Madras High Court
M/S.Isha Exim vs The Commissioner Of Customs on 22 December, 2023
Author: C.Saravanan
Bench: C.Saravanan
W.P.No.7905 of 2023 and etc., batch
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on 18.08.2023
Pronounced on 22.12.2023
CORAM
THE HONOURABLE MR.JUSTICE C.SARAVANAN
W.P.Nos.7905, 7907, 7909, 7911, 7915, 7918, 7960 and 11888 of 2023 &
W.P.Nos.26225, 27828 and 30426 of 2022
and
W.M.P.Nos.8164, 8167, 8168, 8170, 8171, 8173, 8211, 11781, 11782 and
11784 of 2023 & W.M.P.Nos.25310, 25311, 27112, 29859 & 29860 of 2022
W.P.No.7905 of 2023:-
M/s.Isha Exim,
P-586 Block N, New Alipore,
Kolkata – 700 053,
Represented by its Proprietor
Shri Prabal Kumar Kundu ... Petitioner
Vs
1. The Commissioner of Customs,
Chennai-II Commissionerate
Customs House, No.60, Rajaji Salai,
Chennai – 600 001.
2. The Additional Commissioner of Customs,
Group-1, Chennai-II Commissionerate
Custom House, No.60, Rajaji Salai,
Chennai – 600 001.
1/41
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W.P.No.7905 of 2023 and etc., batch
3. The Assistant / Deputy
Commissioner of Customs,
Group-1B, Custom House,
No.60, Rajaji Salai,
Chennai – 600 001. ... Respondents
Prayer: Petition filed under Article 226 of the Constitution of India to issue a
Writ of Certiorari to call for the records of the second respondent in
F.No.Cus/APR/INV/19/2023-GR 1 leading to issuance of the show cause
notice No.06/2023 dated 24.01.2023 issued under Section 124 of the
Customs Act, 1962 and quash the same.
For Petitioners:
In W.P.Nos.7905, 7907, 7909, : Shri.Vijay Narayan,
7911, 7915, 7918, 7960 & learned Senior Counsel
11888 of 2023 and
W.P.Nos.26225, 27828 of for Mr.B.Sathish Sundar and
2022 Dr.S.Krishnananda
In W.P.No.30426 of 2022 :Mr.V.Sundareswaran
Senior Panel Counsel
For Respondents:
In W.P.Nos.7905, 7907, 7909, :Mr.V.Sundareswaran
7911, 7915, 7918, 7960 & Senior Panel Counsel
11888 of 2023 and
W.P.Nos.26225, 27828 of
2022
In W.P.No.30426 of 2022 Shri.Vijay Narayan,
learned Senior Counsel
2/41
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W.P.No.7905 of 2023 and etc., batch
COMMON ORDER
By this common order all the Writ Petitions are being disposed of.
2. In the following Writ Petitions, the petitioner has challenged the
following Show Cause Notices:-
Table 1:-
Sl. W.P.No. Date Show Cause Date Bill of Entry
No. Notice No. No.
1. 7905 of 2023 24.01.2023 No.06/2023 13.09.2022 No.2424168
2. 7907 of 2023 24.01.2023 No.07/2023 24.09.2022 No.2599722
3. 7909 of 2023 24.01.2023 No.08/2023 24.09.2022 No.2599722
4. 7911 of 2023 14.02.2023 No.09/2023 13.09.2022 No.2424171
5. 7915 of 2023 14.02.2023 No.10/2023 13.10.2022 No.2867223
6. 7918 of 2023 14.02.2023 No.11/2023 13.10.2022 No.2867208
7. 27828 of 2022 30.09.2023 No.17/2022 25.08.2022 No.2163427
3.In W.P.No.7960 of 2023, the petitioner has challenged the Order in
Original No.15/2023-Gr.1 dated 06.02.2023 pursuant to the Show Cause
Notice No.17/2022 dated 30.09.2022 impugned in W.P.No.27828 of 2022.
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W.P.No.7905 of 2023 and etc., batch
4. In W.P.No.26225 of 2022, the petitioner has prayed for a
Mandamus to release the consignment of Betel nut imported by the petitioner
covered by Bill of Entry No.2163427 dated 25.08.2022 which is subject
matter of W.P.No. 27828 of 2022.
5. Thus, W.P.No.26225 of 2022, W.P.No.27828 of 2022 and
W.P.No.7960 of 2023 pertain to the same Bill of Entry No.2163427 dated
25.08.2022. If, W.P.No.7960 of 2023 is allowed, no separate orders have to
be passed in W.P.No.26225 of 2022 W.P.No.27828 of 2022. They are either
liable to be dismissed or disposed.
6. W.P.No.30426 of 2022 has been filed by the Customs Department
against the order dated 31.03.2022 of the Customs Authority for Advance
Ruling, the second respondent therein bearing reference
OrderNo.CAAR/Del/Isha Exim/02/2022 rejecting their request for
Re-examination of earlier Ruling dated 31.02.2017 in
AAR/44/Cus/02/2017of the Authority For Advance Rulings [Central
Excise, Customs and Service Tax] (hereinafter referred to as AAR for short)
passed under Section 28I of the Customs Act, 1962.
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W.P.No.7905 of 2023 and etc., batch
7. The Advance Rulings dated 31.03.2017 in AAR/44/Cus/02/2017 of
the AAR was sought to be annulled by the Customs Department by the filing
of an application under Section 28K of the Customs Act, 1962 before the
Customs Authority for Advance Ruling.
8. The said authority has dismissed the application filed by the
Customs Department, the petitioner in W.P.No.30426 of 2022 under Section
28K of the Customs Act, 1962 to annul the Advance Rulings dated
31.03.2017 in AAR/44/Cus/02/2017 of the of AAR vide impugned order
dated 31.03.2022 bearing reference Order No.CAAR/Del/Isha
Exim/02/2022.
