TMI Blog2021 (8) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... rs under Article 226 is called upon to decide the legality and validity of a seizure memo by weighing the pros and cons of the test reports on the quality of the product, reports divergent which are produced by the petitioner and the respondent - The Court in exercise of its extra-ordinary jurisdiction under Article 226 of the Constitution Of India cannot enter into a roving inquiry on the basis of conflicting test reports to decide the validity of a seizure memo. The exercise of seizure is an interim measure pending investigation. What is evident from the affidavit-in-reply filed by the investigating agency is that based on the statements recorded under Section 108 of the Customs Act, 1962, the investigation is pending. Reading of the provisions of the Customs Act, 1962 Sections 111 and 112 which provide for confiscation of goods post an investigation, the authorities are required to issue a show-cause notice under Section 124 of the Customs Act, 1962 before confiscation of goods. That stage has yet not reached. The entire issue of the seizure memo being disputed on the basis of test reports essentially being in the realm of disputed questions of facts we do not propose to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by Muscat International Shipping Logistics certifying that this consignment was of Naphtha.The vessel thereafter arrived at Kandla . 2.3 It is the case of the petitioner that once the consignment arrived at the Kandla Port vide Bills of Entry dated 06.02.2021, a test was carried out by the Custom House, Kandla. According to the petitioner, the report concluded that the sample was composed of mixture of hydrocarbons having certain qualities. The test report was for carrying out a test as to whether the goods were Naphtha or others. 2.4 The Director of Revenue Intelligence at Gandhidham issued a Seizure Memo under Section 110 of the Customs Act, 1962, seizing the goods under the provisions of the Act. Briefly stated the case of the authorities is that the goods that were imported purportedly as Naphtha, on examination at the Custom House Laboratory at Kandla were found to be Natural Gasoline Liquid . In the opinion of the authorities it appears that the imported goods have been mis-declared and mis-classified as Naphtha instead of Natural Gasoline Liquid, which according to the authorities is covered under CTH No. 27101290 and can only be imported by State Trading Enterp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner before the CBIC was that Natural Gasoline Liquid has been omitted from Chapter 27 of the Customs Tariff Act, 1975 hence the seizure memo classifying the subject goods as Natural Gasoline was illegal in view of the Test Reports of Geo- Chem and IIPM. The goods therefore need not be detained by the Customs Authorities at Kandla and be forthwith released or at least be provisionally released subject to further investigation. 3 Mr. Vikram Nankani, learned Senior Counsel assisted by Mr. Gaurav Mehta and Mr. Nimesh Mehta, learned counsels for the petitioner have made the following submissions: 3.1 That the Seizure Memo effected on the ground that the goods have been mis-declared as Naphtha, is based on the opinion of the Chemical Examiner of the Customs House Laboratory. According to Mr.Nankani, learned Senior Counsel, except for the opinion of the Chemical Examiner, there is no sufficient cause or material to seize the goods. There has to be reason to believe that the seized goods are prohibited goods. 3.2 With regard to the expert opinion of the Chemical Examiner, Mr. Nankani, learned Senior Counsel, would submit that the report is irrerlevant and or unreliable. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Ltd vs. Union of India reported in (1976) 2 SCC 241 submitting that where there is a reasonable claim to be classified under a specific entry in the tariff, it will be against the very principle of classification to deny it the parentage and fine it on the orphanage of a residuary entry, in this case entry 27101290. 4 Mr. Devang Vyas, learned ASG, reading the seizure memo would submit that in view of a categorical test report dated 15.02.2021 and a subsequent letter dated 19.02.2021, which clearly opined that the sample drawn from the subject imported goods was Natural Gasoline Liquid, there was no reason to doubt the fact that the authorities had reason to believe that the goods imported were misdeclared and misclassified. 4.1 He would further submit that a re-test report dated 28.05.2021 of CRCL, New Delhi, carried out pursuant to the order of the High Court would indicate that the goods imported were Natural Gasoline Liquid. 4.2 He would extensively rely on the averments made in the affidavitin- reply filed by the Assistant Director, Directorate of Revenue Intelligence and submit that based on the preliminary investigation of the DRI, there is a clear suggestion th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner under Section 110A of the Customs Act, 1962, are yet pending and the petition, therefore, need not be entertained. 5 Having considered the submissions made by the learned counsels for the respective parties and having heard Mr. Vikram Nankani, learned Senior Counsel for the petitioner and Mr. Devang Vyas, learned ASG for the respondents, we propose to hold as under: (i) Reading of the prayers made by the petitioner what is evident is that in exercise of its powers under Article 226 of the Constitution of India, the petitioner wants this Court to quash and set aside the Seizure Memo dated 26.02.2021. Essentially in support of this prayer, consequential prayers have been made, that in view of the test reports dated 11.05.2021 of the Geo Chem Laboratory and that of the Indian Institute of Petroleum dated 18.05.2021 in respect of samples 4 and 5 respectively which confirmed that the subject goods are Naphtha, such test reports be declared as valid test reports and the seizure memo be set aside. (ii) In other words, what the petitioner wants this Court to hold, is to weigh the validity of various reports i.e. the test reports on record submitted on behalf of the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of 11.05.2021 and the other report dated 18.05.2021 also confirms the consignment being Naphtha and therefore there is no mis-declaration cannot be gone into when there are reports in favour and against the petitioner by 5 different laboratories. Analysing the Chemical Reports and based on which to undertake a scrutiny of a Seizure Memo is not warranted in exercise of powers under Article 226 of the Constitution Of India. 8. Based on the correspondences that have been undertaken post the order passed by this Court on 05.04.2021 permitting drawing of samples for a re-test on 08.04.2021, the Directorate of Revenue Intelligence addressed a letter to the Managing Director of M/s. Hazel Mercantile Limited, the petitioner, requesting them to make necessary arrangment to make an authorized representative available for sampling proceedings. The petitioner proposed that the material be drawn by sample and be re- tested at certain laboratories namely 5 in number and also proposed certain parameters based on which such tests be carried out on the preferred methods. A clarification was issued on 15.04.2021 reiterating the parameters to be followed for re-test and the preferred methods at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication being unjustified inasmuch as CTH 27101290 is a residuary entry with description others and not specifically Natural Gasoline Liquid which was erstwhile an entry 27101220 specifically covering Natural Gasoline Liquid and therefore since the scope of the residuary entry remained unchanged and never included Natural Gasoline Liquid makes the seizure memo invalid is a realm of interpretation of entries in context of the test reports which we would not want to undertake. 11. What is evident therefore in context of the pleadings in the petition and the response of the Union of India is that this court in exercise of powers under Article 226 is called upon to decide the legality and validity of a seizure memo by weighing the pros and cons of the test reports on the quality of the product, reports divergent which are produced by the petitioner and the respondent. We are afraid then when the validity of the reports are disputed inasmuch as it is the case of the Union of India through its investigating agency that the parameters and scientific analysis of the reports on which the petitioner seeks reliance are contradictory, this Court would be loathe in weighing its options on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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