Single Judge directed release of seized black pepper via bond under Section 110A Customs Act, relying on precedent and lack of objection from DPII, while preserving right to final adjudication.
Release of seized consignment within one week of payment of duty and execution of bond in lieu of bank guarantee.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
W.P.[MD]No.22788 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 12.01.2022
CORAM:
THE HONOURABLE MR.JUSTICE M.SUNDAR W.P.[MD]No.22788 of 2021
and W.M.P(MD).No.19248 of 2021
M/s.Travancore Solvents & Oils, Rep. by its Proprietor, VI/260(20), IInd Floor, Palmlands Buildings, Bank Junction, Aluva, Ernakulam – 683 101, Kerala State. : Petitioner
Vs.
Custom House, New Harbour Estate, Tuticorin – 628 004.
Tuticorin – 628 004. : Respondents
P RAYER: Writ Petitions filed under Article 226 of the Constitution of India for issuance of Writ of Mandamus directing the respondents 1 to 3 to release forthwith the petitioner's consignment of imported Black Pepper under Bill of Entry No.4656562 dated 13.07.2021.
For Petitioner : Mr.Isaac Mohanlal, Senior Counsel Assisted by Mr.K.Ragatheesh Kumar, for M/s.Isaac Chambers (Law Firm) For Respondents : Mr.B.Vijay Karthikeyan, Senior Standing Counsel for Customs for R1 to R4
O R D E R
The writ petitioner has imported '30120.00 kilograms of Black https://hcservices.ecourts.gov.in/hcservices/ Pepper Sri Lankan origin' (hereinafter 'said consignment' for the sake of convenience and clarity). A 'Bill of Entry dated 13.07.2021 bearing reference No.4656562' (hereinafter 'said Bill of Entry' for
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the sake of convenience and clarity) for home consumption was filed. Thereafter more than two and half months later, writ petitioner was visited with a summons under Section 108 of 'the Customs Act, 1962 (Act No.52 of 1962)' (hereinafter 'said Act' for the sake of convenience and clarity) calling upon the writ petitioner to give annual statement, balance sheet, remittance particulars etc., and the writ petitioner was called upon to appear before the officer concerned on 12.10.2021. This Court is informed that the writ petitioner appeared and produced the documents sought for. Thereafter as the consignment was not released, the writ petitioner sent two representations one dated 08.10.2021 and another dated 21.10.2021. Immediately thereafter, a seizure memo was issued on 26.10.2021 seizing the said consignment. Though no reasons have been given in the seizure memo, as the said consignment remains seized, writ petitioner has come before this Court with the captioned writ petitioner seeking release of said consignment vide said Bill of Entry. This Court issued notice on 23.12.2021 vide proceedings which reads as follows:
' Mr.Isaac Mohanlal, learned Senior Advocate instructed by the Counsel on record for the writ petitioner is before me.
2.Learned Senior Counsel submits that the captioned writ petition pertains to import of Black Pepper from Sri Lanka, a similar issue came up before this Court vide W.P.(MD)No.21469 of 2021 and the same was disposed of by this Court in and by order dated 03.12.2021.
3.Mr.R.Aravindan, learned Senior Standing Counsel for Customs who accepts notice on behalf of all the four respondents submits that there may be certain factual differences qua the aforementioned earlier order cited by learned Senior Counsel and learned Revenue Counsel requests for time to get instructions and revert to this Court. Request acceded to.
Thereafter, there were four listings on 04.01.2022, 06.01.2022, 10.01.2022 and 11.01.2022 respectively and the proceedings made on those listings are read as follows:
Proceedings dated 04.01.2022 :
' Read this in conjunction with and in continuation of earlier proceedings made in previous listing on 23.12.2021. Today, this Court is informed that there is a change in learned Revenue counsel and in place of Mr.R.Aravindan, learned Senior Standing Counsel, Mr.B.Vijay Karthikeyan, learned Senior Standing Counsel for Central Excise and Customs would now be representing the respondents. Registry to show the name of Mr.B.Vijay https://hcservices.ecourts.gov.in/hcservices/ Karthikeyan, learned Senior Standing Counsel for Central
Excise and Customs from the next listing.
2. Learned Revenue counsel submits that a counter-
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affidavit has been email filed but the same has not been placed before me. Let the Registry do the needful before the next listing.
3. List on 06.01.2022. '
Proceedings dated 06.01.2022 :
' At request of Revenue Counsel, list under the Admission Board on Monday (10.01.2022) .' Proceedings dated 10.01.2022 :
'Read this in conjunction with and in continuation of earlier proceedings made in previous listing on 04.01.2022.
2. Today the counter-affidavit filed by the respondents forming part of a typed set of papers (referred to in 04.01.2022 proceedings) has been placed before this Court.
