Kerala High Court
M/S Shri Amman Dhall Mill vs The Commissioner Of Customs on 22 January, 2021
CUS.Appeal Nos.13 & 14 of 2020 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
FRIDAY, THE 22ND DAY OF JANUARY 2021 / 2ND MAGHA, 1942
Cus.Appeal.No.13 OF 2020
AGAINST THE ORDER NO. 20845/2020 DATED 16-12-2020 OF
CUSTOMS,EXCISE&SERVICE TAX APP.TRIBUNAL,BANGALORE
APPELLANT:
M/s SHRI AMMAN DHALL MILL, B-7/269/1,
2 BYE PASS ROAD, ANNANJI, THENI, TAMILNADU 6254 53,
REP.BY ITS PROPRIETOR SOMASUNDARAM, AGED 56 YEARS,
S/O S.SAKTHIVEL, R/O NO.46/2269 H, APSARA BUILDING,
CHAKKARAPARAMBU, ERNAKULAM 682 032.
BY ADVS.
SRI.P.A.AUGUSTIAN
SMT.SWATHY E.S.
RESPONDENT:
THE COMMISSIONER OF CUSTOMS,
CUSTOMS HOUSE, WILLINGTON ISLAND,
COCHIN 682 009.
OTHER PRESENT:
SR ADV . N VENKATARAMAN, ASG., SC SREELAL WARRIER
THIS CUSTOMS APPEAL HAVING BEEN FINALLY HEARD ON 15-01-
2021, ALONG WITH CUS.APPEAL No.14/2020, THE COURT ON 22-01-
2021 DELIVERED THE FOLLOWING:
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
FRIDAY, THE 22ND DAY OF JANUARY 2021 / 2ND MAGHA, 1942
Cus.Appeal.No.14 OF 2020
(Against the Final Order No.10845/2020 dated 16.12.2020
passed by CESTAT, Bangalore)
APPELLANT:
THE COMMISSIONER OF CUSTOMS,
CUSTOMS HOUSE, WILLINGTON ISLAND, COCHIN - 682 009.
BY ADVS.
N.VENKATARAMAN ADDITIONAL SOLICITOR GENERAL
SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE &
CUSTOMS
RESPONDENT:
M/S. SHRI AMMAN DHALL MILL,
B-7/269/1,2, BYE PASS ROAD, THENI, TAMIL NADU-625
453, REPRESENTED BY ITS SOLE PROPRIETOR
SRI.SOMASUNDARAM, AGED 56 YEARS, S/O.SAKTHIVEL, R/O
NO.46/2269H, APSARA BUILDING, CHAKARAPARAMBU,
ERNAKULAM - 682 032.
R1 BY ADV. SRI.P.A.AUGUSTIAN
R1 BY ADV. SMT.SWATHY E.S.
THIS CUSTOMS APPEAL HAVING BEEN FINALLY HEARD ON 15-01-2021,
ALONG WITH Cus.Appeal.13/2020, THE COURT ON 22-01-2021 DELIVERED
THE FOLLOWING:
CUS.Appeal Nos.13 & 14 of 2020 3
JUDGMENT
Dated this the 22nd day of January 2021
S.V.Bhatti, J.
Heard learned ASG N.Venkataraman and learned
Adv.P.A.Augustine for parties.
2. The instant Customs Appeals are under Section 130 of the
Customs Act, 1962 (for short 'Act 1962) and are at the instance of
M/s Shree Amman Dhal Mill/Importer and the Commissioner of
Customs, Kochi/Revenue. For convenience, the parties are
referred to as 'Importer' and 'Revenue' respectively. The appeals
are directed against final order No.20845/2020 dated 16.12.2020 of
the CEST Appellate Tribunal, South Zonal Bench, Bangalore. The
appellate Tribunal through the impugned order dated 16.12.2020
held and directed as follows:
"In view of the above, the appeal is disposed of by allowing
redemption of impugned goods on payment of fine of
Rs.12,00,000/- (Rupees Twelve Lakh only) in lieu of
confiscation under Section 125 of the Customs Act, 1962.
However, penalty of Rs.4,00,000/- (Rupees Four Lakhs only)
imposed by the Commissioner is upheld."
3. Hence, Customs Appeal No.13 of 2020 is at the instance of
Importer challenging the levy of penalty of Rs.4 lakhs and
Customs Appeal No.14 of 2020 is at the instance of Revenue
questioning the release of subject goods on payment of
redemption fine of Rs.12 lakhs.
4. The undisputed circumstances leading to the filing of
Customs Appeals are stated thus:-
The Union of India in exercise of power under Section 3 of
Foreign Trade (Development and Regulation) Act, 1992 referred
to as FTDR Act issued Notification No.37/2015-2020 dated
18.12.2019. The said notification is followed by Notification
No.1225(E) dated 28.3.2020. The notifications have bearing on the
submissions made by the counsel appearing for the parties and
we find it useful to excerpt the respective notifications
hereunder:
Government of India
Ministry of Commerce & Industry
Department of Commerce
Directorate General of Foreign Trade
Notification No.37/2015-2020
New Delhi, dated: 18th December, 2019
Subject: Amendment in import policy and Policy condition under
HS code 0713 1000 of Chapter 7 of ITC (HS), 2017, Schedule-I
(Import Policy).
