IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION CUSTOMS APPEAL NO.65 OF 2007 CUSTOMS APPEAL NO.65 OF 2007 CUSTOMS APPEAL NO.65 OF 2007 The Commissioner of Customs (Import) ) Jawaharlal Nehru Customs House, Nhava ) Sheva, Tal. Uran, Dist. Raigad. )..Appellant. V/s. Amrit Banaspati Co. Ltd., Amrit Nagar, ) GT Road, Ghaziabad (UP) - 201 009 & ) Factory at Post Box No.9, Chandigarh ) Road, Rajpura 140 401. )..Respondent. WITH WITH WITH CUSTOMS APPEAL NO.66 OF 2007 CUSTOMS APPEAL NO.66 OF 2007 CUSTOMS APPEAL NO.66 OF 2007 The Commissioner of Customs (Import) ) Jawaharlal Nehru Customs House, Nhava ) Sheva, Tal. Uran, Dist. Raigad. )..Appellant. V/s. Swastik Enterprises, 1-Unit RIK ) Industries, 204, Shekhar Pride, 62/1 ) South Tukaganj, Indore (M.P.) 452 001 )..Respondent. Mr.P.S.Jetly, Advocate with Mrs.S.V.Bharucha and Ms. Anamica Malhotra for appellant in Customs Appeal Nos.65 & 66 of 2007. Mr.Bharat Vaishnawa i/b. Bharat Vaishnawa & Co. for respondent. WITH WITH WITH CUSTOMS APPEAL NO.67 OF 2007 CUSTOMS APPEAL NO.67 OF 2007 CUSTOMS APPEAL NO.67 OF 2007 The Commissioner of Customs (Import) ) Jawaharlal Nehru Customs House, Nhava ) Sheva, Tal. Uran, Dist. Raigad. )..Appellant. V/s. Raghuvar (India) Ltd., Durgapur, ) - = : 2 : = - Jaipur. )..Respondent. WITH WITH WITH CUSTOMS APPEAL NO.68 OF 2007 CUSTOMS APPEAL NO.68 OF 2007 CUSTOMS APPEAL NO.68 OF 2007 The Commissioner of Customs (Import) ) Jawaharlal Nehru Customs House, Nhava ) Sheva, Tal. Uran, Dist. Raigad. )..Appellant. V/s. Vijay Solvex Ltd., Bhagwati Sadan, ) Swami Dayanand Marg, Alwar-301 001. )..Respondent. Mr.P.S.Jetly, Advocate with Mrs.S.V.Bharucha and Mr. Kiran Khanpile for appellant in Customs Appeal Nos.67 & 68 of 2007. Shri V.Sridharan, Advocate with Prakash Shah with Jitu Motwani i/b. M/s.PDS Legal for respondent. WITH WITH WITH CUSTOMS APPEAL NO.76 OF 2007 CUSTOMS APPEAL NO.76 OF 2007 CUSTOMS APPEAL NO.76 OF 2007 The Commissioner of Customs (Import) ) Jawaharlal Nehru Customs House, Nhava ) Sheva, Tal. Uran, Dist. Raigad. )..Appellant. V/s. Teej Impex Ltd., 518-B, Dalmal Tower, ) Nariman Point, Mumbai - 400 021. )..Respondent. Mr.P.S.Jetly, Advocate with Mrs.S.V.Bharucha and Mr. S.D.Bhosale for appellant. Mr.M.R.Baya for respondent. WITH WITH WITH APPELLATE SIDE APPELLATE SIDE APPELLATE SIDE WRIT PETITION NO.3536 OF 2007 WRIT PETITION NO.3536 OF 2007 WRIT PETITION NO.3536 OF 2007 M/s.Jhunjhunwala Vanaspati Ltd., ) - = : 3 : = - a Company incorporated under the ) Companies Act, 1956 having its ) office at Jhunjhunwala Bhawan, Nati ) Imli, Varanasi-001 and factory at ) Naupur, P.O. Thengaddi, Tehsil ) Kesakat Dist. Jaunpur (UP) )..Petitioner. V/s. 1) The Union of India (Through) The ) Joint Secretary, Ministry of Law ) Justice and Company Affairs, ) Ayakar Bhawan, New Marine Lines, ) MK Road, Churchgate, ) Mumbai - 400 020. ) ) 2) The Commissioner of Customs ) (Import) JNCH, having his ) office at Jawahar Customs House ) Sheva, Tal. Uran, Dist. Raigad. ) ) 3) The Deputy Commissioner of ) Customs, Group I, having his ) office at Jawahar Customs House, ) Sheva, Tal. Uran, Dist. Raigad. ) ) 4) The Port Health Officer, Jawahar ) Lal Nehru Port Sheva, Tal. Uran, ) Dist. Raigad. ) ) 5) The Director, Central Food ) Laboratory, Pune. )..Respondents. Mr.Madhur R.Baya for petitioner. Mr.Kunal Chaudhary for respondents. WITH WITH WITH WRIT PETITION NO.3888 OF 2007 WRIT PETITION NO.3888 OF 2007 WRIT PETITION NO.3888 OF 2007 Amrit Banaspati Co. Ltd. having its ) office at Chandigarh Road, ) Rajpura - 140 401. )..Petitioner. V/s. 1) The Union of India Notice to be ) served through The Secretary, ) Ministry of Finance, Department ) - = : 4 : = - of Revenue, North Block, New Delhi.) ) 2) The Customs, Excise and Service ) Tax, Appellate Tribunal, West ) Zonal Bench, having its office ) at Jai Centre, 34, P.D’Mello ) Road, Masjid Bunder (East), ) Mumbai - 400 009. ) ) 3) The Commissioner of Customs ) (Import) Jawaharlal Nehru ) Customs House, Nhava Sheva, ) Tal. Uran, Dist. Raigad. )..Respondents. Shri V.Sridharan, Advocate with Prakash Shah with Jitu Motwani i/b. M/s.PDS Legal for petitioner. Mr.P.S.Jetly with S.D. Bhosale for respondents. WITH WITH WITH WRIT PETITION NO.3647 OF 2007 WRIT PETITION NO.3647 OF 2007 WRIT PETITION NO.3647 OF 2007 Raghuvar (India) Ltd., Station Road, ) Durgapura, Jaipur - 302 108. )..Petitioner. V/s. 1) The Union of India Notice to be ) served through The Secretary, ) Ministry of Finance, Department ) of Revenue, North Block, New Delhi.) ) 2) The Customs, Excise and Service ) Tax, Appellate Tribunal, West ) Zonal Bench, having its office ) at Jai Centre, 34, P.D’Mello ) Road, Masjid Bunder (East), ) Mumbai - 400 009. ) ) 3) The Commissioner of Customs ) (Import) Jawaharlal Nehru ) Customs House, Nhava Sheva, ) Tal. Uran, Dist. Raigad. )..Respondents. Shri V.Sridharan, Advocate with Prakash Shah with Jitu Motwani i/b. M/s.PDS Legal for petitioner. Mrs.S.V.Bharucha with Heena Shah i/b. H.P.Chaturvedi - = : 5 : = - for respondents. WITH WITH WITH WRIT PETITION NO.3657 OF 2007 WRIT PETITION NO.3657 OF 2007 WRIT PETITION NO.3657 OF 2007 Vijay Solvex Ltd., Old Industrial Area ) Itarana Road, Alwar- 301 001. )..Petitioner. V/s. 1) The Union of India Notice to be ) served through The Secretary, ) Ministry of Finance, Department ) of Revenue, North Block, New Delhi.) ) 2) The Customs, Excise and Service ) Tax, Appellate Tribunal, West ) Zonal Bench, having its office ) at Jai Centre, 34, P.D’Mello ) Road, Masjid Bunder (East), ) Mumbai - 400 009. ) ) 3) The Commissioner of Customs ) (Import) Jawaharlal Nehru ) Customs House, Nhava Sheva, ) Tal. Uran, Dist. Raigad. )..Respondents. Shri V.Sridharan, Advocate with Prakash Shah with Jitu Motwani i/b. M/s.PDS Legal for petitioner. Mrs.S.V.Bharucha with Heena Shah i/b. H.P.Chaturvedi for respondents. WITH WITH WITH WRIT PETITION NO.4099 OF 2007 WRIT PETITION NO.4099 OF 2007 WRIT PETITION NO.4099 OF 2007 M/s. Swastik Enterprises, (Unit RIK. ) Industries, 204, Shekar Pride, 61/1, ) South Tuko Ganj, Indore M.P. )..Petitioner. V/s. 1) The Union of India, through ) Ministry of Finance, ) Department of Revenue, North ) Block, New Delhi. ) - = : 6 : = - ) 2) The Customs, Excise and Service ) Tax, Appellate Tribunal, West ) Zonal Bench, having its office ) at Jai Centre, 34, P.D’Mello ) Road, Masjid Bunder (East), ) Mumbai - 400 009. ) ) 3) The Commissioner of Customs ) (Import) Jawaharlal Nehru ) Customs House, Nhava Sheva, ) Tal. Uran, Dist. Raigad. )..Respondents. Mr.Bharat Vaishnawa i/b. Bharat Vaishnawa & Co. for petitioner. Mrs.S.V.Bharucha with Mr.Y.R.Mishra and D.A.Dubey i/b. H.P.Chaturvedi for respondents. WITH WITH WITH WRIT PETITION NO.4878 OF 2007 WRIT PETITION NO.4878 OF 2007 WRIT PETITION NO.4878 OF 2007 M/s.Teej Impex Pvt. Ltd. A Company ) incorporated under the Companies Act, ) 1956 having its Registered office ) at B/518, Dalamal Tower, 5th Floor, ) Nariman Point, Mumbai - 400 021. )..Petitioner. V/s. 1) The Union of India (Through) The ) Joint Secretary, Ministry of Law ) Justice and Company Affairs, ) Ayakar Bhawan, New Marine Lines, ) MK Road, Churchgate, ) Mumbai - 400 020. ) ) 2) The Commissioner of Customs ) (Import) JNCH, having his ) office at Jawahar Customs House ) Sheva, Tal. Uran, Dist. Raigad. ) ) 3) The Port Health Officer, Jawahar ) Lal Nehru Port, Sheva, Tal. Uran, ) Dist. Raigad. ) ) 5) The Director, Central Food ) Laboratory, Pune. )..Respondents. - = : 7 : = - Mr.Madhur R.Baya for petitioner. Mr.G.N.Srinivasan with G.Hariharan i/b. H.P.Chaturvedi for respondents. CORAM : F.I.REBELLO AND CORAM : F.I.REBELLO AND CORAM : F.I.REBELLO AND J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. JUDGMENT RESERVED ON : 4TH OCTOBER, 2007. JUDGMENT RESERVED ON : 4TH OCTOBER, 2007. JUDGMENT RESERVED ON : 4TH OCTOBER, 2007. JUDGMENT PRONOUNCED ON : 25TH OCTOBER, 2007. JUDGMENT PRONOUNCED ON : 25TH OCTOBER, 2007. JUDGMENT PRONOUNCED ON : 25TH OCTOBER, 2007. JUDGMENT (PER J.P.DEVADHAR, J.) JUDGMENT (PER J.P.DEVADHAR, J.) JUDGMENT (PER J.P.DEVADHAR, J.) 1. As the issues raised in these group of Customs Appeals and group of Writ Petitions are common, all these cases are heard together and disposed of by this common Judgment. 