1994 (9) TMI 93 - HC - Customs

Summary

Issues Involved:
1. Validity of the Customs Authority's confiscation of goods and imposition of penalty.
2. Legality of the Import Trade Control Authority's enhancement of export obligations.
3. Jurisdiction of the Customs Authority in questioning the validity of the import licence.
4. Compliance with the Import and Export Policy and related notifications.

Summary:

1. Validity of the Customs Authority's confiscation of goods and imposition of penalty:
The petitioner, a partnership firm, challenged the Customs Authority's order confiscating 5,376 kgs. of polyester filament yarn and imposing a penalty of Rs. 1 lakh u/s 112(a) of the Customs Act, 1962. The Customs Authority argued that the petitioner was entitled to import only 10,365 kgs. of polyester filament yarn based on the actual quantity used in the resultant products, and thus, the import licence for duty-free import of 15,741 kgs. was wrongly issued. The High Court held that the Customs Authority could not impinge upon the jurisdiction of the Import Trade Control Authority and adjudicate the imports as unauthorized.

2. Legality of the Import Trade Control Authority's enhancement of export obligations:
The Import Trade Control Authority increased the export obligation from 14,497.5 kgs. to 22,330 kgs. without notice to the petitioner. The High Court found this action illegal, as no opportunity was granted to the petitioner while increasing the export obligation limit. The court emphasized that the Import Trade Control Authority failed to notice that for the grant of an advance licence, there had to be a firm order from a foreign buyer, which was absent for the enhanced quantity.

3. Jurisdiction of the Customs Authority in questioning the validity of the import licence:
The Customs Authority's principal objection was that the licence had been wrongly issued and was against the provisions of the Duty Exemption Scheme as per the Policy. The High Court ruled that the Customs Authority could not go behind the licence issued by the Import Trade Control Authority and that the import was valid as per the terms of the advance licence and the DEEC Book. The court cited various judgments to support the view that the Customs Authority could not question the validity of the licence issued by the Import Trade Control Authority.

4. Compliance with the Import and Export Policy and related notifications:
The High Court noted that the petitioner had met the export obligations and that the goods satisfied all the conditions mentioned in the advance licence and the DEEC Book. The court held that the Customs Authority's action was wrong and that the Appellate Tribunal also failed to correctly exercise its jurisdiction. The petition was allowed, and the orders of the Additional Collector of Customs and the Customs, Excise and Gold (Control) Appellate Tribunal were set aside. The court directed the release of the goods to the petitioner without payment of any detention or demurrage charges, following the Supreme Court's decision in Akbar Badruddin Jiwani v. Collector of Customs.

Conclusion:
The High Court allowed the petition, set aside the orders of the Additional Collector of Customs and the Appellate Tribunal, and directed the release of the goods to the petitioner without any detention or demurrage charges. The petitioner was also entitled to costs, with counsel fee fixed at Rs. 2,500/-.