S.O.(E): In exercise of powers conferred by Section 3 of FT (D&R)
Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade
Policy, 2015-2020, as amended from time to time, the Central
Government hereby amends import policy and policy conditions
under HS code 0713 1000 of Chapter 7 of ITC (HS), 2017, Schedule-
(Import Policy), as under:
Exim Item Description Existing Revised policy Existing Policy Revised Policy
code import condition condition
policy
0713 10 Peas (Pisum Restricted Restricted and Import of Peas Import of Peas shall
00 sativum) subject to shall be subject to be subject to an
including Yellow Minimum Import an annual (fiscal annual (fiscal year)
Peas, Green Peas, Price (MIP) year) quota of 1.5 quota of 1.5 lakh MT
Dun Peas and Rs.200/- CIF per lakh MT as epr as epr procedure
Kaspa Peas kg. procedure notified notified by DGFT
by DGFT. This and it will be subject
Restriction shall to Minimum Import
not apply to Price (MIP) of
Government's Rs.200/- and above
import CIF per kilogram
commitments and import is
under any allowed through
Bilateral or Kolkata sea port
Regional only. This
Agreement or Restriction shall not
Memorandum of apply to
Understanding Government's
import
commitments under
any Bilateral or
Regional Agreement
or Memorandum of
Understanding.
Effect of the Notification: Import of Peas (Pisum Sativum) including
yellow peas, Green peas, Dun Peas and Kaspa Peas is restricted and
import subject to MIP of Rs.200/- CIF per kilogram and import is
allowed only through Kolkata sea port.
This issues with the approval of Minister of Commerce &
Industry.
Sd/-
(DIWAKAR NATH MISRA)
Joint Secretary to the Government of India
(F.No.14/3/2018-EP(Agri.III)
Note: The principal notification No.36/2015-2020, dated the 17 th
January 2017 was published in the gazette of India, Extraordinary vide
number S.O.172(E) dated the 17th January, 2017 and last amended vide
Notification S.O.6364(E) dated 28th December, 2018.
---
MINISTRY OF COMMERCE AND INDUSTRY
(Department of Commerce)
NOTIFICATION
New Delhi, the 28th March, 2020
S.O.1225(E).-In exercise of powers conferred by section 3 of the Foreign
Trade (Development and Regulation) Act, 1992 (22 of 1992), read with
paragraphs 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020 as
amended from time to time, the Central Government hereby notifies
the annual quota for the fiscal year 2020-2021 for the items of Chapter 7
of the Indian Trade Classification (Harmonized System), 2017,
Schedule-I (Import Policy) as under:
Exim Code Item Description Import Policy Quota for fiscal year 2020-2021
0713 10 10 Yellow Peas Restricted 1.5 lakh MT (the quantity of
each category of peas will be
0713 10 20 Green Peas Restricted
notified shortly)
0713 10 90 Other Restricted
0713 31 90 Moong (Beans of the SPP Vigna Restricted 1.5 lakh MT
Radiata (L) Wilezek).
0713 60 00 Tur/Pigeon peas (Cajanus Cajan) Restricted 4 lakh MT
2. The import policy conditions such as Minimum import price
(MIP) of Rs.200/- and port restriction through Kolkata sea port only
for all peas (07131010, 07131020 & 07131090) as notified vide
Notification No.37, dated 18th December, 2019 remain unchanged.
3. The above quota restriction will not apply to Government's
import commitments under any bilateral/regional
Agreement/Memorandum of Understanding.
4. This notification shall come into force form the date of its
publication in the official Gazette. The above mentioned quota for
the fiscal year 2020-2021 shall be allotted only to millers/refiners as
per detailed procedure to be notified by Directorate General of
Foreign Trade.
(F.No.14/3/2018-EP (Agri.III) (pt.)
DIWAKAR NATH MISRA, Jt.Secy.
Note: The principal notification No.36/2015-2020, dated the 17 th
January , 2017 was published in the Gazette of India, Extraordinary
vide S.O. 172(E), dated the 17th January, 2017 and last amended vide
notification No.14/3/2018-EP (Agri.III) published in the Gazette of
India, Extraordinary vide S.O.1122(E) dated the 17 th March 2020.
5. Earlier in point of time, Union of India issued Notification
dated 29.3.2019 bearing S.O.Nos.1478-E, 1479-E, 1480-E and 1481-E
imposing restrictions on import of a few agricultural
products/pulses. The Notification was challenged by a group of
traders by filing Writ Petition in different High Courts. These
Writ Petitions were transferred to Supreme Court in Transfer
Petition(Civil) Nos.496-509 of 2020 dated 26.8.2020. The Hon'ble
Supreme Court through its judgment dated 26.8.2020 in Union of
India and others v Agricas LLP and others1 rejected the challenge
to the notifications impugned in the batch of cases. At
appropriate stage of this judgment a few of the circumstances
leading to the filing of the Writ Petition or the consideration by
the Apex Court would be considered to the extent required for
disposing of the instant Customs Appeals. But for continuity of
narration, at this juncture, we refer to the concluding portion in
1 2020 SCC Online SC 675
the judgment dt. 26.8.2020 of the Apex Court in Agricas LLP case.