2. In all the Customs Appeals filed by the revenue, the challenge is to the order passed by the CESTAT, wherein the Tribunal has set aside the confiscation / reexport orders passed by the assessing officer in the respective cases and directed the Customs Authorities to allow reprocessing of the confiscated goods and on reprocessing if the said goods meet the standards prescribed under the Prevention of Food Adulteration Act, 1954 (‘1954 Act’ for short) to allow clearance for home consumption. 3. In all the Writ Petitions, the importers have sought implementation of the orders passed by the CESTAT in their respective cases, except in the case of - = : 8 : = - M/s.Jhunjhunwalla Vanaspati Ltd. (Appellate Side Writ Petition No.3536 of 2007) wherein the Writ Petition is directly filed in the High Court seeking clearance of the goods subject to repro cessing. 4. The common question of law raised in all these cases is:- " Whether on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the order of adjudication and directing the customs authorities to allow reprocessing of the confiscated goods and thereafter allow clearance for home consumption, if the reprocessed goods are found to conform to the standard prescribed under the 1954 Act and the rules made thereunder? " 5. All the Appeals are admitted on the above question of law and by consent of the parties, the appeals as also the Writ Petitions are taken up for final hearing. 6. For the sake of convenience, we may set out out relevant facts in Customs Appeal No.65 of 2007 (Commissioner of Customs (Import) V/s. Amrit Banaspati - = : 9 : = - Co. Ltd.). Counsel on both sides agree that the decision in the case of Amrit Banaspati would apply to all other cases. 7. Before narrating the relevant facts, we may refer to the relevant provisions of the Act and the Rules that are necessary for deciding the aforesaid question. 8. The Central Government in exercise of powers conferred under section 5(1) of the Customs Tariff Act, 1975 has framed the Customs Tariff (Determination of Origin of Goods under the Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and the Republic of India) Rules, 2000. As per the said Rules, imports from Sri Lanka which comply with the conditions specified therein are entitled to concessional rate of duty. 9. Para 2.2 of the Export Import Policy 2004-09 provides that all imports during the said policy period shall be subject to domestic Laws, Rules, Orders, Regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods. Para 8 of the General notes relating to imports covered under part I Schedule I of the Import policy framed under section 5 of the Foreign Trade - = : 10 : = - (Development & Regulation) Act, 1992 (‘1992 Act’ for short) provides that the imports of edible food products shall be subject to all the conditions laid down in the 1954 Act. 10. Section 2(33) of the Customs Act, 1962 as well as clauses (l) and (m) of Sections 2 (ia) and sections 5 & 6 of the 1954 Act are relevant and the same are reproduced below :- "Customs Act, 1962 S.2 - In this Act, unless the context, otherwise requires :- (33) ‘prohibited goods’ means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported, have been complied with; Prevention of Food Adulteration Act, 1954 (1954 Act) "2. Definitions - In this Act, unless the context otherwise requires - (i) ............. (ia) "adulterated" - an article of food shall be deemed to be adulterated - (a) to (k) ........ (l) if the quality or purity of the article falls below the prescribed standard or its constituents are present in quantities not within the prescribed limits of variability, which renders it injurious to health; - = : 11 : = - (m) if the quality or purity of the article falls below the prescribed standard or its constituents are present in quantities not within the prescribed limits of variability but which does not render it injuries to health; Provided that, where the quality or purity of the article being primary food, has fallen below the prescribed standards or its constituents are present in quantities not within the prescribed limits of variability; in either case, solely due to natural causes and beyond the control of human agency, then, such article shall not be deemed to be adulterated within the meaning of this sub-clause. 5. Prohibition of import of certain articles of food- No person shall import into India- (i) any adulterated food; (ii) any misbranded food; (iii) any article of food for the import of which a licence is prescribed except in accordance with the conditions of the licence; and (iv) any article of food in contravention of any other provision of this Act or of any rule made thereunder. 6. Application of law relating to sea customs and powers of Customs Officers - (1) The law for the time being in force relating to sea customs and to goods, the import of which is prohibited by Sec.18 of the Sea Customs Act, 1878 (8 of 1878) shall, subject to the provisions of Sec.16 of this Act apply in respect of articles of food, the import of which is prohibited under Sec.5 of this Act, and officers of customs and officers empowered under that Act to perform the duties imposed thereby on a [Commissioner of Customs] and other officers of customs shall have the same powers in respect of such articles of food as they have for the time being in respect of such goods as aforesaid. - = : 12 : = - (2) Without prejudice to the provisions of sub-section (1) the [Commissioner of Customs], or any officer of the Government authorized by the Central Government in this behalf, may detain any imported package which he suspects to contain any article of food the import of which is prohibited under Sec.5 of this Act and shall forthwith report such detention to the Director of the Central Food Laboratory and, if required by him, forward the package or send samples of any suspected article of food found therein to the said Laboratory. " Thus, import of any food articles is allowed in India under the Import Policy and the Customs Act only if the food articles conform to the standards prescribed under the 1954 Act and the Rules made thereunder. If the imported food articles do not conform to the prescribed standards prescribed under the 1954 Act, then such goods are liable to be declared as prohibited goods and consequently cannot be allowed clearance for home consumption. 11. In Customs Appeal No.65 of 2007, Amrit Banaspati Co. Ltd. (‘Company’ for short) had imported five consignments of hydrogenated vegetable oil (‘said goods’ for short) from Sri Lanka during December, 2005 to January, 2006. The assessable value of the said goods was declared at Rs.1,33,38,000/-. The said goods were subjected to test by the Port Health Officers at - = : 13 : = - JNPT. The samples were analysed by the Central Food Laboratory, Pune and it was reported vide report dated 10/1/2006 and 2/2/2006 that the said goods do not conform to the standards of Vanaspati prescribed under the Prevention of Food Adulteration Rules, 1955 (‘1955 Rules’ for short). 