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TMI Blog2020 (11) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... as reason to believe that such goods are liable to confiscation. Further more, seizure cannot also be for an indefinite period. Timeline is provided in sub section (2) of section 110. In case of confiscation, the statute has provided for the requisite procedural safeguards in section 124. As a pragmatic measure, provisional release of seized goods pending adjudication is provided in section 110A. Having regard to the dispute raised and the statutory framework in place, we feel that it may not be proper for the writ court to step in at this stage to render a finding as to whether the seized goods are old and used rubber tyres scrap in pressed baled form or rubber tyre in reusable form; in other words, whether the imported goods fall under the customs tariff heading of 4004000 or under the heading of 4012, which will basically be a finding of fact. Therefore, we are of the view that this aspect should be best left to the adjudicating authority to decide, if it requires adjudication. Pre-empting an adjudication on this issue by the writ court by taking a view one way or the other may not be justified. While respondents have stated that getting the goods examined by a Chartered E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the import of old and used rubber tyres scrap (multiple cuts/pressed baled/shredded). As per the import license such imported goods have been classified under the customs tarif heading 4004000 which covers waste, parings and scrap of rubber (other than hard rubber) and powders and granules obtained therefrom. 6. On the basis of the consent of the Maharashtra Pollution Control Board, permission/ no objection certificate of the Ministry of Environment, Forest and Climate Change, Government of India and import license issued by the Directorate of Foreign Trade, Government of India, petitioner imported seven consignments of old and used scrap tyres in pressed baled form at Nhava Sheva Port during the period July - August, 2020 whereafter clearance of the consignments were sought for by fling the following bills of entry:- Bill of Entry No. Date 8252961 23.07.2020 8293747 27.07.2020 8288347 27.07.2020 8319380 29.07.2020 8325968 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppropriate bond and bank guarantee as decided by the adjudicating authority for provisional release of the seized goods. 11. According to the petitioner, the imported goods are used scrap tyres in pressed bale; however, as per the seizure memos which were on the basis of inspection report of the Chartered Engineer respondent No.3 took the view that a portion of the imported goods (30%) were found in usable condition and those could be reused. 12. By letters dated 24th August, 2020 and 27 th August, 2020, both prior to and post seizure, petitioner requested respondent No.3 that representative samples from the disputed portion of the imported goods be drawn and sent to the Indian Rubber Manufacturers Research Association (IRMRA) for testing. It is stated that IRMRA is an accredited laboratory of the Ministry of Commerce and Industry, Government of India. When it was found that respondent Nos.2 and 3 were not willing to draw such samples for testing, petitioner requested IRMRA to depute their technical officials for inspection of the goods. Following such request IRMRA officials visited the place where the seized goods were kept and carried out detailed inspection, whereafter i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember, 2020. A further prayer has been made for a direction to the respondents not to take any coercive action against the petitioner and its officials. 17. An additional affidavit on behalf of the petitioner has been filed by Mr. Vishesh Agarwal, Chief Executive Officer of the petitioner. He has stated that pursuant to summons issued by the customs authorities, he had attended officer of the customs authorities and his statement was recorded on three occasions spanning several hours. According to him, he had submitted all the records/documents which were asked for and had fully co-operated with the customs authorities. On one occasion, he was summoned by the customs authorities at 8.30 p.m. However, when he reported, he found the officer to be closed. On another occasion, he was asked to read section 135 of the Customs Act and was threatened. 17.1. It is stated that identical goods i.e. tyres scrap in pressed baled form are being cleared by the customs authorities. In this connection, petitioner has annexed a copy of invoice of an importer by the name of Pragati Rubber. 17.2. Respondents had carried out search operations /inspection in the factory premises of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h July, 2020, 8325968 dated 30 th July, 2020, 8327426 dated 30th July, 2020, 8252961 dated 23 rd July, 2020 and 8293747 dated 27th July, 2020 were seized under section 110(1) of the Customs Act. 19.3. Referring to CTH 4012, it is stated that the said heading deals with retreaded or used pneumatic tyres of rubber, solid or cushion tyres, tyre treads and tyre flaps of rubber-retreaded tyres. All old and used tyres without bead cut would fall under CTH 4012. Therefore, the contention is that around 25% to 40% of the tyres in the import consignment do not merit classification under CTH 4004000 as the important condition of the bead wire having one cut has not been fulfilled; those would fall under CTH 4012. 19.4. It is therefore contended that petitioner has misinterpreted the description of import items by saying that pressed baled would mean that the tyres are scrap. Again referring to the report of the Chartered Engineer, it is stated that he has certified that 25% to 40% of the tyres are not scrap and are reusable. Importer has not fulfilled the condition of single cut or multiple cuts in the imported tyre bead, thus rendering the reusable tyres liable to confiscation under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitored by the Maharashtra Pollution Control Board. In this connection letter dated 15th September, 2020 of the Maharashtra Pollution Control Board has been annexed. 