UNION OF INDIA & ORS. versus M/S. RAJ GROW IMPEX LLP & ORS.
[2021] 12 S.C.R. 371, Supreme Court of India, 2021
Outcome: Appeal(s) allowed (Granted)
Segment: Facts
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UNION OF INDIA & ORS.
v.
M/S. RAJ GROW IMPEX LLP & ORS.
(Civil Appeal No(s). 2217-2218 of 2021)
JUNE 17, 2021
[A. M. KHANWILKAR, DINESH MAHESHWARI AND
KRISHNA MURARI, JJ.]
Customs Act, 1962 – ss.2(33), 11(1) and 111(d) – Import –
‘prohibited goods’ – Appellants aggrieved of directions issued by
High Court in its writ jurisdiction for compliance of orders-in-
original dated 28.08.2020 passed by the Additional Commissioner
of Customs and consequently, for release of goods imported by
private respondents though the goods in question, according to
appellants, were liable to absolute confiscation – Nature of the goods
in question – Held: On facts, import of the referred goods was
restricted to a particular quantity and could be made only against
a licence – The letter and spirit of the restriction was that, any
import beyond the specified quantity was clearly impermissible and
prohibited –The goods in question, having been imported in
contravention of the notifications dated 29.03.2019 issued by the
Central Government as also the trade notice dated 16.04.2019,
issued by the DGFT; and being of import beyond the permissible
quantity and without licence, were ‘prohibited goods’ for the purpose
of the Customs Act – Foreign Trade (Development and Regulation)
Act, 1992 – s.3.
Customs Act, 1962 – s.125 – Import – ‘prohibited goods’ and
‘other goods’ – Distinction between – Latter part of s.125 obligates
the release of confiscated goods
(i.e., other than prohibited goods)
against redemption fine but, the earlier part of this provision makes
no such compulsion as regards the prohibited goods; and it is left
to the discretion of the Adjudicating Authority that it may give an
option for payment of fine in lieu of confiscation – If the
Adjudicating Authority does not choose to give such an option, the
result would be of absolute confiscation – Principles to be applied
for exercise of discretion so available in the first part of s.125(1) –
Held: Exercise of discretion is a critical and solemn exercise, to be
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undertaken rationally and cautiously and guided by law; according
to rules of reason and justice; and based on relevant considerations
– The purpose behind leaving such discretion with the Adjudicating
Authority in relation to prohibited goods is to ensure that all the
pros and cons shall be weighed before taking a final decision for
release or absolute confiscation of goods – On facts, orders-in-
original dated 28.08.2020 of the Adjudicating Authority cannot be
said to have been passed in a proper exercise of discretion – The
Adjudicating Authority did not even pause to consider if the other
alternative of absolute confiscation was available to it in its discretion
as per the first part of s.125(1) of the Customs Act and proceeded
as if it has to give the option of payment of fine in lieu of confiscation
– Such exercise of discretion by the Adjudicating Authority was
more of assumptive and ritualistic nature rather than of a conscious
and cautious adherence to the applicable principles – When personal
business interests of importers clash with public interest, the former
has to, obviously, give way to the latter – Further, if excessive
improperly imported goods are allowed to enter the country’s market,
the entire purpose of the notifications would be defeated – Discretion
in cases of present nature, involving far-reaching impact on national
economy, cannot be exercised only with reference to the hardship
suggested
by the importers, who made such improper imports only
for personal gains – The imports in question suffer from the vices
of breach of law as also lack of bona fide and accordingly held
liable to absolute confiscation but with a relaxation of allowing re-
export, on payment of necessary redemption fine and subject to the
importer discharging other statutory obligations – No leniency in
the name of equity can be claimed by the importers – Respondent-
importers being responsible for improper imports as also for the
present litigation, apart from other consequences, also deserve to
be saddled with heavier costs – Respondent-importers to pay costs
of litigation to appellants, quantified at Rs. 2,00,000/- each.
Import-Export – Adjudicating Authority, while ordering
confiscation, gave option to the importers to redeem the goods in
question on payment of fine in lieu of confiscation u/s.125(1) of the
Customs Act – However, the DGFT took exception against release
of the goods stating that the same were restricted items – Importers
(private respondents) approached the High Court by way of
separate writ petitions, seeking mandamus for clearance of the goods
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in question – While the writ petitions were pending, the Commissioner
of Customs passed order dated 01.10.2020 in exercise of his powers
u/s.129D(2) of the Customs Act, pointing out the alleged deficiencies
in the adjudication orders; and directed filing of appeals before
the Commissioner (Appeals) – Meanwhile, the High Court by order
dated 15.10.2020 held that, prima facie, the grounds stated in the
order dated 01.10.2020 did not make out any such case of illegality
or impropriety as to call for exercise of suo motu revisional powers
by the Commissioner under s.129D(2) of the Customs Act – Having
said that, the High Court left the matter to be decided by the
Commissioner (Appeals) – However, thereafter, the High Court
issued directions to the respondents to forthwith release the goods
of the importers – Legality and validity of the orders passed by the
High Court – Held: Order dated 15.10.2020 passed by High Court
suffers from inherent contradictions and inconsistencies; and cannot
be approved – Significantly, if the purport of the order dated
15.10.2020 of the High Court had been that even if Commissioner
(Appeals) would be deciding the matter in appeal, he could not
order absolute confiscation of the goods because the High Court
had ordered their release, it would immediately lead to the position
that the order dated 15.10.2020 of the High Court carried inherent
contradictions – If release of goods was the only option available
with the authorities,
the material part of consideration of the
Appellate Authority had already been rendered redundant – When
the matter was left for decision by the Commissioner (Appeals), there
was neither any occasion nor any justification for the High Court
to pass the order for release of the goods for the simple reason that
any order for release of goods was to render the material part of
the matter a fait accompli – This, simply, could not have been done
–Apart from the fundamental flaws of contradictions, the order
passed by the High Court on 15.10.2020 further suffers from the
shortcomings that while issuing mandamus for release of goods,
the High Court omitted to take into account the relevant facts as
also the material factors concerning the imports in question –
Impugned order dated 15.10.2020, having been passed while
ignoring the relevant considerations, cannot be approved.
Equity – Claim of – Held: Once the Court has reached to the
conclusion that a particular action is wanting in bona fide, the
perpetrator cannot claim any relief in equity in relation to the same
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action – Absence of bona fide in a claimant and his claim of equity
remain incompatible and cannot stand together.
Interim relief – Grant of – Matter of discretion –
Considerations – Held: In matters of grant of interim relief,
satisfaction of the Court only about existence of prima facie case
in favour of the suitor is not enough – The other elements i.e.,
balance of convenience and likelihood of irreparable injury, carry
their own relevance; and while exercising its discretion in the matter
of interim relief and adopting a particular course, the Court needs
to weigh the risk of injustice, if ultimately the decision of main matter
runs counter to the course being adopted at the time of granting or
refusing the interim relief.
Allowing the appeals, the Court
HELD:
Whether the goods in question are of ‘prohibited goods’
category?
1. The categorical findings in the case of Agricas by this
Court, read with the provisions above-quoted, hardly leave
anything to doubt that sub-section (3) of Section 3 of the FTDR
Act applies to the goods in question and, for having been imported
under the cover of the interim orders but, contrary to the
notifications and the trade notice issued under the Foreign Trade
(Development and Regulation) Act, 1992 and without the requisite
licence, these goods shall be deemed to be prohibited goods under
Section 11 of the Customs Act; and all the provisions of the
Customs Act shall have effect
over these goods and their import
accordingly. [Para 65][451-C-E]
2.1. The contention on the part of the importers, that the
subject goods fall in ‘restricted’ category and not ‘prohibited’
category, is baseless and required to be rejected. [Para 66]
[451-E]
2.2. In the present case import of the referred peas/pulses
has been restricted to a particular quantity and could be made
only against a licence. The letter and spirit of this restriction, is
that, any import beyond the specified quantity is clearly
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impermissible and is prohibited. This Court has highlighted the
adverse impact of excessive quantity of imports of these
commodities on the agricultural market economy in the case of
Agricas. In the present case, the underlying feature for restricting
the imports by quantum has been the availability of excessive
stocks and adverse impact on the price obtainable by the farmers
of the country. [Para 67.4.3][455-E-G]
2.3. The goods in question, having been imported in
contravention of the notifications dated 29.03.2019 and trade
notice dated 16.04.2019; and being of import beyond the
permissible quantity and without licence, are ‘prohibited goods’
for the purpose of the Customs Act. Even in the orders-in-original
dated 28.08.2020 by the Adjudicating Authority, it was clearly
held that the goods in question were prohibited goods.
[Para 68][455-H; 456-A]
2.4. The unnecessary and baseless arguments raised on
behalf of the importers that the goods in question are of ‘restricted’
category, with reference to the expression ‘restricted’ having
been used for the purpose of the notifications in question or with
reference to the general answers given by DGFT or other
provisions of FTDR Act are, therefore, rejected. The goods in
question fall in the category of ‘prohibited goods’. [Para 68.1]
[456-B]
Whether the goods in question are liable to absolute
confiscation?
3. Once it is clear that the goods in question are improperly
imported and fall in the category of
‘prohibited goods’, the
provisions contained in Chapter XIV of the Customs Act, 1962
come into operation and the subject goods are liable to
confiscation apart from other consequences. [Para 69][456-C-D]
4. A bare reading of Section 125(1) of the Customs Act
makes it evident that a clear distinction is made between
‘prohibited goods’ and ‘other goods’. The latter part of Section
125 obligates the release of confiscated goods (i.e., other than
prohibited goods) against redemption fine but, the earlier part of
this provision makes no such compulsion as regards the
prohibited goods; and it is left to the discretion of the Adjudicating
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Authority that it may give an option for payment of fine in lieu of
confiscation. It is innate in this provision that if the Adjudicating
Authority does not choose to give such an option, the result would
be of absolute confiscation. [Paras 69 and 69.1][456-G; 457-A-B]
5.1. The exercise of discretion is a critical and solemn
exercise, to be undertaken rationally and cautiously and has to
be guided by law; has to be according to the rules of reason and
justice; and has to be based on relevant considerations. The quest
has to be to find what is proper. Moreover, an authority acting
under the Customs Act, when exercising discretion conferred by
Section 125 thereof, has to ensure that such exercise is in
furtherance of accomplishment of the purpose underlying
conferment of such power. The purpose behind leaving such
discretion with the Adjudicating Authority in relation to prohibited
goods is, obviously, to ensure that all the pros and cons shall be
weighed before taking a final decision for release or absolute
confiscation of goods. [Para 79][465-F-H]
5.2. It is but evident that the orders-in-original dated
28.08.2020 passed by the Additional Commissioner of Customs
(the Adjudicating Authority) cannot be said to have been passed
in a proper exercise of discretion. The Adjudicating Authority
did not even pause to consider if the other alternative of absolute
confiscation was available to it in its discretion as per the
first
part of Section 125(1) of the Customs Act and proceeded as if it
has to give the option of payment of fine in lieu of confiscation.
Such exercise of discretion by the Adjudicating Authority was
more of assumptive and ritualistic nature rather than of a conscious
as also cautious adherence to the applicable principles. The
Appellate Authority, on the other hand, has stated various reasons
as to why the option of absolute confiscation was the only proper
exercise of discretion in the present matter. The reasons assigned
by the Appellate Authority, in the order-in-appeal dated
24.12.2020 are fully in accord with the principles of exercise of
discretion. [Para 80][466-A-D]
5.3. The prohibition involved in the present matters, of not
allowing the imports of the commodities in question beyond a
particular quantity, was not a prohibition simpliciter. It was
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provided with reference to the requirements of balancing the
interests of the farmers on the one hand and the importers on
the other. Any inflow of these prohibited goods in the domestic
market is going to have a serious impact on the market economy
of the country. The cascading effect of such improper imports in
the previous year under the cover of interim orders was amply
noticed by this Court in Agricas. This Court also held that the
imports were not bona fide and were made by the importers only
for their personal gains. [Para 81][466-D-F]
6. The sum and substance of the matter is that as regards
the imports in question, the personal interests of the importers
who made improper imports are pitted against the interests of
national economy and more particularly, the interests of farmers.
This factor alone is sufficient to find the direction in which
discretion ought to be exercised in these matters. When personal
business interests of importers clash with public interest, the
former has to, obviously, give way to the latter. Further, if
excessive improperly imported peas/pulses are allowed to enter
the country’s market, the entire purpose of the notifications would
be defeated. The discretion in the cases of present nature,
involving far-reaching impact on national economy, cannot be
exercised only with reference to the hardship suggested by the
importers, who had made such improper imports only for personal
gains. The imports in question suffer from the
vices of breach of
law as also lack of bona fide and the only proper exercise of
discretion would be of absolute confiscation and ensuring that
these tainted goods do not enter Indian markets. Imposition of
penalty on such importers; and rather heavier penalty on those
who have been able to get some part of goods released is,
obviously, warranted. [Para 82][466-F-H; 467-A-B]
7. On the facts and in the circumstances of the present case,
the discretion could only be for absolute confiscation with levy of
penalty. At the most, an option for re-export could be given to
the importers and that too, on payment of redemption fine and
upon discharging other statutory obligations. The orders-in-
original dated 28.08.2020 cannot be approved. As a necessary
corollary, the orders-in-appeal dated 24.12.2020 deserve to be
approved. [Paras 84 and 85][467-G-H; 468-A-B]
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Invocation of equity by the importers
8. Various submissions invoking equity were made on behalf
of the importers while submitting that they have already suffered
huge losses and that even re-export of subject goods is not a
feasible option. However, no leniency in the name of equity can
be claimed by these importers. In fact, any invocation of equity in
these matters is even otherwise ruled out in view of specific
rejection of the claim of bona fide imports by this Court in Agricas.
Once this Court has reached to the conclusion that a particular
action is wanting in bona fide, the perpetrator cannot claim any
relief in equity in relation to the same action. Absence of bona
fide in a claimant and his claim of equity remain incompatible and
cannot stand together. [Para 86, 86.1][468-B-E]
Prayer for keeping issues open for statutory appeal
9. A prayer was made for keeping the opportunity of further
statutory appeal to CESTAT open for the importers. Though in
ordinary circumstances, such a prayer might have been of no
difficulty but, having regard to the background and the relevant
circumstances, any liberty for further rounds of litigation, at least
in relation to the respondents, is not called for; and the matters
ought to be given a finality. There is no reason to allow any prayer
for filing appeal against the orders-in-appeal dated 24.12.2020.
[Paras 87, 90][468-H; 469-A; 470-A-B]
Incidentally: principles relating
to the grant or refusal of
interim relief
10.1. The root cause of the present controversy had not
been that much in the notifications in question as it had been in
the interim orders passed by the High Court of Rajasthan, Bench
at Jaipur. Only under the cover of such interim orders that the
importers ventured into the import transactions which resulted
in excessive quantities of peas/pulses than those permitted by
the notifications reaching the Indian ports. As has been noticed
in the present cases, some of the goods so imported got released
and the Commissioner (Appeals) had to take that aspect as fait
accompli. For what has been held by this Court in Agricas, and
further for what has been held in this judgment, the goods in
question were not to mingle in the Indian market. Such mingling,
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obviously, has an adverse impact on the agricultural market
economy and defeats the policy of the Government of India. This
state of affairs was an avoidable one; and would have been avoided
if, before passing interim orders, the respective Courts would
have paused to consider the implications and impact of such
interim orders, which were, for all practical purposes, going to
operate as mandatory injunction, whereby the appellants were
bound to allow the goods to reach the Indian ports, even if the
notifications were prohibiting any such import. Even though
granting of an interim relief is a matter of discretion, such a
discretion needs to be exercised judiciously and with due regard
to the relevant factors. [Paras 91, 91.1][470-B-F]
10.2. In the matters of grant of interim relief, satisfaction
of the Court only about existence of prima facie case in favour of
the suitor is not enough. The other elements i.e., balance of
convenience and likelihood of irreparable injury, are not of empty
formality and carry their own relevance; and while exercising its
discretion in the matter of interim relief and adopting a particular
course, the Court needs to weigh the risk of injustice, if ultimately
the decision of main matter runs counter to the course being
adopted at the time of granting or refusing the interim relief.
[Para 92][470-G-H; 471-A]
10.3. One of the simple questions to be adverted to at the
threshold stage in the present cases was, as to whether the
importers (writ petitioners) were likely to suffer irreparable injury
in case the interim relief was denied and they were to ultimately
succeed in the writ petitions. A direct answer to this question
would have made it clear that their injury, if at all, would have
been of some amount of loss of profit, which could always be
measured in monetary terms and, usually, cannot be regarded as
an irreparable one. Another simple but pertinent question would
have been concerning the element of balance of convenience;
and a simple answer to the same would have further shown that
the inconvenience which the importers were going to suffer
because of the notifications in question was far lesser than the
inconvenience which the appellants were going to suffer (with
ultimate impact on national interest) in case operation of the
notifications was stayed and thereby, the markets of India were
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allowed to be flooded with excessive quantity of the said imported
peas/pulses. [Para 93][472-E-G]
10.4. In fact, the repercussion of the stay orders passed in
the earlier years were duly noticed by this Court in Agricas; and
unfortunately, more or less same adverse consequences had been
hovering over the markets because of the imports made under
the cover of the interim orders passed in relation to the
notifications dated 29.03.2019. This was not likely to happen if
the material factors relating to balance of convenience and
irreparable injury were taken into account while dealing with the
prayers for interim relief in the writ petitions. This Court had, in
unequivocal terms, declared in Agricas, that the importers cannot
be said to be under any bona fide belief in effecting the imports
under the cover of interim orders; and they would face the
consequences in law. It gets, perforce, reiterated that all this
was avoidable if the implications were taken into account before
granting any interim relief in these matters. [Para 94][472-H;
473-A-B]
Summation
11. The goods in question are held liable to absolute
confiscation but with a relaxation of allowing re-export, on
payment of the necessary redemption fine and subject to the
importer discharging other statutory obligations. The respondent-
importers being responsible for the improper imports as also for
the present litigation, apart from other consequences, also
deserve to be saddled with heavier costs. The respondent-
importers shall pay costs of this litigation to the appellants,
quantified at Rs. 2,00,000/- (Rupees two lakhs) each. [Paras 96,
99][473-D-E; 474-D]
Commissioner of Customs v. Atul Automations Private
Limited, (2019) 3 SCC 539 – held inapplicable.
Hargovind Das K. Joshi and Ors. v. Collector of
Customs and Ors., (1987) 2 SCC 230 – explained.
Commissioner of Customs (Import), Mumbai v. Finesse
Creation Inc., (2009) 248 ELT 122 – distinguished.
Union of India and Ors. v. Agricas LLP and Ors., 2020
SCC OnLine SC 675 – relied on.
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Garg Woollen Mills (P) Ltd. v. Addl. Collector of
Customs, New Delhi, (1999) 9 SCC 175; Sant Raj and
Anr. v. O.P. Singla and Anr., (1985) 2 SCC 349 : [ 1985]
3 SCR 623; Reliance Airport Developers (P) Ltd. v.
Airports Authority of India and Ors. (2006) 10 SCC 1
: [2006] 8 Suppl. SCR 39; Sheikh Mohd. Omer v.
Collector of Customs, Calcutta and Ors: (1970) 2 SCC
728 : [ 1971] 2 SCR 35; Commissioner of Customs, New
Delhi v. Brooks International & Ors: (2007) 10 SCC
396 : [2007] 7 SCR 791; Om Prakash Bhatia v.
Commissioner of Customs, Delhi: (2003) 6 SCC 161 :
[2003] 1 Suppl. SCR 412; P.T.R. Exports (Madras) Pvt.
Ltd. and Ors. v. Union of India and Ors., (1996) 5 SCC
268 : [1996] 2 Suppl. SCR 662; S.B. International Ltd.
and Ors. v. Asstt. Director General of Foreign Trade
and Ors., (1996) 2 SCC 439 : [1996] 1 SCR 910; Shri
Amman Dhall Mill v. Commissioner of Customs, (2021)
SCC OnLine Ker 362; U.P. State Road Transport
Corporation and Anr. v. Mohd. Ismail and Ors., (1991)
3 SCC 239 : [1991] 2 SCR 274; Assistant Commissioner
(CT) LTU, Kakinada and Ors. v. Glaxo Smith Kline
Consumer Health Care Limited, 2020 SCC OnLine SC
440 and Dorab Cawasji Warden v. Coomi Sorab Warden
and Ors., (1990) 2 SCC 117 : [1990] 1 SCR 332 –
referred to.
