2022 (7) TMI 883 - HC - Customs

Seeking provisional release of goods - Betel Nuts - petitioner submitted that in identical situations, the goods have been released in all major ports and ICDs, namely, Bangalore, Mundra, Nhavaseva and other places - Section 110-A of the Customs Act - HELD THAT - It is the consistent view of this Court that in case of provisional assessment, provisional release is permissible - Hence, this Court permits the petitioner to make an application for provisional release under Section 110-A, on such application, when received, shall be disposed of by the Adjudicating Authority, after hearing the petitioner and simultaneous with a prima facie determination of the classification of the commodity, within a period of two (2) weeks from the date of receipt of the application. The Commissioner of Customs (Imports) is hereby directed to release the cargo covered under Bill of Entry No.7101263, dated 16.01.2022, provisionally subject to furnishing of PD bond for full value of the goods and furnishing of bank guarantee at 50% of the differential duty considering, Duty Free Tariff Preference Scheme for Least Developed Countries (LDC) benefit. The petitioner shall furnish the Least Developed Countries Certificate at the time of assessment and the same shall be considered by the Assessing Officer at the time of assessment. The Department shall continue their adjudication process and conclude the same without delay. The entire exercise shall be completed within a period of three (3) weeks from the date of receipt of a copy of this order. Petition allowed.

Summary

Issues Involved:
1. Classification of imported goods (Betel Nuts).
2. Detention and provisional release of goods.
3. Compliance with DGFT Notification.
4. Jurisdiction and authority in classification disputes.
5. Application of previous judgments and circulars.

Issue-Wise Detailed Analysis:

1. Classification of Imported Goods (Betel Nuts):
The petitioner imported 57,600 Kgs of Boiled Supari (Betel Nut product) from Myanmar, declaring it under Customs Tariff Heading (CTH) 2106 9030. The Customs Authority detained the goods, questioning the classification. The petitioner argued that similar goods had been cleared at other ports under the same classification, and referenced various judgments supporting this classification. The respondent contended that the goods should be classified under CTH 08028020, as "Processed Boiled Supari/Areca Nut," and not under 21069030, citing DGFT Notification No.20/2015-2020 and Chapter Notes of the Customs Tariff Act.

2. Detention and Provisional Release of Goods:
The petitioner sought the release of the goods, arguing that the FSSAI report confirmed the goods were fit for human consumption and not prohibited. The petitioner referenced CBEC Circular No.22/2004-Customs, which allows for provisional release in classification disputes unless the goods are prohibited. The respondent argued that the goods were mis-declared to circumvent the prohibition on importing Areca Nuts below CIF Rs.251 per Kg, as per DGFT Notification No.20/2015-2020. They also cited CBIC Circular No.35/2017-Cus, which restricts provisional release of prohibited goods.

3. Compliance with DGFT Notification:
The respondent emphasized that the import of Areca Nuts below CIF Rs.251 per Kg is prohibited, and the petitioner's goods, valued at approximately Rs.114 per Kg, violated this notification. They argued that the petitioner mis-declared the goods to evade this prohibition. The petitioner countered that the goods were correctly classified and not prohibited, referencing the FSSAI and lab reports confirming the goods as Boiled Supari.

4. Jurisdiction and Authority in Classification Disputes:
The respondent contended that classification disputes are within the exclusive domain of the Customs Authority and should not be decided through a Writ Petition. They cited the Supreme Court judgment in Raj Grow Impex LLP, emphasizing the discretion of statutory authorities in such matters. The petitioner argued for provisional release based on previous judgments and the principle of natural justice.

5. Application of Previous Judgments and Circulars:
The petitioner referenced several judgments and orders supporting the provisional release of goods in classification disputes, including decisions by the Principal Bench of the High Court and the Commissioner of Customs (Appeals-II), Chennai. The respondent cited judgments affirming the classification of betel nuts under Chapter 8 and argued against provisional release based on CBIC Circular No.35/2017-Cus.

Judgment:
The Court permitted the petitioner to apply for provisional release under Section 110-A of the Customs Act. The Adjudicating Authority was directed to dispose of the application within two weeks, considering the classification of the commodity. The Commissioner of Customs (Imports) was instructed to release the goods provisionally, subject to furnishing a PD bond for the full value and a bank guarantee at 50% of the differential duty, considering the Duty Free Tariff Preference Scheme for Least Developed Countries (LDC) benefit. The petitioner was required to furnish the LDC Certificate at the time of assessment. The Department was directed to conclude the adjudication process within three weeks. The Writ Petition was allowed, with no order as to costs.