2019 (5) TMI 832 - HC - Customs

Prohibited goods or not - requirement of registration - Redemption of goods for the limited purpose of re-export to the supplier - confiscation of the imported product - main grounds on which the impugned order is assailed are that a direction for re-export is beyond the purview of Section 125(1) of the Customs Act, 1962 and that so long as the imported goods do not fall under the category of prohibited goods, there cannot be a direction to re-export. HELD THAT - It is no doubt true that the petitioner offered to re-export the goods, in view of the circumstances in which they were placed. By the time an order was passed giving them an option to pay fine and reexport the goods, the supplier seems to have taken a different position. It is seen from the papers that the petitioner also made attempts to reexport the goods. This is why they sought extension of time by three months. But, the supplier seems to have rejected the request. Therefore, after having invited an order for re-export, it is not open to the petitioner to contend that section 125 (1) does not entitle the respondent to order the re-export. Whether the goods in question are prohibited goods or not? - HELD THAT - It is only those goods which are subjected to any prohibition under the Customs Act or any other law, that are taken to be prohibited goods. It is not the case of the respondents that the goods in question are prohibited for import under the Customs Act - the import of plant growth regulators is not prohibited absolutely. They may actually fall under the category of restricted goods , and the restriction is with regard to registration. Whether the condition regarding registration will make the goods prohibited goods? - HELD THAT - It is interesting to see that even goods which are prohibited for import under the Customs Act or any other law for the time being in force, will not automatically become prohibited goods within the meaning of Section 2 (33) of the Customs Act, 1962, if such goods are imported after complying with the conditions for their import. In other words, even goods which are prohibited for import will shed the character of being prohibited goods, if they are imported after complying with the conditions for such import. There are no fault with the respondents in treating the requirement of registration as a restriction on the free import and consequently treating the goods, imported without registration, as prohibited goods. Petition dismissed.

Summary

Issues:
1. Confiscation of imported goods and option for re-export.
2. Applicability of Section 125(1) of the Customs Act, 1962.
3. Classification of goods as prohibited or restricted.
4. Interpretation of the Foreign Trade Act and its impact on import regulations.

Analysis:
1. The petitioner challenged an order directing the confiscation of imported goods, "MOREKING," with an option for re-export. The petitioner sought permission to re-export due to delays in clearance and supplier refusal. The respondents contended that the petitioner initially agreed to re-export and paid a fine, making it binding. However, the petitioner later requested to redeem the goods for home consumption, which was rejected, leading to the writ petition.

2. The main grounds of challenge were the perceived overreach of the order for re-export under Section 125(1) of the Customs Act, 1962, and the contention that non-prohibited goods should not be subject to re-export orders. The Court noted the petitioner's prior willingness to re-export, the subsequent supplier refusal, and the attempts made by the petitioner, leading to the conclusion that Section 125(1) did authorize the re-export order.

3. The classification of the goods as prohibited or restricted was crucial. The respondents argued that import by an unregistered person, like the petitioner, made the goods fall under the category of prohibited goods. However, the Court analyzed the definition of "prohibited goods" under the Customs Act, 1962, and found that the goods did not qualify as prohibited. The Court highlighted that the goods were freely importable subject to registration, making them restricted but not prohibited.

4. The interpretation of the Foreign Trade Act and its impact on import regulations was significant. The Court referenced precedents like Om Prakash Bhatia and Brooks International to establish that non-compliance with import conditions could lead to goods being treated as prohibited. The Court examined the provisions of the Foreign Trade Act, emphasizing that restrictions on free import, such as registration requirements, could render goods as prohibited. Ultimately, the Court dismissed the writ petition, upholding the classification of the goods as prohibited due to non-registration, in line with the Foreign Trade Act provisions.

In conclusion, the judgment addressed the issues of confiscation, re-export, statutory provisions, and import regulations, emphasizing the distinction between prohibited and restricted goods under the Customs Act and the Foreign Trade Act.