9. Classification of imported Betel nut by the petitioner is on the
strength of above Advance Rulings dated 31.03.2017 in
AAR/44/Cus/02/2017 of the AAR.
10. Relevant portion of the impugned Order No.CAAR/DEL/Isha
Exim/02/2022 dated 31.03.2022 impugned in W.P.No.30426 of 2022 reads
as under:-
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W.P.No.7905 of 2023 and etc., batch
“8. In the instant case, after going through the
representation dated 19.02.2020 made before the
erstwhile AAR for re-examination of the said advance
ruling by the erstwhile AAR, I find that the crux of the
representation is that "it appeared from the said test
report that the process of roasting involved in the
preparation of 'unflavoured supari as declared by the
importer before the Advance Ruling Authority was not
carried out on the imported goods", It is, therefore,
alleged that "the importer has misrepresented facts
before the Authority Authority." The representation
goes on to in proposing to classify argue that the
Authority has erred the subject goods under CTH
21069030 by not emphasizing on the word
"preparation" mentioned in Explanatory Note 2 to
Chapter 21 of the IISN."
9. I must at the outset clarify that correction of error,
as contended by the concerned Commissioner of
Customs, Chennai -11 is not an objective covered by
the scope of section 28K of the Customs Act read with
regulation 26 of CAAR Regulations, 2021.
10. Further, on careful consideration of the documents
submitted by the concerned Commissioner of Customs
and having pronounced advance rulings on the same
question of classification of betel nut items, albeit
disagreeing with the rulings of the erstwhile AAR, I am
not able to accord the crucial role ascribed to the
process of "roasting" as has been claimed by the
concerned Commissioner. The process of manufacture
of four varieties of supar?, involved inter alia boiling
and/or drying/roasting, with the objective to minimize
moisture content. On perusal of the said advance
ruling, it is obvious to me that the ruling of the Hon'ble
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W.P.No.7905 of 2023 and etc., batch
AAR was not dependent on the involvement or
otherwise of the process of "roasting". Therefore, I am
of the considered opinion that the contention of the
concerned Commissioner of Customs in this regard,
cannot be a ground for invocation of the provisions of
section 28K of the Customs Act read with regulation 26
of CAAR Regulations, 2021.
11. In view of the above, I decline to admit the said
representation dated 19.02.2020 by the Commissioner
of Customs, Chennai-II against the advance ruling No.
AAR/44/Cus/02/2017 dated 31.03.2017 pronounced by
the erstwhile Hon'ble AAR”
11. W.P.No.11888 of 2023 has been filed for a Certiorarified
Mandamus to call for the records of the respondent in
F.No.CUS/APR/MISC/1792/2023-GR1 leading to issuance of Provisional
Release Order No.33/2023-Gr.1 dated 27.03.2023 issued under Section
110A of the Customs Act, 1962 and quash the same and further direct the
respondent to release the goods under the said Section based on the orders of
this Hon’ble Court in W.P.Nos.34569, 34575, 34576, 34579, 34582 & 34584
of 2022 and connected WMPs all dated 01.02.2023 and also issue Detention
Certificate for waiver of Demurrage/Container Detention Charges, in terms
of Regulation 6(1)(l) of the Handling of Cargo in Customs Areas
Regulations, 2009 read with Regulation 10(1)(l) of the Sea Cargo Manifest
and Transshipment Regulation 2018.
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W.P.No.7905 of 2023 and etc., batch
12. By the impugned Provisional Release Order No.33/2023-Gr.1
dated 27.03.2023, the respondent therein has refused to order provisional
release of imported consignment of “Betel nut” covered by the following
Bills of Entries and Show Cause Notices as detailed below:-
Table 2:-
Sl. Bill of Bill of Show Show Cause File No. Re-assessed Applicable Duty
No. Entry Entry Cause Notice Date AV (in Rs.) on the
No. Date Notice No. re-assessed
value in Rs.
1. 2424168 13.09.2022 06/2023 24.01.2023 CUS/APR/INV/ 7,44,28.720 8,18,71,592
19/2023-GR 1
2. 2599722 24.09.2022 07/2023 24.01.2023 CUS/APR/INV/ 7,43,82,462 8,18,20.708
05/2023-GR 1
3. 2867225 13.10.2022 08/2023 24.01.2023 CUS/APR/INV/ 7.62,79,030 83,906,933
06/2023-GR 1
4. 2424171 13.09.2022 09/2023 14.02.2023 CUS/APR/INV/ 10.42.00.208 11,46,20,228
33/2023-GR 1
5. 2867223 13.10.2022 10/2023 14.02.2023 CUS/APR/INV/ 8,16,21,790 8,97,83,969
34/2023-GR 1
6. 2867208 13.10.2022 11/2023 14.02.2023 CUS/APR/INV/ 7,62,79,030 8,39,06,933
35/2023-GR 1
Total (in Rs.) 48,71,91,240 53,59,10,363
13.The petitioner has filed the above mentioned Bill of Entries
wherein the petitioner has declared the imported “Betel nut” as product
known as “Supari” (Unflavoured Supari) classifiable under Tariff Sub
Heading 2106 90 30 of the 1st Schedule to Customs Tariff Act, 1975 on the
strength of Advance Rulings dated 31.03.2017 in AAR/44/Cus/02/2017 of
the AAR.
