Custom, Excise & Service Tax Tribunal
Excellent Betelnut Products Private ... vs Commissioner Central Goods And Service ... on 29 March, 2022
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
CUSTOMS APPEAL NO: 85127 OF 2022
[Arising out of Order-in-Original No: VIII(Cus)25-169/SIIB/Betelnut
Borkhedi/2021 dated 30th December 2021 passed by the Commissioner of
Customs, Nagpur.]
Excellent Betelnut Products Private Ltd
Shop No. 13, Platinum Commercial Premises CHS
C/o Shah Premchand Damji & Co, Praful Jyoti,
Road No. 7, Ghatkopar East, Mumbai - 400077 ...Appellant
versus
Principal Commissioner of Customs
GST Bhawan, Civil Lines, Telangkhedi Road,
Nagpur - 440 001 ...Respondent
APPEARANCE:
Shri Prakash Shah, Advocate for the appellant Shri Manoj Kumar, Deputy Commissioner (AR) for the respondent CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) FINAL ORDER NO: A/85233 /2022 DATE OF HEARING: 10/03/2022 DATE OF DECISION: 29/03/2022 PER: C J MATHEW The appeal of M/s Excellent Betelnut Products Private Limited sought our intervention in determining the correctness of outcome, C/85127/2022 2 based on a selected report, of sample testing that had nothing to do with reasons recorded for seizure in exercise of authority conferred by '110A. Provisional release of goods, documents and things seized pending adjudication. - Any goods, documents or things seized under section 110, may, pending the order of adjudicating officer, be released to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require.' of Customs Act, 1962 as 'API supari', imported by them between September and October 2021 against 15 bills of entry filed at ICD Borkhedi for assessment at rate of duty corresponding to 'betel nut product known as supari' in chapter 21 of First Schedule to Customs Tariff Act, 1975 had been seized, under section 110 of Customs Act, 1962, in the reasonable belief that chapter 8 of First Schedule to Customs Tariff Act, 1975 titled 'edible fruit and nuts; peel of citrus fruit or melons' covering 'areca nuts' is more befitting and, in the normal course, such a dispute over rival entries in First Schedule to Customs Tariff Act, 1975, with differential duty as the outcome, would not have impeded the provisional release conditional upon adequate security for safeguarding revenue. However, in the present instance, such conditional relief was denied to the appellant as the goods were purportedly unfit for human consumption.
2. On commencement of hearing of the appeal, it had been contended on behalf of the appellant that the conflicting test results, C/85127/2022 3 with some arising from unauthorized samples tested without regulatory authorization, could cloud appreciation of arguments and that the decision of the Commissioner of Customs had failed to elaborate upon, or furnish, the results relied upon for penalizing the importer. Acknowledging the submission, this Tribunal had, on 7th February 2022, directed drawal of fresh samples and testing thereof to preclude taint being attached to any of the reports filed by either side.
3. Even though the seizure was prompted by the reasonable belief of the impugned goods having been misclassified for evading restrictions imposed in the Foreign Trade Policy on import of 'areca nuts', that is not the controversy before us. It is on record that, in exercise of powers under section 28-I of Customs Act, 1962, the Authority for Advance Rulings (Central Excise, Customs and Service Tax) Authority, on application by the importer, had, by order dated 7th August 2015, determined the goods to be classifiable under chapter 21 of First Schedule to the Customs Tariff Act, 1975. The seizure, which, in the ordinary course of events, is to be followed by show cause notice that culminates in adjudication, is also not an issue in this appeal. It is the legality of appropriating a ground that was not only unconnected with the seizure but also bereft of any explanation that is challenged in the proceedings. A brief background, noted in the interim order of 7th February 2022, may not be out of place.