12. By an adjudication order dated 29/6/2006, the Commissioner of Customs confiscated the above goods under Section 111(d) of the Customs Act with an option to redeem the same on payment of nominal fine of Rs.1,00,000/- for the purpose of reexport and on payment of nominal fine of Rs.25,000/- under Section 112(a) of the Customs Act. 13. In the meantime, pursuant to an order passed by the Delhi High Court, the aforesaid goods imported by the Company were tested once again by the Central Food Laboratory, Kolkata and by its certificate of analysis dated 13/6/2006 the CFL, Kolkata reported that the goods failed in the melting point test and hence do not conform to the standards of Vanaspati prescribed under the 1955 Rules. 14. Challenging the OIO dated 29/6/2006 the Company filed an appeal before the CESTAT and by the impugned order dated 14/2/2007 the Tribunal allowed the - = : 14 : = - appeal. By the said order, the Tribunal remanded the matter back to the adjudicating authority with a direction that the goods be allowed to be reprocessed and if found fit for human consumption on reprocessing, the same be allowed clearance for home consumption. Challenging the above order, the present appeal is filed by the Revenue. 15. In the meantime, the Company filed Writ Petition No.3888 of 2007 seeking implementation of the order passed by the Tribunal and by an ad-interim order dated 17/5/2007, this Court directed the revenue to allow reprocessing of the goods in question, but made it clear that the grant of ad-interim relief will not in any way prejudice the case of the revenue since clearance of the said goods for home consumption is not ordered by the Court. We are informed that the goods in question have already been reprocessed under the supervision of the customs authorities. 16. Similarly, in all other cases (except in the case of Jhunjhunwala Vanaspati Ltd.) the food articles imported by various importers admittedly do not conform to the standards prescribed under the 1954 Act and, therefore, the said goods being prohibited goods, the adjudicating authority has confiscated the said goods with option to the importers to reexport the same on - = : 15 : = - payment of fine and penalty. On appeal filed by those importers, the Tribunal has set aside the adjudication order and directed that the confiscated goods be allowed to be reprocessed and if the reprocessed goods conform to the standards prescribed under the 1954 Act and the Rules made thereunder, then the same be allowed for home consumption. The dispute is, whether the Tribunal could pass such orders ? 17. Mr.Jetly, learned counsel for the appellant submitted that in the light of Board’s Circular dated 15-6-2001 and the circular issued by the Ministry of Finance (Department of Revenue) on 25-10-2001 and 6-11-2006, imports of all edible/food products for domestic sale and manufacture shall have to be subject to all the conditions laid down under the 1954 Act and the Rules made thereunder. In the said circulars it is provided that if the product fails the prescribed test, then the Customs authorities must ensure that the goods are reexported out of the country by following the usual adjudication procedure or destroyed as required under the relevant rules. In the present case, admittedly the imported goods do not conform to the standards prescribed under the 1954 Act and the Rules made thereunder. Therefore, the adjudication orders passed in all these cases being in consonance with the above circulars, the Tribunal ought not to have - = : 16 : = - interfered with the said orders. 18. Relying on the decisions of the Apex Court in the case of Union of India V/s. Paras Laminates Union of India V/s. Paras Laminates Union of India V/s. Paras Laminates reported in 49 E.L.T. 322 (S.C.) 49 E.L.T. 322 (S.C.) 49 E.L.T. 322 (S.C.) and Northern Plastics Northern Plastics Northern Plastics Limited V/s. Hindustan Photo Films Mfg. Co. Ltd. Limited V/s. Hindustan Photo Films Mfg. Co. Ltd. Limited V/s. Hindustan Photo Films Mfg. Co. Ltd. reported in 91 E.L.T. 502 (S.C.) 91 E.L.T. 502 (S.C.) 91 E.L.T. 502 (S.C.), Mr.Jetly submitted that the CESTAT being a creature of the statute and deriving its jurisdiction and powers from the statute could not have deviated from the mandate of the statute and order reprocessing of the confiscated goods and allow clearance if found to be conforming to the standards after reprocessing. 