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W.P.No.7905 of 2023 and etc., batch
14. Tariff Sub Heading 2106 90 30 under Tariff Heading 2106 of the
1st Schedule to Customs Tariff Act, 1975 reads as under:-
Table 3:-
Tariff Item Description of goods Unit Rate of duty
Standard Preferential
Areas
(1) (2) (3) (4) (5)
2106 Food Preparations not elsewhere
specified or included
2016 90 Other:
… … … … …
… … … … …
… … … … …
… … … … …
2106 90 30 Betel nut product known as Kg. 150% -
“Supari”
15. It is the contention of the Department, that the product imported by
the petitioner falls under residuary Sub Heading 0802 80 90 as “other”
under Tariff Heading 0802 80 for Areca nuts. Tariff Heading, 0802 to the
1st Schedule of the Customs Tariff Act, 1975 reads as under:-
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W.P.No.7905 of 2023 and etc., batch
Table – 4:-
Tariff Item Description of goods Unit Rate of duty
Standard Preferential
Areas
(1) (2) (3) (4) (5)
0802 Other nuts, fresh or dried, whether
or not shelled or peeled
0802 80 - Areca nuts:
… … … … …
… … … … …
… … … … …
0802 80 90 --- Other Kg. 100% 90%
16.Tariff Sub Heading “0802 80 90” is the residuary Tariff Entry
under the 1st Schedule to Customs Tariff Act, 1975. As mentioned above,
the petitioner had earlier obtained a clarification from the Authority for
Advance Rulings (Central Excise, Customs and Service Tax), (hereinafter
referred to as AAR) under Chapter V-B of the Customs Act, 1962 as it
stood in 2017 in AAR/44/Cus-1/14/2016 on 31.07.2017.
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W.P.No.7905 of 2023 and etc., batch
17. AAR had given its ruling in Ruling No.AAR/44/Cus/02/2017 on
31.07.2017. The aforesaid ruling was obtained by the petitioner by placing
reliance on the Advance Ruling No.AAR/CUS/08/2015 dated 07.08.2015 in
the case of M/s. Excellent Betelnut Products Pvt. Ltd., Nagpur.
Relevant portion of Advance Ruling No.AAR/44/Cus/02/2017 dated
31.03.2017 of AAR reads as under:-
4. Applicant seeks a ruling by this Authority on the
following issue;The goods sought to be imported,
namely; 'unflavoured supari', 'flavoured supari',
'API supar" and "Chikni supari being processed
Betelnut products which do not contain specified
ingredients, namely; lime, katha and tobacco but
containing other flavouring material / additives
are classifiable under Customs Tariff Heading
2106 90 30.
5. Applicant inter-alia submits that the items are
classifiable under Custom Tariff Hoading
21069030; that said entry in Customs Tariff Act,
1975 reads as under:-
Tariff Item Description of Goods
2106 Food preparations not elsewhere specified or
included
2106 90 -Other
2106 90 30 --Betelnut product known as Supari
Supplementary Note 2 to Chapter 21
(Miscellaneous edible preparations) defines Supari
as under:
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W.P.No.7905 of 2023 and etc., batch
In this chapter Betelnut product known as supari means
any preparation containing Betelnuts, but not containing
any one or more of following ingredients, namely, lime,
katha (Catechu) and tobacco whether or not containing
any other ingredients such as cardamom, copra or
menthol.
6. Applicant submits that subject products do not
contain lime, katha (catechu) ortobacco, that in
view of the processes carried out in preparation of
Imported goods,addition of other items and in the
light of the specific provision in Supplementary
Note 2 to Chapter 21, the goods proposed to be
imported merit classification under heading
21069030. Applicant relied on the Ruling dated
07.08.2015 of this Authority passed in the matter
of M/s Excellent Betelnut Products Pvt. Ltd. Vs.
Commissioner of Customs, Jawaharlal Nehru
Custom House, Nhava Sheva in Application No.
AAR/44/Cus/21/2014 wherein the identical goods
are held classifiable under 21069030.
7. It is noticed that the comments in respect of said
application were called for from Principal
Commissioner of Customs, Chennai-Il and
Commissioner of Customs (Nhava Sheva-II).
Commissioner of Customs, Chennal-II agreed
with the applicant that the subject items are
classifiable under Chapter Heading 21069030 as
"Betelnut Product as Supari”.
8. Principal Commissioner of Customs, Nhava Sheva
inter-alia submits that pure betelnuts or supari,
which have not undergone changes, to merit being
called as a product of supari, would remain to be
classified under Chapter 8; that there does not
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W.P.No.7905 of 2023 and etc., batch
appear to be any charge in the nature of the end
product undertaken, and therefore, it does not
merit classification under CTH 21069020.
Purther, reliance is also placed on the judgment
of the Hon'ble Supreme Court in case of M/s
Crane Betelnut Powder Works reported in 2007
(210) ELT 171(SC).
9. It is noticed that in an identical case, this
Authority in Ruling No. AAR/CUS/08/2015 dated
07.08.2015 in case of M/s Excellent Betelnut
Products Pvt. Ltd., Nagpur observed that the
contention of Revenue that in order to fit in
chapter 21, supari, which is also known as
Betelnut should undergo à diffèrent character
change, meaning & should not remain supari, is
incorrect due to the positive language of
Supplementary Note No. 2 which does not require
any such basic change in the character of the
product like Betelnut. Further, this Authority
observed that reliance by Revenue on the decision
of Hon'ble Supreme Court in case of M/s Crane
Betelnut Powder Works (supra) was completely
uncalled for as it was in respect of Central Excise
Act and also after sald judgment, an amendment
was brought in the Central Excise Tariff by way of
Chapter Note No. 6. In view of sald ruling of this
Authority in case of M/s Excellent Betelnut
Products Pvt. Ltd., it is clear that Supplementary
Note 2 to Chapter 21 does not require any change
in the nature of the end product and also reliance
on the Hon'ble Supreme Court Judgment in case
of M/s Crane Betelnut Powder Works is not
appropriate. Therefore, the contention of the
Revenue is not correct.
