2018 (1) TMI 1493 - HC - Customs

Release of confiscated goods - import of cotton seeds for animal feed - petitioners had made similar imports in the past and cleared the same without any resistance. It appears that this time round, the Ministry of Agriculture got involved and raised objections to the clearance of the cargo on the basis of the Plant Quarantine Order (Regulation of Import into India), 2003 - petitioner claimed release of goods whereas Revenue suggested either re-export of the goods or its destruction - HELD THAT - It is undisputed that in the past, the present petitioners and several other importers had imported cotton seeds in the seed form, but for animal feed consumption. Such import consignments were cleared by the Customs authorities without insisting on the procedure of certification prescribed under Schedule-V. However, we are prepared to proceed on the basis that the Ministry of Agriculture was not at that time taken into confidence and that therefore, such imports of the past would not act as a precedent against the Ministry. In the present group of cases, the petitioners have imported cotton seeds in seeds form, but claiming that the same are meant only for animal feed consumption. In fact, further contending that the cotton seeds are not capable of being used for sowing purposes. According to the petitioners, the cotton seeds used for animal feed is generally of inferior quality as compared to those used for sowing. The germination rate in the former case would be extremely low making it completely inviable for anybody to use the same for sowing. In fact, due to passage of time, since their import, the germination rate would further go down and therefore, seeds cannot be put to any use other than for animal feed consumption. Schedule-VII pertains to list of plants, imports of which are permissible on the basis of phytosanitary certificate issued by the exporting country and certificate of fumigation, if required. The conditions of import contained in Schedule-VII themselves are less stringent as compared to those prescribed in Schedule-V. This is otherwise also logical as in the present case, since Schedule-V covers cases where cotton seeds are imported for sowing, which would naturally have much wider impact on plant and insects species of the country. Item-19 on the other hand of Schedule-VII pertains to Animal feed , where conditions for importers understandably are less stringent. If one compares Schedule-V with Schedule-VII, in particular Entry No.19 of Schedule-VII, the contentions of respondent No.2 that import of cotton seeds for any purpose other than for sowing is not permissible, cannot be accepted. The cotton seeds imported for sowing would fall under Entry No.7 of Schedule-V. If cotton seeds happen to be animal feed, the same would fall under Entry No.19 of Schedule- VII. It is open for importer to import cotton seeds for animal feed consumption by complying the conditions contained in Schedule-VII. Whether the cotton seeds imported for animal feed consumption can be in any form other than crushed /kibbled? - HELD THAT - Once the cotton seeds are imported, may be claiming them ultimately to be used as animal feed, as long as the same are allowed to be imported in seeds form, there is neither any control of the importer nor any guarantee that the same will not be used for sowing purpose by the ultimate consumers. The concerns of environmental damage or spreading of unknown pests and diseases to the plant and animal species in the country cannot be brushed aside without minute examination and expert s intervention and reports. However, in the present case, we are neither able to carry out nor would the time permit us to enter into such arena. The clearance of goods would, therefore, have to be on certain conditions, which we propose to impose hereafter - Two conditions to safeguard general interests would be one to ensure that the seeds under import are not capable of being used for sowing and second that even after import, the same are not sold in the seed form and are crushed or kibbled before selling for the ultimate consumption. The respondents are directed to clear the goods for import after fulfilling certain conditions and after the petitioners paying all duties and taxes and other charges - petition disposed off.

Summary

Issues Involved:
1. Legality of the import of cotton seeds for animal feed under the Plant Quarantine (Regulation of Import into India) Order, 2003.
2. Applicability of Schedule-V and Schedule-VII of the PQ Order to the import of cotton seeds.
3. Definition and conditions of "Animal Feed" as per the PQ Order.
4. Compliance with statutory provisions and conditions for import.

Issue-wise Detailed Analysis:

1. Legality of the import of cotton seeds for animal feed under the Plant Quarantine (Regulation of Import into India) Order, 2003:
The petitioners, engaged in importing cotton seeds for animal feed, faced objections from the Ministry of Agriculture based on the Plant Quarantine Order (PQ Order), 2003. The Ministry argued that cotton seeds could only be imported for sowing purposes under Schedule-V of the PQ Order, and not for animal feed. The petitioners contended that their imports were meant for animal feed, which should fall under Schedule-VII, not Schedule-V.

2. Applicability of Schedule-V and Schedule-VII of the PQ Order to the import of cotton seeds:
The court examined whether the cotton seeds imported for animal feed could be classified under Schedule-VII, which has less stringent conditions compared to Schedule-V. Schedule-V pertains to seeds for sowing, while Schedule-VII includes "Animal feeds." The court noted that the past imports were cleared without the Ministry's involvement and thus did not set a precedent. The court concluded that cotton seeds for sowing fall under Schedule-V, whereas those for animal feed fall under Schedule-VII.

3. Definition and conditions of "Animal Feed" as per the PQ Order:
The term "Animal Feed" was defined in the PQ Order only after the petitioners' imports, through a notification dated 27.12.2017. The new definition required animal feed to be in kibbled, crushed, pellet, or dried cake form. The court found that this amendment was substantive and not merely clarificatory, implying that the petitioners' imports could not be subjected to this new definition retroactively. The court emphasized that the statutory framework allowed import of cotton seeds for animal feed under Schedule-VII, provided they met the conditions specified therein.

4. Compliance with statutory provisions and conditions for import:
The court acknowledged the Ministry's concerns about the potential environmental impact and the spread of pests and diseases through imported seeds. To address these concerns, the court imposed specific conditions for the clearance of the goods. The respondents were directed to test the germination rate of the seeds to ensure they were not viable for sowing. Additionally, the petitioners were required to undertake that the seeds would be crushed or kibbled before being sold to the ultimate consumer.

Conclusion:
The court directed the respondents to clear the goods for import after fulfilling the specified conditions, including testing the germination rate and ensuring the seeds are crushed or kibbled before sale. The petitions were disposed of accordingly, allowing the import of cotton seeds for animal feed under Schedule-VII, subject to compliance with the imposed conditions.