Isha Exim Also Prabal Kumar Kundu vs Union Of India Thr. Secretary ...
2022 Latest Caselaw 603 Bom

Osk                                                      1-Wp-7898-2021 & Ors.odt



               IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                      CIVIL APPELLATE JURISDICTION

                     WRIT PETITION NO. 7898 OF 2021
                                 WITH
                     WRIT PETITION NO. 2284 OF 2021
                                 WITH
                     WRIT PETITION NO. 7355 OF 2021

M/s. Isha Exim                                       ]
carrying on business through                         ]
Mr.Prabal Kumar Kundu of                             ]
Kolkata inhabitant and having its                    ]
office at P-586, Block-N, New Alipore,               ]
Kolkata - 700 053.                                   ]        ... Petitioner

      Versus

1.    Union Of India                                 ]
      Though The Secretary,                          ]
      Department of Revenue                          ]
      Ministry of Finance having its office          ]
      North Block, New Delhi - 110 001.              ]

2.    Commissioner of Customs (NS-V)                 ]
      Jawaharlal Nehru Customs House                 ]
      Having his office at Jawaharlal Nehru          ]
      Customs House, Nhava Sheva,                    ]
      District : Raigad - 400 707                    ]
      Maharashtra.                                   ]

3.    Additional Commissioner of Customs (NS-V)      ]
      Special Intelligence & Investigation Branch    ]
      (Import) Jawaharlal Nehru Customs House        ]
      Having his office at Jawaharlal Nehru          ]
      Customs House, Nhava Sheva,                    ]
      District : Raigad - 400 707                    ]
      Maharashtra.                                   ]

4.    Deputy Commissioner of Customs (NS-V)          ]
                                                                                    1/16
 Osk                                                      1-Wp-7898-2021 & Ors.odt



      Special Intelligence & Investigation Branch    ]
      (Import) Jawaharlal Nehru Customs House        ]
      Having his office at Jawaharlal Nehru          ]
      Customs House, Nhava Sheva,                    ]
      District : Raigad - 400 707                    ]
      Maharashtra.                                   ]

5.    Principal Commissioner of Customs (NS-I)       ]
      Jawaharlal Nehru Customs House                 ]
      Having his office at Jawaharlal Nehru          ]
      Customs House, Nhava Sheva,                    ]
      District : Raigad - 400 707                    ]
      Maharashtra.                                   ]

6.    Additional Commissioner of Customs (NS-I),     ]
      Gr. I & IA                                     ]
      Jawaharlal Nehru Customs House                 ]
      Having his office at Jawaharlal Nehru          ]
      Customs House, Nhava Sheva,                    ]
      District : Raigad - 400 707                    ]
      Maharashtra.                                   ]        ... Respondents



                                    ******
Mr.Prakash Shah i/b. Mr.Aansh Desai for Petitioner.
Mr.P.S. Jetley, Senior Advocate a/w. Mr.J.B. Mishra and Smt. Maya Mujumdar
for Respondents.
                                    ******

                                     CORAM : R. D. DHANUKA &
                                             S. M. MODAK, JJ.

                                     DATE     : 18th JANUARY 2022.
                                     (Through Video Conference)


ORAL JUDGMENT (PER : R. D. DHANUKA, J.) :-

1.          Rule.


 Osk                                                           1-Wp-7898-2021 & Ors.odt

2. Mr.P.S. Jetley, learned counsel for Respondents waives service of

notice. By consent of parties, Petitions are heard finally.

3. In Writ Petition No. 7898 of 2021, the petitioner has prayed for a

writ of certiorari for quashing and setting aside the impugned Provisional

Release Order dated 22nd October, 2021 and further seeks a writ of mandamus

to clear the goods imported by the petitioner covered by Bill of Entry No.

2784973 dated 16th February, 2021 on payment of applicable duty under

Chapter 21. In the Writ Petition No. 7355 of 2021, the petitioner has prayed

for a writ of certiorari for quashing and setting aside the impugned Seizure

Memo dated 3rd August, 2021 and the DYCC JNCH, Laboratory Test Reports.

