

2015 (5) TMI 732 - KERALA HIGH COURT

Country of origin - import of areca nuts - rate of duty @4% if the areca nut is of 'Sri Lankan origin' or leviable at 108% - Provisional assessment - Detention of goods - Demand of differential duty of 35% - Held that:- Particularly with reference to the contention that no incriminating circumstances are there to have doubted the transaction of the petitioners, it is to be noted that the respondents were proceeding with steps, to find out the origin of import with reference to the documents prod .....

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he second petitioner herein was arrayed as the 4th appellant. The antecedents of the said petitioners, with reference to the above case, show that there was every reason for the respondent Customs Department to have doubted or raised some suspicion as to the place of origin and the transaction concerned. As such, it is not merely with reference to the ongoing enquiry with reference to some other trader, that provisional assessment is ordered imposing condition, but also with reference to the ong .....

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or the Petitioner : Sri Devan Ramachandran, Adv, T Rajasekharan Nair, Sri Adarsh Kumar For the Respondent : Sri N Nagaresh, Asst Solicitor General, Sri Thomas Mathew Nellimoottil, SC JUDGMENT The petitioners are merchants engaged in the business of trading in agricultural produce like areca nut falling under tariff entry 0802 80 90 of the Customs Tariff Act 1975. The first and second petitioners are partnership firms, whereas the 3rd petitioner is a proprietary concern. The petitioners claim to .....

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under Section 18 of the Customs Act, with liberty to have the goods released, on satisfaction of 35% of the differential duty as cash deposit. The ground of challenge is that, absolutely no insinuating circumstance, doubt or reason to believe is expressed anywhere in the impugned orders, but for the reference made to some enquiry going on with regard to the import made by some other trader from Sri Lanka. 3. With regard to the factual position, it is to be noted that areca nuts are normally levi .....

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P6 are the packing lists issued by the said dealers in Sri Lanka and Exts. P7 to P9 are the bills of lading. True copies of the certificates of origin have been produced by the petitioners as Exts. P10 to P12, besides a certificate issued by the Chamber of Commerce of Sri Lanka, in the case of the first petitioner, as Ext. P10A. Pursuant to submission of Exts. P13 to P15 bills of entries by the petitioners, the position was verified by the competent authority of the Customs, who issued Exts. P1 .....

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e petitioners vide Exts. P27 to P29. But the third respondent chose to pass Exts. P30 to P32 orders on 02.03.2015 intending to proceed with provisional assessment under Section 18 of the Act, requiring the petitioners to satisfy 35% of the differential duty, as against the vested right of the petitioners to have the import by satisfying duty only @ 4%. This unconscionable burden made the petitioners to approach this Court challenging the said proceedings, raising many a ground. 6. Heard the lear .....

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stigation being carried out by 'DRI' in relation to some import made by other traders, which is stated as going on. It is stated that the department, in the said circumstances requires some more verification and make further enquiry as to the origin of the goods and the eligibility for the benefit of notification No. 26/2000 dated 01.03.2000. Hence the provisional assessment had to be made under Section 18 (1) (c) of the Customs Act, also imposing a condition to satisfy the amount to an .....

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ght to be explained with reference to the guidelines issued by a Division Bench of this Court, as per the judgment in W.A. No. 107 of 2011. The position is sought to be further explained with reference to the verdict passed by a learned Judge of this Court in W.P.(C) Nos. 2803 of 2015 and 5585 of 2013. 8. The learned standing counsel for the respondents/Customs Department submits that the course pursued by the respondents as per Sections 30 to 32 is very much in conformity with the observation m .....

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rein. The learned standing counsel further points out that, as per the materials collected by the Department, Sri Lanka is not an areca nut producing county and that India stands in the forefront with a production of 330000 metric tons for the year '2003', with an area of cultivation of 290000 hectares. The factual particulars stated as downloaded from the Internet are placed for consideration of this Court, which reads as follows : "Areca nut producing countries : Areca nut has bee .....

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e major producers of the nut with their respective production figures for the year 2003. India (330000 metric tons) China (162253 metric tons) Myanmar (57000 metric tons) Bangladesh (51000 metric tons) Indonesia (41000 metric tons) Thailand (26000 metric tons) Malaysia (1300 metric tons) Regarding the area under the cultivation of betel nut, the world figures have reached an approximate of around 0.476 million hectares. India again stands tall in the list of the countries having the maximum area .....

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ivity of nuts is considered and produce nuts @ 3.752 tons/hectare with world productivity of 1.287 tons/hectare." 9. The aforesaid data (that too, of the year 2003) however cannot lead to an inference that Sri Lanka is not an areca nut producing country. The particulars furnished by the learned standing counsel only reflect the position with reference to the major areca nut producers of world, where India is standing in the forefront among the seven named countries. No material is produced .....

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ter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer deems it necessary to make further enquiry for assessing the duty, the proper officer may direct that the duty leviable on such goods may, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally if the importer or the exporter as the case may be, furnishes such security as the proper offic .....

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massive quantity from abroad, making the department to face the risk of losing huge revenue because of not turning up for final assessment. In the case of the petitioners herein, they are having proper identity, doing business in Kerala for several years with unblemished track record and that they cannot be branded as "fly by night traders". Section 18 is only an exception to Section 17 of the Act, which provision stipulates that, if final assessment is possible, whether it is import o .....

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extracted below: "13. What is clear from Section 18(1) read with the above Regulations is that the Officer could make provisional assessment and release goods under Section 18 of the Act pending finaladjudication only after ensuring that the actual duty that could belevied later will be recoverable from the party. For this purpose, the provisions of the Act and the Regulations above referred provide for determination of duty based on available documents, evidence and claim made by the part .....

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cer. Regulation 2 makes it clear that besides remittance of the admitted duty in terms of the claim of the importer / exporter the officer can demand payment of duty up to 20% of the duty provisionally determined by him which is over and above the admitted duty payable in accordance with the claim of the party and assessed by the Officer. After remitting the duty in terms of the claim made by the party (admitted duty) and up to 20% of the provisional duty demanded by the Officer, the Officer is .....

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on demand. However, a surety bond should be valid only when it is supported by proper security, which may be by way of mortgage of immovable property or Bank Guarantee in favour of the Department or otherwise, and bond executed without proper security would serve only as a document to claim the amount. The Officer should realise that the best and safest course open to the Department is to demand Bank Guarantee from the local branch of a Nationalised Bank for balance provisional duty determined, .....

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. In W.P.(C) No. 2803 of 2015, the suspicion felt by the authorities of the Customs Department was on finding gunny bags in the containers. It was doubted, whether it was of Pakistan origin as claimed or was it of Indonesian origin. The commodity, if of Pakistan origin, was to have a tax only at a concessional rate; whereas in the case of Indonesian origin, it was 108 %. Referring to the materials produced, it was observed by a learned Judge of this Court in paragraph 3 of the judgment that, the .....

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uts from Sri Lanka, some gunny bags were found out in the containers, by virtue of which, the origin of the commodity was doubted. It was accordingly that a condition was imposed for causing release by way of provisional assessment, subject to satisfaction of 20 % in lieu of 35 % of the differential duty. Such reduction was made by the learned Judge observing that, as per the relevant document issued by the High Commission of the Democratic Socialistic Republic of Sri Lanka and addressed to the .....

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