2021 (9) TMI 369 - HC - Customs

Seeking provisional release of goods - Black Pepper - Goods of Sri Lankan Origin - prohibited goods or not - Section 110A of the Customs Act, 1962 - HELD THAT - There is no dispute that the petitioner is having licence to import and he has admittedly imported eight consignments of Black Pepper from Sri Lanka, which is the originating country and it had been imported through the Tuticorin port. The same has been intercepted and it has been seized on the ground allegedly that the goods imported is a prohibited goods, in view of the notification dated 25.07.2018 of DGFT. One thing has become clear that, it is not the stand of the Customs authorities while passing the impugned order that, the petitioner does not have even the right of making application seeking provisional release of the goods before adjudication commences. However, now the stand has been taken by the respondent Customs, as has been vehemently contended and projected by the learned Standing counsel for the respondent that, even the right of making application to get the provisional release of the goods, if it is a prohibited one, does not arise. If at all the Customs Department finds with documents to substantiate that the goods in question having been imported by the petitioner is prohibited goods within the meaning of 25.07.2018 notification issued by DGFT, apart from taking a decision of declaring the goods as prohibited goods and imposing penalty etc., they can also make a strong recommendation to the DGFT to initiate action against the importer under the provisions of Foreign Trade (Development and Regulation) Act, 1992, especially under Section 8 referred to above and to allow the same to reach its logical conclusion. As it is a drastic decision to be taken by the Foreign Trade Department with the recommendation of Customs Department in any given case, where the documents are rightly available with the customs department, this Court feels that some check and balance measure can be ensured to be placed as against these kind of importers. The respondent is hereby directed to pass orders for releasing the goods in question by way of provisional release ofcourse by imposing the conditions - Petition disposed off.

Summary

Issues Involved:

1. Provisional Release of Imported Black Pepper.
2. Determination of Goods as Prohibited under Notification No. 21/2015-2020.
3. Adjudication Process and Timeline.
4. Legal Precedents and Comparisons with Similar Cases.
5. Rights of Importers under the Customs Act and Foreign Trade Policy.
6. Impact of Supreme Court Judgment in Raj Grow Impex Case.
7. Recommendations for Action under the Foreign Trade (Development and Regulation) Act, 1992.

Detailed Analysis:

1. Provisional Release of Imported Black Pepper:

The petitioner sought a Writ of Certiorarified Mandamus to quash the impugned proceedings and direct the release of Black Pepper provisionally under Section 110A of the Customs Act, 1962. The petitioner argued that the price of the Black Pepper was above ?500 per kg, making it non-prohibited under the Foreign Trade Policy. However, the Customs Department seized the goods, alleging the price was below ?500 per kg, making it prohibited under Notification No. 21/2015-2020.

2. Determination of Goods as Prohibited under Notification No. 21/2015-2020:

The Customs Department argued that the Black Pepper was a prohibited item if priced below ?500 per kg. The petitioner contended that the price was between ?525 and ?533 per kg, thus not falling under the prohibited category. The determination of whether the goods were prohibited required adjudication.

3. Adjudication Process and Timeline:

The court noted that adjudication to determine if the goods were prohibited would take a reasonable time. The Customs Department admitted that immediate adjudication was not feasible. The court emphasized the perishable nature of the goods and the need for provisional release to prevent wastage.

4. Legal Precedents and Comparisons with Similar Cases:

The petitioner referenced a similar case (M/s. Global Metro vs. The Commissioner of Customs) where provisional release was granted. The court in that case had directed the release of goods subject to conditions, considering the perishable nature of the goods. The court in the present case found this precedent relevant and applicable.

5. Rights of Importers under the Customs Act and Foreign Trade Policy:

The court acknowledged the importer's right to apply for provisional release, especially for perishable goods. This right was recognized by the Division Bench in an earlier order, allowing the petitioner to apply for provisional release despite the ongoing adjudication.

6. Impact of Supreme Court Judgment in Raj Grow Impex Case:

The Customs Department cited the Supreme Court judgment in Raj Grow Impex, arguing that prohibited goods could not be released provisionally. However, the court distinguished the present case, noting that adjudication was yet to determine if the goods were indeed prohibited. The balance of convenience favored the petitioner, allowing for provisional release.

7. Recommendations for Action under the Foreign Trade (Development and Regulation) Act, 1992:

The court suggested that if the Customs Department ultimately found the goods to be prohibited, it could recommend action under Section 8 of the Foreign Trade (Development and Regulation) Act, 1992, including suspension or cancellation of the importer's license.

Conclusion:

The court set aside the impugned order and directed the Customs Department to release the goods provisionally, subject to the petitioner paying customs duty and providing a bank guarantee for potential penalties. The Customs Department was also directed to expedite the adjudication process and consider recommending action under the Foreign Trade (Development and Regulation) Act, 1992, if the goods were found to be prohibited. The writ petition was ordered accordingly, with no costs.