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2021 (6) TMI 778 - SC - CustomsValidity of notification for restricting the import of certain beans, peas and pulses - different interim orders were passed by the different High Courts and the importers effected various imports on the strength of such interim orders. - Notifications issued by the Central Government under the Foreign Trade (Development and Regulation) Act, 1992 - Absolute confiscation or redemption to be allowed on payment of redemption fine - HELD THAT - it is at once clear that when the matter was left for decision by the Commissioner (Appeals), there was neither any occasion nor any justification for the High Court to pass the order for release of the goods for the simple reason that any order for release of goods was to render the material part of the matter a fait accompli. This, simply, could not have been done. Putting it differently, a little pause after paragraph 36 of the impugned order 15.10.2020 and before the directions in the next paragraph would make it clear that for what had been observed in the said paragraph 36 of the impugned order (as regards leaving of the matter for decision by the Appellate Authority), any direction for release of goods pursuant to the order-in-original could not have been issued - It gets, perforce, reiterated that if the orders-in-original dated 28.08.2020 were to be executed under the mandate of the High Court, the appeals were going to be practically redundant after release of the goods and nothing material was to remain for decision by the Appellate Authority on the main subject matter of the appeal. The High Court has taken into account a few factors standing in favour of the importers like the orders-in-original holding the field; the importers having made the necessary payments; and the importers incurring expenditure because of warehousing. An additional factor had been the High Court's dissatisfaction that the orders dated 01.10.2020 were passed in an improper manner and grounds given therein were not justifying the withholding of the goods. While proceeding on these reasons and considerations, it appears that the other overriding factors like the interest of domestic agriculture market economy totally escaped the attention of the High Court. Thus, the impugned order dated 15.10.2020, having been passed while ignoring the relevant considerations, cannot be approved - the impugned orders dated 15.10.2020 (read with the modification order dated 09.12.2020) and 05.01.2021 remain unsustainable and are required to be set aside. Prohibited goods or not - HELD THAT - The learned ASG has rightly pointed out with reference to the decision in PTR Exports (supra) that an Applicant has no vested right to have export or import licence; and granting of licence depends upon the policy prevalent on the date. The learned ASG has further rightly submitted, with reference to the decision in S.B. International (supra), that granting a licence to import is not a matter of formality; and the authorities have to satisfy themselves that the application satisfies all the requirements of the scheme and the applicable laws. As noticed, only the particular restricted quantity of the commodities covered by the said notifications could have been imported and that too, under a licence. Therefore, any import within the cap (like that of 1.5 lakh MTs) under a licence is the import of restricted goods but, every import of goods in excess of the cap so provided by the notifications, is not that of restricted goods but is clearly an import of prohibited goods. The present case is of an entirely different restriction where import of the referred peas/pulses has been restricted to a particular quantity and could be made only against a licence. The letter and spirit of this restriction, as expounded by this Court earlier, is that, any import beyond the specified quantity is clearly impermissible and is prohibited. This Court has highlighted the adverse impact of excessive quantity of imports of these commodities on the agricultural market economy in the case of Agricas 2020 (8) TMI 705 - SUPREME COURT whereas, it had not been the case in Atul Automations 2019 (1) TMI 1324 - SUPREME COURT that the import was otherwise likely to affect the domestic market economy. In contrast to the case of Atul Automations, where the goods were permitted to be imported (albeit with authorisation) for the reason that they were not manufactured in the country, in the present case, the underlying feature for restricting the imports by quantum has been the availability of excessive stocks and adverse impact on the price obtainable by the farmers of the country. The unnecessary and baseless arguments raised on behalf of the importers that the goods in question are of 'restricted' category, with reference to the expression 'restricted' having been used for the purpose of the notifications in question or with reference to the general answers given by DGFT or other provisions of FTDR Act are, therefore, rejected. The goods in question fall in the category of 'prohibited goods'. Whether the goods in question are liable to absolute confiscation? - HELD THAT - Once it is clear that the goods in question are improperly imported and fall in the category of 'prohibited goods', the provisions contained in Chapter XIV of the Customs Act, 1962 come into operation and the subject goods are liable to confiscation apart from other consequences - A bare reading of the provision of Section 125(1) of the Customs Act, 1962 makes it evident that a clear distinction is made between 'prohibited goods' and 'other goods'. As has rightly been pointed out, the latter part of Section 125 obligates the release of confiscated goods (i.e., other than prohibited goods) against redemption fine but, the earlier part of this provision makes no such compulsion as regards the prohibited goods; and it is left to the discretion of the Adjudicating Authority that it may give an option for payment of fine in lieu of confiscation. It is innate in this provision that if the Adjudicating Authority does not choose to give such an option, the result would be of absolute confiscation. The sum and substance of the matter is that as regards the imports in question, the personal interests of the importers who made improper imports are pitted against the interests of national economy and more particularly, the interests of farmers. This factor alone is sufficient to find the direction in which discretion ought to be exercised in these matters - The imports in question suffer from the vices of breach of law as also lack of bona fide and the only proper exercise of discretion would be of absolute confiscation and ensuring that these tainted goods do not enter Indian markets. Imposition of penalty on such importers; and rather heavier penalty on those who have been able to get some part of goods released is, obviously, warranted. Thus, the goods in question are to be held liable to absolute confiscation but with a relaxation of allowing re-export, on payment of the necessary redemption fine and subject to the importer discharging other statutory obligations. The Respondent-importers being responsible for the improper imports as also for the present litigation, apart from other consequences, also deserve to be saddled with heavier costs - appeal allowed.
