2023 (8) TMI 802 - HC - Customs

Demand of bank guarantee for re-export of the goods - seeking issuance of detention certificate for demurrage and container detention charges in terms of Regulation 6(1)(l) of Handling of Cargo in Customs Areas Regulation, 2009 r/w Regulation 10 (1)(l) of Sea Cargo Manifest Transhipment Regulations, 2018. Classification of goods - Betelnuts/Areca Nuts - to be classified under Tariff Heading 0802 or under Tariff Heading 2106 9030? - HELD THAT - If the classification is as contemplated by the Department, then the import of this product with CIF value of less than Rs.251/- per kg is prohibited as per Notification 20/2015-2020. The pricing is so fixed in order to protect our farmers. However, it has to be borne in mind that the above referred Notification which forms the basis for the show cause has been stayed by the Karnataka High Court and the same has not been varied or set aside. The issue of confiscation would arise only if the goods are prohibited and the issue of classification is still pending adjudication. Another factor that engages the attention of this Court is the fact that in all the earlier imports the Department had not raised this issue of classification. The records would further show that although in the earlier writ petitions and appeals the petitioners had requested for a provisional release of the goods, after the disposal of the writ appeals the petitioners have requested to re-export the goods. Therefore, the direction to consider the provisional release in terms of Section 110A of the Customs Act now stands converted to the issue as to whether 're-export' can be granted by just receiving a bond. On reading of the impugned order would show that no reason has been given for imposing the condition for furnishing the bank guarantee. The petitioners have set out in detail in their application the fact that earlier imports of the similar product has not been questioned the Authority has not dealt with this submission. Since the detention is on the orders of the Department applying the ratio laid in Balaji Dekors Vs. Commissioner of Customs, Commissionerate-III, Chennai 2017 (8) TMI 686 - MADRAS HIGH COURT , detention certificate should be issued to the petitioners - The argument of the Department against its issue is the Central Government Notification No.20/2015-2020 dated 25.07.2018. This notification, as already stated, is stayed by the Karnataka High Court. The 2nd issue is therefore to be answered in favour of the above referred petitioners. Petitions disposed off.

Summary

Issues Involved:
1. Whether the Department was justified in demanding a bank guarantee for re-export of the goods.
2. Whether the Department should issue a detention certificate for demurrage and container detention charges in terms of Regulation 6(1)(l) of Handling of Cargo in Customs Areas Regulation, 2009 r/w Regulation 10 (1)(l) of Sea Cargo Manifest Transhipment Regulations, 2018.

Summary:

Issue 1: Justification of Bank Guarantee Demand for Re-export

The petitioners, importers of betelnut products, contended that their goods should be classified under Chapter Heading 21069030, while the Department argued for classification under Chapter 08028020, which would prohibit their import under Notification 20/2015-20. This notification, however, had been stayed by the Karnataka High Court. The petitioners argued that demanding a bank guarantee for re-export was against the language of the order in W.A.No.556 of 2022 and that the stay on the notification should nullify the demand. The Department maintained that the bank guarantee was necessary to cover potential redemption fines and penalties, citing Section 110A of the Customs Act, which allows for provisional release with security. The court noted that the discretion exercised by the Department in demanding a bank guarantee was not evident in the cases of W.P.(MD) Nos.1250 and 1252 of 2023, unlike in W.P.(MD) No.1391 of 2023, where the petitioner was deemed a habitual offender.

Issue 2: Issuance of Detention Certificate

For W.P.(MD) Nos.1250 and 1252 of 2023, the court ruled that since the detention was on the Department's orders and the notification was stayed by the Karnataka High Court, the petitioners should be issued detention certificates for demurrage and container detention charges. The court referenced the case of Balaji Dekors Vs. Commissioner of Customs, which supported the issuance of such certificates under similar circumstances.

Conclusion:

- W.P.(MD) Nos.1250 and 1252 of 2023: Allowed. The petitioners are permitted to re-export upon executing a bond to the full value of the goods without a bank guarantee. They shall be issued detention certificates for demurrage and container detention charges.
- W.P.(MD) No.1391 of 2023: Dismissed due to the petitioner's status as a habitual offender.

Costs: No order as to costs.