2022 (5) TMI 593 - HC - Customs

Constitutional Validity of N/N. 5/2019-Cus dated 16th February 2019 - Vires of Customs Act 1962 and/or Customs Tariff Act 1975 read with Entry No.83 of List I of Schedule VII to the Constitution of India - seeking to insert tariff item 9806 00 00 in the First Schedule to CTA - goods imported from Pakistan or not - HELD THAT - Under the impugned Notification if the goods are imported from Pakistan it would carry 200% customs duty. The Petitioner had paid 18% duty. The Respondents have prima facie found the containers and the product therein to be of Pakistan origin. The reasons for the belief has been set out by the Respondent Authorities. At this prima facie stage, the writ Court would not sit in an appeal over the said prima facie observations of the Authorities. The request is to allow the re-export of the goods. Prima facie, it does not appear that the goods are brought over at the port under some bona fide mistake and belief. At this stage, it would not be proper to pass any orders with regard to the goods of which the investigation is in progress. As per Circular dated 20th January 2015, re-export of the goods imported can be considered when the goods are destined for elsewhere but which are inadvertently imported at a particular customs station. In such case, the permission for re-export may be granted on merit by the officer concerned - In the present case, prima facie, the Respondent Authorities have found that the goods are not imported from the place the Petitioner claims but have been imported from Pakistan, probably to evade 200% customs duty. The Petitioner would not suffer any irreparable loss if the goods, at present, are not re-exported and are retained till the investigation is over. The prayer of the Petitioner for re-export of the goods, cannot be entertained - Place the matter for hearing on 11th July 2022.

Summary

Issues:
Challenge to Notification No.5/2019-Cus dated 16th February 2019 as unconstitutional and ultra vires the Customs Act 1962 and/or Customs Tariff Act 1975, Request for re-export of goods, Legislative competence of the Central Government.

Analysis:
1. The Writ Petition challenges Notification No.5/2019-Cus as unconstitutional, alleging it seeks to insert tariff item 9806 00 00 in the First Schedule to CTA beyond the Government's legislative competence. The Petitioner seeks interim orders for re-export, claiming a strong prima facie case. The Senior Counsel argues that the impugned Notification exceeds powers under Section 8A of the Customs Tariff Act and violates procedural requirements under Sections 7(3) and 7(4) and Section 12 of the Customs Act. Reference is made to a Supreme Court judgment to support the argument.

2. The Respondents detained goods imported from UAE, alleging they are of Pakistan origin based on the amended Notification. The Petitioner asserts the goods are of UAE origin and requests re-export, highlighting the authority of Respondents to detain and challenge the Notification. The balance of convenience favors the Petitioner, emphasizing no prejudice to Respondents if re-exported. The Senior Counsel argues against detaining goods without evidence of an offense committed.

3. The Respondent's Senior Counsel defends the impugned notice, justifying detention based on evidence indicating goods of Pakistan origin. Allegations of contravention of Customs Act provisions are made, justifying seizure and potential confiscation under relevant sections. Evidence-based conclusions support the Respondent's position.

4. The Court focuses on the request for re-export, finding the goods potentially of Pakistan origin and subject to 200% customs duty under the impugned Notification. Prima facie observations by the Authorities are not challenged at this stage, and the investigation is ongoing. The Court declines to order re-export pending investigation, citing Circular guidelines and the need to await investigation completion.

5. Ultimately, the Court denies the prayer for re-export, emphasizing the ongoing investigation and the need to await its conclusion. The Respondents are directed to expedite the investigation and the matter is scheduled for a hearing in July 2022. The decision prioritizes the investigation's completion before considering any further actions regarding the goods.

This detailed analysis covers the legal arguments, factual background, and the Court's reasoning regarding the challenge to the Notification, the request for re-export, and the legislative competence of the Central Government, providing a comprehensive understanding of the judgment.