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TMI Blog2022 (1) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... red under the bill of entry . Such bill of entry may be for home consumption (i.e. for clearing the goods from the customs station to any other place in India) or a bill of entry for warehousing (i.e. for depositing the imported goods in a warehouse for a certain period of time). In any case, the person who files the bill of entry is the importer and, therefore, in the present case, the respondent no.5 is the importer of the goods in India. The stance of the respondents, that it is the respondent no.5 who has imported the goods in India and the respondent no.5 is the importer, appears to be correct and justified - the stance of the department that the respondent no.5, as an importer, availed or claimed exemption of a notification that prescribes or lays down a condition of utilization of the imported materials and export of the resultant products for the fulfillment of the export obligation in respect of the authorization also appears to be correct. The fact that the exporter, i.e. the writ-applicant, has not been paid the price of the goods and that his goods are liable to be confiscated because of a lapse or any irregularity on the part of the respondent no.5, the same would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se is a part of a business risk because sellers in the international trade ordinarily insist on irrevocable letter of credit of the prospective buyers for safeguarding their interest, which appears to have not been done in the present case. This writ-application is disposed off reserving the liberty in favour of the writ-applicant to file an application addressed to the Commissioner seeking re-export of the goods. X X X X Extracts X X X X X X X X Extracts X X X X ..... 16-Customs dated 6th July 2016 issued by the Union of India. 2.3 Under the Customs Tariff Act, 1975 (for short, the 'Act 1975'), Serial No.63 of the Tariff Item No.1701, the customs duty payable on the sugar exported against the valid advance authorization issued by the Regional Authority/Director General of Foreign Trade is NIL. 2.4 The writ-applicant and the respondent no.5 respectively entered into a contract dated 13th June 2017 for the sale of 4200 MTS of raw sugar on credit basis. 2.5 It appears from the materials on record that the understanding between the parties was that the cargo would be purchased by the respondent no.5 in terms of the advance authorization held by it. The relevant clauses of the Bond to Bond contract is reproduced herein below : "Special Conditions : a) it is expressly understood that the sugar being purchased against ALS (Advanced License Scheme) Clearance. Clause 7 : Payment : The Buyer agrees that 100% of the final contract value shall be paid to the seller's nominated bank by BANK TRANSFER as per a copy of the seller's invoice without any offset and deductions, within 4 weeks against lifting of the cargo. Seller undertakes to provide t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... go with the respondent no.2 herein, which was cleared on 21st June 2017 by way of a debit in the advance license of the respondent no.5. 2.10 It appears that on account of the financial difficulties that the respondent no.5 had to face, it failed to lift the 3137 MTS of the cargo and thereby did not take the delivery of the same after De-bonding. 2.11 As the respondent no.5 got entangled into financial problems, the corporate insolvency resolution process came to be initiated on 29th May 2018 under the Insolvency and Bankruptcy Code, 2016 (for short, the 'Code 2016'). A moratorium was declared against the respondent no.5 vide the order passed by the National Company Law Tribunal at Allahabad that the refinery has been shut down. The management of the respondent no.5 was also brought under the supervision of the Resolution Professional. 2.12 In view of the aforesaid, the respondent no.5 conceded that it was not in a position to operate the refinery and process/refine the cargo referred to above lying at the warehouse at Kandla and export the same in accordance with the stipulation of the contract. 2.13 In view of the aforesaid, it is the case of the writ-applicant that in accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se serious prejudice and hardship to the writ-applicant. 5. Mr.Joshi would submit that if the respondent no.3 proceeds to confiscate the goods, then in such circumstances the writ-applicant would lose the goods without receiving any sale consideration. The transaction in question cannot be said to be contrary to law and the ownership of the goods in question continue to remain with the writ-applicant as the respondent no.5 has not paid to the writ-applicant. 6. Mr.Joshi invited the attention of this Court to the decision of the Supreme Court in the case of Union of India vs. Sampat Raj Dugar, reported in (1992) 2 SCC 66, wherein the Supreme Court took the view that in a situation like the one on hand, the title of the goods would not vest with the importer and the importer would become the owner only at a later stage, that is, when he makes the full payment towards the sale consideration and obtain the relevant documents. Mr.Joshi would submit that since the ownership of the goods remains with the writ-applicant and the respondent no.5, being the importer, could be said to have abandoned the goods, the writ-applicant is entitled to seek re-export of the entire cargo subject to im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhatt, the learned standing counsel appearing on behalf of the Director General of Foreign Trade, New Delhi, has also vehemently opposed the present writ-application, submitting that the writ-applicant in the first instance has no locus standi to challenge the action of the respondent no.4 in not accepting the request of the respondent no.5 for extension of the time period for completion of the export obligations under the Advance Authorization License. He would submit that the Advance Authorization License was issued in the name of the respondent no.5 on 24th May 2017. In October 2018, the respondent no.5 had prayed for extension of the time period to complete the export obligations as the respondent no.5 was undergoing corporate insolvency resolution proceedings before the NCLT at Allahabad. 