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W.P.No.7905 of 2023 and etc., batch
10. Revenue also submits that in respect of
applicant's claim that in case of "API Supari",
Betelnut is bolled for 6 hours, cannot be
conclusively proved and hence not ascertainable.
It is noticed from the process of preparation
submitted by the applicant in respect of "API
supari" that is not only restricted to boiling
Betelnut for 6 hours but includes removing of
large impurities by labour, boiling in water for 6-
8 hours with lemon peel and/or food starch for
imparting goods texture to product, drying,
polishing and packaging. Therefore, exact hours
of boiling of Betelnut is not so significant in said
process of preparation than its boiling in water
with lemon peel and / or food starch for the
purpose of imparting texture to the product as
also other processes. Therefore, contention of
Revenue is not correct.
11.Further, Revenue submits that unless the product
is seen at the time of import i.e., nature of
ingredients, manufacturing process and packing,
it would be difficult to decide the classification. It
is observed that applicant has narrated in detail
the nature of ingredients and manufacturing
process of subject goods. Therefore, contention of
Revenue is unfounded.
12.In view of the above, we rule as under;
The goods sought to be imported, namely; 'unflavoured
supari', 'flavoured supari', 'API supari and 'Chikni
supari’ being processed Betelnut products which do not
contain specified ingredients, namely, lime, katha and
tobacco but containing other flavouring material/
additives are classifiable under Customs Tariff
Heading 2106 90 30.”
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W.P.No.7905 of 2023 and etc., batch
18. As long as the Clarification Ruling of AAR dated 31.03.2017
remains undisturbed, classification of the imports of the petitioner which are
covered by the aforesaid Clarification Ruling will be governed by the
aforesaid ruling.
19. It will be not only binding on the importer but also on the customs
department. This is the mandate of Chapter V-B of the Customs Act, 1962.
This is also made clear in Section 28(J)(1) of the Customs Act, 1962, which
reads as under:-
“Section28J. Applicability of Advance Ruling-
(1) The advance ruling pronounced by the Authority under
section 28-I shall be advance ruling binding only-
a) on the applicant who had sought it;
b) in respect of any matter referred to in sub-section (2)
of section 28-H;
c) on the [Principal Commissioner of Customs or
Commissioner of Customs), and the customs authorities
subordinate to him, in respect of the applicant.”
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W.P.No.7905 of 2023 and etc., batch
20. When AAR had given its ruling on 31.03.2017 in Ruling
No.AAR/44/Cus/02/2017, Section 28J(2) of the Customs Act, 1962, reads
as under:-
“(2) The advance ruling referred to in sub-section (1) shall
be binding as aforesaid unless there is a change in law
or facts on the basis of which the advance ruling has
been pronounced.”
21. Thus, the Ruling No.AAR/44/Cus/02/2017 dated 31.03.2017 was
to bind the parties as per Section 28J(1) of the Customs Act, 1962 for all
time to come, unless the ruling is modified under Section 28K of the Customs
Act, 1962.
22. The provisions of Chapter V-B of the Customs Act, 1962 have
undergone few changes after Ruling No.AAR/44/Cus/02/2017 dated
31.03.2017 was obtained by the petitioner from AAR.
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W.P.No.7905 of 2023 and etc., batch
23. Section 28J(2) of the Customs Act, 1962 as it stood after order
dated 31.03.2017 was passed by AAR in favour of the petitioner stood
modified vide Section 92 of the Finance Act, 2022. Amended Section 28J(2)
of the Customs Act, 1962, now reads as under:-
“(2) The advance ruling referred to in sub-section (1)
shall remain valid for three years or till there is a
change in law or facts on the basis of which the
advance ruling has been pronounced, whichever is
earlier;
Provided that in respect of any advance ruling in force
on the date on which the Finance Bill, 2022 receives
the assent of the President, the said period of three
years shall be reckoned from the date on which the
said Finance Bill receives the assent of the President.”
24. As per the proviso to amended Sub-Section (2) to Section 28J of
the Customs Act, 1962, as amended by Section 92 of the Finance Act, 2022,
advance ruling referred to in sub-section (1) shall remain valid for three years
or till there is a change in law or facts on the basis of which the advance
ruling has been pronounced, whichever is earlier.
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W.P.No.7905 of 2023 and etc., batch
25. In view of the above, Rulings of AAR is now confined to for a
further period of three years from the date Finance bill received the assent of
the President of India.
26. Thus, if Ruling No.AAR/44/Cus/02/2017 dated 17.03.2021 is to
be upheld and is not disturbed, it has to remain in force for a period of further
three years till 2025, unless it is validly annulled under an order passed under
Section 28-K of the Customs Act, 1962.
27. Before proceeding to deal with the challenge to the impugned
notices in the rest of the Show Cause Notices as in Table-1 and impugned
Provisional Release Order dated 27.03.2023 passed in respect of Bills of
Entry in Table-2 and whether the importer is entitled for a Writ of
Mandamus in W.P No.26225 of 2022 and Writ of Certiorarified Mandamus
in W.P.No.11888 of 2023, I propose to first answer the issue in
W.P.No.30426 of 2022, as the classification adopted by the importer in the
imports is on the strength of the Clarification dated 31.03.2017 the AAR
bearing reference Ruling No.AAR/44/Cus/02/2017.
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W.P.No.7905 of 2023 and etc., batch
28. Therefore, I shall now proceed to first answer whether the Customs
Department is justified in challenging the order dated 31.03.2022 in Order
No.CAAR/Del/Isha Exim/02/2022 passed by the Customs Authority for
Advance Ruling (Central Board of Indirect Taxes and Customs) impugned in
W.P.No.30426 of 2022.