Horizon Ferro Alloys Pvt. Ltd. and Ors. v. Union of
India and Ors., (2016) 340 ELT 27 – referred to.
Rover International Ltd. and Ors. v. Cannon Film Sales
Ltd., [1986] 3 All ER 772 – referred to.
Case Law Reference
(1999) 9 SCC 175
referred to
Para 38.2
[1985] 3 SCR 623
referred to
Para 38.2
[2006] 8 Suppl. SCR 39
referred to
Para 38.2
[1971] 2 SCR 35
referred to
Para 44.2
[2007] 7 SCR 791
referred to
Para 44.2
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[2003] 1 Suppl. SCR 412
referred to
Para 44.2
[1996] 2 Suppl. SCR 662
referred to
Para 44.3
[1996] 1 SCR 910
referred to
Para 44.3
(2019) 3 SCC 539
held inapplicable
Para 44.6
(1987) 2 SCC 230
explained
Para 45.6
[1991] 2 SCR 274
referred to
Para 47.1.2
[1990] 1 SCR 332
referred to
Para 92.1
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2217-
18 of 2021.
From the Judgment and Order dated 15.10.2020 of the High Court
of Judicature at Bombay in Writ Petition 3502-3503 of 2020.
With
Civil Appeal No. 2219 of 2021.
N. Venkataraman, ASG., Ms. B. Sunita Rao, V. Chandra Shekara
Bharathi, Liz Mathew, Mukesh Kumar Maroria, B. Krishna Prasad, B.
V. Balaram Das, Advs. for the Appellants.
Ranjit Kumar, Neeraj Kishan Kaul, Sr. Advs., Sanjay Bansal, Ms.
Swati Bansal, Ms. Vaishali Gupta, G. K. Bansal, Sujay Kantawalla,
Samsher Garud, Sandeep Sudhakar Deshmukh, Ms. Juhi Valia, Buddy
A Ranganadhan, A. V. Rangam, Animesh Kumar, Anantha Narayana
M. G., V. C. Shukla, Ambuj Dixit, Rishabh Prasad, Sujit Ghosh, Nishant
Kumar, Ms. Utkarsha Sharma, Neeraj Shekhar, Advs. for the
Respondents.
The Judgment of the Court was delivered by
DINESH MAHESHWARI, J.
Contents*
Preliminary and brief outline ............................................... 2
The parties and their respective interests in the matter...........10
Relevant factual aspects and background............................14
Judgment dated 26.08.2020 of this Court in
Agricas............ 20
*The Contents is as per the Original Judgment.
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Orders-in-original dated 28.08.2020: The Adjudicating
Authority allows release of goods on payment of redemption
fine..................................................................................26
Immediate sequels to the orders-in-original..........................31
The order dated 15.10.2020 and its modification dated
09.12.2020: The High Court issues mandamus for release
of goods...........................................................................39
Orders dated 24.12.2020 by the Appellate Authority: Orders-
in-original set aside with enhancement of penalty.................48
Another round in High Court: Challenge to the order-in-
appeal dated 24.12.2020 and stay order by the High Court
dated 05.01.2021...............................................................56
Rival submissions..............................................................59
Points for determination.....................................................77
Legality and validity of the orders passed by the High Court..78
Whether the goods in question are of ‘prohibited goods’
category?.........................................................................90
Whether the goods in question are liable to absolute
confiscation?.....................................................................99
Invocation of equity by the importers.................................115
Prayer for keeping issues open for statutory appeal............116
Incidentally: principles relating to
the grant or refusal of
interim relief....................................................................118
Summation......................................................................122
Conclusions and directions................................................123
Preliminary and brief outline
1.Leave granted.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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2. In this set of appeals, the Union of India and the authorities
related with customs have questioned the orders dated 15.10.2020 and
05.01.2021, passed by the High Court of Judicature at Bombay in Writ
Petition (L) Nos. 3502-3503 of 2020 and Writ Petition (ST) No. 24 of
2021 respectively1. The appellants are essentially aggrieved of the
directions issued by the High Court for compliance of the orders-in-
original dated 28.08.2020 passed by the Additional Commissioner of
Customs, Group-I, Mumbai and consequently, for release of the goods
imported by the private respondents though the goods in question are,
according to the appellants, liable to absolute confiscation.
2.1. Looking to the subject-matter of the present appeals involving
a multitude of issues and several of the background aspects, we may
profitably draw a brief outline and sketch of the matter at the outset.
3. The genesis of the present litigation lies in the notifications
issued by the Central Government under the Foreign Trade (Development
and Regulation) Act, 19922 as also the consequential trade notices issued
by the Directorate General of Foreign Trade3, making provisions for
restricting the import of certain beans, peas and pulses.
3.1. In the preceding years, such notifications and trade notices
were put to challenge in different High Courts by way of writ petitions
wherein, different interim orders were passed and the importers effected
various
imports on the strength of such interim orders. However, the
said writ petitions were ultimately dismissed by the High Courts and one
petition seeking special leave to appeal was also dismissed by this Court.
Similar notifications and trade notice issued in the subsequent year, on
restriction of import of certain beans, peas and pulses, were again
challenged in different High Courts and, notwithstanding the rejection of
a similar challenge in the past by other High Courts, various interim
orders were again passed; and the importers again proceeded to effect
various imports under the cover of such interim orders.
3.2. Faced with such challenges and interim orders in different
High Courts, the Union of India filed various transfer petitions, seeking
transfer of the cases relating to the same subject-matter to this Court.
Having regard to the nature of controversy and surrounding factors, this
1 The order dated 15.10.2020 is to be read with the modification order dated 09.12.2020
in I.A. (L) No. 5735 of 2020 in Writ Petition (L) No. 3502 of 2020.
2 Hereinafter also referred to as ‘the FTDR Act’.
3 Hereinafter also referred to as ‘the DGFT’ for short.
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Court heard the matters on merits so as to finally deal with the challenge
to the notifications and the trade notice in question. This led to the judgment
dated 26.08.2020 by this Court in the case of Union of India and Ors.
v. Agricas LLP and Ors.4 upholding such notifications dated 29.03.2019,
issued by the Central Government as also the consequential trade notice
dated 16.04.2019, issued by the DGFT.
3.3. In the said judgment dated 26.08.2020, this Court, apart from
other findings, held that the importers cannot be said to be under any
bona fide belief in effecting the imports under the cover of interim
orders; and they would face the consequences in law. While dismissing
the writ petitions, this Court held that the imports made while relying on
the interim orders were contrary to the said notifications and trade notice
issued under the FTDR Act; and would be so dealt with under the
provisions of the Customs Act, 19625. However, this judgment has also
not given a quietus to the litigation and the events taking place after this
decision have given rise to the present appeals.
4. Immediately after the decision of this Court dated 26.08.2020,
the private respondents of these appeals, M/s. Raj Grow Impex LLP
and M/s. Harihar Collections, whose imported goods covered by the
said notifications had not been released, addressed respective
communications to the Additional Commissioner of Customs, Group-I,
Mumbai6, on the very day of judgment i.e., 26.08.2020,
requesting for
waiver of show cause notices and for urgent personal hearing. The
Adjudicating Authority took up their cases in priority and, by his almost
identical orders-in-original dated 28.08.2020, while ordering confiscation,
gave an option to the importers to redeem the goods in question on
payment of fine in lieu of confiscation under Section 125(1) of the Customs
Act. While acting upon the orders so passed by the Adjudicating Authority,
the importers made certain payments towards customs duty, redemption
fine and penalty and obtained out of charge7; and some of the
consignments were released. However, the DGFT took exception against
release of the goods in question as the same were restricted items and
stated in its letter dated 01.09.2020 that such release would be contrary
to the import policy. Consequent to this and other communications, the
4 Since reported as 2020 SCC OnLine SC 675; hereinafter also referred to as the case of
‘Agricas’.
5 Hereinafter also referred to as ‘the Customs Act’.
6 Hereinafter also referred to as the ‘Adjudicating Authority’.
7 ‘OOC’ for short.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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customs authorities requested Mumbai Port Trust not to issue delivery
order of the consignments in question and hence, the other consignments
were not released.
5. Feeling aggrieved by such communications and stoppage of
release of the goods in question, the importers (private respondents herein)
approached the High Court by way of separate writ petitions, essentially
seeking mandamus for clearance of the goods in question. While the
said writ petitions were pending, the Commissioner of Customs (Import-
II) passed an order dated 01.10.2020 in exercise of his powers under
Section 129D(2) of the Customs Act, pointing out the alleged deficiencies
in the adjudication orders; and directed filing of appeals before the
Commissioner (Appeals)8. The appeals so filed were ultimately allowed
by the Appellate Authority on 24.12.2020. However, before such decision
in appeals, the High Court heard the said writ petitions of the importers
on 06.10.2020 and proceeded to decide the same by the common order
dated 15.10.2020.
5.1. In its order dated 15.10.2020, the High Court took the view
that, prima facie, the grounds stated in the order dated 01.10.2020 did
not make out any such case of illegality or impropriety as to call for
exercise of suo motu revisional powers by the Commissioner under
Section 129D(2) of the Customs Act. Having said that, the High Court
left the matter to be decided by the Commissioner (Appeals). However,
thereafter, the High Court proceeded to examine the question as to the
justification or otherwise for not releasing the goods in question. In this
regard, the High Court was of the view that when the orders-in-original
were holding the field and the importers had complied with the terms
and conditions thereof; and where the importers were incurring
expenditure because of warehousing, any further withholding of the
imported goods was not justified. Thus, the High Court issued directions
to the respondents to forthwith release the goods of the importers covered
by the bills of entry mentioned in paragraph 38 of the order.
6. Seeking to challenge the aforesaid order dated 15.10.2020, the
Union of India and its authorities related with customs approached this
Court on 26.11.2020 but, before their SLPs were taken up for
consideration, three major events took place in these matters. First such
event related to an application made by one of the importers M/s. Raj
Grow Impex to the High Court for modification of the order dated
8 Hereinafter also referred to as ‘the Appellate Authority’.
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15.10.2020 because some of its bills of entry had not been included
therein. The High Court accepted this application and issued modification
order dated 09.12.2020 accordingly. The second relevant event had been
that by the orders-in-appeal dated 24.12.2020, the Commissioner
(Appeals) proceeded to allow the appeals preferred by the Department
against the aforesaid orders-in-original dated 28.08.2020 and ordered
absolute confiscation of the goods in question while enhancing the amount
of penalty; of course, the Appellate Authority found that some of the
goods in question had since been released and treated that part of the
matter a fait accompli. In the third major event, the said importer M/s.
Raj Grow Impex challenged the order-in-appeal dated 24.12.2020 by
way of another writ petition in the High Court. While considering this
fresh writ petition on 05.01.2021, the High Court took exception against
the observations made and directions issued by the Appellate Authority
which, according to the High Court, were running contrary to its decision
dated 15.10.2020. Accordingly, the High Court stayed the operation of
the order-in-appeal and directed the authorities concerned to comply
with the directions of the orders dated 15.10.2020 and 09.12.2020. An
ancillary part of the third event was that the said importer also moved a
contempt petition stating willful disobedience of the aforesaid order dated
09.12.2020 whereupon, by a separate order dated 05.01.2021,
the High
Court issued show cause notice to the authorities concerned and directed
them to remain personally present in the Court on 21.01.2021. Again
aggrieved, the Union of India and its authorities concerned approached
this Court against these orders dated 05.01.2021, as passed by the High
Court, respectively in the fresh writ petition and in the contempt petition.
7. The aforementioned SLPs against the orders so passed by the
High Court were considered analogously on 20.01.2021 and, while issuing
notice, this Court stayed the operation of the order impugned. Later on,
these matters were taken up for hearing in priority looking to the nature
of controversy and the goods involved. During the course of hearing, on
18.03.2021, this Court found no reason for continuation of contempt
proceedings in the High Court and closed the same. On 18.03.2021, yet
another observation was made by this Court with reference to the
submission of learned ASG appearing for the appellants, that it was open
to the private respondents to opt for re-export of perishable imported
goods lying in the customs warehouse to outside India.
8. The outline foregoing makes it clear that in the case of Agricas
(supra), while deciding on the validity of the notifications and the trade
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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notice, this Court did not accept that the imports in question, as made on
the basis or under the cover of the interim orders passed by the High
Courts, could be regarded as bona fide; but, in the given circumstances
and the issues raised, this Court left those goods to be dealt with under
the Customs Act. Now, dealing of the goods in question under the
Customs Act has given rise to this litigation. On one hand, the appellants
maintain that the subject goods are required to be confiscated absolutely
or else, the entire purpose of the said notifications and trade notice shall
be frustrated; and hence, they question the legality and validity of the
orders passed by the Adjudicating Authority and the High Court whereby
and whereunder, the goods in question are required to be released with
payment of fine in lieu of confiscation. On the other hand, the importers
maintain that the goods in question are not falling in the category of
banned or totally prohibited goods and hence, they have rightly been
ordered to be released with payment of fine in lieu of confiscation and
other charges. They, thus, support the impugned orders passed by the
Adjudicating Authority and the High Court.
8.1. Apart from the said two importers who had filed their
respective writ petitions in the High Court and who are directly related
with the orders in question before us, two more importers have moved
impleadment/intervention applications while
asserting that they have also
imported under the cover of the interim orders of the High Court and
their matters were pending at different stages with the authorities but,
they are also likely to be affected by the decision in this set of appeals.
They also support the stand that the goods in question are available for
release and are not liable to absolute confiscation.
The parties and their respective interests in the matter
9. Having drawn a brief sketch indicating the salient features of
this case and the issues involved, we may narrate, in brief, the relevant
particulars of the parties before us in these appeals9.
The appellants
10. The Union of India through the Secretary, Ministry of
Commerce and the Secretary, Department of Revenue, Ministry of
Finance is the appellant before us; and is joined by the Commissioner of
9 This introduction of persons/entities is to broadly co-relate the parties with the
points to be taken up for determination; and is not intended to be an exhaustive list of
the parties involved.
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Customs (Import-I), Mumbai and other authorities related with customs.
The Commissioner of Customs (Appeal), Mumbai (Zone-I), who had
passed the order dated 24.12.2020 as Appellate Authority, has joined as
a party only in the appeal against the order dated 05.01.202110. These
appellants are aggrieved of the respective orders passed by the High
Court of Judicature at Bombay in the respective writ petitions; and
maintain that the goods in question could not have been released and are
liable to absolute confiscation.
The contesting respondents
11. The two importers, in whose relation the impugned orders
have been passed by the authorities concerned and the High Court are
the contesting respondents of these appeals. Their relevant particulars
are as under:
11.1. M/s. Raj Grow Impex LLP
This importer is said to be a partnership firm having its registered
office at Jaipur in the State of Rajasthan. This firm had filed ten bills of
entry dated 01.11.2019 for clearance of 24,815 MTs of yellow peas, said
to have been imported under the cover of interim order dated 20.07.2019,
as passed by the Rajasthan High Court, Bench at Jaipur in WP No.
11974 of 2019. Its efforts to get the goods released with payment of fine
led to the order-in-original dated 28.08.2020. This importer had obtained
OOC for three bills of entry and got released 7,500 MTs of the goods in
question but the remaining were not released. This importer had filed
WP (L) No. 3502 of 2020 before the High
Court of Judicature at Bombay
seeking mandamus which was decided by the common order dated
15.10.2020. This importer has also filed WP (ST) No. 24 of 2021
questioning the order-in-appeal dated 24.12.2020 wherein, the High Court
of Judicature at Bombay passed the interim order dated 05.01.2021.
11.2. M/s. Harihar Collections
This importer is said to be a proprietorship concern having its
registered office at Jaipur in the State of Rajasthan. This importer had
filed eight bills of entry dated 18.11.2019 for clearance of 38,500 MTs of
yellow peas, said to have been imported under the cover of interim order
dated 10.07.2019, as passed by the Rajasthan High Court, Bench at
10 The Director General of Foreign Trade, the Zonal Additional Director General of
Foreign Trade, and the Mumbai Port Trust are proforma respondents in the appeals
against the common order passed by the High Court on 15.10.2020.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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Jaipur in WP No. 11752 of 2019. Similar to the above, the efforts of this
importer to get the goods released with payment of fine in lieu of
confiscation led to another order-in-original dated 28.08.2020. This
importer had filed WP (L) No. 3503 of 2020 before the High Court of
Judicature at Bombay seeking mandamus which was decided by the
common order dated 15.10.2020. In relation to this importer, the Appellate
Authority passed another order-in-appeal dated 24.12.2020, which has
not been challenged but, the importer has stated its desire to do so in due
course.
The intervenors
12. Apart from the above, two other importers have filed
impleadment applications with the submissions that they have also
imported a substantial quantity of goods pursuant to the interim orders
passed by the Rajasthan High Court in their respective writ petitions;
and that they have substantial interest in the present proceedings because
any final judgment herein shall have impact on their interests. Their
relevant particulars are as under:-
Nikhil Pulses Pvt. Ltd.
12.1. This importer is said to be a private limited company having
its registered office at Jaipur in the State of Rajasthan. This company is
said to have imported 1,02,550 MTs of yellow peas under the cover of
interim order dated 02.08.2019, as passed by the Rajasthan High Court,
Bench at Jaipur in WP No. 12283 of 2019. This company had received
a notice dated 20.11.2020 from the
Principal Commissioner of Customs,
Mundra requiring to show cause as to why the goods in question are not
liable to confiscation.
Agricas LLP
12.2. This importer is said to be a partnership firm having its
registered office at Jaipur in the State of Rajasthan. This firm is said to
have imported, inter alia, 27,775 MTs of black mapte under the cover
of interim order dated 14.08.2019, as passed by the Rajasthan High
Court, Bench at Jaipur in WP No. 13392 of 2019; and out of the quantity
imported, 14,366 MTs of goods got released but not the remaining. It is
stated by this importer that pursuant to the show cause notice dated
05.10.2020, the Commissioner of Customs, Nhava Sheva found the goods
to be prohibited and liable to confiscation whereafter it had filed a writ
petition bearing No. 525 of 2021 before the High Court of Judicature at
Bombay against the non-clearance of the goods but in the meantime, the
main issue has been taken up by this Court in these appeals.
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Relevant factual aspects and background
13. Having taken note of the salient features of the case, the
relevant particulars of the parties before us with their respective interests,
we may now enter into the relevant factual aspects and background in
necessary details but while avoiding the facts which may not have bearing
on determination of the real issues involved.
14. The relevant background aspects of the matter are that the
Central Government had issued notifications dated 05.08.2017 and
21.08.2017, revising the policy for import of urad/moong and pigeon peas/
toor dal from “free” to “restricted” with a stipulation as to annual quota
and requirement of a prior licence from DGFT. Then, by the notification
dated 25.04.2018, import of the said beans/pulses was to remain restricted
requiring a prior licence and with a stipulation as to annual quota for the
fiscal year 2018-2019. One of the importers, M/s. Hira Traders, preferred
a writ petition before the Madras High Court, challenging the notification
dated 25.04.2018 and trade notices issued on 9th, 16th and 18th May,
2018 respectively. The said petitioner also prayed for interim relief, of
permission to import peas as per the contracts. By the interim order
dated 28.06.2018, the said High Court stayed the operation of the
notification dated 25.04.2018 and thereby, permitted imports without the
requisite licence. Several other writ petitions were filed before different
High Courts challenging the
restrictions on import of these beans/peas/
pulses and various interim orders were passed, staying the notifications;
and leading to the effect of permitting imports without any restrictions
as to quota or licence.
14.1. The main plank of submissions in the said writ petitions was
that DGFT, the statutory authority under the FTDR Act, was not
authorised to issue an order amending the EXIM policy and such a power
vested only in the Central Government in terms of Section 3(2) read
with Section 6(3) of the FTDR Act.