"Accordingly, we uphold the impugned notifications and the trade
notices and reject the challenge made by the importers. The
imports, if any, made relying on interim order(s) would be held to
be contrary to the notifications and the trades notices issued under
the FTDR Act and would be so dealt with under the provisions of
the Customs Act 1962. The Writ Petitions subject matter of the
Transfer Petitions, subject to E above (What is not decided) are
dismissed. Writ Petitions filed by the intervenors before the
respective High Courts shall stand dismissed in terms of this
decision. Pending application(s), if any, also stand disposed of in
the above terms. No order as to costs."
6. Thus the imports pursuant to interim orders made in
different Writ Petitions were allowed to be dealt with under the
Customs Act 1962. The subject import is not one of the instances
covered by the judgment of Supreme Court in Agricas LLP. The
Ministry of Commerce & Industries Department, Government of
India issued notification dt.16.4.2020 specifying the quantity of
import for each category of peas for fiscal year 2020-2021 which
reads thus:
MINISTRY OF COMMERCE AND INDUSTRY
(Department of Commerce)
NOTIFICATION
New Delhi, the 16th April, 2020
S.O.1260(E).-In exercise of powers conferred by Section 3 of
the Foreign Trade (Development and Regulation) Act, 1992 (22 of
1992), read with paragraphs 1.02 and 2.01 of the Foreign Trade
Policy, 2015-2020, the central Government, in pursuance to the
Notification S.O. 1225(E) dated 28 th March, 2020, hereby notifies the
quantity of each category of peas, for fiscal year 2020-2021, as
under:
Exim Code Item Description Quota (in MTs)
0713 10 10 Yellow Peas o(zero)
0713 10 20 Green Peas 75000
0713 10 90 Other 75000
2. This notification shall come into force from the date of its
publication in the official Gazette."
7. On 21.4.2020 trade notice No.5 of 2020-2021 was issued by
the Deputy Director General of Auditorate inviting applications
for grant of Licence. On 22.4.2020 the importer applied for issue
of licence for import of 200 metric tonnes of green peas through
Cochin Port. The importer, before actual grant of licence
imported goods and filed Bill of Entry dated 23.6.2020 for
clearance of goods declared as Canadian Green Peas henceforth
referred as the "subject goods". As per the declaration in Bill of
Entry the quantity declared is 210 metric tonnes with declared
assessable value of Rs.79,28,444/-. The Bill of Lading is dated
27.4.2020. The subject goods is Green Peas and presently treated
as 'restricted' by the Revenue and Union of India. The
Commissioner of Customs, Kochi through Order dated 16.10.2020,
made on the request of importer for release of goods noted that
DGFT Notification No.37/2015-2020 dated 18.12.2019 revised the
import policy for the import of Peas (Pisum sativum) including
Yellow Peas, Green Peas, Dun peas and Kaspa peas. Further policy
conditions such as minimum import price of Rs.200/- and above
CIF per kg; with annual fiscal quota of Rs.1.5 lakh MT as per the
procedure notified by DGFT and that the import is permitted
through Calcutta Seaport are incorporated. The importer
imported the subject goods after the issue of notification dated
18.12.2019 and 28.3.2020. The importer filed W.P.(C) No.15215 of
2020 in this Court praying for provisional release of the subject
goods. Vide judgment dated 14.8.2020 the prayer of importer for
provisional release was declined by this Court. The importer
aggrieved thereby filed W.A.No.110 of 2020 and by the judgment
dated 14.9.2020, the appeal was dismissed, however, this Court
desired that the customs authorities proceed with the
adjudication proceedings expeditiously. The Commissioner of
Customs in his order dt.16.10.2020, while considering the request
of importer for provisional release refers to the three conditions
in the notification dated 18.12.2020 as modified in the
notification dated 28.3.2020 which are:
I) Import subject to annual (fiscal) year quota of 1.5 lakh
metric tonnes.
II) II) Imports subject to minimum import price of Rs.200/-
and above CIF per kg.; And
III) Import is allowed through Calcutta Seaport only. The
Commissioner of Customs takes note of the affidavit dt.20.6.2020
filed by the Union of India before the Supreme Court in Transfer
Petition No.496-509 of 2020 and reasons for restriction on
quantity, minimum import price and also entry port only as
Calcutta Port; orders confiscation of subject goods and imposes
penalty on importer. The operative portion of the order reads
thus:
"Under Section 125 of the Customs Act, 1962, releasing
prohibited goods in lieu of fine is not obligatory and the
stand of the Union Government before the Hon'ble
Supreme Court cannot be ignored by this adjudicating
authority. More so, when the supply of the peas and
pulses in the domestic market would have an adverse
impart on the economy and would defeat the purposes of
the restrictions imposed. Therefore, I hold that peas
imported against the policy restrictions are liable to
penalty and confiscation.