3. List in the admission board tomorrow.
4. List on 11.01.2022. '
Proceedings dated 11.01.2022 :
' When the matter was taken up, order dated 22.12.2021 made in W.A(MD No.1782 of 2021 by a Hon'ble Division Bench of this Court in M/s.Al Qahir International case came up for consideration.
2. Learned Revenue Counsel requested for a short accommodation to get instructions on implementation qua the aforementioned order and revert to this Court. Request acceded to. List tomorrow in the admission boar i.e., motion list.
3. List on 12.01.2022. '
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before me are, order dated 14.07.2021 made in W.P.No.12454 of 2021, order dated 23.08.2021 made in W.P(MD) No.13790 of 2021 and order dated 03.12.2021 made in W.P(MD) No.21469 of 2021.
Paragraph 38 of Single Judge's order:
' 38.In this context, the earlier order passed by the learned Judge referred to above in similar circumstances in M/s.Global Metro case, can very well be followed in the present case also. Accordingly, I am of the view that this writ petition can be disposed of with the following order:
(i)that the impugned order is set aside for the reasons discussed above and in view of the https://hcservices.ecourts.gov.in/hcservices/ same, the respondent is hereby directed to pass orders for releasing the goods in question by
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way of provisional release of course by imposing the following conditions:
that the petitioner shall pay the entire customs duty and also to execute a bank guarantee for interest, penalty or charges that may be charged and in this context, the respondent before passing such order for provisional release, shall quantify the amount, which may be imposed by way of penalty and charges etc., on the petitioner and equal to that amount, the bank guarantee shall be obtained from the petitioner and after getting the same, the goods in question shall be released by way of provisional release.
(ii)Further, this Court wants the respondent Customs Department to complete the adjudication process at the earliest, for which, the petitioner shall cooperate without taking any unnecessary adjournments and after completing the adjudication process at the earliest, within a reasonable time, ultimately if the Customs Department comes to a conclusion that the goods in question are prohibited goods, within the meaning of notification dated 25.07.2018, the needful as per law shall be undertaken by the Customs Department. That apart, the Customs Department shall also make a recommendatory report to the DGFT to initiate action against the petitioner within the meaning of Section 8 of the Foreign Trade (Development and Regulation) Act, 1992. The needful as indicated above to pass orders of making provisional release of the goods concerned shall be undertaken within a period of one week from the date of receipt of a copy of this order.
(iii) It is further made clear that, insofar as the claim to be made with regard to the waiver charges, it can be considered separately in accordance with law. '
Paragraphs 12 to 14 of order of Division Bench:
' 12. To make it clear, we modify the condition imposed by the Writ Court to furnish bank guarantee to furnish a bond to the same value. So far as the adjudication is concerned, the authorities are to proceed with the same without being influenced by this order as this order does not express any opinion in that regard.
13. Excepting the above modification, the order passed by the learned Single Judge in all other aspects https://hcservices.ecourts.gov.in/hcservices/ shall stand confirmed.
14. The writ appeal is disposed of accordingly. No Costs .'
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' 9......... There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morris in Herrington v. British Railways Board [(1972) 2 WLR 537 : 1972 AC 877 (HL) [Sub nom British Railways Board v. Herrington, (1972) 1 All ER 749 (HL)]]. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases.'
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' Heard Mr.Vijay Narayan, learned senior counsel appearing for Dr.S.Krishnandh, learned counsel for the petitioner and Mr.K.Mohanamurali, learned Senior Panel https://hcservices.ecourts.gov.in/hcservices/ Counsel for Customs Department/R1 to R4 and Mr.V.Sundareswaran, learned Senior Panel Counsel for the Directorate of Revenue Intelligence (DRI)/R5 & R6.
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2. This Writ Petition challenges, by way of certiorarified mandamus, communication dated 25.05.2021, which has been issued by R4/Deputy Commissioner of Customs conveying the decision of the Chief Commissioner of Customs rejecting the petitioner's request for provisional release of consignments of import of black pepper that have been seized vide seizure memo dated 03.04.2021. They also seek a direction to the respondents to release the goods provisionally in terms of Section 110A of the Customs Act 1962 (in short 'Act') and issue Demurrage-cum-Detention Waiver Certificate for waiver of Demurrage and Container Detention Charges, in respect of the said goods in terms of Section 6(1)(l) of Handling of Cargo in Customs Areas Regulations 2009 read with Regulation 10(1)(l) of Sea Cargo Manifest and Transhipment Regulations, 2018.
3. The petitioner has imported five consignments vide Bill of Entry Nos. 3185706 dated 17.03.2021, 3212240 dated 19.03.2021, 3256382 dated 23.03.2021, 3256389 dated 23.03.2021 and 3308760 dated 26.03.2021. The petitioner sought release of the consignments, both before the DRI as well as the authorities under the Customs Act, being the Commissioner of Customs as well as the Chief Commissioner of Customs. A detailed communication of the DRI dated 26.04.2021 indicates certain concerns that the DRI had entertained in regard to the consignments imported.