14.2. The writ petitions so filed in challenge to the said and akin
notifications and trade notices were dismissed by different High Courts.
The writ petition by M/s. Hira Traders was dismissed by the Madras
High Court on 04.04.2019. The Bombay High Court had dismissed similar
writ petitions on 03.07.2018. Similarly, the Madhya Pradesh High Court
had dismissed such petitions on 25.10.2018; and the Gujarat High Court
had also dismissed similar writ petitions on 19.12.2018. The order passed
by the Gujarat High Court was sought to be challenged in this Court in
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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Special Leave Petition (C) No. 1922 of 2019 but, the same was also
dismissed by the order dated 28.01.2019.
14.3. Thus, to put in a nutshell, it is evident that even though the
High Courts initially took up the challenge to the said notifications and
trade notices and granted interim orders but, ultimately, the writ petitions
were dismissed. An attempt to challenge one of the decisions in this
Court also failed with dismissal of the special leave petition.
15. Thereafter, in the month of March, 2019, the Central
Government, in exercise of its power under Section 3 of the FTDR Act
read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy 2015-
2020, amended the import policy conditions relating to various items of
Chapter 7 of the Indian Trade Classifications (Harmonized System) 2017,
Schedule I by way of S.O. Nos. 1478(E), 1479(E), 1480(E) and 1481(E)
dated 29.03.2019. These were followed by the trade notice dated
16.04.2019 by the DGFT. These notifications are at the core of
controversy involved in these matters and hence, it would be just and
appropriate to reproduce the same as under: -
“S.O. 1478(E).–In exercise of powers conferred by section 3 of
the Foreign Trade (Development and Regulation) Act, 1992 (22
of 1992), read with paragraphs 1.02 and 2.01 of the Foreign Trade
Policy, 2015-2020, as amended from time to time, the Central
Government hereby notifies the Import Policy of items of Chapter
7 of the
Indian Trade Classification (Harmonized System), 2017,
Schedule-1 (Import Policy), as under-

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2. This notification shall come into force from the date of its
publication in the official Gazette.
xxx   xxx   xxx
S.O. 1479(E).–In exercise of powers conferred by section 3 of
the Foreign Trade (Development and Regulation) Act, 1992 (22
of 1992), read with paragraphs 1.02 and 2.01 of the Foreign Trade
Policy, 2015-2020, as amended from time to time, the Central
government hereby amends the Import Policy Conditions of items
of Chapter 7 of the Indian Trade Classification (Harmonized
System), 2017, Schedule-1 (Import Policy), as under -
2. This notification shall come into force with effect from the 1st
April, 2019.
xxx   xxx   xxx
S.O. 1480(E).–In exercise of powers conferred by section 3 of
the Foreign Trade (Development and Regulation) Act, 1992 (22
of 1992), read with paragraphs 1.02 and 2.01 of the Foreign Trade
Policy, 2015-2020, as amended from time to time, the Central
Government hereby notifies the Import Policy of items of Chapter
7 of the Indian Trade Classification (Harmonized System), 2017,
Schedule-1 (Import Policy), as under-
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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Exim Code 
Item 
Description 
Existing Policy 
condition 
Revised 
Policy 
condition 
0713 31 90 
Beans of the 
SPP 
Vigna 
Radiata 
(L.) 
Wilezek 
Restricted. 
Import of Urad shall be 
subject to an annual 
(fiscal year) quota of 1.5 
lakh 
MT 
as 
per 
procedure to be notified 
by Directorate General 
of Foreign Trade: -  
Provided 
that 
this 
restriction 
shall 
not 
apply to Government’s 
import 
commitments 
under any Bilateral or 
Regional Agreement or 
Memorandum 
of 
Understanding. 
0713 90 10 
Split 
0713 90 90 
Other 
2. This notification shall come into force from the date of its
publication in the official Gazette.
xxx   xxx   xxx
S.O. 1481(E).–In exercise of powers conferred by section 3 of
the Foreign Trade (Development and Regulation) Act, 1992 (22
of 1992), read with paragraphs 1.02 and 2.01 of the Foreign Trade
Policy, 2015-2020, as amended from time to time, the Central
Government hereby notifies the Import Policy of items of Chapter
7 of the Indian Trade Classification (Harmonized System), 2017,
Schedule-1 (Import Policy), as under -
2. This notification shall come into force from the 1st April, 2019.”
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15.1. The trade notice dated 16.04.2019 issued by the DGFT laid
down the modalities for making the applications for import of the
commodities in question and carried the following amongst other
stipulations: -
“a. Applications are invited online from the intending millers/refiners
(having own refining/processing capacity) of pulses/peas for its
import as per ANF-2M of FTP 2015-20 to DGFT, at policy2-
dgft@nic.in besides the concerned jurisdictional Regional
Authorities …..”
16. Seeking to challenge the said notifications dated 29.03.2019
and the trade notice dated 16.04.2019, about 90 writ petitions were filed
before the Rajasthan High Court, Bench at Jaipur. Various akin writ
petitions were filed before the High Courts of Delhi, Punjab and Haryana,
Andhra Pradesh, Bombay and Calcutta. In several such writ petitions,
interim orders were passed, permitting the importers to import the said
peas/pulses, notwithstanding the fact that they had not been issued the
import licences, as also the fact that the total imports with such interim
orders would exceed the maximum quantity fixed by way of the impugned
notifications.
17. In the given set of circumstances, Union of India approached
this Court with several transfer petitions. Having regard to the
circumstances and submissions sought to be made, such writ petitions
concerning the notifications in question were withdrawn to this Court
and were ultimately dismissed by the said judgment dated 26.08.2020, in
the
case of Agricas (supra).
Judgment dated 26.08.2020 of this Court in Agricas
18. In the case of Agricas (supra), a variety of issues, essentially
relating to the validity of notifications and the corresponding trade notices
imposing restrictions on import of peas and pulses, were dealt with by
this Court on the anvil of the FTDR Act, particularly Sections 3 and 9A
thereof. We need not dilate on all the issues examined and dealt with by
this Court in Agricas but, a few salient features of the said decision
need to be accentuated, for the purpose of the issues involved in these
appeals.
18.1. In Agricas (supra), this Court specifically took note of the
stand of the Union of India, as regards the purpose and purport of the
notifications in question, which could be usefully reproduced as under: -
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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“53. The Union of India, in their affidavit filed on 26th June
2020, have pleaded that they were required to strike a
balance between the farmers and the importers as
largescale imports would adversely impact the interests of
the farmers due to fall in prices in the local market. Reference
was made to the Minimum Support Price (MSP) for Moong,
Urad and Toor dal and Gram fixed on the recommendation of
the Commission for Agricultural Costs and Prices. Further, the
Central Government under the schemes being run had
procured 85 lakh MT of pulses directly from 53 lakh farmers
by paying them MSP in the last five years. There was also
increase in production of pulses from 25.42 Million MTs in
2017-18 to 26.66 Million MTs in 2020-21. Imported Yellow
Peas are the perfect substitute for Gram in making of Besan
which is primarily used in preparation of Indian savouries.
As the price of imported Yellow Peas in India is cheaper
than the domestic price of Gram, a huge shift in industry
usage from Gram to Yellow Peas has taken place. In these
circumstances that the government has imposed
restrictions from April, 2018 onwards with a small window of
annual quota for permitted imports. However, in view of the
interim orders passed by the various High Courts, the actual
imports of peas were to the tune of 8,51,408 MT and
6,52,607 MTs in 2018-2019 and 2019-2020 respectively,
though the annual quota for these two years was 1/1.50 lakh
MTs. The Government is presently holding a buffer stock of 26.94
lakh MT of Gram, against the target quantity of 3 lakh MTs. The
Gram is being sold at Rs.4,000 - 4,200 per quintal, which is below
the MSP of Rs.4,875/- per quintal. Imported CIF value of Yellow
Peas is Rs.2,028/- per quintal. Due to the pandemic, the farmers
could be compelled to make panic disposal at much lower prices.
In the further affidavit filed on 1st July 2020, the Union of
India has stated that they had not issued any quota for Peas,
Yellow Peas etc. as inspite of restricted quota of 1 lakh and
1.5 lakh MTs for Peas in the Financial Years 2018-19 and
2019-20, due to interim orders passed by the various High
Courts, the actual import was 8.51 lakh MTs and 6.67 lakh
MTs during the Financial Years 2018-19 and 2019-20,
respectively. Consequently, it has been decided not to import
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Yellow Peas in the current Financial Year 2020-21. In the affidavit
filed on 6th July 2020, with reference to Section 9A of the FTDR
Act, the Union of India has stated that the said section is attracted
only when the goods are imported into India in increased quantity
and under such conditions as to cause or threaten to cause serious
injury to domestic industry. Section 9A is enacted as a safeguard
mechanism in terms of Article XIX of the GATT-1994 and Article
II of the WTO Agreement on Safeguards vide the Amendment
Act, 2010. The notifications under challenge have been issued
within the express terms of Section 3 of the FTDR Act which
permits the Central Government to impose restrictions without
any qualification of the nature specified in Section 9A. Power of
the Central Government to restrict imports to limited quantities
under Section 3 and quantitative restrictions under Section 9A of
the FTDR Act are completely distinct and have no connection or
interplay. The power under Section 3(2) of the FTDR Act is of a
wide amplitude. Reference is also made to Rule 5(2) to assert
that there is necessity of evidence that the imports had increased
as a result of ‘unforeseen developments’ in addition to the necessity
for evidence disclosing serious injury or threat of serious injury to
domestic industry and a causal link between imports and serious
injury. The restrictions have been imposed not due to
increased quantities of imports but to prevent panic disposal
by farmers as the prices of Gram would come down. It is
submitted that special provisions like 9A of the FTDR Act would
be limited to areas within its scope leaving the general provision
free to operate in other areas.”
(emphasis in bold supplied)
18.2. Another line of over-ambitious but rather misconceived
arguments on the interpretation of the impugned notification was
suggested on behalf of the importers as if each licencee could import the
quantity mentioned in the notification. Such a baseless contention had, in
fact, been rejected at the outset by this Court. The relevant finding in
that regard may also be usefully noticed as follows:
“17. We would also without any hesitation reject the contention
raised by some of  the importers that the impugned notification is
illegal because of vagueness or allows restricted quantity of 1/1.5
lakh MT of Peas (Pisum Sativum) including Yellow Peas, Green
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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Peas, Dun Peas and Kaspa Peas as against a licence, meaning
thereby each licensee is allowed to import the maximum quantity
specified in the notification. In other words, the total quantity
specified in the notification is per licensee and not for the total
imports of the commodity specified in the notification. The
submission has no merit as the notification expressly uses the
expression ‘total quantity’ of the commodity specified which could
be imported. There is no ambiguity or vagueness in the
notifications, relevant portions of which have been quoted above.
Even otherwise the expression ‘total quantity’ cannot be construed
as quantity per licence issued as the number of licences issued
concerning the subject goods could be numerable (as per the Union
of India 2248, 1016 and 2915 licences were issued in 2019-20 for
import of Tur, Moong and Urad dals against restricted quota of
4, 1.5 and 4 lakh MT, respectively). If each licence holder is
allowed to import 1/1.5 lakh MT of Peas, the total import would
well exceed the total annual consumption after we account for
the production within India. In our opinion, the plea and
interpretation of the importers if accepted will not only be contrary
to the express language of the notification but would frustrate the
intent and object of restricting the imports of the stated goods by
prescribing a quota. We decline and would not accept this
farfetched and somewhat drivel
interpretation of simple and straight
forward words.”
18.3. After dealing with the interpretation of Section 9A of the
FTDR Act and its co-relation with Article XI and Article XIX of GATT-
1994 as also Section 3 of the FTDR Act, this Court held the notifications
in question to be valid, for having been issued in accordance with the
powers conferred on the Central Government in terms of sub-section
(2) of Section 3 of the FTDR Act. This Court, inter alia, observed and
held as under: -
“61. This being the position, Section 9A has to be interpreted as
an escape provision when the Central Government i.e. the Union
of India may escape the rigours of paragraph (1) of Article XIX
of GATT-1994. Section 9A is not a provision which incorporates
or transposes paragraph (1) of Article XI into the domestic law
either expressly or by necessary implication. To hold to the contrary,
we would be holding that the Central Government has no right
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and power to impose ‘quantitative restrictions’ except under
Section 9A of the FTDR Act. This would be contrary to the
legislative intent and objective. Section 9A of the FTDR
Act does not elide or negate the power of the Central
Government to impose restrictions on imports under sub-
section (2) to Section 3 of the FTDR Act.
62. In other words, the impugned notifications would be
valid as they have been issued in accordance with the power
conferred in the Central Government in terms of sub-
section (2) to Section 3 of the FTDR Act. The powers of the
Central Government by an order imposing restriction on imports
under sub-section (2) to Section 3 is, therefore, not entirely curtailed
by Section 9A of the FTDR Act.”
(emphasis in bold supplied)
18.4. As noticed, before the said writ petitions were withdrawn
to this Court, various interim orders had been passed by the High Courts.
It was stated before this Court that, relying upon such interim orders, the
importers had imported various quantities of peas and pulses; and it was
contended on behalf of the importers that those had been bona fide
imports under the interim orders of the Courts. This Court specifically
rejected such contentions and held that despite the High Courts of Madras,
Bombay, Gujarat and Madhya Pradesh having dismissed the writ petitions
of similar nature while upholding the notifications and trade notices, the
importers took their chance, obviously for personal gains and they would,
accordingly, face the consequences in law. This Court, in no uncertain
terms, rejected the submissions that the importers had acted in bona
fide belief. The relevant observations and findings of this Court in Agricas
(supra) in this regard could be usefully extracted as under: -
“D. Contention of the importers of bona fide imports under
interim orders and prayer for partial relief.
65.Learned counsel for some of the importers had placed reliance
on Raj Prakash Chemical v. Union of India, which judgment,
in our opinion, has no application. In Raj Prakash
Chemical(supra), the petitioner had acted under a bona fide belief
in view of judgments and orders of High Courts and the
interpretation placed by the authorities. In this background,
observations were made to giving benefit to the importers, despite
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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the contrary legal interpretation. In the instant case, the importers
rely upon the interim orders passed by the High Court’s whereas
on the date when they filed the Writ Petitions and had obtained
interim orders, the Madras High Court had dismissed the Writ
Petition upholding the notification. Similarly, the High Court of
adjudicature at Bombay, High Court of Gujarat and the High Court
of Madhya Pradesh had dismissed the Writ Petitions filed before
them and upheld the notifications and the trade notices.
Notwithstanding the dismissals, the importers took their chance,
obviously for personal gains and profits. They would accordingly
face the consequences in law. In these circumstances, the
importers it cannot be said had bona fide belief in the right
pleaded.”
18.5. Only one aspect of the matter was not decided by this Court
and that related to the pending appeals against the orders suspending or
terminating the import-export code11 of some of the parties. This Court
left the statutory appeals in that regard to be decided in accordance with
law.
19. Having upheld the validity of the notifications and trade notice
and also having held that the importers, while effecting the imports by
relying upon the interim orders, cannot be said to have acted bona fide,
this Court concluded on the writ petitions with the observations and
directions that the imports in question would be held to be contrary to the
notifications and
trade notices issued under the FTDR Act; and would
be so dealt with under the provisions of the Customs Act. This Court
dismissed all the writ petitions which were subject of the transfer petitions
as also the writ petitions filed by the intervenors. The concluding part of
the decision of this Court in Agricas (supra) reads as under: -
“F. Conclusion
67. Accordingly, we uphold the impugned notifications and the
trade notices and reject the challenge made by the importers. The
imports, if any, made relying on interim order(s) would be held to
be contrary to the notifications and the trades notices issued under
the FTDR Act and would be so dealt with under the provisions of
the Customs Act 1962. The Writ Petitions subject matter of the
Transfer Petitions, subject to E above (What is not decided) are
11 ‘IEC’ for short.
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dismissed. Writ Petitions filed by the intervenors before the
respective High Courts shall stand dismissed in terms of this
decision. Pending application(s), if any, also stand disposed of in
the above terms. No order as to costs.”
20. Therefore, it is beyond a shadow of doubt that in Agricas
(supra), this Court took note of raison d’être that the notifications
were fundamentally intended to protect the domestic agriculture
market and also pronounced on the true meaning and import of
these notifications; and while rejecting the far-stretched
interpretation suggested on behalf of the importers that each
licencee was entitled to import the quantity mentioned in the
notifications, this Court not only upheld the notifications and the
trade notice in question but also held that any import made under
the cover of the interim order cannot be regarded as bona fide;
and being contrary to the applicable notifications and trade notice,
would be so dealt with under the provisions of the Customs Act.
However, what has happened after the aforesaid decision of this
Court dated 26.08.2020 in Agricas has given rise to the present
round of litigation.
Orders-in-original dated 28.08.2020: The Adjudicating
Authority allows release of goods on payment of redemption fine
21. As noticed, within no time after the decision of this Court
dated 26.08.2020 in Agricas (supra), the private respondents of these
appeals, M/s. Raj Grow Impex LLP and M/s. Harihar Collections, who
had made
certain imports of the goods covered by the said notifications
but their imported goods had not been released, took up the proceedings
in the manner that the eventuality of absolute confiscation could be
obviated and they could get the goods released by payment of fine. In
this regard, they addressed respective communications on 26.08.2020,
requesting for waiver of show cause notices under Section 124 of the
Customs Act and for urgent personal hearing. The Adjudicating Authority
took up their cases in priority and, by his almost identical orders-in-original
dated 28.08.2020, while ordering confiscation under Section 111(d) of
the Customs Act, gave an option to the importers to redeem the goods in
question on payment of fine in lieu of confiscation under Section 125(1)
thereof. Having regard to the questions involved, the relevant features
of the said orders-in-original dated 28.08.2020, in relation to the individual
importer may be taken note of.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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M/s. Raj Grow Impex LLP
22. On 01.11.2019, the importer M/s Raj Grow Impex LLP filed
ten bills of entry bearing numbers 5520536, 5520537, 5520538, 5520539,
5520540, 5520541, 5520732, 5520871, 5520872 and 5521191, for
clearance of 24,815 MTs of yellow peas, said to have been imported
under the cover of interim order passed by the Rajasthan High Court on
20.07.2019 in WP No. 11974 of 2019. However, the goods were not
released, particularly for the objections against their release by the officers
of DGFT. The goods were stored in a warehouse under Section 49 of
the Customs Act.
22.1. On the very day of the decision of this Court in the case of
Agricas (supra) on 26.08.2020, this importer sent a letter to the
Adjudicating Authority with the request that show cause notice under
Section 124 of the Customs Act be waived and personal hearing may be
provided expeditiously. Accepting this request, the Adjudicating Authority
granted expedited hearing because of perishable nature of the goods;
and proceeded to pass the order-in-original on 28.08.2020 (which was
issued on 03.09.2020).
22.2. The Adjudicating Authority observed in its order-in-original
dated 28.08.2020 that the goods were imported by the importer in the
month of November 2019 under the protection of the interim order granted
by the Rajasthan High Court but, when held to have been imported in
contravention of the applicable notifications, they became prohibited
goods
under Section 11 of the Customs Act read with Section 3 of the FTDR
Act; and hence, the goods were liable to confiscation under Section
111(d) of the Customs Act. Further, the importer was also held liable for
penalty under Section 112(a)(i) of the Customs Act. The relevant findings
of the Adjudicating Authority could be usefully extracted as under: -
“9. The impugned goods were imported in contravention of the
DGFT notifications No. S.O. 1478(E), 1479(E), 1480(E) and
1481(E) dated 29.03.2019 and subsequent trade notice No. 06/
2019-2020 Dated 16.04.2019. Thereby, the impugned goods
became prohibited under section 11 of the Customs Act, 1962
read with section 3 of the FOREIGN TRADE (DEVELOPMENT
AND REGULATION) ACT, 1992. Hence, I hold that the goods
are liable for confiscation u/s. 111(d) for the Customs Act, 1962.
10. For the above acts of omission and commission which render
the impugned goods liable for confiscation u/s. 111(d) of the
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Customs Act, 1962, I hold that the importer is liable for penalty u/
s. 112(a)(i) of the Customs Act, 1962.”