29. The provisions of the Customs Act, 1962, indicate that the
clarification in Ruling No.AAR/44/Cus/02/2017 dated 31.3.2017 as also the
impugned order passed under Section 28-K of the Customs Act, 1962 on
31.03.2022 bearing reference: Order No.CAAR/Del/Isha Exim/02/2022
impugned in W.P.No.30426 of 2022 were/are appealable within sixty days
from the date of the communication of such ruling or order under Section 28-
KA of the Customs Act, 1962.
30. When Ruling No.AAR/44/Cus/02/2017 dated 31.3.2017 was
passed by the AAR, appeal was to be filed under Section 28-KA of the
Customs Act, 1962 before the Appellate Authority as defined in Section
28E((ba) of the Customs Act, 1962 namely the Authority for Advance
Rulings constituted under Section 245-O of the Income Tax Act, 1961.
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W.P.No.7905 of 2023 and etc., batch
31. Since no appeal was filed before the Appellate Authority under
Section 28-KA of the Customs Act, 1962, an application was filed under
Section 28K of the Customs Act, 1962 to annul Ruling
No.AAR/44/Cus/02/2017 dated 31.3.2017 was passed by the AAR. It was an
indirect method to annul the said Ruling.
32. Vide Order No.CAAR/Del/Isha Exim/02/2022 dated31.3.2022,
application field under Section 28K of the Customs Act, 1962 to annul
Ruling No.AAR/44/Cus/02/2017 dated 31.3.2017 passed by the AAR was
rejected.
33. The order rejecting the review of Ruling No.AAR/44/Cus/02/2017
dated 17.03.2017 vide impugned Order No.CAAR/Del/Isha Exim/02/2022
dated 31.03.2022 is an appealable order under Section 28KA of the Custom
Act, 1962 before the High Court, in view of the amendment to Section 28-
KA of the Customs Act, 1962, vide Section 5(d)(i) of The Tribunal
Reforms (Rationalization and Conditions of Service) Ordinance, 2021
with effect from 04.04.2021.
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W.P.No.7905 of 2023 and etc., batch
34. Section 28KA of the Customs Act, 1962 as amended by the
Tribunal Reforms (Rationalization and Conditions of Service) Ordinance,
2021 with effect from 04.04.2021 now reads as under:-
Section 28KA: Appeal:-
(1) Any officer authorised by the Board, by notification,
or the applicant may file an appeal to the High Court
against any ruling or order passed by the Authority,
within sixty days from the date of the communication of
such ruling or order, in such form and manner as may
be prescribed:
Provided that where the High Court is satisfied that the
appellant was prevented by sufficient cause from
presenting the appeal within the period so specified, it
may allow a further period of thirty days for filing such
appeal.”
35. Such an appeal ought to been filed within sixty days of the
impugned Order No.CAAR/Del/Isha Exim/02/2022 dated 31.03.2022
before this High Court. Prior to amendment to Section 28KA of the vide
Section 5(d)(i) of The Tribunal Reforms (Rationalization and Conditions
of Service) Ordinance, 2021,appeal was to be filed before the Appellate
Authority namely Authority for Advance Rulings constituted under Section
245-O of the Income Tax Act, 1961.
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W.P.No.7905 of 2023 and etc., batch
36. Whether indeed the petitioner had resorted to falsehood or obtained
Ruling dated 31.03.2022 in Order No.CAAR/Del/Isha Exim/02/2022 from
AAR by giving incorrect and false particulars or not cannot be decided under
the supervisory jurisdiction under Article 226 of the Constitution of India.
37. Such power of correction is vested with this High Court in its
appellate jurisdiction under amened Section 28KA of the Customs Act,
1962.
38. The jurisdiction of this Court under Article 226 of the Constitution
of India cannot be transformed in an appellate jurisdiction especially when
the an appellate remedy exist under the Statute under amened Section 28KA
of the Customs Act, 1962.
39. In Assistant Commissioner (CT), LTU v. Glaxo Smith Kline
Consumer Health Care Limited, 2020 (36) G.S.T.L. 305 (S.C.), it was held
as under:-
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W.P.No.7905 of 2023 and etc., batch
“14. A priori, we have no hesitation in taking the view
that what this Court cannot do in exercise of its plenary
powers under Article 142 of the Constitution, it is
unfathomable as to how the High Court can take a
different approach in the matter in reference to Article
226 of the Constitution. The principle underlying the
rejection of such argument by this Court would apply on
all fours to the exercise of power by the High Court
under Article 226 of the Constitution.
15. In a given case, the assessee may approach the High
Court before the statutory period of appeal expires to
challenge the assessment order by way of writ petition
on the ground that the same is without jurisdiction or
passed in excess of jurisdiction - by overstepping or
crossing the limits of jurisdiction including in flagrant
disregard of law and rules of procedure or in violation
of principles of natural justice, where no procedure is
specified. The High Court may accede to such a
challenge and can also non-suit the petitioner on the
ground that alternative efficacious remedy is available
and that be invoked by the writ petitioner. However, if
the writ petitioner choses to approach the High Court
after expiry of the maximum limitation period of 60
days prescribed under Section 31 of the 2005 Act, the
High Court cannot disregard the statutory period for
redressal of the grievance and entertain the writ
petition of such a party as a matter of course. Doing so
would be in the teeth of the principle underlying the
dictum of a three-Judge Bench of this Court in Oil and
Natural Gas Corporation Limited (supra). In other
words, the fact that the High Court has wide powers,
does not mean that it would issue a writ which may be
inconsistent with the legislative intent regarding the
dispensation explicitly prescribed under Section 31 of
the 2005 Act. That would render the legislative scheme
and intention behind the stated provision otiose.
