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2021 (8) TMI 1126 - HC - CustomsSeizure of imported goods - Provisional release of goods and for re-testing - Validity of seizure memo being disputed on the basis of test reports - contract with Aureole Trading (U.A.E) for supply of product Naphtha - HELD THAT - From reading of the affidavit-in-reply of the respondent, it appears that no parameters were suggested by the petitioner pertaining to the test of goods as Natural Gasoline Liquid. Even if the letters dated 16.02.2021 and 17.02.2021 which are pressed into service by Mr. Nankani are considered as creating a doubt about the Custom House Laboratory what is indicated is that though the lines of investigation was in context of whether the goods was Naphtha, the CRCL report dated 28.05.2021 (page 447 of the paperbook) in accordance with the parameters prescribed by the authorities in the test memo indicate unequivocally that the consignment is that of Natural Gasoline Liquid. What is evident therefore in context of the pleadings in the petition and the response of the Union of India is that this court in exercise of powers under Article 226 is called upon to decide the legality and validity of a seizure memo by weighing the pros and cons of the test reports on the quality of the product, reports divergent which are produced by the petitioner and the respondent - The Court in exercise of its extra-ordinary jurisdiction under Article 226 of the Constitution Of India cannot enter into a roving inquiry on the basis of conflicting test reports to decide the validity of a seizure memo. The exercise of seizure is an interim measure pending investigation. What is evident from the affidavit-in-reply filed by the investigating agency is that based on the statements recorded under Section 108 of the Customs Act, 1962, the investigation is pending. Reading of the provisions of the Customs Act, 1962 Sections 111 and 112 which provide for confiscation of goods post an investigation, the authorities are required to issue a show-cause notice under Section 124 of the Customs Act, 1962 before confiscation of goods. That stage has yet not reached. The entire issue of the seizure memo being disputed on the basis of test reports essentially being in the realm of disputed questions of facts we do not propose to exercise jurisdiction under Article 226 of the Constitution of India in favour of the petitioner and entertain the petition in context of the prayers made herein - Petition dismissed.
Issues Involved:
1. Legality of the Seizure Memo dated 26.02.2021. 2. Validity of various test reports regarding the imported goods. 3. Classification of the imported goods under the Customs Tariff Act. 4. Provisional release of the seized goods. Issue-wise Detailed Analysis: 1. Legality of the Seizure Memo dated 26.02.2021: The petitioner challenged the Seizure Memo issued by the Directorate of Revenue Intelligence (DRI) under Section 110 of the Customs Act, 1962, claiming it was based on an inconclusive test report. The petitioner argued that the goods were misclassified as "Natural Gasoline Liquid" instead of "Naphtha" and that the seizure was unauthorized. The court, however, held that the Seizure Memo was issued based on the DRI's investigation and the test report from the Customs House Laboratory at Kandla, which indicated the goods were "Natural Gasoline Liquid." The court concluded that the Seizure Memo was a valid interim measure pending investigation and could not be quashed under Article 226 of the Constitution. 2. Validity of Various Test Reports Regarding the Imported Goods: The petitioner presented test reports from Geo-Chem Laboratories and the Indian Institute of Petroleum (IIPM), which confirmed that the goods were "Naphtha." In contrast, the Customs House Laboratory and the Central Revenue Control Laboratory (CRCL) in New Delhi reported the goods as "Natural Gasoline Liquid." The court noted the conflicting test reports and stated that it could not weigh the validity of these reports under its jurisdiction in Article 226. The court emphasized that the dispute over the test reports involved complex scientific analysis, which was beyond its purview. 3. Classification of the Imported Goods under the Customs Tariff Act: The petitioner argued that the goods should be classified under a specific entry for "Naphtha" rather than the residuary entry CTH 27101290, which covers "others." The respondents maintained that the goods were correctly classified under the residuary entry due to the absence of a specific entry for "Natural Gasoline Liquid." The court declined to interpret the classification entries, stating that such an interpretation involved technical and factual determinations better suited for the investigating authorities. 4. Provisional Release of the Seized Goods: The petitioner sought the provisional release of the goods pending investigation. The court observed that the applications for provisional release under Section 110A of the Customs Act, 1962, were still pending with the authorities. The court directed the respondents to decide on these applications within four weeks from the receipt of a certified copy of the order. The court emphasized that the seizure was an interim measure and that the authorities were required to issue a show-cause notice under Section 124 of the Customs Act before confiscation of the goods. Conclusion: The court dismissed the petition, stating that it could not entertain the petition under Article 226 due to the disputed questions of fact and conflicting test reports. The court directed the respondents to decide on the applications for provisional release in accordance with the law within a specified timeframe. The petition was dismissed with no order as to costs.
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