2019 (2) TMI 464 - HC - Customs

Release of goods after being provisionally assessed - exemption from levy of customs duty as per the provisions of the Indo-Sri Lanka Free Trade Agreement (ISFTA) - seeking clearance of cargo - Held that - A careful reading of the entire instructions would clearly indicate that the Customs Authorities are not to insist on verification in each and every case. The grounds provided for verification have been clearly laid down in Paragraph No.2 of the instruction No.31 of 2016-Customs dated 12.09.2016. Apart from undertaking verification on random basis, only in cases of doubt regarding genuineness of the documents received, the respondents may resort to a verification exercise. In this case, neither in the counter affidavit nor in the typed set of papers, the respondents have indicated if they entertained any doubt in the first instance regarding the genuineness of the certificates of origin submitted by the writ petitioner. The imported goods are agricultural commodities. They are perishable and vulnerable to speedy decay. In such cases, the authorities must expedite the clearance and if they propose to conduct a verification exercise, it must be fast tracked. The burden lies entirely on the authorities. When they entertain a doubt regarding the genuineness of the documents submitted by the assessee, it is for them to get it cleared as expeditiously as possible. The respondents are directed to conclude all the formalities and release the goods forthwith - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Dispute over the classification and duty exemption of imported goods under the Indo-Sri Lanka Free Trade Agreement (ISFTA).
2. Delay in the verification process of the imported goods' country of origin.
3. Allegations of unreasonable delay causing prejudice to the importer.
4. Interpretation of rules and instructions governing verification procedures for imported goods.
5. Consideration of the impact of bureaucratic efficiency on ease of doing business and economic development.

Analysis:
Issue 1: The petitioner, an importer of Areca/Betal Nuts, imported goods from Sri Lanka under the ISFTA, claiming duty exemption. The respondents sought provisional assessment due to concerns over the origin of the goods based on a circular issued by the Directorate of Revenue Intelligence.

Issue 2: The respondents initiated a verification process with Indian and Sri Lankan authorities to confirm the goods' origin. Delays in receiving responses led to prolonged detention of the goods, despite initial checks confirming compliance with the declared origin.

Issue 3: The court criticized the authorities for the delay, emphasizing the perishable nature of the agricultural goods and the need for expedited clearance. The petitioner's entitlement to release under the ISFTA terms was highlighted, subject to verification outcomes.

Issue 4: The judgment referenced detailed instructions on verification procedures, highlighting that authorities should not mechanically verify every case but act on doubts regarding document genuineness. The court noted the lack of evidence suggesting doubts in the petitioner's case, questioning the necessity of the extended verification process.

Issue 5: The judgment underscored the importance of efficient bureaucratic processes in facilitating business and economic growth. Criticism was directed towards unnecessary delays impacting trade and the need for officials to act promptly within legal frameworks to support business activities.

The court allowed the writ petitions, directing the immediate release of the goods while reserving the right for the authorities to take legal action if document authenticity issues arise. The judgment emphasized the need for timely and efficient administrative actions to support business operations and economic development.