Issues Involved:
1. Legality and validity of the orders passed by the High Court. 2. Whether the goods in question are of 'prohibited goods' category? 3. Whether the goods in question are liable to absolute confiscation? 4. Invocation of equity by the importers. 5. Prayer for keeping issues open for statutory appeal. Detailed Analysis: 1. Legality and Validity of the Orders Passed by the High Court: The High Court's orders dated 15.10.2020 (with modification on 09.12.2020) and 05.01.2021 were challenged. The High Court had directed the release of goods based on the orders-in-original dated 28.08.2020, despite the fact that the Commissioner had exercised his powers under Section 129D(2) of the Customs Act to review these orders. The Supreme Court found that the High Court erred in entertaining the writ petitions and issuing directions for the release of goods, as it rendered the appeals before the Commissioner (Appeals) redundant. The High Court's observations about the propriety of the Commissioner's orders and the grounds stated therein were also found to be premature, as the matter was left for the Appellate Authority's decision. The Supreme Court set aside the High Court's orders, emphasizing that the High Court's directions for release of goods contradicted its own observation that the matter was to be decided in appeal. 2. Whether the Goods in Question are of 'Prohibited Goods' Category? The Supreme Court held that the goods in question, imported contrary to the notifications dated 29.03.2019 and the trade notice dated 16.04.2019, and without the requisite license, are deemed to be prohibited goods under Section 11 of the Customs Act by virtue of Section 3(3) of the FTDR Act. The Court rejected the importers' argument that the goods were 'restricted' and not 'prohibited'. The Court clarified that any import beyond the specified quantity in the notifications is clearly prohibited. The decisions in Sheikh Mohd. Omer, Om Prakash Bhatia, and Brooks International were cited to support the interpretation that restrictions on import amount to prohibition. 3. Whether the Goods in Question are Liable to Absolute Confiscation? The Supreme Court examined Section 125 of the Customs Act, which provides discretion to the Adjudicating Authority to allow redemption of prohibited goods on payment of fine. The Court found that the Adjudicating Authority had not properly exercised this discretion and had assumed that redemption fine must be given. The Appellate Authority's decision to order absolute confiscation was upheld, as it was found to be in line with the principles of discretion and the facts of the case. The Court emphasized that the discretion must be exercised judiciously, considering the impact on national economy and the interests of farmers. The goods were held liable to absolute confiscation, with an option for re-export on payment of redemption fine and other statutory obligations. 4. Invocation of Equity by the Importers: The Supreme Court rejected the importers' plea for equity, stating that the imports were not bona fide and were made for personal gains, as held in Agricas. The Court emphasized that equity cannot be invoked in the absence of bona fide. The importers' arguments about the dynamic nature of demand and supply and the feasibility of re-export were also dismissed. 5. Prayer for Keeping Issues Open for Statutory Appeal: The Supreme Court denied the importers' request to keep the option of further statutory appeal open. The Court noted that the importer M/s. Raj Grow Impex had chosen to file a writ petition instead of a statutory appeal, and any further appeal would be futile. Similarly, for M/s. Harihar Collections, the Court found that the enhanced penalty was justified given the release of goods and the damage caused. Conclusions and Directions: - The appeals were allowed. - The High Court's orders dated 15.10.2020 (with modification on 09.12.2020) and 05.01.2021 were set aside. - The orders-in-appeal dated 24.12.2020 were approved, and the orders-in-original dated 28.08.2020 were quashed. - The goods were held liable to absolute confiscation, with an option for re-export on payment of redemption fine and other statutory obligations. - The importers were directed to pay costs of ?2,00,000/- each to the Appellants.
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