The petitioner also seeks a writ of mandamus to forthwith assess and clear the

goods imported by the petitioner and covered by Bill of Entry No. 2784973

dated 16th February, 2021 on payment of applicable duty under Chapter 21.

4. By Writ Petition No. 2284 of 2021, the petitioner seeks a

declaration that the Officers of the respondent no.2 in charge of Special

Intelligence and Investigation Branch (Import) are not 'proper officers' for the

purpose of Section 110 of the Customs Act and seeks further declaration that

the decision of the Authority for Advance Rulings dated 31 st March, 2017 is

Osk 1-Wp-7898-2021 & Ors.odt

binding on the respondents. The petitioner has also prayed for writ of

certiorari for quashing and setting aside the impugned Seizure Memo dated

24th March, 2021 and also the impugned order dated 13 th May, 2021. The

petitioner has prayed for an order and direction against the respondents to

clear the goods imported by the petitioner vide Bill of Entry No. 9936145

dated 12th December, 2020 and Bill of Entry No. 2784973 dated 16 th February,

2021 on execution and furnishing of a Provisional Duty Bond in terms of

Section 18 of the Customs Act.

5. The petitioner is engaged in the business of import of various

edible products including products of betel nut (processed supari). According

to the petitioner, the said products of betel nut is classified under Chapter

Head 21069030 of the First Schedule in the Customs Tariff Act, 1975.

Sometime in the year 2016, the petitioner filed an application bearing no.

AAR/44/CVS-1-14-2016 before the Authority for Advance Ruling, New Delhi

('AAR') in terms of Section 28H of the Customs Act. The said Authority

decided the said application on 31st March, 2017, wherein the classification of

the said products was confirmed under CTH - 21069030. The respondent

no.5 did not prefer any appeal against the said ruling dated 31 st March, 2017

under Section 28KA of the Customs Act.

Osk 1-Wp-7898-2021 & Ors.odt

6. It is the case of the petitioner that on 12 th December, 2020, the

petitioner imported a consignment in Unflavoured Processed supari from

JNPT Port vide Bill of Entry No. 9936145 dated 12 th December, 2020. On 16th

December, 2020, the petitioner imported the same products vide Bill of Entry

No. 9980277 dated 16th December, 2020. The said Bill of Entry was

provisionally assessed and cleared by the respondent no.6 on payment of

custom duty and filing of Provisional Duty Bond.

7. On 16th December, 2021, the petitioner imported another

consignment vide Bill of Entry No. 2784973. On 24 th March, 2021, the

respondents issued a Seizure Memorandum seizing goods imported vide Bill

of Entry No. 9936945 dated 12th December, 2020. On 6th May, 2021, the

petitioner filed a Writ Petition bearing Stamp No.9836 of 2021 challenging the

said Seizure Memo dated 24th March, 2021. On 6th May, 2021, this Court

disposed of the said Writ Petition bearing Stamp No. 9836 of 2021 filed by the

petitioner in view of the statement made by the learned counsel for the

respondents that SIIB had recommended provisional release of goods and that

adjudicating authority would pass an order for provisional release of goods

under Section 110A of the Customs Act within a week's time.

Osk 1-Wp-7898-2021 & Ors.odt

8. On 13th May, 2021, the respondent no.6 passed a Provisional

Release Order directing release of goods imported vide Bill of Entry No.

9936145 dated 12th December, 2020 on the condition of the petitioner

executing a P. D. Bond for Rs.2,01,61,575/- along with bank guarantee of

Rs.1,70,00,000/- towards differential custom duty, fine and penalty. The

petitioner impugned the said Provisional Release Order by filing a Writ

Petition before this Court (2284 of 2021).

9. It is the case of the petitioner that the respondent no.4 neither

completed the assessment of the goods nor made any communication with the

petitioner regarding those goods assessed for a period of 5.5 months from the

date of filing of Bill of Entry. However, on 3 rd August, 2021, the respondent

no.3 issued a seizure memo inter-alia stating that the goods covered vide Bill

of Entry No. 2784973 dated 16th February, 2021 were liable for confiscation.

10. The petitioner filed Writ Petition bearing No. 7355 of 2021 in this

Court challenging the seizure memo dated 3rd August, 2021 on 21st October,

2021. It is the case of the petitioner that on 22 nd October, 2021, the

respondents during the pendency of the said writ petition passed an ex-parte

provisional release order in respect of the goods covered vide Bill of Entry No.