22.3. However, after having held that the goods were liable to
confiscation and the importer was liable for penalty, the Adjudicating
Authority proceeded to determine the quantum of redemption fine and
penalty to be levied on the importer. In this regard, the Adjudicating
Authority took into account the alleged margin of profit of the importer,
market price of the goods, and the expenditure incurred on storage and
transportation etc. The Adjudicating Authority also took into account
various other factors for which the quality of goods, being perishable in
nature, had deteriorated, like poor condition of warehouses, excessive
rainfall, humidity, exposure and pest attacks. It was, however, observed
by the Adjudicating Authority that the goods in question, though having
lost much of their market value, were still fit for human consumption, as
per the certificate from the accredited laboratory. On these considerations,
the Adjudicating Authority considered it appropriate to impose fine and
penalty while calculating the margin of profit @ Re. 1 per Kg; and
concluded on the matter with the following order: -
“12. In view of the above discussion and findings, I pass the
following order:-
Order
i. I confiscate the impugned goods u/s. 111(d) of the Customs
act, 1962. Whereas I give an option to the importer to redeem
the impugned goods on payment of the
redemption fine of
Rs. 1.0 crores (Rupees One Crores only) in lieu of
confiscation u/s 125(1) of the Customs Act, 1962.
ii. I, also impose a penalty of Rs. 1.485 crores (Rupees
One Crore Forty Eight Lakhs Fifty Thousand only) on M/s.
Raj Grow Impex LLP, Jaipur u/s. 112(a)(i) of the Customs
Act, 1962.
13. This order is passed without prejudice to any other action that
may be contemplated against the importer or any other person in
terms of any provision of the Customs Act, 1962 and/or any other
law for the time being in force.”
M/s. Harihar Collections
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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23. The case of the other importer M/s. Harihar Collections is not
materially different except for a few individual facts. This importer had,
on 18.11.2019, filed eight bills of entry on 18.11.2019 bearing numbers
5720040, 5720192, 5720693, 5722458, 5722730, 5719772, 5722243 and
5722456 for clearance of 38,500 MTs of yellow peas, said to have been
imported under the cover of interim order passed by the Rajasthan High
Court on 10.07.2019 in WP No. 11752 of 2019. In this case too, the
goods were not released in view of objections and were stored in a
warehouse.
23.1. Soon after the decision of this Court in the case of Agricas
(supra) on 26.08.2020, this importer also sent a similar communication
on the same day to the Adjudicating Authority, seeking waiver of show
cause notice under Section 124 of the Customs Act and for expeditious
personal hearing. This case was also considered expeditiously and
another order-in-original of similar nature was passed by the Adjudicating
Authority on 28.08.2020 (issued on 03.09.2020).
23.2. Almost on the similar considerations as noticed above in
the case of M/s. Raj Grow Impex, the Adjudicating Authority held that
the goods in question became prohibited goods under Section 11 of the
Customs Act read with Section 3 of the FTDR Act; and hence, were
liable to confiscation under Section 111(d) of the Customs Act; and the
importer was also liable for penalty under Section 112(a)(i) of the
Customs Act. Again, on similar lines, the Adjudicating Authority
proceeded to determine the quantum of redemption fine and penalty
to be levied on the importer; and, on similar considerations as above,
proceeded to impose fine and penalty while calculating the margin of
profit @ Re. 1 per Kg and concluded on the matter with the following
order: -
“13. In view of the above discussions and findings, I pass the
following order: -
Order
i. I confiscate the impugned goods u/s. 111(d) of the Customs
act, 1962. Whereas I give an option to the importer to redeem
the impugned goods on payment of the redemption fine of Rs.
1.5 crores (Rupees One Crores Fifty Lakhs Only) in lieu of
confiscation u/s 125(1) of the Customs Act, 1962.
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ii. I, also impose a penalty of Rs. 2.35 crores (Rupees Two
Crores Thirty Five Lakhs only) on M/s. Harihar Collections,
Jaipur u/s. 112(a)(i) of the Customs Act, 1962.
14. This order is passed without prejudice to any other action
that may be contemplated against the importer or any other
person in terms of any provision of the Customs Act, 1962
and/ or any other law for the time being in force.”
Immediate sequels to the orders-in-original
24. The aforesaid orders-in-original dated 28.08.2020 instantly led
to several actions and reactions. Acting swiftly on the orders-in-original,
the respondent-importers took immediate steps for payment of redemption
fine and penalty. On 29.08.2020, the respondent M/s. Raj Grow Impex
made such payment in relation to three bills of entry bearing Nos. 5520732,
5520871 & 5520536 and obtained OOC. On the other hand, the
respondent M/s. Harihar Collections made payment of redemption fine
and penalty in respect of all its eight bills of entry on 29.08.2020 and
obtained OOC. When the respondent M/s. Raj Grow Impex was in the
process of making payment for the remaining seven bills of entry and
when the goods for which OOC had been issued were in the process of
unloading and release, the DGFT addressed its letter dated 01.09.2020
to the Chairman, Central Board of Indirect Taxes and Customs, referring
to the import policy and restrictions over import of peas as also to the
judgment of this Court in Agricas (supra). The DGFT stated
that any
release of imported peas would be contrary to the import policy; that
they were in the process of obtaining legal opinion from the ASG; and till
then, the field formations under the Customs may be directed not to
release the consignments of peas and, if any such consignments had
been released, the details may be provided. It appears that acting on this
communication from DGFT, the Zonal Additional Director General of
Foreign Trade at Mumbai issued necessary instructions and thereupon,
the Deputy Commissioner of Customs, Import Docs (Import-I), Mumbai,
issued a letter dated 02.09.2020, instructing the Mumbai Port Trust
authorities to stop the release of the goods in question. This led to the
stoppage of unloading and release of the goods whereupon, the
respondent-importers made a request to the Commissioner of Customs
(Import-I), Mumbai on 03.09.2020 to release the cargo when the requisite
fine and penalty had already been paid. However, the respondent-
importers received the communication from Mumbai Port Trust authorities
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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that the cargo stored in the port trust premises will not be released on
account of the directions received from the customs authorities.
Thereafter, they received one more letter from the Mumbai Port Trust
on 11.09.2020 stating that the goods could be cleared subject to fulfilment
of the Customs and Port Trust formalities. However, despite all their
efforts, the importers could not secure the desired release of goods.
25. Being aggrieved by the said communications and denial of
release of the goods, the respondent-importers approached the High
Court of Judicature at Bombay on 15.09.2020, seeking mandamus for
clearance of the goods imported by them while also questioning the
communications denying them the release of the goods in question. The
writ petitions so filed by the importers, being Writ Petition (L) No. 3502
of 2020 (M/s. Raj Grow Impex LLP v. Union of India and Ors.) and
Writ Petition (L) No. 3503 of 2020 (M/s. Harihar Collections v. Union of
India and Ors.), were decided by the impugned common order dated
15.10.2020. We shall be dilating on the relevant features of the order
dated 15.10.2020 a little later but, at this juncture, we may take note of
the reliefs claimed in the respective writ petitions which read as under: -
In Writ Petition (L) No. 3502 of 2020 by M/s. Raj Grow Impex
“36. The Petitioner therefore prays that:
(a) This Hon’ble Court be pleased to issue a writ of certiorari or
a writ in the
nature of certiorari or any other appropriate writ,
order or direction for calling for the records of the present case
and after going through the legality and validity thereof be pleased
to quash and set aside the Letters issued by Respondent Nos.5
and 6 on 02.09.2020 (“Exhibits O & P”);
(b) This Hon’ble Court be pleased to issue a writ of mandamus or
a writ in the nature of mandamus or any other appropriate writor
order or direction under Article 226 of the Constitution of India
ordering and directing the Respondents and in particular the
Respondent No.7and Respondent No. 4 itself, its officers,
subordinates, servants and agents to clear the goods imported by
the Petitioner vide Bills of Entry Nos. 5520732, 5520871 and
5520536 all dated 01.11.2019;
(c) this Hon’ble Court be pleased to issue a writ of mandamus or
a writ in the nature of mandamus or any other appropriate writor
order or direction under Article 226 of the Constitution of India
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ordering and directing the Respondent No. 4 itself, its officers,
subordinates, servants and agents torelease the goods imported
vide 7 Bills of Entry bearing Nos. 5520537, 5520538, 5520539,
5520540, 5520541, 5520872 and 5521191 on payment of
Redemption Fine and Penalty;
(d) that pending the hearing and final disposal of this Petition, that
this Hon’ble Court be pleased to-
i. restrain the Respondent Nos.3 and 4 itself, its officers,
subordinates, servants and agents from taking any further action
to stop the clearance of the goods imported by the Petitioner
vide Bills of Entry Nos. 5520732, 5520871 and 5520536 all
dated 01.11.2019;
ii. direct the Respondent No.4 ,itself, its officers, subordinates,
servants and agents to clear the goods imported by the
Petitioner vide Bills of Entry Nos. 5520732, 5520871 and
5520536 all dated 01.11.2019;
iii. direct the Respondent No.7 and Respondent No. 4 itself, its
officers, subordinates, servants and agents to release the goods
imported vide 7 Bills of Entry bearing Nos. 5520537, 5520538,
5520539, 5520540,5520541, 5520872 and 5521191 on payment
of Redemption Fine and Penalty;
(e) for ad-interim reliefs in terms of prayer clause (d) above;
(f) for costs of this Petition and the Orders made thereon, and
(g) for such further and other reliefs as this Hon’ble Court may
deem fit in the facts and circumstance of the case.”
In Writ Petition (L) No. 3503 of 2020 by M/s. Harihar Collections
“33. The Petitioner therefore prays
that:
(a) This Hon’ble Court be pleased to issue a writ of certiorari or
a writ in the nature of certiorari or any other appropriate writ,
order or direction for calling for the records of the present case
and after going through the legality and validity thereof be pleased
to quash and set aside the Directions / Letter issued by Respondent
No.5 and 6 on 02.09.2020 (“Exhibit K & L”);
(b) This Hon’ble Court be pleased to issue a writ of mandamus or
a writ in the nature of mandamus or any other appropriate writor
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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order or direction under Article 226 of the Constitution of India
ordering and directing the Respondents and in particular
Respondent No. 7 and Respondent No.4 itself, its officers,
subordinates, servants and agents to clear the goods imported by
the Petitioner vide Bills of Entry bearing Nos. 5720040, 5720192,
572069, 5722458, 5722730, 5719772, 5722243 and 5722456, all
dated 18.11.2019;
(c) that pending the hearing and final disposal of this Petition, that
this Hon’ble Court be pleased to-
i.
restrain the Respondent No.3 itself, its officers,
subordinates, servants and agents from taking any further action
to stop the clearance of the goods imported by the Petitioner
vide Bills of Entry bearing Nos. 5720040, 5720192, 572069,
5722458, 5722730, 5719772, 5722243 and 5722456, all dated
18.11.2019;
ii.
direct the Respondent No.4,itself, its officers,
subordinates, servants and agents to clear the goods imported
by the Petitioner vide Bills of Entry bearing Nos. 5720040,
5720192, 572069, 5722458, 5722730, 5719772, 5722243 and
5722456, all dated 18.11.2019;
(d) for ad-interim reliefs in terms of prayer clause (d) above;
(e) for costs of this Petition and the Orders made thereon, and
(f) for such further and other reliefs as this Hon’ble Court may
deem fit in the facts and circumstances of the case.”
25.1. In the writ petitions so filed by the importers, the High Court
issued notice and directed the respondents to file an
affidavit within 10
days while fixing the matter for consideration on 06.10.2020.
26. While the aforesaid writ petitions remained pending with the
High Court, the Commissioner of Customs (Import-II), Mumbai, in
exercise of his powers under Section 129D(2) of the Customs Act,
proceeded to issue separate orders dated 01.10.202012, stating various
grounds on which the said orders-in-original were questionable on legality
and propriety; and directed the authority concerned to apply to the
Commissioner (Appeals) for setting aside the said orders and for passing
12 Being Review Order No. 1/2020-21 in the case of M/s. Raj Grow Impex and Review
Order No. 2/2020-21 in the case of M/s. Harihar Collections.
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a suitable order as deemed fit. The grounds stated in the aforesaid orders
dated 01.10.2020 carry their own relevance for the issues arising in
these appeals and the same may also be noticed in the requisite details.
26.1 In the case of M/s. Raj Grow Impex, the Commissioner
found the following shortcomings: -
a.  Non-issuance of show cause notice
With reference to Section 124 of the Customs Act, the
Commissioner opined that the order-in-original suffered from a legal
infirmity for want of serving a detailed show cause notice incorporating
all the relevant grounds of confiscation. The Commissioner observed as
follows: -
“In the present case, the oral submissions as recorded in the subject
OIO do not have any mention of grounds of confiscation being
communicated to the importer and their submissions regarding
the same, The recordings of personal hearing are largely with
respect to importers contention that as per the Hon’ble Supreme
Court order Customs Authorities to deal with the goods imported
under provisions of Customs Act, and with regards to deterioration
in the quality of goods. No detailed Show cause was issued
incorporating all relevant ground of prohibitions in the matter viz
suspension of IEC etc. Therefore, the subject order of ADC suffers
from legal infirmities.”
b. Non-addressal of the issue of suspension of IEC of the Importer
In regard to this aspect, the Commissioner referred to the fact
that there was a question-mark about the very
existence of the firm in
question; and also referred to the statutory appeals concerning suspension
or termination of IEC. The Commissioner observed as follows: -
“In the subject OIO issued by the Adjudicating Authority,
mention has been made in brief facts regarding receipt of
complaints by Jt. DGFT doubting financial status of the importer
that it could be a shell firm and the same had to be verified at
Customs Level.
In this regard, it has been mentioned in the brief facts that the
bank statement of 3 accounts of importer M/s Raj Grow Impex
was scrutinized and financial credentials were forwarded to the
Jt. DGFT, Jaipur vide letter dated 22.11.2019. That despite advisor
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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from Jt. DGFT that the facts can be verified and put before Hon’ble
court, ADC adjudicated the matter.
There is no discussion regarding cancellation of IEC or
otherwise by DGFT in respect of the said importer. The order is
therefore not a speaking order and in terms of Hon’ble Supreme
Court order, the issue of suspension of IEC has to be examined in
this case. Therefore, in order to follow due process of law, the
order merits review.”
c. The order having been passed on the assumption that the goods
were to be released against redemption fine
The Commissioner further observed that the order in question
was passed on the assumption that the goods were required to be released
against redemption fine though various issues including those of
quantitative restrictions were to be taken into consideration. In this regard,
the Commissioner referred, inter alia, to Section 2(33) of the Customs
Act defining prohibited goods as also Sections 111 and 113 thereof. The
Commissioner further reproduced the findings of this Court in the case
of Agricas (supra) on the implication and meaning of the quantitative
restrictions in the subject notifications and observed as under: -
“The adjudicating authority failed to consider the same in this order.
The adjudication authority while addressing the question of allowing
redemption of impugned goods on payment of fine, did not apply
his mind on the legislative intent for imposing restrictions
on the
import of Green peas. Redemption has been allowed
mechanically without going into the merits or demerits of
allowing such an option, thus circumventing the legislative
intent behind the restrictions.”
(emphasis in bold supplied)
d. No reasons were given as to why absolute confiscation or re-
export was not taken into consideration
The Commissioner further referred to the fact that the goods
became prohibited under Section 11 of the Customs Act read with Section
3 of the FTDR Act and found omission on the part of the Adjudicating
Authority to take into account the relevant considerations while observing
as under: -
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“19. The goods became prohibited under section 11 of the Customs
Act, 1962 read with section 3 of Foreign Trade (Development
and Regulation) Act, 1992. Thus, the option of re-export of the
said goods to the original supplier should also have been taken
into consideration. It is now settled law that power of discretion
by the authority is to be exercised based on well-founded principles
and should not be done in a mechanical way. It is the Adjudicating
authority’s bounden duty to give cogent reasons while exercising
discretion as to why goods are being released on redemption fine
which he grossly failed to do. He had an obligation to Revenue
and the State, as much as he did towards the appellant while
considering the question of redemption. The adjudicating
authority did not give reasons as to why absolution
confiscation or re-export is not taken into consideration in
view of the facts of the case as listed above.”
(emphasis in bold supplied)
e. Apart from the above, the Commissioner also found the
shortcomings that the Adjudicating Authority, (i) chose to rely on the
accredited laboratory certificate rather than referring the matter to the
designated government agency; (ii) did not conduct an inquiry for
ascertaining market price and margin of profit; and (iii) did not assess
the duty payable on the consignment.
26.2. As regards the matter of M/s. Harihar Collections, the
Commissioner passed an almost identical order on 01.10.2020 with one
basic
difference concerning the issue of IEC. Not much of the
observations were made on this issue as were made in the other case of
M/s. Raj Grow Impex but, it was observed that the licence of this importer
was shown as cancelled and this fact was not taken into consideration
by the Adjudicating Authority. Besides this, the order-in-original
concerning this importer was also found suffering from the same
shortcomings as noticed hereinabove.
27. The aforesaid orders dated 01.10.2020 led the Additional
Commissioner of Customs, Group-I, Mumbai to apply to the
Commissioner (Appeals) and on that basis, the matters were examined
in appeal; and came to be decided by the Appellate Authority in its orders-
in-appeal dated 24.12.2020. However, before such decision by the
Appellate Authority, the aforementioned writ petitions filed by the
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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importers were taken up for consideration by the High Court and were
decided by the common order dated 15.10.2020. This common order
has been challenged in the appeal arising out of SLP(C) Nos. 14633-34
of 2020. Therefore, before dilating on the orders-in-appeal dated
24.12.2020, it is necessary to examine the impugned order dated
15.10.2020 in requisite details with the relevant particulars.
The order dated 15.10.2020 and its modification dated
09.12.2020: The High Court issues mandamus for release of
goods.
28. As noticed, the respondent-importers, before passing of the
said order dated 01.10.2020, had already approached the High Court on
15.09.2020 seeking mandamus for clearance of the goods imported by
them while also questioning the communications denying them the release
of the goods in question. In these writ petitions, the High Court had
issued notice and directed the respondents to file an affidavit within 10
days while fixing the matter for consideration on 06.10.2020 but, in the
interregnum, the Commissioner of Customs (Import-I), Mumbai passed
the aforesaid orders dated 01.10.2020 under Section 129D(2) of the
Customs Act.
29. When the writ petitions were heard on 06.10.2020, a submission
was made on behalf of the respondents that after passing of the said
order dated 01.10.2020 by the Commissioner, the writ petitions were
rendered infructuous and were also liable to be dismissed for the writ
petitioners
having not challenged the order so passed by the Commissioner.
It was also pointed out that pursuant to the said order dated 01.10.2020,
the appeals had already been filed before the Commissioner (Appeals)
against the orders-in-original. Per contra, it was submitted on behalf of
the writ petitioners that the stand so taken was not only unfair but was
untenable too. It was submitted that the respondents of the writ petitions
had attempted to materially alter the subject matter of the petitions without
taking leave of the Court. This apart, it was also contended that the
grounds stated by the Commissioner while directing the Additional
Commissioner to apply for appeal were totally frivolous; and all the
grounds given in the order dated 01.10.2020 were also countered. It
was also submitted that the orders-in-original dated 28.08.2020, issued
on 03.09.2020, were holding the field and had neither been set aside nor
stayed by any appellate authority or higher authority; that the writ
petitioners had complied with all the conditions of the orders and had
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made the payments; that there was no justifiable reason not to release
the goods in question; and that because of storage of goods in the customs
warehouse, the writ petitioners were suffering huge expenditure.