ORDER
1. I order absolute confiscation of the goods covered
under the Bill of Entry No.7978930 dated 23.0.6.2020 for
contravention of the provisions of Section 111(d) of the
customs Act, 1962, read with Section 3(3) of Foreign Trade
(Development & Regulations) Act, 1992.
2. I impose a penalty of Rs.4,00,000/- (Rupees Four Lakhs
only) on M/s Shri Amman Dhall Mill, B-7/269/1,2 Bye Pass
Road, Annanji, Theni, Tamil Nadu 625 531, under Section
112(a) of Customs Act, 1962."
8. The importer challenged the order dated 16.10.2020 of
Commissioner in Customs Appeal No.20380 of 2020 before the
Appellate Tribunal, Bangalore. The Appellate Tribunal allowed
Customs Appeal on 16.12.2020 and referred to the circumstances
noted chronologically in the preceding paragraphs and in
paragraph 15 of the impugned judgment observed that the
subject goods have been imported in violation of the conditions
of the Exim Policy Notifications cited above. By virtue of the
same, i.e. import contrary to Exim Policy, the goods have
acquired the nature of prohibited goods in terms of Section 2(33)
of Customs Act, 1962 and have become liable for confiscation in
terms of Section 111(d). Thereafter the Tribunal formulated the
question in appeal as to whether the adjudicating authority has
an option to allow such goods i.e. Prohibited Goods to be
redeemed on payment of fine in lieu of confiscation. In the above
background, after referring to the judgments of Commissioner of
Customs v M/S. Atul Automations Pvt Ltd.2 and the judgment of
Bombay High Court in M/s Harihar Collections v Union of India3
directed redemption of fine to impugned goods on payment of
Rs.12 lakh and confirmed the penalty of Rs.4 lakhs imposed by
the Commissioner. Hence the Customs Appeals by both the
parties .
9. The learned Additional Solicitor General of India
appearing for Revenue through his elaborate arguments
canvasses that the order of Appellate Tribunal releasing subject
goods on payment of redemption of fine, ignores the
Notifications issued by the DGFT from time to time, including the
latest Notifications dt. 18.12.2019 and 28.03.2020. The
notifications applicable to the case on hand are the latest in
2 [2019 (365) DLT 465 (SC)]
3 (2020 (10 EMI 830)
sequence of notifications issued by the competent authority from
time to time. The rigor and restrictions of Notification dt.
18.12.2019 read with 28.03.2020 are substantially same or similar
to the notifications considered by the Apex Court in Transfer
Petition (Civil) Nos.496-509/2020. The challenge at the instance
of traders to the notification dated 29.03.2019 was rejected by the
Apex Court. The DGFT and the Union of India being conscious of
various factors concerning Pulses for import need necessity of
protecting farmer's interest and subsisting stock, protection of
price under FTDR Act from time to time. There is no fresh
challenge to the Notification dated 18.12.2019 and 28.03.2020 by
any stake holder. The Customs Commissioner, therefore, has
rightly considered the circumstances leading to the judgment in
Agricas LLP case(supra), the findings recorded therein and has
taken comprehensive view ordering confiscation of subject
goods. He argues that exercise of discretion by the Commissioner
in any other manner would defeat the Exim Policy, Notification in
vogue, the judgment of the Apex Court in Agricas case and would
adversely affect the interest of farmers in the Country. It is also
argued that the Tribunal, by ordering release of goods on
payment of redemption fine has opened the floodgates and also
opened a window for release of goods without complying with
any of the conditions applicable for import of subject goods.
According to him, these conditions operate in any matter
concerning release of goods restriction on quantity, price, and
port through which the goods could be imported. The Tribunal
having treated the subject goods in para 15 of the judgment as
acquiring the nature of prohibited goods, should have kept in
perspective, the condition imposed by the subject notification
and upheld the confiscation ordered by the commissioner of
Customs. He contends that the Appellate Tribunal by ordering
release of subject goods committed a serious error in law,
particularly, by placing reliance on the judgment dated
18.12.2020 of the Bombay High Court, in Kishore Chandra
Kalyanji Agri LLP and another v Union of India and others4 to
record a finding that the denial of release of goods would be
travesty of justice for imports or importers with similar violation
are treated in a dissimilar manner to wit importers at Mumbai or
4 Writ Petition (Stamp) No.96109 of 2020
Importers at Cochin cannot be treated differently. He argues that
the considerations relevant in matters like the present are
substantially guided by law and applicable notifications. The
discretion in exercising the power is conditioned by
circumstances and controlled by Exim Policy Notification etc.
Incidentally for a very limited purpose, it is pointed out that the
Bombay High Court, according to him, fell in error by releasing
goods on redemption fine on the ground that denial of release
would amount to travesty of justice. Therefore in
imports/exports neither travesty of justice nor proverbial justice
is the guiding principle, but the law and the valid notifications
issued by competent authorities alone are relevant matters.
10. It is further argued that the very finding recorded by the
Bombay High Court in judgment dated 18.12.2020 is
distinguishable. Further all the issues are left open for
consideration by the Commissioner of Customs (Appeals).