11. Mr.Bhatt submitted that even otherwise the policy relaxation cannot be claimed as a matter of right. The Policy Relaxation Committee would consider each case on its own merits and grant relaxation only in cases where the committee is of the view that the applicant has been suffering genuine hardships resulting in adverse impact on trade, as provided in para-2.58 of the Foreign Trade Poli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf: Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf: Provided further that the rules made in this behalf may provide for,- (i) the circumstances in which the buyer and the seller shall be deemed to be related; (ii) the manner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be.] (2) The provisions of this section shall not apply to baggage and goods imported by post." 17. We now come to Chapter VII of the Act, 1962. 18. Section 45 is with respect to restrictions on custody and removal of imported goods. Section 45 reads thus: "45. Restrictions on custody and removal of imported goods.--(1) Save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. (2) The person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force,- (a) shall keep a record of such goods and send a copy thereof to the proper officer; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be presented at any time not exceeding thirty days prior to the expected arrival of the aircraft or vessel or vehicle by which the goods have been shipped for importation into India: Provided further that where the bill of entry is not presented within the time so specified and the proper officer is satisfied that there was no sufficient cause for such delay, the importer shall pay such charges for late presentation of the bill of entry as may be prescribed. (4) The importer while presenting a bill of entry shall make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, [and such other documents relating to the imported goods as may be prescribed]. [(4A) The importer who presents a bill of entry shall ensure the following namely :- (a) the accuracy and completeness of the information given therein; (b) the authenticity and validity of any document supporting it; and (c) compliance with the restriction or prohibition, if any, relating to the goods under this Act or under any other law for the time being in force.] (5) If the proper officer is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encement for the purpose of this section: Provided also that if the Board is satisfied that it is necessary in the public interest so to do, it may, by order for reasons to be recorded, waive the whole or part of any interest payable under this section." CUSTOMS ACT, 1962 Section 47 - Clearance of goods for home consumption 21. We now proceed to Chapter IX of the Act, 1962. Chapter IX is with respect to warehousing. 22. Section 57 is with respect to licensing of public warehouses. Section 57 reads thus : "57. Licensing of public warehouses.--The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a public warehouse wherein dutiable goods may be deposited." 23. Section 59 is with respect to warehousing bond. Section 59 reads thus : "59. Warehousing bond.--(1) The importer of any goods in respect of which a bill of entry for warehousing has been prescribed under section 46 and assessed to duty under section 17 or section 18 shall execute a bond in a sum equal to thrice the amount of the duty assessed on such goods, binding himself-- (a) to comply with all the provisions of this Act and the rules and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of any goods referred to in this clause, the Principal Commissioner of Customs or Commissioner of Customs may, on sufficient cause being shown, extend the period for which the goods may remain in the warehouse, by not more than one year at a time: Provided further that where such goods are likely to deteriorate, the period referred to in the first proviso may be reduced by the Principal Commissioner of Customs or Commissioner of Customs to such shorter period as he may deem fit: (2) Where any warehoused goods specified in clause (c) of sub-section (1) remain in a warehouse beyond the period of ninety days from the date on which the proper officer has made an order under sub-section (1) of section 60, interest shall be payable at such rate as may be fixed by the Central Government under section 47, on the amount of duty payable at the time of clearance of the goods, for the period from the expiry of the said ninety days till the date of payment of duty on the warehoused goods: Provided that if the Board considers it necessary so to do, in the public interest, it may,-- (a) by order, and under the circumstances of an exceptional nature, to be specified in such order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property has passed to the buyer." 29. We shall now look into the Advance Authorization License, which is at Page-143 of the paper-book. 30. The additional condition sheet beneath the condition sheet reads thus : "Advance Authorisation is issued as per Para 4.13 (iii) of FTP 2015-20 with pre-import condition the export obligation period is restricted to 6 months (As in Appendix 4J - Public Notice No.62/2016 dt. 24.03.2017) from the date of clearance of each import consignment by Customs Authority. 16. Authorisation holder willing to take the finished components imported and Advance Authorisation scheme, directly from the port to the site of the recipient of deemed export supply (Project Authority) shall follow the procedure laid down by DOR in this regard. For availing the facility, name of such components and the address of the site where the said components are to be supplied, should indicated in the Advance Authorisation issued by Regional Authority concerned. 17. No drawback shall be available for any duty paid material whether imported or indigenous unless such item(s) is/are endorsed on the authorisation by RA in terms of para 4.15 of the FTP 2015-20." 31. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e imported materials and export of the resultant products for the fulfillment of the export obligation in respect of the authorization also appears to be correct. 35. We go to the extent of observing that if the export obligation period of 18 months from the date of issue of the authorization has elapsed and no extension has been granted in favour of the respondent no.5 being the authorization holder, then the stance of the department that as the exemption from duty was granted at the time of the import of the goods subject to the conditions of the Customs Notification No.79/2017-Cus and the condition of fulfillment of export obligation within the period specified in the authorization not being complied with, the goods are liable to be confiscated under Section 111(o) of the Act, 1962, also appears to be well justified. 