30. In its impugned common order dated 15.10.2020, the High
Court took up the petition of M/s. Harihar Collections as the lead case
and after taking note of all the background aspects, first of all took up
the issues related with propriety in passing the order dated 01.10.2020
by the Commissioner when the writ petitions were pending in the High
Court. In this regard, a serious exception was taken that the
Commissioner at all chose to pass the order when the High Court was in
seisin of the matter. The High Court also observed that the suggestion
for dismissing the writ petitions because of the subsequent development
or relegating the writ petitioners to appellate forum amounted to
interference with the administration of justice. The High Court strongly
expressed its views in the following terms: -
“26. When this Court had taken cognizance of the grievance made
by the petitioner and was in seisin of the matter fixing 06.10.2020
for consideration, it was highly improper on the part of
Commissioner of Customs (Import-II) to have passed the order
dated 01.10.2020 without any intimation to or taking leave of the
Court. It needs no reiteration that when the court, that too the
High Court, is in seisin of a matter, an administrative or executive
authority
cannot start a parallel proceeding on the very same
subject matter at its own ipse dixit and record a finding. It would
amount to interfering with the dispensation of justice by the courts.
In the instant case, when the Court was set to examine the
grievance of the petitioner regarding non-release of the goods
despite the order-in-original, what was sought to be done was to
present the Court with an order passed in the midst of such
examination keeping the Court totally in the dark saying that the
order-in-original suffers from illegality or impropriety directing the
subordinate authority to apply to the Commissioner (Appeals) to
set aside the order-in-original andthen contending that the writ
petition should be dismissed because of the subsequent development
or that the petitioner should be relegated to the appellate forum to
contest the subsequent order. As pointed out above, this amounts
to interfering with the administration of justice and is thus not at
all acceptable. A view may be taken that such an order should be
ignored as it is contumacious.”
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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31. Having said that, the High Court proceeded to examine the
scope and purport of the powers under Section 129D(2) of the Customs
Act and held that those powers were in the very narrow compass, being
essentially of revision and not of review. The High Court also observed
that the Commissioner had three months’ time to pass the said order
which was further extendable by thirty days; and yet, ‘he chose to pass
the order most hastily in the midst of the court proceeding keeping
the court completely in the dark’. Proceeding further, the High Court
summarised the reasons given by the Commissioner of Customs for
taking the view against the orders-in-original in the following terms: -
“29……..After narrating the facts of the case and the order-in-
original passed by the adjudicating authority, Commissioner of
Customs took the view that the said order is not legal and proper
for the following reasons (mentioned asgrounds):-
1. non-issuance of show cause notice by the adjudicating
authority;
2. non-addressal of the issue of suspension of import export
code of theimporter;
3. adjudication order was issued proceeding on the basis that
the goods were required to be released against redemption
fine whereas there were number of issues which were required
to be taken into consideration, such as, suspension of import
export codeetc.;
4. adjudicating authority did not give reasons as to why absolute
confiscation or re-export was not
considered as anoption;
5. adjudicating authority did not discuss as to why he reliedupon
thecertificateofaccreditedlaboratoryratherthanreferringthe
matter to the designated governmentagency;
6. enquiry not conducted for ascertaining market price and
margin of profit for imposition of redemption fine and penalty.”
32. Thereafter, the High Court dealt with the aforesaid grounds
of the order dated 01.10.2020.
32.1. The High Court observed, as regards the first ground relating
to non-issuance of show cause notice, as follows: -
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“32.2. In the instant case, petitioner made a request not to issue
show cause notice but to give him personal hearing. This was
accepted by the adjudicating authority which power admittedly
he has under the first proviso to section 124 and he has given
reasons for the same i.e., long pendency and perishable nature of
theconsignments.”
32.2. As regards the second ground of non-addressal of the issue
of suspension of import export code of the importer, the High Court
referred to the observations of this Court in Agricas (supra) that such
issue was left open to be decided in the pending statutory appeal; and
even otherwise, the order of suspension dated 06.12.2019 had barred
the importer prospectively and such suspension in no way impacted the
imports in question. The High Court said: -
“33.2. In view of what the Supreme Court had observed the
adjudicating authority could not have taken up and examined such
order of suspension. Besides, from a perusal of the order of
suspension dated 16.12.2019 it is evident that the said order has
barred the petitioner from conducting any further import and export
meaning thereby that it is prospective and in no way impacted the
import made prior to that date which was the subject matter of
adjudication in theorder-in-original.”
32.3. The third, fourth and sixth grounds aforesaid were examined
together and the High Court took the view that taking exception to the
order-in-original on the basis of these grounds appeared to
be
questionable. The High Court, inter alia, observed as under: -
“34.3. The power under sub-section (1) of section 125 regarding
giving option to the owner or person concerned to pay fine in lieu
of confiscation is discretionary in respect of goods the importation
or exportation whereof is prohibited but in respect of other goods
it is mandatory. Therefore, such a power is available to the
adjudicating authority and he has exercised that power. That apart,
when fine is imposed in lieu of confiscation, sub-section (2) makes
it abundantly clear that the owner or the person concerned would
have to pay in addition to the fine, the customs duty and other
charges.Non-mentioning of the duty payable in the order-in-original
is therefore immaterial, as payment of the same is statutorily
mandated under sub-section (2) of section125.
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xxx
xxx
“34.6. In such circumstances, taking exception to theorder-in-
original on the above grounds appears to be questionable. As
already discussed, adjudicating authority had the power to give
option to the owner or person concerned to pay fine in lieu of
confiscation which power he exercised and the quantum of fine
was determined after considering various aspects including the
margin of profit suggested by the assessing officer.”
32.4. As regards the fifth ground, the High Court observed that
the laboratory in question was accredited to the customs department
and no fault could be found in the Adjudicating Authority placing reliance
on its report.
33. For what has been noticed in the preceding paragraphs, it
would appear that the High Court not only questioned the propriety in
passing of the order dated 01.10.2020 by the Commissioner of Customs
but also examined the grounds stated therein, for directions to challenge
the orders passed by the Adjudicating Authority; and expressed its views
against tenability of the grounds so suggested by the Commissioner.
However, even after such detailed discussions and observations, the
High Court consciously stopped short of pronouncing finally on the said
grounds because the matter had already been taken in appeal pursuant
to the said order dated 01.10.2020. The High Court, however, observed
that the manner of passing of the said order dated 01.10.2020 was
definitely
questionable and further observed that the contents of the
said order and the grounds given, as examined prima facie, did not make
out that the order passed by the Adjudicating Authority was suffering
from any such illegality and impropriety that suo motu revisional powers
under Section 129D(2) should have been exercised. The High Court
iterated that on prima facie examination of the stated grounds, the orders-
in-original could not be said to be unlawful or inappropriate or unjust or
beyond the bounds of the Adjudicating Authority. However, it was
reiterated that since application had been filed which would be decided
as an appeal, the High Court was limiting its examination to the
justification or otherwise of not releasing the goods on the strength of
the order dated 01.10.2020. These observations of the High Court,
occurring in paragraph 36 of the impugned order read as under: -
“36. We have examined the grounds given in the order dated
01.10.2020 not as an appellate authority over the Commissioner
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but only to satisfy ourselves as to whether on such grounds a
bona fide satisfaction can be arrived at that the order-in-original
suffers from illegality or impropriety. Even on that aspect also,
we refrain from expressing our final views since it is stated
that application has been filed pursuant to the order dated
01.10.2020 which shall now be treated as an appeal, but
the manner in which the order has been passed is definitely
questionable and the contents of the order dated 01.10.2020
particularly the grounds given as examined prima faciedo not
make out a case that the order-in-original suffers from such
illegality and impropriety that suo-motu revisional power under
section 129 D(2) should be exercised. Prima-facie, on
examination of the grounds as above, we cannot say that
the order-in-original is unlawful or inappropriate or unjust
or that the adjudicating authority acted beyond the bounds
of his authority. However, since application has been filed
which will now be decided by the Commissioner (Appeals)
as an appeal, we only limit our examination to the
justification or otherwise of not releasing the goods of the
petitioner on the strength of the order dated 01.10.2020.”
(emphasis in bold supplied)
34. Thereafter, the High Court recounted the factors that the order-
in-original was already holding the field; the respondents admitted that
redemption fine and personal fine were levied proportionately to the
quantity declared; the petitioner had
complied with the terms and
conditions of the order-in-original and had made the necessary payments;
out of charge had been issued; and the petitioner was incurring substantial
expenditure because of warehousing of the goods. Taking note of these
factors, the High Court expressed its views that withholding of imported
goods of the petitioner would not be just and proper; and their release
could not be denied on the basis of the order dated 01.10.2020. Having
said that, the High Court concluded on the writ petitions with the findings
and conclusions occurring in paragraph 37 to 39 of the impugned order,
which read as under: -
“37. We have already discussed and noted that the order-in-original
is holding the field. The same has neither been set aside nor stayed.
Interestingly, respondent Nos.4 to 6 in para 16 of theiraffidavit
have themselves admitted that the redemption fine and personal
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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fine were levied proportionately to the quantity declared in the
bills of entry. Petitioner has complied with the terms and conditions
of the order-in-original and made the necessary payments. Out of
charge has been issued. Because of warehousing of the goods
under section 49 of the Customs Act, petitioner is required to pay
a substantial amount to the customs authority. In the above context
and after thorough consideration of all aspects of the matter, we
are of the view that non-release or withholding of the imported
goods of the petitioner any further would not be just and proper.
At least the grounds given in the order dated 01.10.2020, which
order itself was passed in a highly improper manner, do not justify
that the goods should be withheld or denied release notwithstanding
the order-in-original and compliancethereto.
Conclusion
38. Consequently, we direct the respondents more particularly
respondent Nos.4 to 7 to forthwith release the goods of the
petitioner covered by bills of entry bearing Nos.5720040, 5720192,
572069, 5722458, 5722730, 5719772, 5722243 and 5722456, all
dated 18.11.2019. Similar direction also follows in Writ Petition
No.3502 of 2020 in respect of bills of entry bearing Nos.5520732,
5520871 and 5520536, all dated01.11.2019.
39.  Both the writ petitions are accordingly allowed. We thought
of imposing cost in this case but we have refrained ourselves
from doing so.”
35. As noticed, the
appellants had approached this Court against
the aforesaid order dated 15.10.2020 on 26.11.2020 by way of SLP(C)
Nos. 14633-34 of 2020 but the SLPs did not come up for consideration
and, in the meantime, the importer M/s. Raj Grow Impex moved an
application before the High Court for modification of the order dated
15.10.2020 and for incorporating the left-over bills of entry, which did
not occur in paragraph 38 of the original order dated 15.10.2020. Though
it was pointed out before the High Court that SLPs had already been
filed in this Court against the order dated 15.10.2020 but it was also an
admitted position that until then, no stay had been granted by this Court.
Having noticed the submissions, the High Court deemed it just and proper
to issue the modification order on 09.12.2020 in the following terms: -
“10. Having heard learned Counsel for the parties and on due
consideration, we modify our judgment and order dated 15th
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October, 2020 by insertion/addition of the following sentence in
paragraph 4.1 as well as in paragraph 38 thereof. The last line in
paragraph 38 would thus read as under:-
“In addition, respondent Nos.4 to 7 are also directed to
forthwith release the goods of the petitioner covered by
seven Bills of Entry bearing Nos. 5520537, 5520538,
5520539, 5520540, 5520541, 5520872 and 5521191 on
payment of redemption fine, penalty, customs duty and any
other dues that may be payable as per law.”
36. As noticed, the High Court, even while making several
observations and comments that the Commissioner had acted wholly
improper in issuing the order dated 01.10.2020; and even while indicating
its views that the grounds stated by the Commissioner may not be tenable,
did not return final findings on such grounds and made this aspect
repeatedly clear in paragraph 36 of the order dated 15.10.2020 that the
matter (on merits) would be examined in appeal by the Commissioner
(Appeals).
37. The Appellate Authority i.e., the Commissioner of
Customs (Appeals), dealt with the matter in separate appeals registered
in the individual cases of the private respondents and decided the same
by way of separate orders-in-appeal dated 24.12.2020. Having regard
to the questions involved, it would also be appropriate to take note of the
salient features of the orders so passed by the Appellate Authority on
24.12.2020.
Orders dated 24.12.2020 by the Appellate Authority:
Orders-in-original set
aside with enhancement of penalty
38. In the order-in-appeal dated 24.12.2020 in relation to the case
of M/s. Raj Grow Impex, the Appellate Authority thoroughly examined
the contents of the order-in-original dated 28.08.2020 and the grounds
of appeal as also the submissions and counter submissions of the parties;
and thereafter, formulated the issues requiring determination as follows:-
“52.2. From the plain reading of the submissions dated 16.12.2020
made by the Respondents, I have observed that there has been
some technical/peripheral issues raised by them, which includes
maintainability of the present appeal on the grounds like Additional
Commissioner being equivalent to the Commissioner of Customs
and hence, the appeal, if any, will not lie with Commissioner
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(Appeals) and the issue of Review Vs Revision as dealt by Hon’ble
High Court in its order. Further, from the grounds of appeal, the
major issues which needs to be decided are (i) whether Additional
Commissioner of Customs was correct in going ahead with the
adjudication despite non issue of show cause notice, cancellation
of IEC, etc. (ii) whether the impugned goods is liable for absolute
confiscation or redemption under Section 125(1) of the Act should
have been considered or should have been redeemed for the
purpose of re-export to the original supplier and (iii) whether
Redemption Fine and Penalty imposed is adequate looking into
the gravity of the offense. In my discussions below, I will deal
with these issues.”
38.1. After rejecting the peripheral/technical issues raised by the
importer, as regards maintainability of the appeal and his jurisdiction to
deal with the same, the Appellate Authority entered into the determination
of major issues involved in the matter. It would be relevant to notice that
one of the arguments urged before the Appellate Authority in opposition
to the appeal was that all the grounds of appeal had been examined by
the High Court in its order dated 15.10.2020 and, therefore, the appeal
merited rejection. This contention was countered on behalf of the appellant
with the submission that only the implementation of the order dated
28.08.2020 was the issue for consideration before the High
Court; and
any prima facie observation by the High Court on the grounds stated in
the order dated 01.10.2020 cannot be treated as final views of the High
Court, particularly when the entire matter was left open for adjudication
by the Appellate Authority. The Commissioner (Appeals) rejected this
objection of the importer while observing as under: -
“52.7. I agree with the above submissions of the Appellant and it
has forcefully rebutted the contentions of the Respondent that
since the Hon’ble High Court has already examined all the grounds
of appeal, the same may not be open for examination again. What
basically is pleaded by the respondent is that the order dated
15.10.2020 of Hon’ble Bombay High Court has shut down appellate
mechanism and consequently, would bar Revenue from pursuing
the present appeal before Commissioner (Appeals). This plea is
both incorrect, misdirected and misconceived for the following
reasons:
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a) What is before the present Appellate Authority is the review of
the Adjudication order dated 28.08.2020, purely on merits. Whereas
what was decided by the order dated 15.10.2020 of Hon’ble High
Court of Bombay is one relating to the release of the goods and
not the merits of the adjudication order, which was not even
assailed before Hon’ble Court.
b) The Hon’ble High Court of Bombay had ordered release of
goods by virtue of the Adjudication Order dated 28.08.2020 but
has vide para 36 of the very same order allowed this Appellate
Authority to hear the appeal on merits and pass appropriate orders.
c) Hon’ble High Court of Bombay having allowed this Appellate
Authority to decide the appeal, this authority had provided adequate
opportunities of hearing, exchange of written submission and
receiving the rejoinder submissions and therefore now can proceed
to pass final orders and once final order gets passed, the Order of
Adjudication would merge into the same. The said process has
not been barred by the Hon’ble High Court.
Considering the above facts, I have decided to exercise my
appellate jurisdiction in this matter and therefore, the contentions
of the Respondent in this regard is not acceptable.”
38.2. After taking note of the findings of this Court in Agricas
(supra), the Appellate Authority proceeded to deal with the grounds of
appeal in the following manner: -
a. As regards non-issuance of show cause notice, the Appellate
Authority observed that the
respondent-importer had expressly waived
the right to show cause notice and though the Adjudicating Authority
was entitled to proceed with adjudication, the order passed by him ought
to be in syncwith the law in terms of Sections 111 and 125 of the Customs
Act read with the ratio in Agricas (supra).
b. As regards non-addressal of the issue of suspension of IEC,
the Appellate Authority observed that by an order dated 05/06.12.2019,
the IEC of the said importer was suspended and the ASG, Rajasthan by
his letter dated 06.12.2019, had informed the appellant that the firm was
non-existent and some other firm dealing with the aviation business was
running its office as tenant for last 10 years. The Appellate Authority
observed that as per the directions of this Court in Agricas (supra), the
statutory appeal, if any, preferred against suspension or termination of
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IEC, was to be decided in accordance with law. The Appellate Authority
took note of the fact that proceedings having been taken up rather at a
brisk pace after the decision of this Court in Agricas (supra) and the
material aspects having been omitted from consideration but, left this
aspect of the matter at that, while observing as under: -
54.2. Non-addressal of the issue of suspension of IEC of
the importer
………….In this regard, I observe that there has been a tearing
hurry to adjudicate the matter as the time lines of the case suggests.
Though what the Respondent says has merits at the same time
the reasons of cancellation of IEC by the order of DGFT as
contended vide Para 6 of their order should have raised concerns
in the minds of the adjudicating authority. If there has been a mis-
declaration whereby the bonafide of the importer has been in
question, the same should have been considered in the right earnest
and to say the least, the OIO should not have been passed in a
tearing hurry. So on one side there has been waiver of show cause
notice and on the other side, there has been a hurry to adjudicate
the matter despite the fact that there has been mis-declaration on
the part of the importer as brought out in the order of DGFT. If a
full-fledged investigation by the Customs authorities would have
been launched it may have brought out the facts like mis-
declaration, etc., but since it is not a subject matter of
this appeal,
hence refrain to discuss about it any further.”
c. After the aforesaid, the Appellate Authority dealt with the core
questions, as regards operation of Section 125 of the Customs Act and
exercise of discretion by the Adjudicating Authority in this case. The
Appellate Authority took note of the ratio in the decisions of this Court in
the cases of Garg Woollen Mills (P) Ltd. v. Addl. Collector of Customs,
New Delhi:(1999) 9 SCC 175,Sant Raj and Anr. v. O.P. Singla and
Anr.: (1985) 2 SCC 349 andReliance Airport Developers (P) Ltd. v.
Airports Authority of India and Ors.: (2006) 10 SCC 1 as also the
relevant provisions of the Customs Act and the FTDR Act and stated its
findings against the proposition of the release of goods and in favour of
their absolute confiscation, inter alia, in the following words: -
“54.3.
Non-consideration of various issues in allowing
redemption of goods
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e. The Revenue seems to have made a strong case of absolute
confiscation which is in sync with the decision of the Hon’ble
Supreme Court dated 26.08.2020 on the grounds that on one hand
the Hon’ble Supreme Court upholds the vires of the Notfn.
imposing a restriction on import quantities while on the other hand
the adjudicating authority defeats the objective of constitutionally
valid Notifications by allowing the goods to mingle in the Indian
markets on payment of a Redemption Fine and Penalty. In the
above submissions of the Appellant, they have countered the
submissions of the Respondent in detail and on the basis of Case
Laws. Section 125 of the Act makes clear distinction between
prohibited goods and other goods and obligates release of other
goods on payment of Redemption Fine…………
f)Hence the law is settled that restricted goods under the Act are
deemed to be prohibited goods if the conditions subject to these
goods have not been complied with. The Hon’ble Supreme Court
in the case of M/s Agrica’s LLP & others has already held that
the steps can be initiated as per the Customs Act 1962 and the
subject goods should be dealt with under the provision of FT (D&R)
Act, 1992. Since the DGFT notification dated 29.02.2019 has been
issued under section 3(2) of FT(D&R) Act, 1992, has imposed
restriction upon the import of the goods, the subject goods under
section 3(3) of FT(D&R) Act,1992 goods deemed to be prohibited
under section 11 of the
Customs Act, 1962. Although under Section
125 of the Customs Act, 1962 in the case goods imported a
discretion is conferred on the Customs authorities to release
the goods which are even prohibited on payment on fine in
lieu of confiscation the same provision mandates reasonable
exercise thereof and requires taking into consideration
circumstances relevant of such exercises of discretion.