Therefore, the judgment in Kishore Chandra Kalyanji case ought
not to have persuasive guidance to this Court for any purpose
and he hastens to add that the submissions made on Kalyanji case
are not to assail or correct the errors, but to persuade that an
inapplicable judgment is relied on by Tribunal and floodgates are
opened for import of restricted/prohibited goods by ordering
release of goods by the Appellate Tribunal.
11. It is next contended that the importers interested in
import of subject goods must comply with the three conditions
stated supra, in contrast an importer disregarding every
condition on its own volition, imports the goods and by giving a
very liberal approach, the release of goods is ordered by the
Tribunal. As a matter of fact, it is stated that the competent
authority, in response to the trade notice dated 21.04.2020, has
not issued licence to any of the applicants. There is no
discrimination in granting Licences to the applicants for import
of green peas etc. and an informed decision is taken by the
authority not to operate or grant licences in the restricted
quantity of 1.5 lakh MT by keeping in perspective the available
stocks in the country. He submits that these matters do not fall
within the ambit of judicial review, much less, for the Appellate
Tribunal to completely ignore relevant considerations and direct
release of goods. The DGFT restricted import of subject goods. A
restriction should be read as something which requires
compliance of certain conditions and import in breach of such
conditions could not be treated as restricted import but
considered as prohibited import. The importer being an actual
user for industrial purpose, is aware of the notifications issued by
DGFT from time to time. The importer cannot claim a
fundamental or vested right for releasing goods on payment of
redemption fine. In other words, the importer does not have a
vested statutory or fundamental right to import any goods. The
import or export is is always subject to policies and procedures
made applicable from time to time under Customs Act, 1962,
FTDR Act, 1993. Hence lodging an application does not create any
right to the importer. Garg Woolen Mills v Additional Collector of
Customs5 , SB International Ltd and others v Assistant Directorate
General of Foreign Trade and others 6 , PTR Exports (Madras) Pvt.
Ltd v Union of India7 . The totality of circumstances including the
findings of fraud recorded by the apex court in Agricas LLP case,
5 (1999 (9) SCC 175)
6 (1996 (2) SCC 439)
7 (1996 (5) SCC 268)
the Appellate Tribunal ought not to have directed release of
goods. He also relies on Sheikh Mohamed Omar v Collector of
Customs8 , Para 11 of Commissioner of Customs, New Delhi v Brook
International and others9, Om Prakash Batia v Commissioner of
customs10 .
12. Next legal argument refers to Section 3(2) of Import and
Export Control Act 1947 and Section 3(3) of FTDR ACT 1992 are
identical and pari materia. Therefore, the decisions rendered by
the Apex Court considering Section 3 (2) of Import and Export
Control Act 1947, are applicable to the disputes considered under
Section 3 (3) of FTDR ACT 1992. He relies on Ambica Industries v
Commissioner of Central Excise11, para 14 of Bangalore Tetra v
Regional Director ESI12. The subject goods according him are
prohibited goods and commissioner of customs is justified in
ordering confiscation and no exception could have been taken by
the Appellate Tribunal. By operation of Section 3 (3) of FTDR Act
1992 read with Section 11 of Customs Act 1962, restricted goods
8 (1970 2SCC 728)
9 (2007 10 SCC 396)
10 (2003 6 SCC 161)
11 (2007 6 SCC 769)
12 (2014 9 SCC 657)
could be deemed as prohibited goods and this position is
admitted by Tribunal also. Reference is made to State of
Karnataka v State of Tamil Nadu13. It is finally argued that the
judgment of Supreme Court in Atul Automations Pvt Ltd. (supra) is
not applicable and each of the import/export conditions are case
specific and distinguishable. He prays for allowing Customs
Appeal No.13/2020.
13. Learned counsel P.A Augustine argues that Section 125 of
Customs Act, 1962 provides that even if the goods are found liable
for confiscation and the import is prohibited by law, still the
adjudicating authority "may" allow redemption of the goods on
payment of redemption fine. The distinction is that goods other
than prohibited by law, if found liable for confiscation, it is
mandatory to release goods. The Customs Act does not define
restricted goods. The view of Apex Court in Atul Automation
Pvt.Ltd (supra) is that option at the discretion of revenue is to
redeem the goods and mandatory. Therefore, the Appellate
Tribunal has given effect to the law declared by Apex Court in
Atul Automation Pvt.Ltd. (supra). The judgment of Apex Court in
13 (2017 3 SCC 362)
Agricas LLP was concerned with the notification issued by DGFT
restricting import of pulses etc. But the said decision cannot be
treated as in any way declaring that import of such goods is
prohibited and liable for absolute confiscation under Section 125
of Customs Act 1962. The reliance placed by the Revenue on
Agricas LLP (supra) is only to prejudice the mind of the court on
the difficulties allegedly placed by farmers. The subject goods
even if fall under the category of prohibited goods the reasoning
of Tribunals in paras 12 to 18 of judgment under appeal notices
the consistency followed by all the Appellate Tribunals in
ordering release of goods and no exception could be taken to such
finding by the Appellate Authority. Appeal before the Tribunal is
continuation of original proceedings. The Appellate Authority
enjoys the powers vested in the original authority by Sec.125 of
Act 1962. The Tribunal, since is vested with the power of the
original authority under Section 125 of Act 1962, ordered release
of goods on payment of redemption fine. The Tribunal is well
within its jurisdiction and discretion. The grounds raised by the
appellant in Customs Appeal No.14/2020 do not fall within
purview of Section 130 of Act 1962, hence appeal liable to be
dismissed. The appellant/Union of India is projecting the cause
of farmers, which according to his argument is a convenient plea
without basis. The importer in the case on hand on 28.04.2020
has followed the procedure by applying for grant of license and
filed bill of entry dated 23.06.2020. He argues that the Court
keeps in mind the standing of petitioners in Agricas LLP (supra)
i.e. Traders and the Importer in the case on hand is an actual
user. The Apex Court in Agricas LLP (supra) finally directed the
authorities to adjudicate under Customs Act 1962. Instant order
is also on the lines directed by the Supreme Court. Therefore, the
Tribunal, by virtue of power in Section 125 of Act 1962, ordered
release.