19. Mr.Jetly further submitted that it is a matter of record that the imported goods do not conform to the standards prescribed under the 1954 Act and the Rules made thereunder. Therefore, the said goods being prohibited goods, the assessing officer was justified in confiscating and ordering reexport of the said goods on imposition of fine and penalty. In support of the above submission he relied upon the decisions of the Apex Court in the case of Collector of Customs V/s. Collector of Customs V/s. Collector of Customs V/s. Elephanta Oil & Industries Ltd. Elephanta Oil & Industries Ltd. Elephanta Oil & Industries Ltd. reported in 152 E.L.T. 152 E.L.T. 152 E.L.T. 257 257 257 and Om Prakash Bhatia V/s. Commissioner of Customs Om Prakash Bhatia V/s. Commissioner of Customs Om Prakash Bhatia V/s. Commissioner of Customs reported in 155 E.L.T. 423 155 E.L.T. 423 155 E.L.T. 423. - = : 17 : = - 20. Mr.Jetly further submitted that the powers conferred upon the Court under Section 18 of the 1954 Act to allow reprocessing of the article of food cannot be exercised by the CESTAT because it is not a Court of enquiry and cannot decide issues based on equitable principles. He submitted that CESTAT cannot function as a Court of equity and has to strictly apply the principles of taxation within the parameters of the statute. Equity will not apply to a party who has imported goods which are prohibited for import. In the case of Amrit Banaspati Co. Ltd., the imported Vanaspati has been tested twice and on both occasions it is held that the said goods do not conform to the standards prescribed under the 1954 Act and the Rules made thereunder. Accordingly, Mr.Jetly submitted that in the facts of the case the Tribunal could not have allowed clearance of the goods subject to reprocessing. 21. Mr.Shreedharan, learned counsel appearing on behalf of the respondents, on the other hand submitted that in the present case the goods imported by the petitioners do not contain any impurities or poisonous substances which are injurious to health. The imported goods conform to all the standards prescribed under the PFA Rules except the melting point test. The prescribed range for the melting point is 31.0 degree to 41.0 degree, whereas the melting point of the sample - = : 18 : = - of the goods imported by the petitioners is found to be 42.40 degrees. Thus, 1.4 degree is found to be excess in melting point. This deficiency can be easily removed by reprocessing the said goods at the cost of the petitioners and under the supervision of the Customs authorities. After reprocessing, if the said goods are found to be in conformity with the 1955 Rules, then only clearance is ordered to be allowed. Therefore, the impugned orders which do not in any way prejudice the case of the revenue need not be interfered with. 22. Mr.Shreedharan further submitted that in none of the test reports, it is stated that the sample is found to be adulterated. None of the reports do show the presence of any foreign substance in the samples. Therefore, if the goods are capable of being made to conform to the prescribed standards for human consumption after reprocessing, then it is just and proper to allow reprocessing of such goods. In support of the above contention, he relied upon a decision of the Gujarat High Court in Special C.A. No.12386 of 2006 dated 4-12-2006 (Teej Impex Pvt. Ltd. V/s. Commissioner of Customs) wherein similar goods have been allowed to be