36. The fact that the exporter, i.e. the writ-applicant, has not been paid the price of the goods and that his goods are liable to be confiscated because of a lapse or any irregularity on the part of the respondent no.5, the same would have no impact on the legal position as regards the goods being liable to be confiscated under Section 111(o) of the Act, 1962. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that since the supplier was in the dark on this aspect, he ought to be permitted to reexport the goods. The Revenue had rejected this request; the High Court granted the relief. When proceedings were pending the licenses were cancelled. 40. In the above background of facts, the Supreme Court upheld the judgment of the High Court - which like in this case, had been directly approached by the foreign supplier. The Court also discussed the relevant provisions of the prevalent Import Control Order, and observed as follows: "19. The exporter is outside the country, while the importer, i.e. the licensee is in India. It is at the instance of the licensee that the goods are imported into this country. Whether or not he is the owner of such goods in law, the Imports (Control) Order creates a fiction that he shall be deemed to be the owner of the such goods from the time of their import till they are cleared through Customs. This fiction is created for the proper and effective implementation of the said order and the Import and Exports (Control) Act. The fiction however cannot be carried beyond that. It cannot be employed to attribute ownership of the imported goods to the importer ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... request for their return through re-export cannot be turned down. 42. At this stage, we would like to clarify something important. In Dugar's case (supra), the Supreme Court has held that if the bill of entry is not filed by the importer and the importer has abandoned the goods, the title in the goods would not pass to the importer and the exporter may be entitled to re-export or return of the goods. Section 68 of the Customs Act, 1962, requires the filing of a bill of entry (ex-bond bill of entry) for clearance of any warehoused goods for home consumption. We were given to understand that over a period of time the ex-bond bills of entry are being filed with the Commissionerates having jurisdiction over the warehouses and in large number of cases, manually. The filing of ex-bond bills of entry on ICES would provide the benefits of automation to the importers availing the warehousing facility and lend efficiency to the process of clearance of the warehoused goods. The importer or owner of the warehoused goods seeking to clear the goods for home consumption under Section 68 is expected to file the ex-bond bills of entry on ICES and the customs station of import would have to assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit of the prospective buyers for safeguarding their interest, which appears to have not been done in the present case. 45. In the aforesaid context, we may refer to and rely upon an order passed by a learned Single Judge of the Madras High Court in the case of M/s.Pacific (HK) Limited vs. The Commissioner of Customs (Airport and Air Cargo Complex), Meenambakkam, Chennai, reported in (2012) 281 ELT 522, wherein the importer had refused to clear and take delivery of the goods, and as the cost of the goods had not been paid, the petitioner therein had requested the authorities to permit reexport/ reshipment of the goods. In such circumstances, a writ-application was filed before the Madras High Court under Article 226 of the Constitution of India. While disposing of the writ-application, the Court observed as under : "4. The learned counsel appearing on behalf of the petitioner had submitted that the petitioner continues to be the owner of the goods in question, when the importer or the consignee concerned abandons the goods imported on their behalf, as held by the Supreme Court, in Union of India Vs. Sampath Raj Dugar, reported in 1992(58) ELT 163 (SC). 5. It had also been sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id, till date. As such, the petitioner continues to be the owner of the goods in question, as the third respondent, being the importer of the goods, had abandoned the goods in question. 9. In view of the above contentions, raised on behalf of the petitioner, as well as the respondents, and on a perusal of the records available, it is clear that the petitioner has the right to request the respondents for the necessary permission, to re-ship or to re-export the goods in question. Further, as the third respondent does not have any serious objection for the re-export of the goods in question, the respondents are directed to permit the petitioner to re-export the goods in question, as prayed for by the petitioner, in the present writ petition. However, it is made clear that it is open to the authorities concerned, to pass an appropriate order, with the view to initiate the necessary action against the parties concerned, if it is deemed to be necessary, in respect of the alleged infringement of the relevant provisions of law, if any, as expeditiously as possible, as the petitioner, has been incurring heavy demurrage charges. Further, it is made clear that the respondents are directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The plea of the Revenue that even if re-export is allowed, the importer has to pay duty, in addition to redemption fine and penalty, cannot be countenanced, because once duty is paid on the goods, it would tantamount to clearance of the goods for home consumption in terms of Section 47 of the Act and once it is cleared for home consumption, that goods get merged with the mass of the goods in the country. Re-export is permitted in a situation where the importer does not want to clear that the goods for home consumption for various reasons and when the goods are permitted to be re-exported, the question of clearance of the goods for home consumption on payment of duty does not arise. Therefore, we are of the considered opinion that duty can be demanded only when the goods are cleared for home consumption and not when they are permitted to be re-exported, on payment of fine and penalty. Before parting with this case, we would also like to observe that, if an importer were to pay duty also (in addition to fine and penalty), on the goods permitted to be re-exported, he need not undergo the various complex and time consuming formalities of re-export again and he is free to dispose of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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