14. He prays for dismissing Customs Appeal No.14/2020 and
submits that the penalty imposed is without a reason. This Court
ought to set aside the levy of penalty as well by allowing Customs
Appeal No.13/2020.
15. Having heard the learned counsel appearing for the
parties and perusing the record, we formulate the following
substantial questions of law for decision.
1) Whether the order of Tribunal under appeal directing
release of subject goods on payment of redemption fine
conforms to the scheme of Sections 2(33), 111(d) and 135 of
Customs Act, 1962, section 3 of FTDR Act, 1992 read with
notification dated 18.12.2019 and 28.3.2020 issued by Union of
India?
2) Whether the levy of penalty of Rs.4 lakhs is warranted in the
circumstances of the case or the penalty is levied capriciously
and arbitrarily?
Question: 1
16. The importer is actual user of subject goods. The
importer is assumed to be familiar with the requirements of the
law and the procedure followed for granting import licence. The
goods are imported and Bill of Entry is filed for customs
clearance.
17. This Court for the purpose of appreciating the case of
importer must keep in perspective the judgment of Apex Court in
Agricas LLP case. The judgment of Apex Court in Agricas LLP case
considered the grounds raised against Notifications impugned
therein, rejected the prayer. The following paras need to be
excerpted hereunder :
"The effect of Notifications, as noticed and beyond
doubt, is to bring the specified commodities from free to
the restricted category and therefore the imports in
question would require a prior authorisation for import.
The requirement of licence is nothing but authorisation.
Therefore, in terms of paragraph 2.10, the imports of
the specified commodities would only be by the 'actual
user' unless the 'actual user' condition was specifically
dispensed with or diluted by the DGFT. The Directorate
by specifying that the licence would be issued to the
miller or refiner has, therefore, just clarified that the
'actual user' alone will be permitted to import the
restricted goods mentioned int he notification for which
a prior authorisation or licence is required. The
importers are traders and it is not the case of any of the
importers that they are the 'actual users'. Further, none
of the importers have applied for a licence or
authorisation for import of the restricted commodities.
Violation of clause 9.03 of the EXIM Policy defining the
expression 'Actual user' is neither alleged or argued
before us."
".....Learned Counsel for some of the importers had placed
reliance on Raj Prakash Chemical v. Union of India, which
judgment, in our opinion, has no application. In Raj
Prakash Chemical (supra), the Petitioner had acted under a
bona fide belief in view of judgments and orders of High
Courts and the interpretation placed by the authorities. In
this background, observations were made to giving
benefit to the importers, despite the contrary legal
interpretation. In the instant case, the importers rely
upon the interim orders passed by the High Court's
whereas on the date when they filed the Writ Petitions
and had obtained interim orders, the Madras High Court
had dismissed the Writ Petition upholding the
notification. Similarly, the High Court of Adjudicature at
Bombay, High Court of Gujarat and the High Court of
Madhya Pradesh had dismissed the Writ Petitions filed
before them and upheld the notifications and the trade
notices. Notwithstanding the dismissals, the importers
took their chance, obviously for personal gains and
profits. They would accordingly face the consequences in
law. In these circumstances, the importers it cannot be
said had bona fide belief in the right pleaded.
E. What is not decided
Learned Counsel for some of the importers had submitted
that they have preferred statutory appeals against orders
suspending or terminating import export code. The said
aspect has not been examined and decided and hence we
make no comment and observation. The statutory
appeals, if any, preferred by the importer(s) will be
decided in accordance with law.
F. Conclusion
Accordingly, we uphold the impugned notifications and
the trade notices and reject the challenge made by the
importers. The imports, if any, made relying on interim
order(s) would be held to be contrary to the notifications
and the trades notices issued under the FTDR Act and
would be so dealt with under the provisions of the
Customs Act 1962. The Writ Petitions subject matter of
the Transfer Petitions, subject to E above (What is not
decided) are dismissed. Writ Petitions filed by the
intervenors before the respective High Courts shall stand
dismissed in terms of this decision. Pending
application(s), if any, also stand disposed of in the above
terms. No order as to costs."
