2013 (8) TMI 510 - HC - Customs

Clearance of the Goods for exportation as per Section 51 - dispute was with respect to the goods presented for the purpose of clearance, physical verification of the goods as envisaged u/s 51 of the Customs Act - Held that - The goods were not examined by the Customs Authorities - The examination of the goods had not taken place and there was no final clearance - Only endorsement was made subject to the examination of the goods - That could not be said to be authorizing the export after the lapse of the validity of the EARCs - the Customs Authorities were right in not clearing the goods for the purpose of export as the goods had not been examined exported within the validity period of the Export Authorization Registration Certifications - the validity of which stood expired and thereafter there could not have been any export made under those EARCs. The provisions of Sections 50 and 51 of the Act were determinative of time when the process of export commences and when the goods were loaded into the ship after clearance by the proper officer - they must be treated as having been exported so far as the exporter was concerned. The clearance had to be made after goods were physically verified as provided in Customs Manual Chapter 3(II) 40 to 245 - The goods did not go outside the territory of India, it could not be said that there could have been any export of the goods before examination and testing of the goods as provided in Section 17(2) of the Act - Thus export was not complete by presentation of paper of bill of export - The procedures prescribed make it clear that examination of the goods was sine qua non for the clearance of the goods Decided in favor of revenue.

Issues Involved:
1. Legality of the order passed by the Single Bench allowing the writ petition.
2. Compliance with Section 51 of the Customs Act regarding physical verification of goods.
3. Validity of the Export Authorisation Registration Certificate (EARC) and its expiration.
4. Procedural requirements for export under the Customs Act and CBEC Customs Manual.
5. Impact of congestion at the Land Customs Station on the export process.
6. Interpretation of Sections 16, 17, 50, and 51 of the Customs Act.

Detailed Analysis:

1. Legality of the Order Passed by the Single Bench:
The appeal questions the legality of the order passed by a Single Bench allowing the writ petition filed by the respondent. The Single Bench allowed the writ application mainly on the ground that goods are to be deemed to have been exported as soon as the goods are cleared for export and loaded into vessels and are outside the control of the exporter. The Single Judge observed that it was not necessary to adjudicate the factual issue of whether the goods could not cross the Indo-Bangladesh border within 15th December, 2010, by reason of congestion as alleged by the petitioners.

2. Compliance with Section 51 of the Customs Act:
Section 51 of the Customs Act empowers the Proper Officer to allow the clearance and loading of goods for exportation if the said goods are not prohibited goods and otherwise exportable in every sense. However, the export was refused illegally in spite of valid documents. The petitioner should have been permitted to export the goods covered under EARCs even after the expiry of 15th December, 2010. It was incumbent upon the respondent authorities to allow the export of the goods as all formalities were observed by the petitioner in all respects.

3. Validity of the Export Authorisation Registration Certificate (EARC) and its Expiration:
The petitioner admittedly applied for registration and Export Authorisation Registration Certificate, in short, EARC was issued to him on 12-10-2010 and 13-10-2010 with respect to raw cotton 5201. For the purpose of export, the registration was valid up to 15-12-2010. Thus the last date by which export was to be completed under the EARC was 15-12-2010. The goods were presented for physical verification on 16-12-2010, after the expiry of the period of EARC on 15-12-2010.

4. Procedural Requirements for Export under the Customs Act and CBEC Customs Manual:
The clearance has to be made after goods are physically verified as provided in Customs Manual Chapter 3(II) 40 to 245. Physical verification is one of the essential ingredients so as to permit the export. Without that export cannot be permitted. The provisions contained in Section 17 make "examination of the goods and testing" a mandatory requirement. The Customs Manual also outlines the necessity of physical examination as a sine qua non for ultimate clearance of the goods.

5. Impact of Congestion at the Land Customs Station on the Export Process:
The petitioner averred that the Land Customs Station is highly congested without adequate infrastructure and virtually controlled by local mafias who decide the fate of the exporters and consignments. This congestion allegedly prevented the goods from crossing the border by 15-12-2010. However, the Customs Authorities contended that the goods were inspected by the Customs authorities only after they arrived at the customs station on 16-12-2010, and on that date, the said Licence of the petitioner had expired.

6. Interpretation of Sections 16, 17, 50, and 51 of the Customs Act:
Section 16(1)(a) provides that the rate of duty and tariff valuation applicable to any export goods shall be the rate and valuation in force on the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation under Section 51. Section 17(2) mandates that the duty, if any, leviable on such goods shall be assessed after examination and testing by the proper officer. Sections 50 and 51 outline the process for entry and clearance of goods for exportation, emphasizing the necessity of physical verification and satisfaction of the proper officer.

Conclusion:
The Customs Authorities were right in not clearing the goods for export as the goods had not been examined and exported within the validity period of the EARCs, which expired on December 15, 2010. The Single Bench failed to properly appreciate the provisions contained in Sections 17 and 51 of the Act, which emphasize the necessity of physical verification for final clearance. The appeal was allowed, and the order passed by the learned Single Bench was set aside.

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