1995 (11) TMI 103 - HC - Customs

Summary

Issues Involved:
1. Classification of betel nuts as dry fruits or consumer goods of agricultural origin.
2. Requirement of import license for betel nuts under the Export-Import Policy 1992-97.
3. Compliance with the appellate authority's order for the release of goods on a license bond.
4. Violation of petitioners' fundamental rights under Articles 14 and 19(1)(g) of the Constitution of India.
5. Judicial discipline and adherence to higher appellate authorities' decisions.

Detailed Analysis:

1. Classification of Betel Nuts:
The primary issue was whether betel nuts should be classified as dry fruits or consumer goods of agricultural origin. The petitioners argued that betel nuts were not covered in the Negative List of Import Policy 1992-97 and should be freely importable. The department contended that betel nuts are consumer goods of agricultural origin and not dry fruits, requiring a valid import license for clearance. The Additional Commissioner of Customs supported the department's view, while the appellate authority referenced the CEGAT decision in G.K. Enterprises v. Collector of Customs, Madras, which classified arecanuts (betel nuts) as dry fruits, thus allowing their free import.

2. Requirement of Import License:
The department's refusal to release the goods was based on the classification of betel nuts as consumer goods of agricultural origin, which fall under the restricted items of the Export-Import Policy 1992-97, requiring a specific import license. The appellate authority, however, allowed the clearance of goods on a license bond, following the CEGAT decision that classified arecanuts as dry fruits under the Open General License (OGL).

3. Compliance with Appellate Authority's Order:
Despite the appellate authority's order to release the goods on a license bond, the department did not comply, leading to the petitioners filing writ petitions for a mandamus to enforce the release. The appellate authority's decision was based on judicial discipline, requiring lower authorities to implement higher authorities' decisions unless stayed by a competent court.

4. Violation of Fundamental Rights:
The petitioners argued that the department's refusal to release the goods despite the appellate authority's order violated their fundamental rights under Articles 14 and 19(1)(g) of the Constitution of India. The court agreed, stating that the department's inaction was arbitrary and caused significant loss to the petitioners.

5. Judicial Discipline:
The court emphasized the importance of judicial discipline, citing the Supreme Court's directive in Union of India v. Kamalakshi Finance Corporation Ltd., which mandates that orders of higher appellate authorities should be followed unreservedly by subordinate authorities. The court criticized the department's disregard for the appellate authority's order and directed the release of the goods forthwith, subject to the conditions imposed by the appellate authority.

Conclusion:
The court allowed the writ petitions, directing the release of the imported betel nuts on a license bond as per the appellate authority's order. The court underscored the necessity of adhering to judicial discipline and following higher appellate authorities' decisions to prevent undue harassment and ensure effective administration of tax laws. The Plant Quarantine authority was also instructed to examine and certify the goods for home consumption promptly. No costs were awarded.