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W.P.No.7905 of 2023 and etc., batch
18. Suffice it to observe that this decision is on the facts
of that case and cannot be cited as a precedent in
support of an argument that the High Court is free to
entertain the writ petition assailing the assessment order
even if filed beyond the statutory period of maximum 60
days in filing appeal. The remedy of appeal is creature
of statute. If the appeal is presented by the assessee
beyond the extended statutory limitation period of 60
days in terms of Section 31 of the 2005 Act and is,
therefore, not entertained, it is incomprehensible as to
how it would become a case of violation of
fundamental right, much less statutory or legal right as
such.
40. If W.P.No.30426 of 2022 was filed within sixty days of passing of
the impugned Order dated 31.03.2022 in bearing No.CAAR/Del/Isha
Exim/02/2022, all these cases could have been referred to the Division of for
passing suitable order.
41. However, W .P.No.30426 of 2022 was filed beyond sixty days of
passing of the impugned Order dated 31.03.2022 in bearing
No.CAAR/Del/Isha Exim/02/2022. W.P.No.30426 of 2022 was filed on
15.11.2022.
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W.P.No.7905 of 2023 and etc., batch
42. Therefore, W.P.No.30426 of 2022 challenging the impugned
Order dated 31.03.2022 bearing reference No.CAAR/Del/Isha
Exim/02/2022 is liable to be dismissed. However, liberty is given to the
customs department to file such appeal under Section 28KA of the Customs
Act, 1962, if advised.
43. Coming to rest of the writ petitions challenging the Show Cause
Notices as tabulated in Table-I and Order-In-Original No.15/2023-GR
dated 06.02.2023 impugned in W.P No.7690 of 2023 and Provisional
Release Order dated 27.03.2023 impugned in W.P.No.11888 of 2023 are
concerned, the Court is of the view that the dispute pertains to classification
imported goods covered by the respective Bills of Entries which have been
filed.
44. Prima facie, “Areca nuts” are classifiable under Heading 0802 80
of the First Schedule to the Customs Tariff Act, 1975. There are four
categories of “Areca nuts” under Heading 0802 80 of the First Schedule to
the Customs Tariff Act, 1975 namely, (i)whole, (ii)split, (iii)ground and
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W.P.No.7905 of 2023 and etc., batch
(iv)other. Heading 0802 80 of the First Schedule to the Customs Tariff Act,
1975 is extracted below:-
Tariff Item Description of goods Unit Rate of duty
Standard Preferential
Areas
(1) (2) (3) (4) (5)
0802 Other nuts, fresh or dried,
whether or not shelled or
peeled
0802 80 - Areca nuts:
0802 80 10 --- Whole Kg. 100% 90%
0802 80 20 --- Split Kg. 100% 90%
0802 80 30 --- Ground Kg. 100% 90%
0802 80 90 --- Other Kg. 100% 90%
45. Sub Heading 2106 90 30 under Chapter 21 to the First Schedule
to the Customs Tariff Act, 1975 is under the category of “Miscellaneous
Edible Preparations”.
46. Chapter 21 to the First Schedule to the Customs Tariff Act, 1975
deals with processed food edible preparations. Chapter 21 does not prima
facie apply to products which are not processed as “edible preparations” as
the Chapter provides for classification of Miscellaneous edible preparations.
Product under Chapter 21 has to be a edible preparation.
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W.P.No.7905 of 2023 and etc., batch
47. As per Chapter Note 1 to Chapter 21 of the First Schedule to the
Customs Tariff Act, 1975, only certain categories of products are excluded
from its provisions. Chapter Note (1) of the First Schedule to the Customs
Tariff Act, 1975 reads as under:-
“1. This Chapter does not cover:
(a) mixed vegetables of heading 0712;
(b) roasted coffee substitutes containing coffee in any
proportion (heading 0901);
(c) flavoured tea ( heading 0902);
(d) spices or other products of headings 0904 to
0910;
(e) food preparations, other than the products
described in heading 2103 or 2104, containing
more than 20% by weight of sausage, meat, meat
offal, blood, insect, fig 2103 2104,containingther
aquatic invertebrates, or any combination thereof
(Chapter 16);
(f) *products of heading 2404;
(g) yeast put up as a medicament or other products of
heading 3003 or 3004; or;
(h) prepared enzymes of heading 3507.”
48. Supplementary Note 2 to Chapter 21 to the First Schedule to
the Customs Tariff Act, 1975 has defined the expression “betel nut
product known as Supari” as follows:-
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W.P.No.7905 of 2023 and etc., batch
“2. In this Chapter “betel nut product known as
Supari” means any preparation containing betel nuts,
but not containing any one or more of the following
ingredients, namely: lime, katha (catechu) and tobacco
whether or not containing any other ingredients, such as
cardamom, copra or menthol.”
49. Sub Heading 2106 90 30 under Chapter 21 to the First Schedule
to the Customs Tariff Act, 1962 relates to “Miscellaneous Edible
Preparations”. As per Chapter Note 2 “betel nut product known as
Supari” means any preparation containing betel nuts, but not containing any
one or more of the following ingredients, namely: lime, katha (catechu) and
tobacco whether or not containing any other ingredients, such as cardamom,
copra or menthol. It has to be prepared.
50. Thus, “edible preparations” containing “betel nuts” are “supari”.
Such “edible preparation” may or may not contain any other ingredients, such
as cardamom, copra or menthol.
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W.P.No.7905 of 2023 and etc., batch
51. However, if “edible preparation” which contains “betel nut”
along with one or more of the following ingredients, namely lime, katha
(catechu) and/or tobacco, then such edible preparation is to be considered
as “betel nut product known as supari” for the purpose of Chapter 21 of
the First Schedule to the Customs Tariff Act,1975.
52. Betel nut product imported by the importer(s) whether is to be
identified as “supari” under Sub Heading 2106 90 30 under Chapter 21 to
the First Schedule to the Customs Tariff Act, 1975 or under residuary Sub
Heading 0802 80 90 to the First Schedule to the Customs Tariff Act, 1975
is to be ascertained by physical and chemical examination of the and by
applying the commercial parlance test by the Assessing Officer under Section
17 and 18 of the Customs Tariff Act, 1975 in the course of the Assessment.