4. The crux of the litigation turns upon the valuation of the consignments in question, as Notification No.21/2015-20 dated 25.07.2018 (Notification in question) permits entry of black pepper falling under Entry No.0904 11 30 only if the CIF value of the import was Rs.500/- per kg or above. Imports of value less than Rs.500/- per kg is prohibited. It was the apprehension of the DRI that the goods have been over valued by the petitioner in order to render them freely importable, the word 'free' being used in the context of 'permitted to be imported', as the commodities are otherwise subject to duty at the rate of 8%.
5. Being of the view that the value of the consignments was in excess of what was the true value, investigation was undertaken by the DRI. The ongoing investigation takes note of various documents that appear to indicate that the pricing of the commodity was less than that revealed by the petitioner and also that full consideration had not been remitted to the supplier overseas. Moreover, the DRI states that it is in possession of information to the effect that sales of the consignments importer earlier had been undertaken by the petitioner in the open market at a sum less than the import value.
6. On the basis of the aforesaid material stated to https://hcservices.ecourts.gov.in/hcservices/ have been gathered by the DRI, the apprehension that arose was that the goods had been consciously inflated in value merely to enable their import in terms of the Notification
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in question. This narration is captured in the communication of DRI dated 26.04.2021 issued to the Deputy Commissioner of Customs, wherein, in conclusion they say that investigation was under progress and that the report would be forwarded to the Customs Department, post completion. As far as release is concerned, the ball is placed in the court of customs, the DRI leaving it to the customs authorities to consider the request for release in terms of Section 110 A of the Act.
7. The final stand of the DRI however, as conveyed vide communication dated 15.04.2021, paragraph 2 is categoric to the effect that 'this office does not have any objection for provisional release of the said goods'. They continue to state at paragraph 3 that 'It is herein requested that the said goods may be provisionally released as per the conditions stipulated under section 110 A of Customs Act, 1962.'. Thus the DRI before whom the investigation is stated to be on-going in regard to the valuation of the goods has expressed no objection for the release of the same.
8. Based on the communication of the DRI dated 15.04.2021, the Deputy Commissioner/R2 on 05.05.2021 communicates to the petitioner that the request for provisional release was rejected by the adjudicating authority. There is some confusion as to who is the adjudicating authority in this case, as in the communications of the Deputy Commissioner of Customs, she merely refers to the rejection of request by the 'adjudicating authority' without specifying who that authority is. Petitioner before me is also unable to clarify this issue.
9. The request of the petitioner before the Chief Commissioner (who is not arrayed as a party before me) has been rejected and conveyed to the petitioner by the Deputy Commissioner under impugned order dated 25.05.2021. The order is cryptic and merely rejects the request stating that the import of the goods was prohibited as per the policy condition. It appears to me that the cart has been put before the horse, as admittedly investigation is presently on-going.
10. The crux of the apprehensions are as follows:
3. Investigation has revealed the following:
The imports of Black Pepper from Sri Lanka by M/s Global Metro in controlled by Shri Arshad Shajahan.
M/s Global Metro has imported black pepper by declaring the unit price in the range of Rs 501 to Rs. 512/kg. The terms of payment as per https://hcservices.ecourts.gov.in/hcservices/ the Invoice in most cases is around 50% on DP/DAP terms i.e. Documents against Payment and balance on DA terms L.e. Documents against
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Acceptance. The time limit for making DA payment is 90 days to 120 days as per commercial Invoice.
The said importer has made payments to the overseas muppliers only to an extent of payment against DP terms as per the Commercial Invoice. However, he has not paid the balance amount to the overseas supplier even after the expiry of time period of 90-120 days. He has accepted all the imported Black Pepper without raising any objection with the overseas suppliers on quality issues, in sum, there is no reason recorded by M/s Global Metro to make the lower payments.
As per the documents recovered such as Sales Contract, email communication recovered during the search of the premises of M/s Global Metro it is found that the actual unit price of Black Pepper imported by M/s Global Metro from Sri Lanka is between USD 3- USD 4 per Kg L.e. much below the declared unit price of Rs. 500 per Kg and less than the MIP specified in the FTP making the goods prohibited.
On receipt of such imported black pepper from M/s Global Metro has sold them in the domestic market at a Unit price in the range of Rs. 300- Rs. 425/kg although the unit price of Rs. 502-Rs. 515/kg has been declared to the Customs authorities for the said imports.