Therefore, in these cases the adjudicating authority needs
to exercise his discretion diligently and free from
arbitrariness and unfairness…….
g) Further, the Hon’ble Supreme Court in its judgment dated
26.08.2020, in Para 34 has given quantitative details that
“However, in view of the interim orders by various High
Courts where the actual imports were to the tune of 8.51 Lakh
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MT and 6.52 Lakh MT in 2018-19 and 2019-20, though the
annual quota for these two years was 1/1.5MT only. Gram is
being sold at Rs. 4000-4200 per quintal which is below the
MSP which is Rs. 4875 per quintal, whereas the imported
CIF value of yellow peas is 2028 per quintal”. Further in Para
48 the Hon’ble Supreme Court has held that imports, if any made,
relying on interim orders would be contrary to the notifications
and the trade notices issued under the FTDR Act, 1992. And in
Para 46 the Hon’ble Court held that the importers cannot be said
to have had bonafide belief and took their chance for personal
gains and profits importing under interim orders and accordingly
have to face the consequences in law. So the Hon’ble Supreme
Court has noted that quantities much more than annual
quota have already been imported by the importers on the
strength of interim orders and I agree with the contention
of the Appellant that under these circumstances allowing
any import inside the country, even if against fine and
penalty, is patently perverse. Further, as detailed earlier, the
domestic production of pulses and therefore, the Govt. has imposed
restrictions giving only a small window of annual import under
defined quota prices. The Govt. has also procured peas and pulses
under various schemes at Minimum Support Price. Consequently,
the buffer stock with the Govt. is very high. Therefore, any
additional supply of peas and
pulses would be against the
interest of the farmers and it would have an adverse impact
on the economy and would defeat the very purposes of
import restrictions. Based on these findings I observe that the
impugned goods merited absolute confiscation.”
(emphasis in bold supplied)
d. The Appellate Authority also found the assessment of margin
of profit and quantum of penalty in the order-in-original wanting in the
requisite analysis and assessment; and observed as under: -
“h. Further, the Revenue has raised objection in the manner of
calculating the quantum of margin of profit and the way the same
has been divided between fine and penalty and has contended
that the order stands on flimsy grounds and beyond the accepted
principles of law. The Revenue explained that how the Redemption
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Fine and Penalty serves the mutually exclusive purposes i.e. while
the Redemption Fine nullifies the margin of profit, the penalty
acts as a deterrent. But the manner in which the adjudicating
authority has conveniently divided the margin of profit between
Redemption Fine and Penalty is questionable and is bad in law.
Further, Revenue has also objected on quantum of Redemption
Fine and Penalty and pleads that the same is abysmally low. On a
plain reading of Para 12 of the order of the adjudicating authority,
any person of average intelligence can notice that how perfunctorily
the margin of profit has been decided in this case. The adjudicating
authority places complete reliance on the submissions made by
the importer and takes them as gospel truth forgetting the fact
that he is also obligated to look into the interests of revenue. The
adjudicating authority should have been much more diligent,
cautious, vigilant, meticulous and should have been more
circumspect in his approach in understanding the letter and spirit
of the judgment of the Hon’ble Supreme Court. Looking into the
gravity of the offence, I observe that the quantum of penalty
imposed in the OIO under Section 112(a)(i) of the Customs Act,
1962, is on a much lower side and it is needed to be enhanced
substantially.”
38.3. In view of the above, the Appellate Authority allowed the
appeal, ordered absolute confiscation of the goods covered by seven
bills of entry that had not been released while
observing that the goods
covered by other three bills of entry (which had already been released)
were not available for absolute confiscation and accepted that as fait
accompli while directing appropriation of the redemption fine paid in
this regard. The Appellate Authority also enhanced the penalty from Rs.
1.485 crores to a sum of Rs. 5 crores under Section 112(a)(i) of the
Customs Act and passed the final order in the following terms: -
“57.
Accordingly, I pass the following order :
ORDER
i. I order absolute confiscation of the goods covered in Bill of
Entry Nos.5520537, 5521191, 5520538, 5520539, 5520540, 5520541
and 5520872 all dated 01.11.2019 under Section 111(d) of the
Customs Act, 1962 read with Section 3(3) of Foreign Trade
(Development & Regulations) Act, 1992.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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ii. I order absolute confiscation of the goods covered under Bills
of Entry Nos.5520732, 5520871 and 5520536 all dated 01.11.2019
under Section 111(d) of the Customs Act, 1962 read with Section
3(3) of Foreign Trade (Development & Regulations) Act,1992.
But, since the goods covered under these 03 Bills of Entry have
already been cleared and not available for absolute confiscation, I
am constrained to accept it as fait accompli and Redemption Fine
already paid, if any, in this regard, is ordered to be appropriated.
iii. I set aside the Penalty of Rs.1.485 Crores imposed by the
lower authority and impose a Penalty of Rs.5,00,00,000/- ( Rupees
Five Crores only ) on M/s Raj Grow Impex LLP, 114, First Floor,
Jaipur Tower, MI Road, Jaipur, under Section 112(a)(i) of Customs
Act 1962, and any Penalty paid, if any, against the impugned Order-
in-Original is ordered to be appropriated towards this new enhanced
Penalty.”
39. From the submissions made and the material placed on record,
it is noticed that a similar order-in-appeal in relation to the other importer
M/s. Harihar Collections was also passed by the Appellate Authority on
24.12.202013. On the facts of that case, the Appellate Authority found
that the goods covered by the said eight bills of entry had already been
cleared and were not available for absolute confiscation. This was also
accepted by the Appellate Authority as fait accompli while directing
appropriation
of the redemption fine paid in this regard but the penalty of
Rs. 2.35 crores in that case, as imposed by the Adjudicating Authority,
was enhanced to a sum of Rs. 10 crores under Section 112(a)(i) of the
Customs Act. The operative portion of the order-in-appeal concerning
the importer M/s. Harihar Collections reads as under: -
“ORDER
i. I order absolute confiscation of the goods covered under Bills
of Entry Nos. 5720040, 5720192, 5720693, 5722458, 5722730,
5719772, 5722243 and 5722456 all dated 18.11.2019 under Section
111(d) of the Customs Act, 1962 read with Section 3(3) of Foreign
Trade (Development & Regulation) Act, 1992. But, since the goods
covered under these 08 Bills of Entry have already been cleared
and not available for absolute confiscation, I am constrained to
13 Placed on record as Annexure R-1 (p. 255) in the counter affidavit on behalf of this
importer.
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accept it as fait accompli and Redemption Fine already paid, if
any, in this regard, is ordered to be appropriated.
ii.I set aside the Penalty of Rs.2.35 Crores imposed by the lower
authority and impose a Penalty of Rs.10,00,00,000/- ( Rupees Ten
Crores only ) on M/s Harihar Collections, 47, Hathi Babu Ka
Baug, Bani Park, Jaipur, Rajasthan – 302016, under Section
112(a)(i) of Customs Act 1962, and any Penalty paid, if any, against
the impugned Order-in-Original is ordered to be appropriated
towards this new enhanced Penalty.
iii. The order of the lower authority dated 28.08.2020 is modified
to the above extent and the Appeal filed by the Revenue stands
disposed off accordingly.”
Another round in High Court: Challenge to the order-in-
appeal dated 24.12.2020 and stay order by the High Court dated
05.01.2021
40. Though the person aggrieved by the said orders-in-appeal could
have preferred statutory appeal under Section 129A of the Customs Act
before the Customs, Excise and Service Tax Appellate Tribunal14 but,
the respondent-importer M/s. Raj Grow Impex approached the High
Court against the order-in-appeal by way of Writ Petition (ST) No. 24 of
2021 and also filed a contempt petition stating willful disobedience of the
High Court’s (modification) order dated 09.12.2020 because the goods
covered by the said order had not been released.
41. Taking up the writ petition so filed by the importer, the High
Court referred to its previous orders dated 15.10.2020
and 09.12.2020
and took exception against the impugned order-in-appeal dated 24.12.2020
while observing that the observations made and the directions issued by
the Appellate Authority were not correct and were running contrary to
its directions. The High Court stayed the operation of the order-in-appeal
dated 24.12.2020 and also directed the authorities concerned to comply
with the directions contained in the orders dated 15.10.2020 and
09.12.2020; and while placing the matter on 27.01.2021, the High Court
required the counsel for the Department to state compliance. The relevant
part of the order dated 05.01.2021 in the fresh writ petition so filed by
the importer M/s. Raj Grow Impex reads as under: -
14 ‘CESTAT’ for short.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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“6. Prima facie the above directions of respondent No.2 are totally
in contravention to the order of this court. That apart, view taken
by respondent No.2 that the decision of this court while directing
release of the goods was prima facie is not correct. When the
High Court had directed release of the goods forthwith, it is beyond
comprehension as to how a lower appellate authority can nullify
such direction by ordering absolute confiscation of such goods. It
is not only unacceptable but contumacious as well which aspect
we may deal with at a later stage.
7. In view of the above, we stay operation of the order dated 24th
December, 2020 until further orders.
8. Respondent Nos.3 and 4 shall comply with the directions of
this court dated 15th October, 2020 and 9th December, 2020.
9. List on 27th January, 2021, on which date Mr. Jetly shall inform
the court about compliance of today’s order.”
41.1. This order dated 05.01.2021 is challenged by the appellants
in the appeal arising out of SLP(C) No. 1037 of 2021.
42. The High Court also entertained the contempt petition, being
Contempt Petition (L) No. 9351 of 2020 by a separate order dated
05.01.2021 and while issuing notice therein, directed the authorities
concerned to remain personally present in the Court on 21.01.2021. The
order so passed by the High Court in contempt petition was challenged
in separate appeal by the appellants; and, as noticed, on 18.03.2021, this
Court found no reason for continuation of contempt proceedings in the
High Court and closed the same while allowing the appeal so filed by the
appellants15.
43. After the narration of all the material factual and background
aspects as also the orders passed at different stages by different
authorities and Courts, we may now refer to the rival submissions to
specify the stand of the respective parties in these appeals.
Rival submissions
44. The learned ASG appearing for the appellants has forcefully
argued against the orders so passed by the High Court while asserting
that the goods in question are liable to absolute confiscation.
44.1. Assailing the orders passed by the High Court, the learned
ASG would submit that the High Court has erred in entertaining the writ
15 Being C.A. No. 985 of 2021 arising out of SLP(C) No. 1097 of 2021.
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petitions and in passing the order dated 15.10.2020 for implementing the
orders-in-original dated 28.08.2020 and thereby, for release of the subject
goods though the orders so passed by the Adjudicating Authority were
not final and were subject to appeal; and, in fact, the appeals had indeed
been filed pursuant to the review orders dated 01.10.2020. With reference
to the observations and directions of the High Court in the order dated
15.10.2020, the learned ASG has pointed out that on one hand, the High
Court permitted the Commissioner (Appeals) to proceed with the appeals
filed by the Department but, at the same time, also directed that the
goods be released. According to the learned ASG, the directions for
release of the goods rather defeated the purpose of adjudication before
the Commissioner (Appeals) on the question as to whether or not the
goods were liable to be confiscated absolutely. On the same lines, it has
also been contended that when the Appellate Authority passed the orders-
in-appeal on 24.12.2020 and one of the importers preferred another writ
petition, the High Court entertained the same and granted stay but, omitted
to consider that the order-in-appeal could have been challenged in regular
statutory appeal before CESTAT under Section 129A of the Customs
Act.
44.1.1. As regards the power under Section 129D of the Customs
Act, the learned ASG has submitted that thereunder, the higher authority
only performs the function of reviewing on
grounds relating to legality or
propriety and directs the lower authority to file an application for appeal;
and exactly that was done in the orders dated 01.10.2020.
44.2. As regards the question as to whether the subject goods
are to be treated as ‘restricted’ or ‘prohibited’, the learned ASG has
referred to sub-sections (2) and (3) of Section 3 of the FTDR Act and
Sections 2(33) and 11 of the Customs Act and has submitted that the
notifications in question, placing a quantitative restriction on the import
of certain pulses, which were upheld by this Court by the judgment dated
26.08.2020 in Agricas (supra), had been issued under sub-section (2) of
Section 3 of the FTDR Act; and since the goods imported by the
respondent are covered by the said notification, they are deemed to be
‘prohibited’ goods under Section 11 of the Customs Act, by virtue of
sub-section (3) of Section 3 of the FTDR Act. While emphasizing on
Section 2(33) of the Customs Act, the learned ASG has also submitted
that through the notifications in question, an upper limit of 1.5 lakh MTs
of import quantity was placed and, therefore, any import within the cap
of 1.5 lakh MTs will be the import of restricted goods but, in excess of
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the cap of 1.5 lakh MTs, the goods would lose the character as restricted
goods and would become prohibited goods. The learned ASG has
particularly relied upon the enunciation on the amplitude of the words
‘any prohibition’ in Section 111(d) of the Customs Act in the case of
Sheikh Mohd. Omer v. Collector of Customs, Calcutta and
Ors:(1970) 2 SCC 728 holding, inter alia, that the wide words ‘any
prohibition’ mean ‘every prohibition’; and restriction is also a type of
prohibition. The learned ASG has further referred to the decision in the
case Commissioner of Customs, New Delhi v. Brooks International
& Ors : (2007) 10 SCC 396 to submit that if the conditions for import
and export of goods are not complied with, it would be considered to be
the case of prohibited goods. Another decision of this Court in Om
Prakash Bhatia v. Commissioner of Customs, Delhi:(2003) 6 SCC
161 has also been referred.
44.3. The learned ASG has also addressed the issue pertaining to
the mode of monitoring the limit specified in the notifications and has
submitted thatevery importer has to apply and obtain a licence for
importing restricted goods; and the goods could be cleared from the port
only upon obtaining such a licence. Every importer is allotted a quota to
be imported; the approving authority has to apply his mind and approve
the licence; and only upon such satisfaction of the approving authority
and issuance of licence that an
importer gets a right to import and else,
right to import is not a vested right, as held in P.T.R. Exports (Madras)
Pvt. Ltd. and Ors. v. Union of India and Ors.:(1996) 5 SCC 268. It
has been argued that obtaining the licence being a condition precedent
for importing restricted goods, any violation of this condition would render
the goods as prohibited goods. On the importance of obtaining a valid
licence wherever required in the context of import/export related
transactions, the learned ASG has referred to the decision in S.B.
International Ltd. and Ors. v. Asstt. Director General of Foreign
Trade and Ors.:(1996) 2 SCC 439.
44.4. On the question regarding treatment of the subject goods,
the learned ASG has made elaborate submissions on the scope of Section
125 of the Customs Act and has contended that thereunder, a clear
distinction is made between ‘prohibited goods’ and ‘other goods’ inasmuch
as in the case of ‘other goods’, Section 125 obligates release of the
same against redemption fine, whereas there is no such compulsion when
it comes to the ‘prohibited goods’. The Adjudicating Authority under the
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Customs Act can absolutely confiscate the prohibited goods using its
judicial discretion. The learned ASG would argue that both, in terms of
provisions of the Customs Act and the decisions rendered, restricted
goods under the Customs Act are deemed to be prohibited goods, if the
conditions attached to restricted goods are breached, as in the present
case. The learned ASG has strongly relied upon the decision of this
Court in the case of Garg Woollen Mills (supra) and has contended
that while deciding a similar customs matter with presence of the elements
of breach of law, trade violations and lack of bona fide, this Court
approved the directions for absolute confiscation. The learned ASG has
also submitted that the orders passed by the Adjudicating Authority, as
directed to be implemented by the High Court, in fact, defeat the purpose
of the notifications in question as also the findings and effort of this
Court in rendering the judgment dated 26.08.2020 in the case of Agricas
(supra).
44.5. While dealing with the question of exercise of judicial
discretion, the learned ASG has referred to the decisions in Sant Raj
and Reliance Airport Developers Pvt. Ltd. (supra) to submit that the
imports in question, being patently illegal and against the object of the
constitutionally valid notifications, cannot be allowed to be cleared in
any manner into India for further sale in the Indian market even after
the imposition of duty and redemption fine. While
maintaining that the
goods in question deserve to be confiscated absolutely, the learned ASG
has submitted that the notifications have put an embargo on the quantity
of pulses that can be imported into the country and allowing any import
over and above the restriction would be against the very purpose of the
restriction. The learned ASG has referred to the observations made by
this Court in Agricas (supra), as regards the excessive quantity having
been imported under the cover of the interim orders in the past, much
beyond the annual quota fixed as also the observations that the present
importers had worked only for personal gains and had not acted bona
fide. Thus, the exercise of discretion by the Adjudicating Authority being
not in accord with law, cannot be approved.
44.6. As regards the decision in the case of Commissioner of
Customs v. Atul Automations Private Limited: (2019) 3 SCC 539,
strongly relied upon by the importers, the learned ASG has argued that
therein, this Court upheld the decision for release of the goods for the
same being not prohibited goods and for the reasons, inter alia, that: (i)
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the goods in question were MFDs (Multi-Function Devices, Photocopiers
and Printers) and they had a utility/shelf life for 5-7 years; and (ii) the
Central Government permitted the import of used MFD’s that had utility
for 5 years because MFDs were not manufactured locally in India. It
has been argued that in contrast to the fact situation in the case of Atul
Automations (supra), in the present case, this Court had held that excess
imports will not be in the interest of the farmers, and the excess imports
made in contravention of the notifications but under the cover of the
interim orders were not bona fide; and further that such imports were
made with the motive to earn profits and gains and therefore, the importers
should suffer the consequences. Thus, according to the learned ASG,
the judgment in Atul Automations (supra), proceeding on its own facts,
will not have a bearing on the facts and circumstances of the present
case.
44.7. The learned ASG has also referred to a decision of the
Kerala High Court in the case of Shri Amman Dhall Mill v.
Commissioner of Customs:(2021) SCC OnLine Ker 362 to submit
that the said High Court, as regards similar imports, has upheld the orders
for absolute confiscation; and the goods imported by the respondent
deserve the same treatment.
44.8. The learned ASG would, therefore, submit that the fine and
penalty imposed by the Commissioner (Appeals) may be upheld; the
importers may be
allowed to re-export the goods out of India on payment
of redemption fine of 5%; and the appellants may be permitted to
absolutely confiscate the goods, of such of the importers who do not opt
for re-export within the time stipulated by this Court.
45.
Per contra, the learned senior counsel appearing for the
respondent-importer M/s. Raj Grow Impex has strenuously argued in
support of the orders-in-original and the orders passed by the High Court
while asserting that release of goods with payment of redemption fine is
in accord with law.
45.1. The learned senior counsel has referred to the material
background aspects as noticed hereinbefore and has pointed out that
ultimately, after the order dated 15.10.2020 of the High Court of
Judicature at Bombay, the appellants permitted the release of goods
covered by three bills of entry for which, redemption fine and penalty
had been paid and OOC had been issued but, the goods covered by
other seven bills of entry, for which payment of duty, fine and penalty
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was made later, were not released. The learned counsel has also referred
to the proceedings relating to appeal before the Commissioner (Appeals)
and the objections taken by the respondent against jurisdiction of the
said Appellate Authority but, according to the learned counsel, the
Appellate Authority, within three days of hearing, hurriedly proceeded to
pass the order-in-appeal dated 24.12.2020, setting aside the order-in-
original dated 28.08.2020 and ordering absolute confiscation of the goods
while enhancing the penalty.
45.2. While supporting the order-in-original dated 28.08.2020 as
also the orders passed by the High Court on 15.10.2020, 09.12.2020 and
05.01.2021, the learned senior counsel would argue that in true operation
of the provisions of the Customs Act and the FTDR Act read with the
pronouncement of this Court in Agricas (supra), the goods in question
were not liable to be confiscated absolutely and had rightly been ordered
to be released on payment of redemption fine.
45.3. With reference to the decision of this Court in Agricas
(supra), the learned counsel has strenuously argued that once this Court
has held, in unequivocal terms, that the notifications in question were
issued imposing restrictions, may be not under Section 9A of the FTDR
Act but under Section 3(3) thereof, the question does not arise to interpret
the same as prohibition on import of the subject goods.
