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2022 (1) TMI 1020 - HC - CustomsClaim of foreign exporter to India as owner of goods seeking to re-export - Period of completion of export obligation in respect of advance license expired - Actual User condition - request for extension of time was declined - petition to re-export the cargo as is - seizure of cargo currently lying in a warehouse at Gandhidham or demanding and/or enforcing customs duty in respect of the subject cargo against the petitioner - whether the respondents are justified in demanding the customs duty on the goods in question for the purpose of re-export at the instance of the writ-applicant? HELD THAT - The condition of re-export of the raw sugar, after being processed within six months, not being complied with and the request for extension declined by the proper officer, the goods are liable to be confiscated. Under the Customs Act, 1962, the person who files a bill of entry under Section 46 of the Act is the importer of the goods covered under the bill of entry . Such bill of entry may be for home consumption (i.e. for clearing the goods from the customs station to any other place in India) or a bill of entry for warehousing (i.e. for depositing the imported goods in a warehouse for a certain period of time). In any case, the person who files the bill of entry is the importer and, therefore, in the present case, the respondent no.5 is the importer of the goods in India. The stance of the respondents, that it is the respondent no.5 who has imported the goods in India and the respondent no.5 is the importer, appears to be correct and justified - the stance of the department that the respondent no.5, as an importer, availed or claimed exemption of a notification that prescribes or lays down a condition of utilization of the imported materials and export of the resultant products for the fulfillment of the export obligation in respect of the authorization also appears to be correct. The fact that the exporter, i.e. the writ-applicant, has not been paid the price of the goods and that his goods are liable to be confiscated because of a lapse or any irregularity on the part of the respondent no.5, the same would have no impact on the legal position as regards the goods being liable to be confiscated under Section 111(o) of the Act, 1962. The license was granted on the condition that the raw silk imported would be utilized for manufacturing and exporting garments. The purchaser later received three consignments but did not fulfill the stipulated condition. Subsequently, the supplier, an Indian national residing and doing business abroad, sent certain quantities of raw silk in four lots, deliverable to the purchaser. The necessary documents were sent to the first supplier's bankers with instructions to deliver them to it on receiving payment. When the four consignments arrived in India, the overseas supplier appeared before the Customs authorities and claimed the right to take delivery of the goods. The authorities, who had come to know by then of the non-compliance of the stipulated condition with respect to the three earlier consignments and also of the alleged misrepresentation made by the buyer, while obtaining the advance import license, initiated proceedings against her and two other persons - In view of the proceedings, the purchaser failed to make the payment and receive the documents; and also did not take any steps to clear the goods, in effect abandoning them. The foreign supplier appeared in the proceedings, and contended that the title to the goods had not passed to the purchaser, and that it continued as owner; the goods could not, therefore, be confiscated or proceeded against for the purchaser's transgression of the law and that since the supplier was in the dark on this aspect, he ought to be permitted to reexport the goods. The Revenue had rejected this request; the High Court granted the relief. When proceedings were pending the licenses were cancelled. Mere filing of the ex-bond bill of entry, by itself, would not vest the title of the goods into the importer if ultimately such goods are not cleared by the importer, or in other words, if such goods are abandoned. In such circumstances also, the title over the imported goods would remain with the exporter and the exporter may, in peculiar facts and circumstances of the case like the one on hand, request the Commissioner to permit him to reexport the goods as an unpaid seller - Undoubtedly, the writ-applicant herein is the unpaid seller and he has been suffering for no fault on his part. However, all these is a part of a business risk because sellers in the international trade ordinarily insist on irrevocable letter of credit of the prospective buyers for safeguarding their interest, which appears to have not been done in the present case. This writ-application is disposed off reserving the liberty in favour of the writ-applicant to file an application addressed to the Commissioner seeking re-export of the goods.
Issues Involved:
1. Extension of the period for completion of export obligation. 2. Relaxation of the 'Actual User' condition. 3. Permission for re-export of cargo. 4. Waiver of the requirement of processing and re-export under the advance license. 5. Restraining the customs authority from seizing the cargo and demanding customs duty. 6. Granting a personal hearing to the petitioner. Detailed Analysis: 1. Extension of the Period for Completion of Export Obligation: The petitioner, a private limited company, sought a writ of mandamus to direct respondent no.4 to extend the period for completing the export obligation under the advance license issued to respondent no.5. The court noted that respondent no.5 faced financial difficulties and initiated corporate insolvency resolution, leading to an inability to fulfill the export obligations within the stipulated six months. The Policy Relaxation Committee rejected the request for an extension, and the court upheld this decision, emphasizing that policy relaxation cannot be claimed as a matter of right and must be evaluated on a case-by-case basis. 2. Relaxation of the 'Actual User' Condition: The petitioner also requested the relaxation of the 'Actual User' condition to allow an alternative entity holding a valid advance license to process and re-export the cargo. The court did not grant this request, as the advance authorization was specifically issued to respondent no.5, and the petitioner lacked the locus standi to challenge the non-acceptance of the extension request. 3. Permission for Re-export of Cargo: The petitioner claimed ownership of the cargo as an unpaid seller under the Sale of Goods Act and sought permission to re-export the cargo. The court recognized the petitioner's right as an unpaid seller to retain possession and seek re-export, citing the Supreme Court's decision in Union of India vs. Sampat Raj Dugar. The court directed the Commissioner to consider the petitioner's application for re-export, subject to verifying ownership and imposing reasonable duty on export. 4. Waiver of the Requirement of Processing and Re-export under the Advance License: The petitioner sought a waiver of the requirement to process and re-export the cargo under the advance license. The court did not grant this waiver, as the advance authorization conditions were not fulfilled, and the request for extension was already rejected by the Policy Relaxation Committee. 5. Restraining the Customs Authority from Seizing the Cargo and Demanding Customs Duty: The petitioner requested to restrain the customs authority from seizing the cargo and demanding customs duty. The court noted that the goods were liable to be confiscated under Section 111(o) of the Customs Act due to non-fulfillment of export obligations. However, the court allowed the petitioner to apply for re-export, which could mitigate the risk of seizure and duty demand. 6. Granting a Personal Hearing to the Petitioner: The petitioner sought a personal hearing before any coercive measures were taken. The court directed the Commissioner to provide an opportunity for a hearing to the petitioner and respondent no.5 before deciding on the re-export application. Conclusion: The court upheld the rejection of the extension request and the conditions of the advance authorization. However, it recognized the petitioner's rights as an unpaid seller and allowed the petitioner to apply for re-export of the goods, subject to verification and reasonable duty imposition. The customs authority was directed to provide a hearing before taking any further action.
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