Further, the total value of import of Black Pepper by M/s Global Metro, as declared to Customs, for the period from May-2020 till date is around 31 Crores. However, it appears that M/s Global Metro has paid only around half of the said amount to their overseas suppliers of Black Pepper in Sri Lanka as per their Bank accounts Statements. Shri Arshad Shajahan of M/s Global Metro has confirmed in his statement that the balance amount to be paid to the Overseas Supplier would never be paid. The content of statement was corroborated by the documents found during investigation.
The above facts have been evidenced by the analysis of bank statements, email communications, e-way bills and the informal accounts maintained by relevant entities.
11. No details of incriminating material have been furnished that would substantiate the conclusion that the goods have been inflated in value. As far as the balance of https://hcservices.ecourts.gov.in/hcservices/ the consideration remaining to be paid to the overseas supplier, this is a matter of negotiation between the supplier and the importer and would not concern the
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statutory authorities in the matter of valuation of the goods. There are also certain statements that appear to have been recorded in the course of the on-going investigation. All in all, the apprehensions expressed are, as of now, just apprehensions, and would have to be supported by tangible material in order to establish a prima facie case against the petitioner.
12. I am given to understand by the learned Senior Standing Counsels for the Customs Department as well as for the DRI that the process of investigation would take some time and cannot be hurried.
13. The commodity in question is agricultural produce. The variety of black pepper imported is stated to be specific to the region of Srilanka, an important ingredient in the making of spices used in Indian cuisine, with a short shelf life. Assuming for the sake of argument that investigation is concluded in favour of the petitioner, if the provisional release is not granted, the entire consignments would have been compromised. The balance of convenience would thus require, in my considered view, that the consignments be released, subject to the petitioner being put to terms. This would also ensure that the interests of the Department are securely protected. The petitioner will remit the entire duty and furnish bond to the satisfaction of the Assessing Authority in regard to interest payable, penalty or charges that may be deemed necessary.
14. The impugned order is set aside. It is made clear that nothing contained in this order will stand in the way of an independent enquiry by the authorities in the ongoing investigation. The Deputy Commissioner of Customs/R3 is directed to quantify the duty and bond amounts and communicate the same to the petitioner forthwith and release the goods within a week of such remittance by the petitioner.
15. On the issue of waiver of demurrage charges, the issue is left open to be pursued before the authorities in the light of applicable Rules and Regulations.
16. This Writ Petition is disposed as above. No costs. Connected Miscellaneous Petitions are closed.'
(a) The second respondent i.e., the Joint
Commissioner of Customs is directed to quantify the duty, bond amounts etc., communicate the same to the https://hcservices.ecourts.gov.in/hcservices/ petitioner forthwith and release the said consignment within one week of said remittance i.e., quantified duty/bond amounts/execution of bonds by the petitioner;
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(b) It is made clear that nothing contained in this order will stand in the way of an independent inquiry by the authorities in the ongoing investigation. In other words, show cause notice adjudication can proceed and the same can be carried to its logical end on its own merits and in accordance with law uninfluenced/untrammelled by any view or opinion expressed by this Court. Though obvious, I make it clear that I have not expressed any view or opinion on the merits of the matter qua allegations of which the said consignment has been seized;
(c) On the issue of waiver of demurrer charges, the issue is left open to be pursued by the authorities in the light of applicable rules and regulations.
There shall be no order as to costs.
Sd/-
Assistant Registrar (CS-II)
// True Copy //
/ /2022 Sub Assistant Registrar(CS)
pkn
To
RK(01/02/2022) 12P 7C
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2 issues framed by the court
Whether the Collector of Customs is directed to grant provisional release of seized black pepper imported below Minimum Import Price by executing a bond instead of bank guarantee.
Whether pending investigation into alleged invoice overvaluation bars immediate release of seized consignment under Section 110A of the Customs Act.
Colour shows how this judgement treated each authority
Padma Sundara Rao v. State of Tamil NaduFollowed¶72
Padma Sundara Rao v. State of Tamil Nadu (2002) 3 SCC 533 · Who else cites this
M/s.Al Qahir International v. The Commissioner of CustomsFollowed¶53
Al Qahir International v. The Commissioner of Customs
The Commissioner of Customs (Exports) v. M/s.Sri G.P.R.LeathersDistinguished¶52
The Commissioner of Customs (Exports) v. M/s.Sri G.P.R.Leathers
Unik Traders v. Directorate of Revenue IntelligenceDistinguished¶52
Unik Traders v. Directorate of Revenue Intelligence, Chennai 2019 (367) E.L.T.353 (Mad.)
M/s.Global Metro v. The Commissioner of CustomsReferred¶76
M/s.Global Metro v. The Commissioner of Customs and others
M/s.Southern Trade Links v. The Deputy DirectorReferred¶76
M/s.Southern Trade Links v. The Deputy Director, Directorate of Revenue Intelligence
2 provisions across 2 enactments
M/s.Travancore Solvents & Oils
Commissioner of Customs
M.Sundar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
