2021 (1) TMI 664 - HC - Customs

Seeking grant of extension of two months to enable them to complete the import of poppy seeds , for which registration certificates have been issued by the Central Bureau of Narcotics - HELD THAT - A perusal of the impugned order dated 21st May, 2020, shows that the Union of India has considered merely factual circumstances to decide that in February, 2020, there was no outbreak of COVID-19 pandemic, and, therefore, the plea of extension in light of the Chinese exporter being unable to supply the consignment, is not justified. Further, the impugned order records that there was no obligation under the guidelines to pay any advance for the said consignments and that making advance payment is completely as per the convenience of the importers. Hence, the payment of advances would not constitute a reason for any extension to be granted. Finally, the reasoning that has been adopted in the impugned order is that since 1802 metric tons out of 2499 metric tons had already been imported by the end of February, 2020, there is no justification to not have had imported the remaining portion of the said consignment. The Petitioners, in all these petitions, are registered importers. The outbreak of the pandemic around early 2020 is a matter of fact which cannot be disputed. The period when the outbreak may have taken place in China, as per the Chinese exporter s letter, ought not be doubted in the manner in which the impugned order doubts the same. It is a matter of which judicial notice can be taken. The COVID-19 pandemic originated in China, and hence the adverse effects and problems due to the outbreak could have been much earlier in China, than in India. The Chinese exporter has repeatedly contacted the Petitioners and has expressed its willingness to complete the contract and to supply the product. However, despite repeated letters and reminders requesting an extension by the Petitioners, the Government has not responded to the same, leading to the filing of these writ petitions. A perusal of the counter affidavit shows that the main reason for which the non-grant of extension is stated to be justified is that the lock-down in India was imposed from 24th March, 2020. The Government seeks to ignore the fact that the lock-down and the impediments caused due to the outbreak, could have been earlier in China and hence in the opinion of this Court, the non-grant of extension is not tenable. The submission of the Respondents relating to limited quotas being available for the import of poppy seeds is devoid of any merit inasmuch as no such argument has been raised in the counter affidavit. Moreover, the quantity sought to be imported is already part of the licensed quantities and not beyond that. This is a case where the authorities have been completely oblivious to the difficulties being faced by the importers in India - this Court directs that the Petitioners, in all these petitions, are permitted to import the permitted and licensed quantity of poppy seeds in accordance with the guidelines on or before 31st March, 2021. It is made clear that no further extension shall be granted. Application disposed off.

Summary

Issues Involved:
1. Grant of extension for import of poppy seeds.
2. Quashing of the impugned order dated 21st October, 2020.
3. Recognition of COVID-19 pandemic as a force majeure event.
4. Financial repercussions and business continuity with the Chinese exporter.

Issue-wise Detailed Analysis:

1. Grant of extension for import of poppy seeds:
The Petitioners sought an extension of two months to complete the import of poppy seeds from China, for which registration certificates had been issued by the Central Bureau of Narcotics (CBN). The original deadline for completing the imports was 17th March, 2020. The Chinese exporter had informed the Petitioners in mid-February that they would be unable to export the consignment due to COVID-19 related issues, including transportation problems and non-availability of labor and containers. Despite multiple requests for an extension by the Petitioners, the Respondents did not respond positively, leading to the filing of writ petitions. The Court directed that the Petitioners be granted an extension to import the licensed quantity of poppy seeds on or before 31st March, 2021, with no further extensions to be granted.

2. Quashing of the impugned order dated 21st October, 2020:
The Petitioners also prayed for quashing the impugned order dated 21st October, 2020, passed by the Director, Department of Revenue, Ministry of Finance, which rejected their representation for an extension. The Court found that the impugned order was not rational or logical, as it failed to recognize the impact of the COVID-19 pandemic in China and the difficulties faced by the Petitioners. The order was based on the incorrect assumption that the pandemic's effects were only relevant from the date of lockdown in India, ignoring the earlier impact in China. The Court thus directed the validation of the registration certificates to ensure the imports could be executed by the extended deadline.

3. Recognition of COVID-19 pandemic as a force majeure event:
The Petitioners argued that the COVID-19 pandemic should be recognized as a force majeure event, citing circulars and an office memorandum issued by the Ministry of Finance acknowledging the disruptions caused by the pandemic. The Court agreed that the pandemic's outbreak in China was a matter of fact and that the adverse effects and problems due to the outbreak could have been much earlier in China than in India. The Court took judicial notice of the pandemic's origin in China and the consequent difficulties faced by the Chinese exporter in fulfilling the sales contracts.

4. Financial repercussions and business continuity with the Chinese exporter:
The Petitioners highlighted the substantial advance payments made to the Chinese exporter and the potential financial repercussions if the extension was not granted. They also expressed concerns about the possibility of being blacklisted by the Chinese exporter, which is the sole recognized company for the supply of poppy seeds from China. The Court acknowledged these concerns, noting that the Petitioners would face severe financial difficulties if the extension was not granted and that there was a reasonable apprehension that the Chinese company might refuse future transactions or impose stringent conditions. The Court found that the Government's refusal to grant an extension lacked rationale and failed to consider the commercial realities during the pandemic.

Conclusion:
The Court directed that the Petitioners be permitted to import the permitted and licensed quantity of poppy seeds by 31st March, 2021, and instructed the CBN to validate the registration certificates by 20th January 2021. The petitions and applications were disposed of in these terms.