2284973 dated 16th February, 2021. The petitioner filed Writ Petition No.

Osk 1-Wp-7898-2021 & Ors.odt

7898 of 2021 inter-alia praying for writ of certiorari for quashing and setting

the impugned Provisional Release Order dated 22 nd October, 2021 and prayed

for a writ of mandamus to assess and clear the goods imported by the

petitioner and covered by Bill of Entry No. 2284973 dated 16 th February, 2021

on payment of applicable duty under Chapter 21.

11. Mr.Shah, learned counsel for the Petitioner invited our attention

to the Seizure Memo dated 3rd August 2021 issued by Respondent No.3 stating

that the goods covered vide Bill of Entry No. 2784973 dated 16 th February

2021 were examined and respective samples of goods were drawn. He

submits that only after the said Seizure Memo was served upon the Petitioner,

the Petitioner came to know about samples drawn by the Respondent No.3

and forwarded to DYCC for testing. He invited our attention to the Public

Notices dated 23rd October 2019 and 16th June 2021, thereby issuing a list of

goods under various chapters which cannot be analyzed/tested at DYCC,

JNCH Laboratory due to non availability of facility. He submits that in both

the Public Notices clearly indicates that the samples of the goods covered

under Chapter 1 to 14 and Chapter 21 cannot be analyzed/tested at DYCC,

NJCH Laboratory.

12. Mr.Shah, learned counsel for the Petitioner also invited our

Osk 1-Wp-7898-2021 & Ors.odt

attention to the averments made by the Respondents in the Affidavit-in-Reply

and more particular paragraph Nos.12 and 13 and would submit that the

Respondents have admitted in the said affidavit that the goods mentioned

under Chapter 8 and 21 could not be analyzed / tested by DYCC according to

both the public notices. He submits that the Respondents have erroneously

contended that the Petitioner did not approach the Respondents to make a

request for retesting of the samples in another Government approved Lab or

in FSSAI to the reason best known to them. He submits that since even

according to the Respondents, the said goods which fell under Chapter 8 and

21 could not have tested by DYCC, the impugned Order of Seizure of the

goods issued by the Respondents falls on the ground. He submits that the

Seizure based on the report of the DYCC is thus untenable and contrary to the

Public Notices issued by the Respondents.

13. In his alternate submission Mr.Shah, learned counsel for the

Petitioner invited our attention to the Order passed by the Authority for

Advance Rulings dated 31st March 2017 and would submit that pursuant to an

application preferred by the Petitioner, in relation to the dispute of

classification of imported supari goods, which is one of the issue involved in

this Petition, the Authority had categorically held that the products sought to

be imported by the Petitioner namely 'unflavoured supari', 'flavoured supari',

Osk 1-Wp-7898-2021 & Ors.odt

'API supari' and 'chikani supari' being processed betel nut products which do

not contain specified ingredients, namely, lime, katha and tobacco but

containing other flavouring material/additives are classified under Customs

Tariff Headings 21069030. He submits that the said ruling given by the said

Authority under Section 28 J of the Customs Act is binding not only on the

Petitioner but also on the Principal Commissioner of the Customs or

Commissioner of Customs and the Customs Authorities subordinate to him in

respect of the Applicant. He submits that the goods in question were the

subject matter of the said Advance Ruling given by the Authority classifying

the said goods under Customs Tariff Heading 21069030. The Custom

Authority thus ought to have cleared the goods on the basis of the said

Advance Ruling under the same classification in view of the said Order of the

Authority having attained finality. The Respondents have not challenged the

said Advance Ruling.

14. It is submitted by Mr.Shah, learned counsel for the Petitioner that

the Order passed by the Respondents issuing Seizure Memo is contrary to the

Advance Ruling issued by the Authority.

15. Mr.Shah, learned counsel for the Petitioner placed reliance on the

Judgment of the Madras High Court in the case of Isha Exmin V/s. Addl.

