2022 (4) TMI 1217 - HC - Customs

Import of restricted item or not - Tyres - contravention with the Foreign Trade Policy FTP 2015-2020 - import without a proper licence, permitted or not - rejection of request of the petitioner for cross-examination - Violation of principles of natural justice - HELD THAT - In this case, the import is from the United States of America. It is not clear why the import has been made through Tuticorin Port, in the tip of the Peninsula in the Bay of Bengal. If the petitioner's case is that the import was made for their factory in Rajasthan, the petitioner would have chosen other Ports, which are nearer to Rajasthan either in Gujarat or in Maharashtra or in Goa or in Kerala on the Western Coasts. This needs to be properly explained by the petitioner. If the petitioner indeed operates a factory in Rajasthan, it is open for the petitioner to file a copy of the GST Registration of the factory and details of documents to substantiate that the petitioner had indeed manufactured the Rubber Crumbs and Granules and sold to various Contractors/statutory authorities engaged in laying of roads. These are the documents which the petitioner is required to produce before the authorities to substantiate that the imported goods do not fall within the purview of restrictions in the Foreign Trade Policy 2015-2020. This exercise has not been carried out. The impugned orders are quashed and the cases are remitted back to the respondent to pass a fresh order within a period of three months from the date of receipt of a copy of this order - Petition allowed by way of remand.

Issues Involved:

1. Legality of import of Tyres under the Foreign Trade Policy (FTP) 2015-2020.
2. Entitlement to provisional release of goods under Section 110A of the Customs Act, 1962.
3. Compliance with principles of natural justice, specifically the right to cross-examination.
4. Jurisdictional and procedural propriety in the investigation and adjudication process.

Issue-wise Detailed Analysis:

1. Legality of Import of Tyres:

The petitioner imported consignments of Tyres, which the respondent claimed were restricted items under the Foreign Trade Policy (FTP) 2015-2020 and required a proper license for clearance. The petitioner obtained interim orders from the court for the provisional release of the goods. The court referenced previous judgments, including *Black Gold Technologies vs. Union of India* (2020 (374) ELT 507 (Mad.)), which clarified that unless the goods fall under Schedule VI of the 2016 Rules, their import is either free or restricted, but provisional release is permissible under Section 110A of the Customs Act, 1962.

2. Entitlement to Provisional Release:

The court reiterated the petitioner's entitlement to provisional release under Section 110A of the Customs Act, 1962, citing several precedents, including the Supreme Court's decision in *Atul Automations* and the Madras High Court's decisions in *City Office Equipments vs. Commissioner of Customs* (2015 (316) E.L.T 199 (Mad.)). The court directed the respondents to provisionally release the goods upon taking a bond with appropriate security and conditions, and without levying demurrage and container detention charges, in line with the Handling of Cargo in Customs Areas Regulations 2009 and government instructions during the lockdown.

3. Compliance with Principles of Natural Justice:

The petitioner argued that the impugned order was passed without adequate time to respond to the earlier order rejecting the request for cross-examination, thus violating principles of natural justice. The court noted that the impugned order was issued within six days of rejecting the cross-examination request. The court emphasized that if the Department relies on any statement from an officer or a Mahazar witness, it must produce them for cross-examination. The court referenced the *Jet Unipex* case, which considered the Supreme Court's decision in *Andaman Timber Industries vs. Commissioner* (2015 (324) ELT 641 (SC)), affirming the necessity of cross-examination for fair adjudication.

4. Jurisdictional and Procedural Propriety:

The respondent's investigation revealed discrepancies in the petitioner's claims about the factory's location and operations. The court highlighted the need for the petitioner to provide concrete evidence, such as GST Registration and sales documents, to substantiate the legality of the imports and the existence of their factory. The court found the respondent's procedural actions, including searches and the issuance of show cause notices, to be within legal bounds but required the petitioner to present substantial proof to support their case.

Conclusion:

The court quashed the impugned orders and remitted the cases back to the respondent for fresh adjudication within three months, allowing the petitioner to submit additional evidence. The respondent was instructed to apply the principles of preponderance of probability and was not required to rely on Mahazar witnesses or officials from Rajasthan. The court concluded that if the petitioner fails to discharge the burden of proof, the respondent may pass appropriate orders based on the available materials, including the petitioner's admissions. The writ petitions were disposed of with no costs, and connected miscellaneous petitions were closed.

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