2015 (9) TMI 144 - HC - Customs

Goods not in conformity with Basmati Rice Confiscation of Goods Tribunal by impugned order allowed appeal of Respondent and set aside order of Commissioner whereby direction was issued to confiscate seized goods as samples were not conforming to Basmati Rice Held that - test reports of RAL clearly stated that percentage of other Rice in consignment was more than 20% which was maximum permitted under Basmati Rules Sample also did not possess natural fragrance in both raw and cooked stages Once there was report of RAL clearly stating that samples did not conform to requirements of Basmati Rules then Customs Authority was bound by such report If Respondent wanted to show that other rice found present to consignment was also Basmati Rice then burden was on Respondent It was justified in proceeding on strength of test report that presence of other rice, i.e. non-basmati rice, was more than permissible maximum limit of 20% Since consignment was not entirely of Basmati Rice, it was not sufficient that grains confirmed to length and length/breadth ratio prescribed for Basmati Rice in order to pass test Therefore Court of opinion that Additional Commissioner was justified in his conclusion that Respondent had attempted to export non-Basmati Rice prohibited for export in terms of DGFT notification Impugned order of Tribunal hereby set aside Decided in favour of Revenue.

Summary

Issues Involved:
1. Conformity of export samples to Basmati Rice standards.
2. Validity of test reports from Agmark Testing Centres.
3. Applicability of DGFT notifications and circulars.
4. Legality of confiscation and penalties under Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Conformity of Export Samples to Basmati Rice Standards:
The primary issue was whether the samples of 'PUSA 1121 Indian Basmati Sella Rice' conformed to the standards prescribed under the Basmati Rice (Export) Grading and Marketing Rules, 1979 ('the Basmati Rules'). The Regional Agmark Laboratory (RAL) reports indicated that the samples did not conform to the Basmati Rules as they contained more than 20% of 'other rice' and lacked the natural fragrance in both raw and cooked stages. The Additional Commissioner of Customs concluded that the goods presented for export were non-Basmati Rice, which was prohibited for export under the Export Policy as per the DGFT notification dated 5th November 2008.

2. Validity of Test Reports from Agmark Testing Centres:
The Respondent had initially requested that the samples be tested at an Agmark Testing Centre, as directed by the Court's order dated 1st March 2011. The RAL reports clearly stated that the samples exceeded the maximum permissible limit of 20% for 'other rice' and did not possess the required natural fragrance. The Court held that the Customs Authority was bound by the RAL report, consistent with the legal position that test reports given by chemical examiners are binding in the absence of other acceptable evidence.

3. Applicability of DGFT Notifications and Circulars:
The Respondent argued that the samples conformed to the requirements of length and length/breadth ratio as per the DGFT notification dated 5th November 2008. However, the Court noted that the DGFT circular dated 30th September 2008 required samples to be tested at Agmark Centres to ascertain variety identification. The Court found that the CESTAT erred by not considering this circular, which mandated compliance with the Basmati Rules, including the maximum permissible limit of 20% for 'other rice'.

4. Legality of Confiscation and Penalties under Customs Act, 1962:
The Additional Commissioner of Customs ordered the confiscation of the goods under Section 113(d) & (i) of the Customs Act, 1962, and imposed penalties under Section 114. The Court upheld this decision, stating that the Respondent had attempted to export non-Basmati Rice, which was prohibited under the DGFT notification. The show cause notice clearly set out all relevant facts, including the requirement of the maximum permissible limit of 'other rice'.

Conclusion:
The Court set aside the CESTAT's order and restored the Order-in-Original dated 21st October 2011 of the Additional Commissioner of Customs, affirming the confiscation and penalties. The appeal was allowed with no order as to costs.