53. The Show Cause Notices issued to the imported itself indicates that
the imported consignments of betel nut have been classified by the importer
under Heading 2106 90 30 have already been examined in a chemical
laboratory.
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W.P.No.7905 of 2023 and etc., batch
54. As mentioned elsewhere, whether the items are to be either
classified under residuary Chapter Sub Heading 0802 80 90 as has been
alleged in the Show Cause Notices in Table-I and confirmed in impugned
Provisional Release order dated 27.03.2023 impugned in W.P No.11888 of
2023 or under Chapter Sub Heading 2106 9030 of First Schedule to the
Customs Tariff Act, 1975 as claimed by the importer in the respective Bills
of Entries is a question of fact.
55. Whether the imported product fall under Chapter Heading
0802 80 90 of the First Schedule to the Customs Tariff Act, 1975 or under
Sub-Heading 2106 90 30 of the First Schedule to the Customs Tariff Act,
1975 and whether it is covered by Ruling dated 31.03.2017 of AAR in
AAR/44/Cus/02/2017 is a question of fact. Court cannot determine the same
as long as the Clarification/Ruling is in force, imports satisfy the description
it should be followed.
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W.P.No.7905 of 2023 and etc., batch
56. Therefore, whether the imported consignment is covered by Ruling
dated 31.03.2017 of AAR in AAR/44/Cus/02/2017 is to be ascertained only
by the Assessing Officer.
57. It is noticed that earlier under Foreign Trade Policy 2015-2020
import of “Areca Nut” falling under residuary Chapter Sub Heading 0802
80 90 of the First Schedule to the Customs Tariff Act, 1975 was freely
importable. The Minimum import price was Rs.162 per Kilogram.
58. By Notification No.35/2015-2020 dated 17.01.2017 the minimum
price for import of Areca Nuts was enhanced to Rs.251 per kilogram issued
by the Director General of Foreign Trade, New Delhi in the exercise of power
conferred under Section 3 of the FT (D&R) Act, 1992, read with Paragraph
1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, minimum price for
import of Areca Nuts was enhanced to Rs.251 per kilogram.
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W.P.No.7905 of 2023 and etc., batch
59. Later by Notification No.20/2015-2020 of the Director General of
Foreign Trade, New Delhi, dated 25.07.2018, Notification No.35/2015-2020
dated 17.01.2017 was amended.
60. As per Notification No.20/2015-2020 dated 25.07.2018 of the
Director General of Foreign Trade, New Delhi import of all the four
categories of “Areca Nut” under residuary Chapter Sub Heading 0802 80
under Sub Heading 0802 80 10; Sub Heading 0802 80 20; Sub Heading
0802 80 30 and Sub Heading 0802 80 90 of the Customs Tariff Act, 1975
were prohibited if the CIF Value import was below Rs.251 per kilogram.
61. It was however reiterated that they are freely importable if the CIF
value was above Rs.251/- per kilogram. Text of Notification No.20/2015-
2020 dated 25.07.2018 of the Director General of Foreign Trade is
reproduced below:-
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W.P.No.7905 of 2023 and etc., batch
Government of India
Ministry of Commerce and Industry
Department of Commerce
Notification No.20/2015-2020
New Delhi, 25 July, 2018
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, in
supersession of Notification NO.35/2015-2020 dated 17
January, 2017, amends the Import Policy of arecanut
under Exim Code 0802 80 of Chapter 8 of ITC (HS)
2017, Schedule 1 (Import Policy) as under:-
Exim Code Item Policy Revised Existing Policy Revised Policy
Description Policy conditions Conditions
Areca Nuts:
0802 80 10 Whole Free Prohibited Provided CIF value However, import is
is Rs.251/- and free if CIF value is
above per Kilogram Rs.251/- and above
per Kilogram.
0802 80 20 Split Free Prohibited Provided CIF value However, import is
is Rs.251/- and free if CIF value is
above per Kilogram Rs.251/- and above
per Kilogram.
0802 80 30 Ground Free Prohibited Provided CIF value However, import is
is Rs.251/- and free if CIF value is
above per Kilogram Rs.251/- and above
per Kilogram.
0802 80 90 Other Free Prohibited Provided CIF value However, import is
is Rs.251/- and free if CIF value is
above per Kilogram Rs.251/- and above
per Kilogram.
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W.P.No.7905 of 2023 and etc., batch
2.Effect of this Notification: Import of arecanut over
and above CIF Rs.251/- per kilogram is free and import
below CIF Rs.251/- is prohibited.
62. Notification No.20/2015-2020 dated 25.07.2018 issued under the
provisions of the Foreign Trade (Development and Regulation) Act, 1992
read with Foreign Trade Policy 2015-2020 was intended only to protect the
domestic farmers so that there is parity in price and level playing.
63. The Central Government in the exercise of power conferred under
Section 14(2) of the Customs Act,1962, had fixed the tariff value in respect
of the imported goods as described in Table-3 and the corresponding Tariff
Heading in Column-II to Notification No.68/2022-Customs(NT) dated
12.08.2022. Notification No.68/2022-Customs(NT) dated 12.08.2022
amended Notification No.36/2001-Customs(NT) dated 03.08.2001.
64. Notification No.68/2022-Customs(NT) dated 12.08.2022
amended Table-I to Notification No.36/2001-Customs(NT) dated
03.08.2001 and added Table II & Table III to the said Notification.
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W.P.No.7905 of 2023 and etc., batch
65. For the purpose of valuation of the Areca Nut under Sub-Heading
0802 80, the Tariff Value was fixed at 6853 US $ per metric ton.