18. Thereafter notifications dated 18.12.2019 and 28.3.2020
stipulating further policy conditions were issued by the
Government. As a sequel for operating policy, trade notice was
issued on 21.4.2020, calling for application for grant of import
licence. The importer on 22.4.2020 applied for licence, It filed
the bill of entry on 30.6.2017 before Customs, Cochin Port. The
importer claims release of goods on payment of redemption fine
notwithstanding restriction/prohibition on import of goods.
This Court before proceeding to consider the manner of exercise
of discretion in different perspectives by the primary authority
and the Tribunal, finds it useful to refer to a few judgments relied
on by the revenue.
19. In S.B.International Limited case, it is held that grant
of licence is neither a mechanical exercise nor a mere formality.
The authorities, while discharging the function, have to satisfy
themselves about the correctness of the contents of the
application,that the requirements of the scheme are fulfilled and
the other applicable provisions of law are satisfied. The grant
of licence occasions only after due verification by the authority.
The Supreme Court rejected the contention that the filing of an
application creates a vested right in the applicant. In PTR Exports,
it is held that the applicant has no vested right to claim Export or
Import licences in terms of the policies on the date of his making
application. For obvious reasons granting of licences depends
upon policy prevailing on the date of granting of licence or
permit but not on the date of making the application. The
authority concerned is in better position to have over all picture
of diverse factors either to grant permit or refuse to grant licence
to import or export goods. A decision in this behalf therefore,
would be taken by considering diverse economic perspectives,
which the executive is informed in a better way. The decision of
the authority unless as stated in the judgment is visited with
mala fide reasons or on account of abuse of power judicial review
is limited. In such an event of the decision of the authority is
vitiated, the decision is subject to judicial review. The importer
in the instant case on 28.04.2020 applied for licence however
proceeded to undertake further step and does on individual's
volition and risk.
20. The Supreme Court has in Agricas LLP case upheld the
notification issued under Section 3(5) of FTDR Act. Imposition of
selective restrictions and prohibition of import of crude oil
through specified port is upheld by Apex court in the reported
case, Harrisons Agri Tech Pvt. Ltd. V Union of India. In Harrisons case
prohibition on import of palm oil from the port of Cochin was
considered by the Apex court and dealing with the power under
FTDR Act has held that the imposition of selective
restriction/prohibition on a port is permissible and within the
power of competent authority under Section 3(2) of FTDR Act. In
the case on hand, the import of subject goods is operated
through Calcutta Sea Port alone and in other words, import
through other ports in the country is prohibited. The importer
in this case intends to import through Cochin Port, which is a
Port prohibited to import the subject goods.
21. The Appellate Tribunal, as already noted, appreciating
Exim Policy notification dated 18.12.2019 and 28.3.2020, noted
that the subject goods have acquired the nature of prohibited
goods in terms of Section 2(33) of Customs Act, 1962. However in
paragraph 18 of the judgment under appeal treated the subject
goods in the nature of restricted goods and held that release can
be allowed on payment of redemption fine in lieu of
confiscation. In the considered view of this Court the Appellate
Tribunal is not consistent in appreciating whether the subject
goods should be treated as restricted goods or prohibited goods.
Still the Tribunal proceeded to direct release of goods on
payment of redemption fine. Be that as it may, the Appellate
Tribunal as one of the supporting reasons relies on the judgment
of the Bombay High Court in M/s. Harihar Collections case and
recorded that denial of release to subject importer would be
travesty of justice. With respect, after appreciating the
circumstances leading to the filing of the writ petition before the
Bombay High Court and issues considered and particularly, what
is observed in paragraph-36 of the said judgment, we are of the
considered view that Harihar Collections is distinguishable and
cannot be treated as an authority or as laying down a principle
permitting release of goods on collecting redemption fine either
by the primary authority or Appellate Tribunal. Paragraph 36 of
the said judgment has left open for consideration by the
Commissioner (Appeals). We have more than one difficulty or
reason for not adopting the reasoning of Bombay High court in
our judgment for sustaining the order under appeal. As rightly
pointed out by the learned ASG these objections or distinguishing
circumstances pointed out by the Revenue, against the Bombay
High Court judgment are for limited purpose of arguing that the
Tribunal misdirected itself in relying on the judgment of the
Bombay High Court. At the same time not with a view to
examine the correctness of the judgment in Harihar Collections
case by this Court. Alive to what constitutes a precedent and
whether binding or persuasive on us; for the circumstances we
are now proposing to consider, we are of the view that judgment
in Harihar need not be followed by this Court.
22. On 18.01.2021 the appeals were reserved for judgment.
By serving memo on the other side, learned ASG mentioned that
the Apex Court has suspended the judgment of Bombay High
Court in Harihar case in SLP No.14633-14634/2020. The
subsequent development is taken note of and is yet another
reason weighing with us not to follow the view taken by Bombay
High Court in Harihar case.
23. Now adverting to the order under appeal, the Appellate
Tribunal stated two main reasons they do not fit within the scope
of appellate power or appear to be contradictory and not
conforming to the scheme of the Acts/notifications referred to
above.
