2016 (8) TMI 712 - HC - Customs

Import of textile - assessed to be cloth used for manufacturing umbrella by the Customs Authorities - re-testing of samples - Held that - The issue here is as to whether it is reasonable that a solitary test be conducted in respect of any particular goods without there being any latitude for mistake. Indeed, there may be a case where the Customs authorities may be aggrieved by the result or where the result may have been tailor-made to suit the interests of the assessee. The important feature of the matter is that the applicable provisions do not prohibit the conduct of a second test. Thus, since the petitioner is dissatisfied with the test conducted on the goods by IIT, Delhi, a second test may be conducted. The parties have agreed that the same goods be sent for examination by the Textiles Committee Laboratory under the Ministry of Commerce. The exercise of sending the goods or the samples to the Textiles Committee Laboratory under the Ministry of Commerce should be completed within a week from date and the result obtained within a fortnight thereafter.

Issues:
1. Arbitrary assessment of imported goods by Customs Authorities.
2. Authority of Indian Institute of Technology (IIT) to examine goods.
3. Permissibility of re-examination of goods by Customs Authorities.
4. Conducting a second test on goods.
5. Directions for testing goods by Textiles Committee Laboratory.
6. Cost implications and timeline for repeat test.
7. Order on costs.

Arbitrary Assessment of Imported Goods:
The petitioner raised a grievance regarding the arbitrary assessment of goods imported for industrial use as cloth used for manufacturing umbrellas by the Customs Authorities. A show-cause notice was issued, and a sample was sent for testing at IIT, Delhi. The petitioner contended that IIT did not have the authority to examine the goods and sought a subsequent test, which was refused by the respondent authorities.

Authority of IIT to Examine Goods:
The petitioner disputed the authority of IIT, Delhi to examine the goods, claiming it was arbitrary for the respondent authorities to deny a subsequent test. The respondents argued that the governing provisions and procedures did not allow for a re-examination of the goods to be conducted, emphasizing the potential for endless re-tests if allowed.

Permissibility of Re-examination of Goods:
The central issue revolved around the reasonableness of conducting a solitary test without any margin for error. While the applicable provisions did not explicitly prohibit a second test, the petitioner's dissatisfaction with the initial test prompted the court to allow a second test. Both parties agreed to send the goods for examination by the Textiles Committee Laboratory under the Ministry of Commerce.

Directions for Testing by Textiles Committee Laboratory:
The judgment directed the goods or samples to be tested by the Textiles Committee Laboratory, with the petitioner bearing the expenses for the repeat test. A substantial pre-deposit equivalent to thrice the cost for re-examination was mandated, refundable if the report supported the petitioner's description of the goods; otherwise, the deposited amount would be forfeited.

Cost Implications and Timeline for Repeat Test:
The petitioner was instructed to bear the expenses for the repeat test, with a timeline set for completing the testing process within a week and obtaining the results within a fortnight. No specific costs were awarded in the judgment.

Order on Costs:
The judgment concluded with no order as to costs, and provision for urgent certified website copies of the order to be supplied to the parties upon application, subject to compliance with formalities.

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