45.4. Again, with reference to the notifications in question, the
learned counsel would argue that the contentions of the appellants are
very much against the spirit of the said notifications dated 29.03.2019
and the trade notice inasmuch as under the said notifications, the policy
conditions qua the goods in question were not revised and they were not
placed in the ‘prohibited’ category. The DGFT’s interpretation on its
own website has also been referred where, in answer to a query as to
‘what is a restricted item’, the DGFT stated that all goods, import of
which is permitted only with an Authorisation/ Permission/ License
or in accordance with the procedure prescribed in a notification/
public notice are ‘Restricted’ goods. It has, thus, been contended that
whenever a licence is required for import of certain goods, the same is a
‘restricted’ item and not a ‘prohibited’ one; and that the appellants are
not right in their contentions that the peas were a ‘prohibited’ item.
45.5. The learned senior counsel has elaborated on his submissions
with reference to the connotation of the terms ‘prohibited’ and ‘restricted’,
particularly with reference to Section 2(33) of the Customs Act and
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ORS. [DINESH MAHESHWARI, J.]
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Clause 9.47 of the Trade Policy as also Schedule I thereof. Further,
while placing strong reliance on the decision of this Court in Atul
Automations (supra), the learned counsel has submitted that this Court
has clearly underscored the difference between what is ‘prohibited’ and
what is ‘restricted’. It is submitted that in Atul Automations, the goods
imported without authorisation were found to be restricted goods; and
redemption of the consignment on payment of the re-assessed market
price with fine was upheld. The learned counsel would submit that the
restricted goods have the option of being redeemed and do not deserve
the treatment of absolute confiscation, which could be applied only to
absolutely prohibited goods.
45.6. In the alternative line of submissions, it has been contended
that even if the goods in question are treated to be ‘prohibited’, the
discretion to allow their redemption/release on fine had been with the
Adjudicating Authority and such a discretion, as exercised in the present
case, calls for no interference. The contentions have been elaborated
with reference to the use of the expression ‘may’ in regard to the
prohibited goods in Section 125 of the Customs Act; and it has been
argued that it is not the expression that the Adjudication Authority ‘shall
not’ give an option to pay fine in lieu of confiscation. It is submitted that
Adjudicating Authority is to exercise the discretion provided to
him under
Section 125 of the Customs Act objectively and this discretion cannot be
taken away through a judicial proceeding. In regard to this line of
argument, strong reliance has been placed on the decision of this Court
in the case of Hargovind Das K. Joshi and Ors. v. Collector of
Customs and Ors.:(1987) 2 SCC 230. Further, with reference to the
decision of this Court in the case of Sant Raj (supra), it has been argued
that whenever something has to be done within the discretion of the
authority then, that thing has to be done according to the rules of reasons
and justice and not according to private opinion. In other words, discretion
means sound discretion guided by law.
45.7. It has also been contended that only 17,000 MTs of yellow
peas imported by this respondent are to be released out of the total
imported quantity of 24,815 MTs. This respondent is ready and willing to
pay duty and redemption fine as deemed fit and proper by this Court but
the option of re-export may not be a feasible option at this stage for, it is
a time-consuming process with logistical and transportation issues and
more particularly, in the present pandemic situation; and the respondent
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has already suffered huge losses by way of detention, demurrage, rent,
interest, insurance and other related costs. With these submissions, the
fervent plea on behalf of this respondent-importer has been to allow the
redemption of remaining goods.
46. The learned counsel appearing for the other respondent-
importer M/s. Harihar Collections, while arguing in tandem with the
aforesaid contentions of the senior counsel, has made yet further
submissions against the proposition of absolute confiscation16.
46.1. With reference to sub-sections (2) and (3) of Section 3 of
the FTDR Act and Section 11 of the Customs Act, it is submitted that all
goods to which an order under sub-section (2) of Section 3 applies shall
be deemed to be the goods of which import has been ‘prohibited’ under
Section 11 of the Customs Act but in the present case, no such order
under sub-section (2) prohibiting the subject goods having been issued,
sub-section (3) of Section 3, creating the deeming fiction is not attracted
in the present case. It has been contended that although there is specific
power to prohibit specified classes of goods by an order to be published
in the official gazette but no such gazette has been placed by the
appellants before this Court. Equally, no such notification under Section
11 of the Customs Act prohibiting the subject goods, either absolutely or
subject to any condition, has been placed on record; and no notification
in terms of Sections 11A and 11B of the
Customs Act, notifying the
subject goods, has been shown. Further, with reference to the decision
of this Court in Agricas (supra), it has been submitted that by the
notifications in question, the import of peas was revised from ‘free’ to
‘restricted’ category; and the goods were clearly mentioned as
‘restricted’. Yet further, it has been pointed out that such restriction was
not applicable to the Government of India’s import commitments under
any treaty, agreement or MoU. With reference to these factors, the
16 During the course of submissions, a line of argument was sought to be adopted with
reference to sub-section (3) of Section 11 of the Customs Act that any prohibition or
restriction or obligation relating to import of goods provided in any other law for the
time being in force shall be executed only if such prohibition or restriction or obligation
is notified under the provisions of this Act and no such notification having been made,
the contentions of the appellants were required to be rejected. However, the learned
ASG pointed out that the said sub-section (3) of Section 11 of the Customs Act, as
proposed to be inserted by the Finance Act, 2018, was to come into force from a date
to be notified but the same has not been notified as yet. Accepting this position, the
said argument has been withdrawn on behalf of the respondent with apology. Having
regard to the circumstances, we would leave this aspect of the matter at that only.
UNION OF INDIA & ORS. v. M/S. RAJ GROW
IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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contention has been that the goods in question, meant for human
consumption, were not absolutely prohibited for import, unlike specifically
notified prohibited goods. Simply put, according to the learned counsel,
goods in question were not of ‘absolutely prohibited’ category from any
point of view.
46.2. It has further been submitted that since the imports in question
were not covered by the import licence, the goods in question were to be
dealt with under Section 125 of the Customs Act; and had rightly been
so dealt with by the Adjudicating Authority, who held them liable to
confiscation and to be redeemed on payment of redemption fine and
duty, which the Adjudicating Authority indeed levied apart from personal
penalty. It has been pointed out that pursuant to the payment of the
entire duty, fine and penalty, aggregating to a sum of about Rs. 44.21
crores, OOC was given and the goods were allowed clearance after the
authority was satisfied that they were fit for human consumption. The
order-in-appeal dated 24.12.2020 in relation to this importer has also
been referred with the submissions that therein, the Commissioner of
Customs (Appeals) has enhanced the penalty to Rs. 10 crores from Rs.
2.35 crores and the importer is desirous of availing statutory remedy of
challenging this enhancement of penalty before the CESTAT; and it is
prayed that the opportunity to avail the appropriate remedy may not be
curtailed for
this importer. In this regard, it has also been submitted that
the High Court, in its order dated 15.10.2020, never injuncted the
Department from proceeding with their statutory appeal and, following
the same thread, the respondent-importer may also be allowed to exercise
its right of appeal before the CESTAT; and, for that matter, any
observation made in the present matter may not prejudice such right of
appeal.
46.3. It has further been argued that the entire quantity of 38,500
MTs, as imported by this respondent-importer, was finally allowed to be
cleared by the authorities concerned after the order of the Bombay High
Court dated 15.10.2020 and hence, when the goods are not available for
confiscation, no redemption fine could be imposed. A decision of Bombay
High Court in the case of Commissioner of Customs (Import), Mumbai
v. Finesse Creation Inc.:(2009) 248 ELT 122 has been referred and
it has also been pointed out that an SLP against the said decision was
dismissed by this Court on 12.05.2010.
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46.4. With reference to the provisions of the FTDR Act and the
Customs Act as also the decisions of this Court in Hargovind Das K.
Joshi and Atul Automations (supra) and that of Punjab and Haryana
High Court in Horizon Ferro Alloys Pvt. Ltd. and Ors. v. Union of
India and Ors.: (2016) 340 ELT 27, it has been argued that the subject
goods are not falling under the category of absolutely prohibited goods,
as they are not having tainted character such as fake currency,
pornographic material etc.; and only the quantity restrictions having been
violated, they were rightly taken by the Adjudicating Authority as acquiring
the tag of being deemed to be prohibited; and hence, the discretion of
‘may’ as given in Section 125 of the Customs Act was rightly applied. It
is submitted that even the order ultimately passed in the case of Om
Prakash Bhatia (supra) rather operates against the stand of the
appellants.
47. As noticed, two of the other importers have moved the
applications for intervention. These importers are said to be similarly
placed as the private respondents of these appeals inasmuch as they too
have imported various quantities of peas/pulses pursuant to the interim
orders in their respective writ petitions by the High Court of Rajasthan
but clearance of the goods remains stalled, particularly because of the
present litigation. Having regard to the circumstances, we may also take
note of the submissions made on their behalf.
47.1. It has been submitted
on behalf of the intervener Nikhil
Pulses Pvt. Ltd. that it had similarly filed WP No. 12283 of 2019, wherein
the High Court passed an interim order dated 02.08.2019 in its favour;
and pursuant to the interim order, it had imported 1,02,550 MTs of yellow
peas at Adani SEZ, Mundra, Gujarat under fifty-nine bills of lading of
the month of September 2019 and had filed bills of entry for home
consumption but, such bills have remained unassessed.
47.1.1. Similar arguments have been advanced on behalf of this
importer as regards difference between ‘restricted’ goods and ‘prohibited’
goods and their treatment under the Customs Act, the FTDR Act and
the Trade Policy; and it is submitted that the goods in question are only
‘restricted’ items and not ‘prohibited’. Again, with reference to the
decision of this Court in Atul Automations (supra), it has been submitted
that ‘restricted’ goods have the option of being redeemed on payment of
market value and do not deserve the treatment of ‘prohibited’ goods
under Section 125 of the Customs Act. Countering the submissions of
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the ASG, it has been contended that the definition of restricted or prohibited
does not apply to a specific quantity but to a product and accordingly, the
entire quantity should be treated as restricted and be released on payment
of fine and penalty.
47.1.2. It has further been submitted that even if the goods in
question are prohibited, the discretion could be exercised by the
Adjudicating Authority under Section 125 of the Customs Act to allow
redemption/release on fine. The decisions in Hargovind Das K. Joshi
and Sant Raj (supra) have been referred. Further, it has been submitted
with reference to the decision in the case of U.P. State Road Transport
Corporation and Anr. v. Mohd. Ismail and Ors.: (1991) 3 SCC 239
that the Court cannot direct the statutory authority to exercise the
discretion in a particular manner not expressly required by law; and with
reference to the decision in Assistant Commissioner (CT) LTU,
Kakinada and Ors. v. Glaxo Smith Kline Consumer Health Care
Limited: 2020 SCC OnLine SC 440 that even under Article 142 of
the Constitution, the Court cannot render the statutory provision otiose.
47.1.3. While invoking equity, it has also been submitted that during
April 2019 to November 2019, approximately 8.5 lakh MTs of similar
goods were imported under the interim orders out of which about 6 lakh
MTs were released by the customs; and even after the decision in Agricas
(supra), the customs has
allowed release of about 50,000 MTs of peas/
pulses during September-October 2020 and a balance quantity of about
2 lakh MTs remains. It has been argued that demand and supply of
these pulses is dynamic and not static in nature and what may have been
in abundance 18 months ago may not be so easily available now.
According to the applicant, there is a short supply of pulses which is
evident from the fact that the Union of India has recently issued import
licences for a quantity of 9 Lakh MTs. The applicant would submit that
releasing the confiscated goods will help in meeting the excess demand
and the effect of releasing the goods will not be adverse.
47.1.4. The applicant would further submit that the goods are
perishable commodities and have been lying at the port for long and
now, their re-export is not feasible anymore for a variety of factors,
including the present times of pandemic. It has, therefore, been prayed
that the cargo in question may be allowed to be released for the domestic
market on payment of redemption fine and penalty.
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47.2. It has been submitted on behalf of the other intervener
Agricas LLP that it had earlier filed WP No. 9321 of 2019, wherein the
High Court passed an interim order dated 24.05.2019 in its favour; and
pursuant to the interim order it had imported 480.54 MTs of black mapte/
urad in July 2019 that were released on execution of bond. Further, this
importer filed another writ petition bearing No. 13392 of 2019 wherein,
the High Court passed interim order dated 14.08.2019 and thereafter, it
had imported a quantity of 27,775 MTs of black mapte that arrived in
November 2019 from which, 14,366 MTs were released and cleared on
payment of requisite charges but the balance has not been released. It is
stated by this importer that pursuant to the show cause notice dated
05.10.2020, the Commissioner of Customs, Nhava Sheva found the goods
to be prohibited and liable to confiscation whereafter, it had filed WP
No. 525 of 2021 before the High Court of Judicature at Bombay against
non-clearance of the goods but in the meantime, the main issue has been
taken up in these appeals.
47.2.1. Almost identical arguments have been raised on behalf of
this importer that the goods in question are not prohibited and, in any
case, they could be released upon payment of redemption charges with
reference to Section 11(9) of the FTDR Act and/or Section 125 of the
Customs Act. Similar grounds of equity have also been urged, as noticed
in the case of the other applicant which need not
be repeated.
48. Before proceeding further, we may usefully summarise the
principal submissions of the parties.
48.1. To put it in a nutshell, the principal submissions on behalf of
the appellants are: that the High Court has erred in entertaining the writ
petitions and the directions by the High Court for release of goods were
not compatible with the purpose of adjudication by the Appellate Authority;
that the subject goods, being covered by Section 3(2) of the FTDR Act
and having been imported without licence as also in excess of the cap of
1.5 lakh MTs, became prohibited goods under Section 11 of the Customs
Act by virtue of the deeming fiction in Section 3(3) of the FTDR Act;
that in view of the purpose of notifications and the observations of this
Court in Agricas, such prohibited goods were liable to be confiscated
absolutely and could not have been released to mingle in the Indian market;
and that the case of Atul Automations has no application to the facts of
the present case.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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48.2. On the other hand, the principal submissions on behalf of
the importers are: that the notifications in question placed quantitative
restrictions and there had not been any order or notification prohibiting
the subject goods and hence, they could not have been treated as absolutely
prohibited goods but were only restricted goods; that in Atul Automations,
the goods imported without authorisation were held by this Court to be
restricted goods and the same principle applies to the subject goods when
they have been imported without import licence; that even if the subject
goods are to be treated as prohibited, discretion was nevertheless available
with the Adjudicating Authority to allow their redemption on payment of
fine and such discretion has rightly been exercised in the orders-in-original;
that the discretion cannot be ordered to be exercised in any particular
manner; that re-export of the subject goods is not a feasible option and
the demand and supply of the pulses in question being dynamic in nature,
the release of the subject goods will not be adverse to the economy; that
the orders-in-appeal could be challenged in further statutory appeal.
49. We have given anxious consideration to the rival submissions
and have perused the material placed on record with reference to the
law applicable.
Points for determination
50. The narration and the recounts foregoing make it evident that
the root question in these
matters is as to whether the goods in question
are liable to absolute confiscation or they could be released with payment
of fine in lieu of confiscation?
50.1. With intervention of the High Court of Judicature at Bombay
in the writ jurisdiction and by way of the impugned orders dated 15.10.2020
(read with the modification order dated 09.12.2020) and 05.01.2021, the
issues concerning legality and validity of the orders so passed by the
High Court are, obviously, interlaced with the core issues, as regards
treatment of the goods in question. In the given circumstances, and looking
to the nature of orders involved in the matter, it would be appropriate to
examine the validity of the orders so passed by the High Court before
dealing with other issues.
Legality and validity of the orders passed by the High Court
51. As noticed, the respondent-importers approached the High
Court with the grievance that the goods were not being released despite
the orders-in-original dated 28.08.2020 having been passed in their favour;
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and they having made the payments (in whole in the case of M/s. Harihar
Collections and partially in the case of M/s. Raj Grow Impex) and having
obtained OOC. During the pendency of matters in the High Court, the
Commissioner passed the orders dated 01.10.2020 in exercise of his
power under Section 129D(2) and then, it was suggested before the
High Court on behalf of the Department that the writ petitions were
rendered infructuous because of the said orders dated 01.10.2020.
52. A close look at the impugned order dated 15.10.2020 makes it
clear that the High Court dealt with the issues before it in three major
segments: (i) as regards the nature of jurisdiction under Section 129D(2)
of the Customs Act; (ii) as regards the propriety in passing of the orders
dated 01.10.2020 by the Commissioner and tenability of the grounds
stated therein; and (iii) as regards the prayer for release of the goods.
53. Much has been said in these matters regarding the exercise
of power by the Commissioner under Section 129D(2) of the Customs
Act. The High Court proceeded to observe in the impugned order dated
15.10.2020 that the Commissioner’s orders dated 01.10.2020 were termed
as review orders but the jurisdiction conferred by Section 129D(2) was
that of suo motu revision and not that of review; and in that regard, the
High Court particularly referred to the expressions “legality or propriety”
occurring in the provision.
53.1. Section 129D of the Customs Act reads as under:
-
“129D. Power of Committee of Principal Chief
Commissioners of Customs or Chief Commissioners of
Customs or Principal Commissioner of Customs or
Commissioner of Customs to pass certain orders.—(1) The
Committee of Principal Chief Commissioners of Customs or Chief
Commissioners of Customs may, of its own motion, call for and
examine the record of any proceeding in which a Principal
Commissioner of Customs or Commissioner of Customs as an
adjudicating authority has passed any decision or order under this
Act for the purpose of satisfying itself as to the legality or propriety
of any such decision or order and may, by order, direct such
Commissioner or any other Commissioner to apply to the Appellate
Tribunal for the determination of such points arising out of the
decision or order as may be specified by the Committee of
Principal Chief Commissioners of Customs or Chief
Commissioners of Customs in its order:
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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Provided that where the Committee of Principal Chief
Commissioners of Customs or Chief Commissioners of Customs
differs in its opinion as to the legality or propriety of the decision
or order of the Principal Commissioner of Customs or
Commissioner of Customs, it shall state the point or points on
which it differs and make a reference to the Board which, after
considering the facts of the decision or order passed by the Principal
Commissioner of Customs or Commissioner of Customs, if is of
the opinion that the decision or order passed by the Principal
Commissioner of Customs or Commissioner of Customs is not
legal or proper, may, by order, direct such Commissioner or any
other Commissioner to apply to the Appellate Tribunal for the
determination of such points arising out of the decision or order,
as may be specified in its order.
(2) The Principal Commissioner of Customs or Commissioner of
Customs may, of his own motion, call for and examine the record
of any proceeding in which an adjudicating authority subordinate
to him has passed any decision or order under this Act for the
purpose of satisfying himself as to the legality or propriety of any
such decision or order and may, by order, directsuch authority or
any officer of customs subordinate to him to apply to
theCommissioner (Appeals) for the determination of such points
arising out of thedecision or order as may be specified by the
Principal Commissioner of
Customs or Commissioner of Customs
in his order.
(3) Every order under sub-section (1) or sub-section (2), as the
case may be, shall be made within a period of three months from
the date of communication of the decision or order of the
adjudicating authority:
Provided that the Board may, on sufficient cause being shown,
extend the said period by another thirty days.
(4) Where in pursuance of an order under sub-section (1) or sub-
section (2), the adjudicating authority or any officer of customs
authorised in this behalf by the Principal Commissioner of Customs
or Commissioner of Customs makes an application to the Appellate
Tribunal or the Commissioner (Appeals) within a period of one
month from the date of communication of the order under sub-
section (1) or sub-section (2) to the adjudicating authority, such
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application shall be heard by the Appellate Tribunal or the
Commissioner (Appeals) as the case may be, as if such applications
were an appeal made against the decision or order of the
adjudicating authority and the provisions of this Act regarding
appeals, including the provisions of sub-section (4) of section 129A
shall, so far as may be, apply to such application.”
53.2. For clarification, we deem it appropriate to observe that
such enactments dealing with several areas of commerce and fiscal
implications, like the Customs Act, 1962 and the Central Excise Act,
194417, do carry akin provisions reserving a residual power in the highest
controlling authority of the Department, apart from the appellate powers
of the departmental Appellate Authority or the Appellate Tribunal and
apart from the powers of revision of the Central Government. Such
residual power, as conferred by Section 129D of the Customs Act or
Section 35E of Central Excise Act, is essentially to serve the purpose
that the highest controlling authority of the Department (or a Committee
of such highest authorities) satisfies itself as to the legality and propriety
of any decision taken by the subordinate authority and, in case it finds
any points arising from the decision in question, to direct the authority
passing such order or any other subordinate authority to apply to the
appellate forum for determination of such points/questions. In the scheme
of the Customs Act, the power of revision is
reserved for the Central
Government, as per Section 129DD thereof. Similar power of revision
in the Central Government could be seen in Section 35EE of the Central
Excise Act. Thus, in the scheme and on the purpose of these enactments,
it cannot be said that such residual power, of requiring the matter to be
taken up before the appellate forum, is that of revision stricto sensu.