Osk 1-Wp-7898-2021 & Ors.odt

Director General, Directorate of Revenue Intelligence (D.R.I.), Chennai 1, filed

by the Petitioner herein and would submit that similar goods were seized by

the D.R.I., which are the subject matter of the present Petitions filed by the

Petitioner. He relied upon paragraph Nos.10 to 14 of the said said Judgment

and would submit that after adverting to the Judgment of the Hon'ble

Supreme Court in the case of Columbia Sportwear Co. Vs. Director of Income

Tax, Bangalore2 and a Judgment of the Delhi High Court in the case of

Worldline Tradex Pvt. Ltd. Vs. Commissioner of Customs (Import) 3, Madras

High Court in the case of the Petitioner itself dealing with the same goods and

the same Advance Ruling has held that the said Advance Ruling was binding

on the Respondents and quashed and set-aside the Seizure Memo. Madras

High Court directed the Respondents to release the cargo in-question

forthwith. He submits that the Respondents cannot be allowed to take a

different view than the view taken by the Madras High Court accepting the

binding effect of the said Advance Ruling dated 31 st March 2017 on the

parties.

16. Learned counsel for the Petitioner submits that SIIB had initiated

simultaneous investigation in respect of the imports made by the Petitioner

1 2018 (13) G.S.T.L. 273 (Mad.) 2 2012 (283) E.L.T. 321 (S.C.) 3 2016 (340 E.L.T. 174 (Delhi)

Osk 1-Wp-7898-2021 & Ors.odt

from Chennai Port in March 2021. The said consignment was also detained by

the Custom Authority. The samples were drawn for testing. During the course

of investigation, the Chennai Customs Authority considered the binding effect

of the same Advance Ruling given by the Authority and granted no objection

for the Petitioner for the goods under Chapter Heading 21069030. He submits

that the Authorities who are the Respondents in this case cannot be allow to

take a different view in the matter.

17. Mr.Shah, learned counsel for the Petitioner also invited our

attention to the ground-T raised in the Petition in support of his submission

that the Petitioner who imported consignments of the same goods as in the

present case from the same supplier through Chennai Port were allowed

clearance under Chapter Heading 21069030 and the bills of entry were finally

assessed.

18. Learned counsel for the Petitioner lastly submitted that the goods

imported by the Petitioner are perishable in nature and are illegally seized by

the Respondents for quite some time. If this Court comes to the conclusion

that the sample of the goods has to be drawn again for retesting to be carried

out by the Government Laboratory, only in that event this Court shall allow

release of the goods by accepting P. D. bond from the Petitioner.

Osk 1-Wp-7898-2021 & Ors.odt

19. Mr.Jetley, learned senior counsel for the Respondents on the other

hand vehemently urged that since the Respondents have taken further steps

by passing an Order of provisional release, at this stage, Order of Seizure

Memo cannot be set aside. He submits that the Respondents have no dispute

that the DYCC could not have analyzed or carried out any testing of the goods

in-question. The Petitioner however did not approach the Respondents for

retesting of the samples in another Government Laboratory or FSSAI.

20. It is submitted by the learned counsel for the Respondents that

the samples can be redrawn and can be sent to the Government Laboratory or

FSSAI even at this stage. The Respondents have no objection if the entire

process is expedited. He prayed that the goods shall not be directed to be

released till a fresh test report is submitted by the Government Laboratory or

by FSSAI, as the case may be after testing the samples.

21. In so far as the submission of Mr.Shah, learned counsel for the

Petitioner on the decision of the Authority for Advance Ruling in this case in

favour of the Petitioner is concerned, learned senior counsel for the

Respondents submits that though the decision of the Authority for Advance

Ruling is binding on the department, in this case the process relating to the

Osk 1-Wp-7898-2021 & Ors.odt

goods declared in the Advance Ruling dated 31 st March 2017 is different from

the process relating to the imported goods in-question and thus no reliance on

the said Advance Ruling dated 31 st March 2017 can be placed by the

Petitioner. He submits that in several other Advance Rulings given by the

Authority in respect of the same goods opposite view is taken classifying the

goods under Customs Tariff Headings.