21. On 14th October, 2020 an additional affidavit on behalf of respondents was filed. It is stated that in the course of investigation, it was revealed that petitioner had issued invoices to M/s Raza Tyre Services with description of goods declared as used tyre crumb . On discreet inquiry it was found that M/s Raza Tyre Services is a dealer in old, used and scrap tyres. Search operation was carried out in the premises of M/s Raza Tyre Services on 3rd October, 2020. During the search, invoices of the petitioner were recovered. Statement of the proprietor of M/s Raza Tyre Services, Mr.Sabirali Roshanali Shah was recorded on 3rd October, 2020 and 5 th October, 2020 in which he stated that he had received tyres from the petitioner in scrap as well as in usable condition. It is stated that presently investigation is going on whereafter appropriate show-cause notice would be issued. 22. When the case was heard next on 25th September, 2020 court observed that petitioner should cooperate with the investigation of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has also referred to the import export license (authorization) dated 28th November, 2019 issued to the petitioner by the Directorate General of Foreign Trade, Government of India for importing old and used tyres scrap (multiple cuts/pressed baled/shredded) for 10,000 MT. 23.2. Referring to the seizure memos he submits that respondents acting on the report of the customs approved Chartered Accountant have proceeded on the reasonable belief that the imported old and used scrap tyres in pressed baled form contains usable tyres and therefore, there is misdeclaration of the imported goods. He strenuously argues that it is not open to the customs authorities to take a view different from the licensing authority as to the definition of rubber tyre scrap. Such definition given by the licensing authority is binding on the customs authorities. In such a case, it would not be a question of reasonable belief, he submits. Going beyond such a definition would be a jurisdictional issue. In this connection, he has referred to a decision of the Supreme Court in M G Abrol Vs. Shantilal Chhotelal and Company, AIR 1966 SC 197 in support of his contention that the view of the licensing autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able belief formed on the basis of specific information and from the report of the Chartered Engineer that in the guise of old and used scrap tyres in pressed baled form petitioner is actually importing usable tyres. There is clear misdeclaration of the goods which may warrant confiscation. Therefore, the customs authorities rightly invoked the provisions under section 110(1) of the Customs Act for seizure of the goods. 24.1. Mr. Singh submits that the report of the Chartered Engineer clearly indicates that approximately 25% to 40% of the imported tyres were found to be in good and in reusable condition. Reiterating the contentions of the respondents as pleaded in the affidavit in reply he submits that all old and used tyres without bead cut would clearly fall under CTH 4012. He has also drawn the attention of the court to photographs of the tyres annexed to the afdavit in reply and submits that the photographs clearly reveal the reusable condition of the imported tyres. 24.2. On the prayer for mutilation of the tyres he submits that the same is not acceptable at all at this stage. In this connection, he has referred to a decision of the Supreme Court in the Collector of Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure memorandum dated 26th August, 2020. 28. Evidently there is a dispute between the petitioner and the respondents regarding classification of the goods imported. While according to the petitioner the goods imported are old and used scrap tyres in pressed baled form which being a restricted item is covered by the import license, it is the stand of the respondents that 25% to 40% of the imported goods were found to be tyres in good shape and in reusable condition. Differing from the petitioner, it is contended that old and used tyres without any bead cut would fall under CTH 4012 which deals with retreaded or used pneumatic tyres of rubber, solid or cushion tyres, tyre treads and tyre faps of rubber retreaded tyres. However, petitioner has contended and which has not been denied by the respondents that respondent No.4 had carried out 100% examination of the goods on arrival and thereafter levied duty following which petitioner paid the assessed duty. Thereafter out of charge was issued by respondent No.4. 29. Respondents have placed heavy reliance on the report of the Chartered Engineer which has been severely criticized by Mr. Nankani by pointing out what he termed as grave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e affidavit in reply. Petitioner has averred in the writ petition that it is hesitant to accept the said offer of provisional release because once the seized goods are out of customs control without there being a test report, the question as to whether the imported goods seized are reusable as tyres or are scrap would not be possible to be decided. 33. At this stage, we may advert to the provisions contained in section 110 of the Customs Act. It deals with seizure of goods, documents and things. Sub section (1) says that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. As per sub section (2), where any goods are seized under sub section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession those were seized. As per the first proviso, the said period of six months can be extended to a further period not extending six months. The second proviso however says that in case of provisional release of the seized goods, the specified period of six months shall not apply. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under section 124(a) of the Customs Act has not yet been issued. 39. Having said so, it needs no reiteration that the writ court is primarily concerned with the decision making process and not with the correctness of the decision per se. The decision making process and by extension the investigation process has to be fair and reasonable, adhering to the due process consistent with the principles of natural justice. 40. While respondents may place reliance on the report of the Chartered Engineer, petitioner would have the right to question the said report. Further more, request of the petitioner to draw samples from the seized containers and thereafter to send the samples for testing before an accredited laboratory, in this case IRMRA, cannot be brushed aside as being of no consequence. As a matter of fact, respondents themselves have allowed the same vide panchnama dated 9th September, 2020 though with the rider that customs department would have nothing to do with the testing; and that the drawing of samples for the purpose of testing has been facilitated on the request of the petitioner. 41. We fail to understand the rationale behind such a stand taken by the responde ..... 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