However, it does not appear necessary to delve further on this aspect in
this judgement because, as noticed, it is not in dispute that the
Commissioner could have exercised such power under Section 129D of
the Customs Act. In fact, we are unable to comprehend as to what
precisely was the outcome of the detailed discussion by the High Court
concerning the nature of power under Section 129D(2) because it had
not been the finding that the orders dated 01.10.2020 were suffering
from any want of jurisdiction or if the Commissioner, while passing the
said orders, transgressed the bounds of his authority.
54. The other aspect commented upon by the High Court had
been about the manner and time of passing of the said order when the
matter was sub judice in the High Court.
17  Hereinafter also referred to as ‘the Central Excise Act’.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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54.1. Coming to the question of propriety in passing of the orders
dated 01.10.2020 by the said Commissioner despite being aware of the
pendency of the writ petitions in the High Court, in our view, the comments
of the High Court, even when not incorrect in general application, do not
appear apt and apposite to the facts and in the circumstances of the
present case. In other words, though we are at one with the High Court
that, ordinarily, when the matter is sub judice in the higher forum and
that too before the Constitutional Court, the executive authorities should
not attempt to bring about a new state of affairs without taking permission
from the Court and/or bringing the relevant facts to the notice of the
Court. However, even in this regard, before pronouncing on the impropriety
on the part of an executive authority who had done anything without
prior information to the Court or without taking Court’s permission, all
the relevant surroundings factors are also required to be examined so as
to find as to whether such an action was calculated at interference with
the administration of justice or was a bona fide exercise of power in the
given circumstances.
54.2. In the present case, though the High Court had issued notice
in the writ petitions on 25.09.2020 and placed the petitions on 06.10.2020
but, it was clear on the face of record that the DGFT was taking serious
exception to the orders-in-original dated
28.08.2020 and it was being
asserted that the said orders were in the teeth of the pronouncement of
this Court in the case of Agricas (supra). Indisputably, the Commissioner
had available with him three months’ time to pass the order under Section
129D(2) and thereby to ensure taking up of the matter against the orders-
in-original dated 28.08.2020 by the Appellate Authority but, the importers
preferred the writ petitions questioning the communication of DGFT
and the denial of release of goods; and sought mandamus for such release.
Such a prayer for mandamus was effectively a prayer for execution of
the orders-in-original dated 28.08.2020. The High Court found it unjustified
on the part of the Department to suggest that the writ petitions were
rendered infructuous because of the orders dated 01.10.2020; and to
this extent, we are again at one with the High Court because, on the
strength of any order passed by the Commissioner during the pendency
of the writ petitions, it could not have been claimed that the Department,
by its own actions, made the writ petitions meaningless. However, such
a submission on the part of the respondents of the writ petition, even if
unwarranted, could not have taken the worth and value out of orders
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dated 01.10.2020; and, at the same time, the High Court could not have
ignored the other material circumstances.
54.3. One of the fundamental and material circumstance, which
the High Court totally omitted to consider, was that the writ petitions
were filed as if seeking execution of the orders-in-original and that if the
writ, as prayed for, was to be issued and the goods were to be released,
nothing much on merits was to be left for examination by the Appellate
Authority; and if, for any reason, the orders-in-original were to be
interfered with at a later stage in the appellate forum, irreparable damage
would have been done because the goods would have been released for
the domestic market. (As noticed, it has indeed happened to a large
extent in present cases, with release of a substantial quantity of goods of
the respondent-importers).
54.4. The purpose of our comments foregoing is that even while
the High Court was right in questioning the fact that the Commissioner
chose to pass the order when the matter was sub judice, the High
Court missed out the relevant feature that the importers had preferred
the writ petitions essentially to pre-empt any further proceedings by the
statutory authority concerned under the Customs Act. In other words,
the invocation of writ jurisdiction by the importers was itself questionable.
55. Noticeable it is that the High Court, even after making some
scathing comments on the question of propriety against the
Commissioner,
took up the points stated in the orders dated 01.10.2020 one by one and
indicated its views that the points so raised were baseless and/or untenable.
However, the High Court was also conscious of the fact that the said
orders dated 01.10.2020 were not in challenge before it and the appeals
preferred pursuant to those orders shall have to be examined by the
Appellate Authority. Thus, the High Court qualified all its findings in
paragraph 36 of the impugned order as being of its prima facie impression
and specifically left the matter open for examination by the Appellate
Authority.
55.1. However, when the Appellate Authority ultimately passed
the orders in setting aside the orders-in-original, one of the importers,
despite being aware of the remedy of further appeal being available,
chose to invoke, again, the writ jurisdiction of the High Court. This time
the High Court, in its impugned interim order dated 05.01.2021, made
the observations that the decision by the Appellate Authority was at
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loggerheads with its earlier findings and directions. The High Court even
observed that its findings in the order dated 15.10.2020 could not have
been regarded as prima facie finding only; and when the goods were
directed to be released forthwith, it was beyond comprehension as to
how a lower Appellate Authority could have nullified such directions by
ordering absolute confiscation.
56. We find it very difficult to reconcile the observations of the
High Court in these matters. Paragraph 36 of the order dated 15.10.2020
left nothing for a doubt with anyone that whatever the High Court had
observed in that order as regards the orders dated 01.10.2020 was not
of final determination; and the matter was left open, to be decided by the
Commissioner (Appeals). Significantly, if the purport of the order dated
15.10.2020 had been that even if Commissioner (Appeals) would be
deciding the matter in appeal, he could not order absolute confiscation of
the goods because the High Court had ordered their release, it would
immediately lead to the position that the order dated 15.10.2020 of the
High Court carried inherent contradictions. In other words, if release of
goods was the only option available with the authorities, the material
part of consideration of the Appellate Authority had already been rendered
redundant.
57. For what has been discussed hereinabove, it is at onceclear
that when the matter was left for decision by the
Commissioner (Appeals),
there was neither any occasion nor any justification for the High Court
to pass the order for release of the goods for the simple reason that any
order for release of goods was to render the material part of the matter
a fait accompli. This, simply, could not have been done. Putting it
differently, a little pause after paragraph 36 of the impugned order
15.10.2020 and before the directions in the next paragraph would make
it clear that for what had been observed in the said paragraph 36 of the
impugned order (as regards leaving of the matter for decision by the
Appellate Authority), any direction for release of goods pursuant to the
order-in-original could not have been issued. To put it in yet other words,
despite making several observations so as to indicate that the review
orders dated 01.10.2020 were unjustified and the points stated therein
were baseless or untenable, the High Court stopped short of setting
aside the orders dated 01.10.2020 and also did not pronounce finally on
the validity of the orders-in-original dated 28.08.2020 because the said
orders-in-original were the subject matter of appeal. Having rightly left
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the matter for decision in appeal, the High Court committed a serious
error in yet issuing such a writ as if the orders-in-original dated 28.08.2020
had become rule of the Court and as if the Court was ensuring its due
execution. It gets, perforce, reiterated that if the orders-in-original dated
28.08.2020 were to be executed under the mandate of the High Court,
the appeals were going to be practically redundant after release of the
goods and nothing material was to remain for decision by the Appellate
Authority on the main subject matter of the appeal.
58. What has been indicated from different angles hereinabove
leads only to one conclusion that the order dated 15.10.2020 passed by
the High Court suffers from inherent contradictions and inconsistencies;
and cannot be approved.
59. Apart from the fundamental flaws of contradictions, the order
passed by the High Court on 15.10.2020 further suffers from the
shortcomings that while issuing mandamus for release of goods, the High
Court omitted to take into account the relevant facts as also the material
factors concerning the imports in question, including the reasons for
issuance of the notifications in question that the same were to safeguard
the agriculture market economy of India; and the observations and findings
of this Court in the case of Agricas (supra). An examination of the
impugned order dated 15.10.2020 in its entirety makes it clear that the
reasons for directing release of goods in favour of
the importers are to
be found only in paragraph 37 thereof. Therein, the High Court has
taken into account a few factors standing in favour of the importers like
the orders-in-original holding the field; the importers having made the
necessary payments; and the importers incurring expenditure because
of warehousing. An additional factor had been the High Court’s
dissatisfaction that the orders dated 01.10.2020 were passed in an
improper manner and grounds given therein were not justifying the
withholding of the goods. While proceeding on these reasons and
considerations, it appears that the other overriding factors like the interest
of domestic agriculture market economy as also the findings and
observations of this Court in Agricas (supra) totally escaped the attention
of the High Court. Thus, the impugned order dated 15.10.2020, having
been passed while ignoring the relevant considerations, cannot be
approved.
60. For what has been observed hereinabove, the other order
dated 05.01.2021 passed by the High Court in the second writ petition
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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filed by the importer M/s. Raj Grow Impex also deserves to be
disapproved.
60.1. As noticed, in the said order dated 05.01.2021, the High
Court even observed that the Appellate Authority wrongly construed
that its earlier decision for release of goods has been prima facie; and
further questioned as to how a lower Appellate Authority could have
nullified its directions for release of goods by ordering confiscation. The
construction of its own order dated 15.10.2020, as put by the High Court
in its later order dated 05.01.2021, only fortifies the inconsistencies we
have indicated hereinabove. This apart, the expression ‘prima facie’ in
regard to the order of the High Court dated 15.10.2020 had not been a
creation of the Appellate Authority but had been stated in unequivocal
terms, twice over, in paragraph 36 of the order dated 15.10.2020, where
the High Court also made it clear that final views were not being expressed
because the matter was to be examined in appeal.
60.2. Apart from the above, while entertaining the said second
writ petition, the High Court seems to have also omitted to consider that
the said writ petition was filed against the order-in-appeal passed by the
Appellate Authority and the alternative remedy of regular statutory appeal
to CESTAT was available to the importer. In our view, on consideration
of the relevant facts and circumstances in their correct perspective, the
High Court would not have
entertained the writ petitions so filed in these
matters.
61. We are, therefore, clearly of the view that the impugned orders
dated 15.10.2020 (read with the modification order dated 09.12.2020)
and 05.01.2021 remain unsustainable and are required to be set aside.
62. However, merely setting aside the orders passed by the High
Court does not bring finality to these appeals because, as noticed, the
core issues still remain as to whether the goods in question are or were
liable to absolute confiscation or could be or could have been released
by recovery of fine in lieu of confiscation?
62.1. For dealing with the core issues, we need to examine in the
first place as to whether the goods in question fall in the category of
prohibited goods, as argued on behalf of the appellants or in the category
of restricted goods, as argued on behalf of the importers.
Whether the goods in question are of ‘prohibited goods’
category?
63. For dealing with the questions relating to the treatment of the
goods in question, it shall be apposite to recapitulate that in the case of
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Agricas (supra), this Court, after dealing with a variety of issues relating
to the validity of the notifications dated 29.03.2019 and the corresponding
trade notice dated 16.04.2019, specifically referred to the purpose behind
and the purport of the notifications; and it was noticed that the notifications
were aimed at striking a balance between the farmers of the country on
one hand and the importers on the other, particularly when large-scale
imports were adversely impacting the interests of the farmers due to fall
in prices in the local market. The repercussions of excessive imports
under the cover of the interim orders in the past were taken note of and
it was also noticed that the restrictions were imposed to prevent panic
disposal in the local markets. As the notifications provided for quantitative
restriction on import of various peas and pulses in the range of 1.5-2
lakh MTs against licence, a rather preposterous line of arguments was
adopted by the importers before this Court that the total quantities
specified in each of the notifications was ‘per licence’ and not for the
‘total imports’. Such contentions were rejected by this Court after finding
no ambiguity in the notifications and holding clearly that the expression
‘total quantity’ did not refer to the ‘quantity per licence’. This Court
further held in no uncertain terms that the impugned notifications were
valid for having been issued in accordance with the power conferred in
the Central
Government in terms of sub-section (2) of Section 3 of the
FTDR Act. Yet further, this Court rejected the submissions that the
importers had acted bona fide in importing the goods in question; and
the imports, made under the cover of interim orders, were held to be
contrary to the notifications and the trade notice issued under the FTDR
Act but, were left to be dealt with under the provisions of the Customs
Act.
64. In view of the findings and requirements aforesaid and in
view of the contentions of the respective parties relating to the treatment
of goods imported under the cover of interim orders, it is necessary to
take note of the relevant statutory provisions, particularly those contained
in Section 3 of the FTDR Act and Sections 2(33), 11(1) and 111(d) of
the Customs Act. These relevant provisions read as under: -
Section 3 of the Foreign Trade (Development and
Regulation) Act, 1992
“3. Powers to make provisions relating to imports and
exports.- (1) The Central Government may, by Order published
in the Official Gazette, make provision for the development and
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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regulation of foreign trade by facilitating imports and increasing
exports.
(2) The Central Government may also, by Order published in the
Official Gazette, make provision for prohibiting, restricting or
otherwise regulating, in all cases or in specified classes of cases
and subject to such exceptions, if any, as may be made by or
under the Order, the import or export of goods or services or
technology:
Provided that the provisions of this sub-section shall be applicable,
in case of import or export of services or technology, only when
the service or technology provider is availing benefits under the
foreign trade policy or is dealing with specified services or specified
technologies.
(3) All goods to which any Order under sub-section (2) applies
shall be deemed to be goods the import or export of which has
been prohibited under section 11 of the Customs Act, 1962 (52 of
1962) and all the provisions of that Act shall have effect accordingly.
(4) without prejudice to anything contained in any other law, rule,
regulation, notification or order, no permit or licence shall be
necessary for import or export of any goods, nor any goods shall
be prohibited for import or export except, as may be required
under this Act, or rules or orders made thereunder.”
Section 2 (33) of the Customs Act, 1962:
“(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;”
Section 11(1) of the Customs Act, 1962:
“11. Power to prohibit importation or exportation of goods.–
(1) If the Central Government is satisfied that it is necessary so to
do for any of the purposes specified in sub-section (2), it may, by
notification in the Official Gazette, prohibit either absolutely or
subject to such conditions (to be fulfilled before or after clearance)
as may be specified in the notification, the import or export of
goods of any specified description.
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xxx
xxx
xxx”
Section 111(d) of the Customs Act, 1962
“111. Confiscation of improperly imported goods, etc.—The
following goods brought from a place outside India shall be liable
to confiscation:-
xxx
xxx
xxx
(d) any goods which are imported or attempted to be imported or
are brought within the Indian customs waters for the purpose of
being imported, contrary to any prohibition imposed by or under
this Act or any other law for the time being in force;
xxx
            xxx
xxx”
65. The categorical findings in the case of Agricas (supra) by this
Court, read with the provisions above-quoted, hardly leave anything to
doubt that sub-section (3) of Section 3 of the FTDR Act applies to the
goods in question and, for having been imported under the cover of the
interim orders but, contrary to the notifications and the trade notice issued
under the FTDR Act and without the requisite licence, these goods shall
be deemed to be prohibited goods under Section 11 of the Customs Act;
and all the provisions of the Customs Act shall have effect over these
goods and their import accordingly. However, a long deal of arguments
has been advanced before us as regards the category in which these
goods are to be placed, i.e., whether they are of ‘restricted’ category or
‘prohibited’ category.
66. The gravamen of the contentions on the part of the importers,
that the subject goods fall in ‘restricted’ category and not ‘prohibited’
category, is that the notifications in question
placed quantitative
restrictions and there had not been any other order or notification
prohibiting the import of these goods. The contentions remain baseless
and are required to be rejected.
66.1. A bare look at the notifications in question and the findings
of this Court in Agricas (supra) make it clear that only the particular
restricted quantity of the commodities covered by the said notifications
could have been imported, like those upto 1.5 lakh MTs; and that too,
under a licence. The learned ASG has rightly pointed out with reference
to the decision in PTR Exports (supra) that an applicant has no vested
right to have export or import licence; and granting of licence depends
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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upon the policy prevalent on the date. The learned ASG has further
rightly submitted, with reference to the decision in S.B. International
(supra), that granting a licence to import is not a matter of formality; and
the authorities have to satisfy themselves that the application satisfies all
the requirements of the scheme and the applicable laws. In S.B.
International, this Court observed, inter alia, as under: -
“9. It should be noticed that grant of licence is neither a mechanical
exercise nor a formality. On receipt of the application, the
authorities have to satisfy themselves about the correctness of
the contents of the application. They also have to satisfy
themselves that the application satisfies all the requirements of
the scheme and the other applicable provisions of law, if any….”
66.2. As noticed, only the particular restricted quantity of the
commodities covered by the said notifications could have been imported
and that too, under a licence. Therefore, any import within the cap (like
that of 1.5 lakh MTs) under a licence is the import of restricted goods
but, every import of goods in excess of the cap so provided by the
notifications, is not that of restricted goods but is clearly an import of
prohibited goods.
67. The applicable principles of law relating to the categorisation
of goods as ‘prohibited’ or ‘other than prohibited’ have been clearly
enunciated by this Court in the decisions referred by
the learned ASG.
67.1. In the case of Sheikh Mohd. Omer (supra), a particular
mare was found to be not a ‘pet animal’and, therefore, its import was
found to be violative of the Imports Control Order. It was, however, an
admitted position that the import of horses or mares was not prohibited
as such. The question was as to whether by making such import, the
appellant contravened Section 111(d) read with Section 125 of the
Customs Act. While answering the question, this Court held that any
restriction on import or export is to an extent a prohibition; and the
expression “any prohibition” in Section 111(d) of the Customs Act includes
restrictions. This Court further underscored that “any prohibition” means
every prohibition; and restriction is also a type of prohibition. This Court,
inter alia, said, -
“11…. While elaborating his argument the learned counsel invited
our attention to the fact that while Section 111(d) of the Act uses
the word “prohibition”. Section 3 of the Imports and Exports
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(Control) Act, 1947, takes in not merely prohibition of imports and
exports, it also includes “restrictions or otherwise controlling” all
imports and exports. According to him restrictions cannot be
considered as prohibition more particularly under the Imports and
Exports (Control) Act, 1947, as that statute deals with “restrictions
or otherwise controlling” separately from prohibitions. We are
not impressed with this argument. What clause (d) of Section 111
says is that any goods which are imported or attempted to be
imported contrary to “any prohibition imposed by any law for the
time being in force in this country” is liable to be confiscated.
“Any prohibition” referred to in that section applies to
every type of “prohibition”. That prohibition may be
complete or partial. Any restriction on import or export is
to an extent a prohibition. The expression “any
prohibition” in Section 111(d) of the Customs Act, 1962
includes restrictions. Merely because Section 3 of the Imports
and Exports (Control) Act, 1947 uses three different expressions
“prohibiting”, “restricting” or “otherwise controlling”, we cannot
cut down the amplitude of the word “any prohibition” in Section
111(d) of the Act. “Any prohibition” means every prohibition.
In other words all types of prohibitions. Restriction is one
type of prohibition…..”
(emphasis in bold supplied)
67.2. In the case of Om Prakash Bhatia (supra), over-invoicing
and fraudulent claim of drawback by the exporter was
held to be that of
exporting prohibited goods with reference to the requirements of Foreign
Exchange Regulation Act, 1973, while rejecting the contention of the
exporter that Section 113(d) of the Customs Act was not applicable as
the goods were not prohibited as such. A line of argument has been
suggested on behalf of one of the respondents that the order ultimately
passed in the case of Om Prakash Bhatia operates against the stand
of the appellants. It is true that in that case, redemption fine and penalty
was imposed but, the exercise of discretion in a particular manner related
to the facts of that case. These aspects relating to the exercise of
discretion shall be considered a little later, while dealing with the question
as to whether the goods in question are liable to absolute confiscation or
could be released on redemption fine. Suffice it to notice for the present
purpose that the export attempted in violation of the conditions was held
to be taking the goods in the category of ‘prohibited’ goods.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]