2009 (3) TMI 62 - HC - Customs

Import of restricted goods by one M/s. Surya - Petitioner entered into a high seas sales contract with M/s. Surya seizure on ground of violation of condition of importer being actual user in absence of any legal provisions either under the Exim Policy, or any condition of import licence, or any provisions of Customs Act prohibiting a transaction of purchase & sale on high seas between a trader and an actual importer, it is not possible to uphold the action of seizure seizure is invalid

Summary

Issues:
Challenge to seizure of goods, legality of seizure, violation of import regulations, high seas sales contract, authority of importer, actual user condition, circumvention of import restrictions, role of Directorate General of Foreign Trade, interpretation of Customs Act.

Analysis:

1. Challenge to Seizure of Goods:
The petition challenges the seizure of goods by respondent No.4 Authority on 05.02.2009, claiming it to be illegal and not justified by law. The petitioner sought direction to assess the Bill of Entry and allow clearance of goods as per the issued license.

2. Violation of Import Regulations:
The petitioner, engaged in weaving grey fabrics, imported Polyester Filament Yarn, a restricted item, for which an Import Export Code was allotted. The import required a license as per the notification, which was obtained by the petitioner. However, the seizure was based on the importer's lack of authorization to import restricted goods.

3. High Seas Sales Contract:
The petitioner entered a high seas sales contract for the purchase of Polyester Filament Yarn. The seizure was made on the grounds that the original importer did not hold a valid license for restricted goods, questioning the legality of the transaction.

4. Authority of Importer and Actual User Condition:
The respondent argued that the transaction attempted to circumvent import restrictions by involving a party not entitled to import restricted goods. The condition of 'actual user' attached to the license was highlighted as a crucial factor in determining the legality of the transaction.

5. Role of Directorate General of Foreign Trade:
The Directorate General of Foreign Trade clarified that the transaction did not violate any provisions of the Exim Policy or license conditions. The Customs Authorities were directed to make a decision based on the Customs Act regarding high seas sales, indicating no violation of relevant regulations.

6. Interpretation of Customs Act:
In the absence of legal provisions prohibiting high seas sales or transactions between traders and actual importers, the court held the seizure to be unjustified and ordered the processing of the Bill of Entry in accordance with the law. The action of respondent No.4 Authority was deemed unlawful and set aside.

7. Conclusion:
The petition was allowed, and the rule was made absolute with no order as to costs. The judgment emphasized the importance of compliance with import regulations and the necessity to uphold the legality of transactions under the Customs Act.