IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.GIRI THURSDAY, THE 29TH OCTOBER 2009 / 7TH KARTHIKA 1931 WP(C).No. 22126 of 2009(I) -------------------------- PETITIONERS: --------------- 1. M/S MOHD, FARIZ AND CO, P.O., CHALISSERY PALAKKAD DT. REP. BY PROP M.M. EBRAHIM. 2. M/S SHABEER ENTERPRISES KUMARANELLUR, THRISSUR PIN 680 590, REP. BY PROP A.H. MOHAMMED. 3. M/S P.K. TRADERS, G.R.H.S.S. ROAD, THOKKAMPARA, P.O. KOTTAKKAL 676 503, MALAPPURAM DIST. REP. BY P.K. BASHEER, PROPRIETOR, 4. M.S ENTERPRISES, 2/744 B, KALLOORKAL BLDGS, P.O. VANIAMKULAM, PALAKKAD DT. KERALA 679 522, REP. BY ITS MANAGING PARTNER 5. M/S HARIPRIYA TRADERS, K.P. X/244, ARIYANNUR P.O., THRISSUR , KERALA. BY ADV. SRI.C.K.KARUNAKARAN RESPONDENTS: --------------- 1. UNION OF INDIA, REP. BY SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NEW DELHI 110 001. 2. COMMISSIONER OF CUSTOMS, CUSTOM HOUSE, COCHIN 682 009. ADV. SRI.JOHN VARGHESE,SC,CEN.BOARD OF EXCIS FOR R1TO2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 26/10/2009, THE COURT ON 29/10/2009 DELIVERED THE FOLLOWING: WP(C).No. 22126 of 2009 APPENDIX PETITIONERS EXHIBITS: EXT.P1: TRUE COPY OF A BILL OF ENTRY (BE) NO.220222 DATED 27.3.2008 EXT.P2: TRUE BCOPY OF TR 6 CHALLAN DATED 1.4.2008 TOGETHER WITH OUT OF CHARGE ORDER DATED 2.4.2008 EXT.P3: TRUE COPY OF SECURITY BOND DATED 29.3.2008 EXECUTED BY THE 5TH PETITIONER FOR RS.13,10,966.00 EXT.P4: TRUE COPY OF BANK GUARANTEE DATED 31.3.2008 FOR RS.6,22,600.00 EXT.P5: A LIST OF BANK GUARANTEES PROVIDED BY THE 1ST PETITIONER EXT.P6: A LIST OF BANK GUARANTEES PROVIDED BY THE 2ND PETITIONER EXT.P7: A LIST OF BANK GUARANTEES PROVIDED BY THE 3RD PETITIONER EXT.P8: A LIST OF BANK GUARANTEES PROVIDED BY THE 4TH PETITIONER EXT.P9: A LIST OF BANK GUARANTEES PROVIDED BY THE 5TH PETITIONER EXT.P10: TRUE COPY OF A LETTER NO.PD 200217483 & 200217484 AP (I) CUS DATED 24.7.2009 EXT.P11: TRUE COPY OF A LETTER DATED 26.3.2008 OF 2ND PETITIONERs EXT.P12: TRUE COPY OF A LETTER F. NO.SIIB/14/2007 CUS DATED 27.3.2008 EXT.P13: A LETTER FROM FILE NO.PD 200215158 AP (I) CUS DATED 25.3.2009 EXT.P14: TRUE COPY OF THE INTERIM ORDER DATED 01.08.2007 IN WPC NO.9624 OF 2007 EXT.P15: TRUE COPY OF THE INTERIM ORDER DATED 31.10.2007 ISSUED IN WPC NO.32270 OF 2007 EXT.P16: TRUE COPY OF THE INTERIM ORDER DATED 11.12.2008 PASSED IN WPC NO.36296 OF 2008 AND CONNECTED CASE. /TRUE COPY/ P.A TO JUDGE V.GIRI,J. ------------------------- W.P ( C) No.22126 of 2009 -------------------------- Dated this the 29th October,2009 J U D G M E N T Petitioners are engaged in the business of import of various commodities including Betel Nuts. The imported ungarbled betel nuts are processed within the state of Kerala and then sold in its various forms/grades. 2. The Director General of Foreign Trade issued notifications on 20.2.2007 and 29.8.2007 permitting free import of betel nuts only through the Mangalore Port. Petitioners challenged the same before this Court in WPC No.9624 of 2007 and this Court stayed the notifications. Subsequently, clearance of betel nuts were allowed provisionally on a bond and bank guarantee being executed. Second notification was issued by the Director General of Foreign Trade permitting free import of betel nuts through Kochi Port as well provided, CIF value of the said item is Rs.35 per Kg and above. That notification has also been challenged and the writ petition is pending before this Court. W.P ( C) No.22126 of 2009 2 3. In the meanwhile, the Customs Authorities initiated proceedings against the petitioners for alleged undervaluation of imported goods. Clearance was thereafter allowed subject to certain conditions. It is admitted that the proceedings regarding valuation so initiated under Section 18 of the Customs Act, have not been finalised against the petitioners. In the meanwhile, petitioners have furnished Bank Guarantees for the full differential amount between the invoice value and the value as proposed by the Department and such Bank Guarantees have been furnished for successive imports. In the meanwhile, valuation proceedings under Section 18 of the Act have not been completed and request made by the petitioners for permission to redeem the Bank Guarantees and to complete the valuation proceedings have not been accepted and hence the writ petition. 4. A counter affidavit has been filed by the Customs Authorities and reply affidavit has been filed by the petitioners. W.P ( C) No.22126 of 2009 3 5. Heard Mr.C.KKarunakaran, learned counsel for the petitioners and Mr.John Varghese, learned counsel for respondents 1 and 2. 6. Mr.John Varghese submits that the writ petitions filed by the petitioners themselves challenging the validity of the notifications issued under Section 5 of Foreign Trade (Development and Regulation) Act, 1992, firstly permitting free import through Mangalore Port and secondly permitting free import through Kochi Port as well but restricted to consignments with CIF value of Rs.35.00 per Kg and above are pending before this Court. Redemption of the Bank Guarantees furnished by the petitioners can be considered or permitted only subject to the decision to be taken by this Court in the aforementioned writ petitions. 7. Mr.Karunakaran submits that proceedings under Section 18 of the Customs Act are independent proceedings and adjudication on the validity of a notification restricting free import will have no impact whatsoever on the valuation proceedings initiated in this regard. W.P ( C) No.22126 of 2009 4 8. Having heard the counsel on both sides, I am of the view that proceedings initiated against the petitioners under Section 18 of the Customs Act may be completed without delay and as expeditiously as possible. But release of the bank guarantees furnished by the petitioners shall abide by further directions that this Court may issue in the writ petitions filed by the petitioners challenging the notifications issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. In the result, there will be a direction to the 2nd respondent to ensure that proceedings initiated against the petitioners under Section 18 of the Customs Act as also under the Customs Valuation Rules framed under Section 14 of the Customs Act are completed as expeditiously as possible, at any rate, within three months from the date of receipt of a copy of this judgment. It is made clear that the Bank guarantees furnished by the petitioners, to facilitate the import of betel nuts, shall be kept alive, until otherwise ordered by this Court in the writ petitions filed by the petitioners challenging the validity of the notifications W.P ( C) No.22126 of 2009 5 issued under Section 5 of the the Foreign Trade (Development and Regulation) Act, 1992. Writ petition is disposed of as above. (V.GIRI,JUDGE) ma W.P ( C) No.22126 of 2009 6 W.P ( C) No.22126 of 2009 7