Consequently, the imported consignments of “Areca Nuts” imported can be
provisionally assessed on the tariff value under Notification No.68/2022-
Customs(NT) dated 12.08.2022 and cleared without prejudice to the rights of
either parties.
66. That apart, it is noticed that Section 11 of the Customs Act, 1962
has been amended by Section 59 of the Finance Act, 2018. It has inserted
Section 11(3) to the Customs Act, 1962. It reads as under:-
Section 11(3) Any prohibition or restriction or
obligation relating to import or export of any goods or
class of goods or clearance thereof provided in any
other law for the time being in force, or any rule or
regulation made or any order or notification issued
thereunder, shall be executed under the provisions of
that Act only if such prohibition or restriction or
obligation is notified under the provisions of this Act,
subject to such exceptions, modifications or adaptations
as the Central Government deems fit.”
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W.P.No.7905 of 2023 and etc., batch
67. However, as per Section 59 of the Finance Act, 2018, sub-clause
(3) to Section 11 of the Customs Act, 1962 will come into force on the date
when it is notified by the Central Government. There are no notifications
available to indicate that Section 11(3) of the Customs Act, 1962 as inserted
by Section 59 of the Finance Act, 2018 has been brought into force.
68. Section 111 of the Customs Act, 1962 contemplates confiscation
of improperly imported goods. Even if the goods imported consignment of
“betel nut” by the importer are classifiable under residuary Sub Heading
0802 80 90 of the First Schedule to the Custom Tariff Act, 1975 and are
prohibited as per Notification No.20/2015-2020 of the Director General of
Foreign Trade, New Delhi dated 25.07.2018, since the declared import value
is below Rs.251/- per kilogram, there is no scope for not releasing them on
payment of redemption fine under Section 125 of the Customs Act, 1962, as
long as Custom Duty is paid in terms of Notification No.68/2022-
Customs(NT) dated 12.08.2022 on the tariff value.
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W.P.No.7905 of 2023 and etc., batch
69. Therefore, as long as custom duty is paid by the importers on the
tariff value under Notification No.68/2022-Customs(NT) dated 12.08.2022
based on provisional assessment, I see no impediment in allowing provisional
release of the imported consignment of “betel nut”. Therefore, even if, the
imported consignment of “betel nut” is classified under residuary Chapter
Sub Heading 0802 80 90 of the First Schedule to the Customs Tariff Act,
1975, it can be allowed to be cleared provisionally on payment of customs
duty on the value in terms of Notification No.68/2022-Customs(NT) dated
12.08.2022.
70. Therefore, the rights of the petitioner to clear the import
consignments covered by W.P.No.11888 of 2023 provisionally under
Section 110 of the Customs Act, 1962 shall be subject to payment of
customs duty on the tariff value Notification No.68/2022-Customs(NT)
dated 12.08.2022.
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W.P.No.7905 of 2023 and etc., batch
71. Since there is a direction to the petitioner to pay customs duty by
adopting transaction value in terms of Notification No.68/2022-Customs
(NT) dated 12.08.2022, absolute confiscation of the imported consignment
need not be ordered. They can be ordered to be released subject to payment
of necessary customs duty on the Tariff Value in terms of Notification
No.68/2022-Customs(NT) dated 12.08.2022.
72. In the result:-
i. The Writ Petitions in W.P.Nos.7905, 7907, 7909, 7911, 7915, 7918 of
2023 & 27828 of 2022 challenging the Show Cause Notices which
have been issued to the petitioners are directed to be disposed in
accordance with the observations contained herein.
ii. Impugned Order in Original No.15/2023-Gr.1 dated 06.02.2023
impugned in W.P.No.7960 of 2023 is allowed by remitting the case
back to the respondent to re adjudicate Show Cause Notice
No.17/2022 dated 28.08.2022 along with the other cases.
iii. W.P.No.26225 of 2022 and W.P.No.27828 of 2022 stands disposed in
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W.P.No.7905 of 2023 and etc., batch
view of the order passed in other Writ Petitions.
iv. Impugned Provisional Release Order dated 27.03.2023 impugned in
W.P.No.11888 of 2023 stands quashed and the case is remitted back to
the respondent. Goods covered by the respective Bill of Entries are
directed to be cleared provisionally.
v. Consignment Goods covered by the respective Bill of Entries are
allowed to be cleared provisionally forthwith subject to the petitioner
paying customs duty and applicable duties and furnishing such security
which may be demanded to secure the interest of revenue for any
Redemption Fine that may be imposed under Section 125 of the
Customs Act, 1962.
vi. W.P.No.30426 of 2022 stands dismissed. No costs. Consequently,
connected miscellaneous petitions are closed.
.12.2023
Neutral Citation: Yes/No
Index: Yes/ No
Speaking/Non-speaking Order
krk/rgm
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W.P.No.7905 of 2023 and etc., batch
C.SARAVANAN, J.
krk/rgm
To
1. The Commissioner of Customs,
Chennai-II Commissionerate
Customs House, No.60, Rajaji Salai,
Chennai – 600 001.
2. The Additional Commissioner of Customs,
Group-1, Chennai-II Commissionerate
Custom House, No.60, Rajaji Salai,
Chennai – 600 001.
3. The Assistant / Deputy
Commissioner of Customs,
Group-1B, Custom House,
No.60, Rajaji Salai,
Chennai – 600 001.
Pre-Delivery Order made in
W.P.Nos.7905, 7907, 7909, 7911, 7915, 7918, 7960 and 11888 of 2023 &
W.P.Nos.26225, 27828 and 30426 of 2022
and
W.M.P.Nos.8164, 8167, 8168, 8170, 8171, 8173, 8211, 11781, 11782 and
11784 of 2023 & W.M.P.Nos.25310, 25311, 27112, 29859 & 29860 of 2022
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