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Commissioner of Customs Versus Orion Enterprises

2015 (9) TMI 144 - DELHI HIGH COURT

Goods not in conformity with Basmati Rice – Confiscation of Goods – Tribunal by impugned order allowed appeal of Respondent and set aside order of Commissioner whereby direction was issued to confiscate seized goods as samples were not conforming to Basmati Rice – Held that:- test reports of RAL clearly stated that percentage of other Rice in consignment was more than 20% which was maximum permitted under Basmati Rules – Sample also did not possess natural fragrance in both raw and cooked stages .....

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t was not sufficient that grains confirmed to length and length/breadth ratio prescribed for Basmati Rice in order to pass test – Therefore Court of opinion that Additional Commissioner was justified in his conclusion that Respondent had attempted to export non-Basmati Rice prohibited for export in terms of DGFT notification – Impugned order of Tribunal hereby set aside – Decided in favour of Revenue. - CUSAA No. 4/2013 - Dated:- 25-8-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner .....

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ebruary, 2012 of the Commissioner of Customs (Appeals) affirming the Order-in-Original dated 21st October, 2011 of the Additional Commissioner of Customs. 2. The background of the present case is that the Respondent filed two shipping bills both dated 25th January, 2011 for export of 'PUSA 1121 Indian Basmati Sella Rice' to Dubai in four containers. The Respondent also submitted a copy of the test report of private laboratory, i.e., Sri Ram Institute of Industrial Research, New Delhi. Th .....

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urt by an order dated 1st March, 2011 in the said writ petition directed the Department to draw the necessary samples in the presence of the Respondent and send them to any of the Agmark Testing Centres in terms of Circular No. 33(RE-2008)/2004-2009 dated 30th September, 2008 of the Customs Department. 4. Pursuant to the above order, samples were drawn on 10th March, 2011 and sent to the Regional Agmark Laboratory, Okhla, New Delhi (RAL). Two analytical reports, both dated 14th March 2011, were .....

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stoms (CoC) wrote a letter dated 15th March, 2013 to the RALNew Delhi asking it to clarify, specifically in the light of the notification dated 5th November 2008, whether the product in question was Basmati (including Pusa Basmati 1121) or Non-Basmati Rice. In response to the above query the RAL, New Delhi sent a letter dated 16th March, 2011 in which it confirmed that both samples were not conforming to the Basmati Rules as they contained 'other rice' in a proportion that exceeded 20% w .....

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ued to the Respondent on 26th May, 2011 by the CoC. 6. Inter alia, in the said show cause notice a reference was made to the order passed by this Court in Writ Petition (Civil) 953/2011 on 1st March, 2011; to the reports sent by the RAL, Okhla, New Delhi; to the further query posed by the CoC to the RAL by the letter dated 15th March, 2011 and the reply thereto from the RAL Laboratory on 16th March, 2011 to the effect that the samples were not conforming to the Basmati Rice as they were having o .....

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hese goods should not be confiscated and penalty should not be imposed. 7. The Additional Commissioner of Customs by the order dated 21st October, 2011, inter alia, held that although the samples conform the requirement of the length and length/breath ratio as per the DGFT Circular dated 5th November 2008, they failed to conform to the standard of Basmati Rice since the samples contained other rice in a proportion that exceeded 20% and did not possess the required natural fragrance in both raw a .....

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o imposed a penalty of ₹ 3,00,000/- on the respondent under Section 114 of the Customs Act, 1962. 8. The Appeal filed by the Respondent against the aforementioned order was dismissed by the CoC (Appeals) by order dated 15th February, 2012. In the Appeal filed by the Respondent before the CESTAT it was submitted by the counsel for the Respondent that a similar issue arose in Appeal No. 504/2011 being Appeal No. 504/2011 (Global Agro Impex v. Commissioner of Customs, NOIDA 2013 (290) E.L.T. .....

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n Writ Petition (Civil) No. 953/2011 directed the samples to be drawn in the presence of the Respondent and sent to the Agmark Testing Centre in terms of the Circular dated 30th September, 2008 of the DGFT. Consequently, the Respondent cannot now raise the plea that the test report of the RAL cannot form a reliable basis for determining whether the consignment sought to be exported by the Respondent conformed to the standards prescribed by DGFT for Basmati Rice. The test reports of the RAL clear .....

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smati Rice or otherwise. The attention of the CESTAT was not drawn to the above DGFT circular dated 30th September, 2008. The DGFT circular has been enclosed with the present Memorandum of Appeal as Annexure-A6. 10. Learned counsel for the Appellant submitted that the decision of the CESTAT in Global Agro Impex (supra) is pending consideration before the Allahabad High Court in Appeal No. 797/2012. He relied on the decision of the Hico Products Ltd. v. Collector of Central Excise (1994) 4 SCC 57 .....

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2008. The requirement regarding percentage of other rice was later on introduced by the Department on its own and even the show cause notice did not call upon the Respondent to explain any discrepancy on that score. It was submitted that it was only the requirements of the above mentioned DGFT notification that were expected to be complied with. It was further submitted that the test reports did not clearly indicate whether the 'other rice' found present in the consignment was also anoth .....

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ting that the said rules have been made to ascertain the 'quality of Basmati Rice.' The thrust of the submission was that the expression 'other rice' could include even other varieties of Basmati rice which may not be able to be determined in terms of the Basmati Rules and that unless the RAL report categorically stated that the other rice was not Basmati Rice, the Respondent could not be said to violate Section 113 (d) of the Customs Act. 12. First, it requires to be noted that .....

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n issued by the DGFT the Customs Department was to allow the export of Basmati Rice and Pusa 1121 non-Basmati Rice based on the parameters of the grain length, and grain length to breadth ratio. This circular made it clear that Customs may draw, redeem samples for testing to ascertain variety identification and send these samples for analysis to Agmark Analyst Centres . While the notification dated 16th September, 2008 did prescribe that the standard to be met as far as Basmati rice meant for ex .....

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prohibited the export of non-Basmati rice, this meant that the consignment had to also conform with the requirement of the Basmati Rice Rules. Schedule 2 to the Basmati Rice Rules specifies the maximum presence of other rice including red grain as 20%. 13. Therefore, the contention of the Respondent that the samples in question were required to conform only to the DGFT notification dated 5th November 2008 and only in terms of the length and length/breadth ratio as specified in said the DGFT noti .....

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pex (supra) clearly committed an error. In the present case, the testing by the RAL was on the request of the Respondent itself as is evident from the order dated 1st March, 2011 passed by this Court in Writ Civil Petition No. 953/2011. Learned counsel for the Appellant is right in the submission that once there was a report of the RAL clearly stating that the samples did not conform to the requirements of the Basmati Rules inasmuch as the presence of other rice exceeded the maximum permissible .....

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