2018 (10) TMI 1084 - HC - Customs

Export of Garnet produced from Beach Sand Mineral - allegation of illegal activity of mining - Direction to produce the certificate/documents to show the legitimacy of the source for Beach Sand Minerals and Natural Garnet brought to Cochin Port for export by the writ petitioner - ban on mining operation for Beach Sand Minerals imposed by the Tamil Nadu Government - authorities felt that the Beach Sand Minerals out of which Natural Garnet is produced by the petitioner, was illegally sourced and transported to Kerala for export. Held that - While exporting, the exporter not only has to be concerned with the Customs Act but he must also adhere to other prohibitory laws like the MMDR Act, The Tamil Nadu Prevention of Illegal Mining, Transportation and Storage of Minerals and Mineral Dealers Rules, 2011 . Merely because export of a particular product is permitted freely under the Foreign Trade Policy and the Foreign Trade (Development and Regulation) Act , the export of any item in violation of other prohibitory laws, cannot be permitted by court - In any case, it is not a case of total ban on export imposed by the authorities but when the exporter is able to satisfy the legal source of the mineral to be exported, he is at liberty to export them. In fact, it is the specific case of the learned counsel for the petitioner that all the items awaiting for export have been sourced through legal operations. If that be the case, if the petitioner can satisfy the authorities about the legitimate source of the minerals, they can carry on with their export activities without any hindrance. The learned single Judge has considered all the above aspects and noted that the custom authorities have issued Exts. P2 and P3 orders in accordance with the powers conferred upon them, under the Customs Act as also the notification issued under the Foreign Trade Policy read with the Foreign Trade (Development and Regulation) Act. Therefore, the court concluded that there is no illegality in the issuance of Exts. P2 and P3 orders and the petitioner is at liberty to export his goods, as soon as he is able to satisfy the authorities on the legal source, of the exported minerals. Appeal dismissed - decided against appellant.

Summary

Issues:
Challenge to judgment dismissing writ petition regarding export of Beach Sand Minerals and Natural Garnet based on legitimacy of source. Interpretation of Customs Act, 1962, and other relevant laws. Legality of restrictions on export imposed by Customs Authorities.

Analysis:
The appellant, a Partnership Firm, challenged the dismissal of their writ petition regarding the legitimacy of the source of Beach Sand Minerals and Natural Garnet for export. The dispute arose from the Customs Authorities' requirement to produce certificates/documents verifying the legality of the minerals' source due to a ban on mining operations by the Tamil Nadu Government. The appellant argued that the restriction impinged on their right to freely export the minerals. The Senior Counsel contended that the minerals were legally sourced and permitted for export under current government policies. The Deputy Commissioner of Tamil Nadu alleged large-scale illegal mining by the appellant, leading to a ban on mining operations in 2013. The authorities insisted on verifying the source of the exported minerals to prevent illegal activities.

The Additional Advocate General of Tamil Nadu argued that the writ petition had no cause of action in the Kerala High Court as the impugned exhibits were based on decisions by Tamil Nadu officers to prevent illegal mining. The State Government had taken steps to stop illegal mining and transportation of minerals, forming committees to address complaints. The Madras High Court had prohibited the appellant from operating their units, with related petitions pending. The Customs Act defines prohibited goods and illegal exports, but the Tamil Nadu rules and MMDR Act impose restrictions on mining, transportation, and storage of minerals.

The Court noted that exporters must comply with not only the Customs Act but also other prohibitory laws like the MMDR Act and Tamil Nadu rules. While the export of certain items may be permitted under trade policies, violating other laws is not allowed. The Court emphasized that exporters must prove the legal source of minerals for export. If the source is legitimate, export activities can continue without hindrance. The judgment cited precedents where restrictions on export were upheld based on proper valuation and the nature of restricted items. Ultimately, the Court found no fault in the reasoning of the single Judge and dismissed the writ appeal.