2014 (8) TMI 846 - HC - Customs

Interpretation of para 197(2) of the Import-Export Policy 1985-88 - import of rapeseeds, which was a canalised item - need to seek licence - Imposition of penalty - Held that - since as on date, the order of the CEGAT has not been upset, we are of the opinion that the impugned order taking a view different from that adopted by the CEGAT cannot be sustained. Further, we are also of the opinion that since the decision of the CEGAT is under challenge, the appropriate course would be to grant liberty to the respondent authorities to take appropriate action, if necessary, having regard to any final orders made in the reference proceedings, by the CEGAT or the High Court, as the case may be, that may be adverse to the petitioner. - Decided in favour of assessee.

Summary

Issues:
Interpretation of para 197(2) of the Import-Export Policy 1985-88.
Validity of penalty imposed on the petitioner.
Applicability of prior approval requirement from the Chief Commissioner of Imports and Exports (CCI&E).
Interpretation of various provisions of the IE Policy by Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT).
Challenge to the decision of CEGAT by the Customs Department.
Decision of the Kerala High Court regarding the Reference Petition.
Sustainability of the impugned order in light of CEGAT's decision.
Granting liberty to respondent authorities for appropriate action.
Opportunity of hearing to be provided to the petitioner before any adverse final order.

Analysis:
The judgment revolves around the interpretation of para 197(2) of the Import-Export Policy 1985-88, specifically focusing on the penalty imposed on the petitioner. The petitioner imported rapeseeds under 45 REP licenses, facing a dispute regarding the requirement of prior approval from the CCI&E as per the IE Policy. The Customs authorities believed the import was unlawful due to canalization, leading to a penalty of Rs. 19 lakhs and debarment from importation. The CEGAT, comprising Technical and Judicial Members, had differing views on the interpretation of the IE Policy provisions, with the Technical Member deeming the import lawful without prior approval. However, the adjudicating authority upheld the penalty, which was affirmed by the Appellate Committee of the Ministry of Commerce in 1997.

The petitioner argued that the specific mention of "seeds" in both Appendix 17 and Appendix 5 Part B (5) of the IE Policy exempted the need for prior approval for rapeseed importation. Conversely, the respondents contended that the generic description of "seeds" in Appendix 17 necessitated compliance with para 197(2) of the IE Policy. The Kerala High Court's decision in 2013 regarding the Reference Petition challenging CEGAT's order added complexity to the case, with the High Court remitting the matter back to CEGAT for further consideration.

The High Court, considering the unsettled nature of the CEGAT decision, concluded that the impugned order deviating from CEGAT's stance could not stand. Granting liberty to the respondent authorities for potential action based on final orders from the reference proceedings, the Court emphasized providing the petitioner with a hearing opportunity before any adverse final decision. The judgment ultimately allowed the writ petition in the mentioned terms without imposing costs, ensuring fairness and procedural adherence in the adjudication process.