22. Mr.Shah, learned counsel for the Petitioner in his rejoinder

argument invited our attention to the impugned Order dated 13 th May 2021

passed by the Respondents for provisional release of the goods, which were

subject matter of the said Order under Section 110 of the Customs Act 1962

and more particularly paragraph 6 thereof. He submits that though the

learned Additional Commissioner of Customs had rendered a prima-facie

finding in favour of the Petitioner in paragraph 6, on the basis of advise

received from the investigating unit, the Additional Commissioner of Customs

passed a drastic Order for release of goods on execution of Bond for estimated

value of seized goods which was Rs.2,01,61,575/- along with adequte

security/BG to cover differential duty of Rs.1,61,41,504/-.

23. A perusal of the Affidavit-in-Reply filed by the Respondents

clearly indicate that both the parties are ad-idem that the Public Notices dated

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23rd October 2019 and 16th June 2021, had issued a list of goods mentioned

under Chapter 8 and 21 which could not be analyzed/tested by DYCC. It is

admitted by the Respondents that the goods in-question however were tested

by the said DYCC Lab, which had no facility to carryout such testing. The only

explanation sought to be rendered by the Petitioner in the Affidavit-in-Reply is

that the Petitioner did not make any request of retesting the samples by

Government Laboratory or by FSSAI. On the other hand the Petitioner has

rightly contended that the Petitioner came to know about such testing by

DYCC only when the Order of Seizure Memo was served upon the Petitioner.

24. However, since after issuance of the impugned Seizure Memo,

which is the subject matter of one of the Writ Petition, the Respondents passed

an Order for provisional release and since the Petitioner could not get any

interim Order in these Petitions till date though they are pending for quite

some time, we do not propose to quash the Order of Seizure Memo

unconditionally. We have not expressed any views in this matter at this stage

whether the Advance Ruling relied upon by the Petitioner would cover the

goods in-question or not in view of the rival contentions raised by the

Respondents in respect of the process followed relating to the said goods. It is

a specific case of the Respondents that there are several other Advance

Rulings in respect of the same goods taking a contrary view. Whether the

Osk 1-Wp-7898-2021 & Ors.odt

Judgment of Madras High Court in case of the Petitioner itself reported in

2018 (13) G.S.T.L. 273 (Mad.), would apply to the facts of this case or not can

be considered after submission of the report by a Government Laboratory or

FSSAI classifying the goods in-question under an applicable entry.

25. In view of the Order for fresh testing of the said goods, we have

not expressed any views, whether the goods cleared by Madras Custom

Authorities or by any other Authority were same as claimed by the Petitioner

in this case at this stage.

26. In our view since it is an admitted position that the said DYCC

could not have carried out such testing at the first instance, we are inclined to

direct the Respondents to draw samples of the goods imported by the

Petitioner which are subject matter of these Petitions and to send to the

Government Laboratory or FSSAI within one week from today.

27. Since the Authorities have admitted that the earlier samples

drawn and tested by DYCC could not have been drawn contrary to the two

public notices and the said report being the basis for issuance of Seizure

Memo, we are inclined to direct the Respondents to release the goods in-

question on the Petitioner submitting P.D. bond.

Osk 1-Wp-7898-2021 & Ors.odt

28. Mr.Shah, learned counsel for the Petitioner, on instructions, states

that the P.D. bond will be submitted within three days from today. The

statement is accepted. Upon submission of the P.D. bond by the Petitioner, the

the Respondents shall release the goods in-question at the earliest and not

later than one week from the date of receipt of P.D. bond. It is made clear that

the release as directed by this Court would be subject to the testing report to

be submitted by the Government Laboratory or by FSSAI and subject to the

final assessment. The impugned Order of Seizure stands set-aside, subject to

final assessment depending upon the fresh test report.

29. All the Writ Petitions are allowed in the aforesaid terms. Rule is

made absolute accordingly.

30. Parties to act upon the authenticated copy of this Order.

31. It is made clear that all the contentions of both the parties not

decided by this Order are kept open.

                                [S. M. MODAK, J.]                          [R. D. DHANUKA, J.]

             Digitally signed
             by OMKAR
OMKAR        SHIVAHAR
SHIVAHAR
KUMBHAKARN
             KUMBHAKARN
             Date:

             2022.01.19
             15:51:09 +0530