24. Applicable provisions Section 2(3), 111(d), 125 of the
Customs Act 1962 are adverted to in the order under appeal. We
do not propose to once again burden our judgment by extracting
these provisions of law. It can be briefly stated that Customs Act
defines what is prohibited goods and effect of importing
prohibited goods; consequence of goods imported contrary to
Section 111(d) option to pay redemption fine in lieu of
confiscation or confiscation. This Court is of the view that the
exercise of discretion and jurisdiction either by the adjudicating
authority or by the Appellate Tribunal ought not to be moulded
by a cast. The jurisdiction under Sections 111 (d) and 125 of
Customs Act, 1962 is read with the provisions of FTDR Act, 1992,
foreign trade policy and the notifications issued by the
Government from time to time. The Supreme Court in Agricas LLP
has upheld notification dated 29.3.2019 issued imposing
restriction on import of pulses described therein. The
notifications dated 18.12.2019 and 28.03.2020 which have bearing
to the issue on hand are substantially same and similar, but
operating for subsequent fiscal years with a few additional
parameters. The combined exercise of authority and discretion
by Customs Commissioner etc. in these matters, conform to the
requirements of judicial discretion. The discretion or power is
exercised combining the relevant provision in the Act,
notification and facts prevailing on the date of consideration etc.
The authorities are guided by the information available to them
in a given case.
25. We hasten to add, that if in every case goods are
released on payment of redemption fine, by the primary or
appellate Tribunal, then such decisions are unsustainable in law
and judicial review. In our considered view, exercise of power
and discretion under Section 125 of Customs Act 1962, are
specific and generally governed by the applicable policy,
notification etc. Notification dated 18.4.2019 stipulates
restriction on import of a quantity of 1.5 lakh M.T only; stipulates
minimum import price of Rs.200/- and above CIF per kg and the
import is allowed through Calcutta Sea Port only. These are the
conditions which the licensee for import of the goods is expected
to conform. The primary authority has noted that by keeping in
view the stand taken by the Union of India before the Supreme
Court in Agricas LLP case; the available stock position of green
peas is treated as surplus, and declined release and ordered
confiscation. The further import according to Customs
Commissioner is not needed or alternatively detrimental to the
interest of farmers. He has further noted that in his order dated
16.10.2020 that the importer does not conform to any of the
conditions applicable for import of green peas. In our considered
view the exercise of above discretion by Customs Commissioner
is the question for consideration before the Appellate Tribunal.
The Appellate Tribunal on the contrary, as already noted,
considered matters not completely germane for appreciating the
mode and manner of exercise of authority by the Commissioner
of customs, but, however, recorded that the subject goods can be
treated as restricted goods and can be released on payment of
redemption fine. in Customs Appeal No.14/2020. We are
concerned with correctness or otherwise of the findings
recorded by the appellate Tribunal for ordering release on
payment or redemption fine. The Tribunal fell in clear error of
law. By holding that release of goods is the only option to
Customs Commissioner in the case on hand the language of
Section 125 of Customs Act is fully liberalised. The reasoning of
Tribunal is adopted both by other primary authority/Appellate
Tribunal, then Exim policy, notifications are defeated and opens
floodgates of the import Green Peas, and such contingencies are
commented by Supreme Court in Agricas Case. We are of the view
that the consideration of Appellate Tribunal in the case on hand
is illegal, ignored relevant notifications, the mandate of FTDR Act
and Customs Act 1962. The adjudications of a dispute in these
matters is neither on the pedestal of travesty of justice or we
have so much discretion for doing proverbial justice to an
importer. In matters of this nature, such approach would go
contrary to the object sought to be implemented by the
authorities, in whom power is conferred particularly in matters
of import, export, price etc. In our considered view, the other
question whether it is restricted, prohibited the decisions
rendered under customs under import and export etc., need not
be considered. By juxtaposing the order of Commissioner of
Customs and the order under appeal we are fully convinced that
the Appellate Tribunal committed serious error in law by
ordering release of goods under Section 125. We answer the
first question in favour of Revenue and against the Importer.
Question:2
26. The importer, as noted by the Commissioner of Customs
is familiar with the practices and procedures for import and
export of goods. The chronological events in the matter are
already noted in the preceding paragraph. The importer in the
case on hand files an application for trade licence on 22.04.2020.
Bill of lading is dated 27.04.2020. Bill of entry is filed on
23.06.2020. The importer used its volition and choices for
importing the subject goods. It is not the argument of importer
that for contravention in any import the authorities does not
power to levy the penalty. The argument on the other hand is
that the circumstances the penalty imposed is not warranted.
The Tribunal, to the limited extent, rejecting this contention,
recorded its view.
We are in agreement with the view taken by the Appellate
Tribunal for sustaining the levy of penalty on importer. The
question is answered against the importer and in favour of
Revenue. For the above reasons, Customs Appeal No.13 of 2020
is dismissed. Custom Appeal No.14 of 2020 is allowed.
S.V.BHATTI
JUDGE
BECHU KURIAN THOMAS
JUDGE
Css/JS