4. Section 110A does not prescribe procedure for setting release of C/85127/2022 4 seized goods in motion. The appellant had challenged the seizure in writ proceedings before the Hon'ble High Court of Bombay and, by order of 15th December 2021, the petition was directed to be deemed as application under section 110A of Customs Act, 1962 for such decision by Commissioner of Customs as is in conformity with law. Thus followed the impugned order which has not elaborated on the legal grounds for refusal of application despite the stipulations in the order of Hon'ble High Court of Bombay.
5. It would appear that restrictions in the extant Foreign Trade Policy, unlike the classification proposed by customs authorities, did not attend upon that claimed in the bills of entry; that the distinction between the two - 'areca nuts' and 'betel nuts' -, resting precariously on a thin edge, was, undoubtedly, responsible for adversarial stances that manifested initially as the controversy with the advantage of prior classification favouring the importer that could be neutralized only by investigation establishing that the impugned goods varied from that for which advance ruling, binding on both sides, had been issued. Moreover, the contours of such dispute, even with added burden of restriction imposed by the Foreign Trade Policy on goods covered by the alternative classification, did not lend itself to denial of access to the goods. It was contended by Learned Counsel for the appellant that, after seizure of impugned goods in November-December 2021, the Directorate of Revenue Intelligence (DRI) drew samples that, upon C/85127/2022 5 testing by the Central Revenue Control Laboratory (CRCL) at Vadodara, was reported as 'unfit for human consumption' contradicting the test report dated 21st October 2021 from M/s Qualichem Laboratories that had been submitted by the importer as being compliant with Food Safety and Standards Act, 2006.
6. It is contended on behalf of the appellant that the 'supari' imported by them corresponds to tariff item 2106 90 30 of First Schedule to Customs Tariff Act, 1975 and freely importable on discharge of the duty so determined. It was further contended that coverage under the chapter pertaining to 'miscellaneous edible preparations' also mandated certification by the Food Safety and Standards Authority of India (FSSAI), the duly constituted agency under Food Safety and Standards Act, 2006, for domestically produced and externally sourced edibles, as a pre-requisite under that statute. Among the records furnished by the appellant are reports dated 21st October 2021 of M/s Qualichem Laboratories as having passed muster for the purposes of Food Safety and Standards Act, 2006. It was submitted that reference was also made on 2nd November 2021, apparently at the prompting of investigators, by the Food Safety and Standards Authority of India (FSSAI) to M/s Testtex who, vide communication dated 11th November 2021, intimated the goods to be 'unfit for human consumption' which was speculated upon by Learned Counsel as the proximate cause for denial of the permission C/85127/2022 6 after the Hon'ble High Court of Bombay directed the Commissioner of Customs to decide within the bounds of law. It would appear that the risk attached to edibles found unfit for human consumption relegates the commercial detriment consequent upon an erroneous determination to an inconsequential footnote. And yet, that such a noble endeavour appeared to have been undertaken furtively, instead of with bold steps in the full glare of light as a responsible, and responsive, administration should have and without any explanation whatsoever, gives cause for pause. This Tribunal was, thus, constrained to issue direction for drawal of fresh samples and testing which, as reported by M/s Qualichem Laboratories, appears to be in conformity the original submission to customs authorities. It also appears from the proposal of Learned Authorized Representative that customs authorities are loathe to accept it and prefer, instead, to assert the exclusive credibility of the report of the Central Revenue Control Laboratory by relying on the observation of the Tribunal in Fomento Resources Pvt Ltd v. Commissioner of Customs, Vijayawada [2019 (7) TMI 728 -CESTAT Hyderabad] that '8.... the test report of the Chemical Examiner or the Chief Chemist..... cannot be brushed aside in favour of reports of private person obtained by the assessee.' as justification for the duplicates of samples to be tested in referral laboratory of Food Safety and Standards Authority of India (FSSAI). We are not particularly impressed by this suggestion as the purported C/85127/2022 7 observation is merely record of submissions of the respondent therein and the final decision was to discard the report of the Chemical Examiner. We also remain unimpressed by the underlying suggestion that any report, other than 'unfit for human consumption', would not be to the satisfaction of the investigators presaging endless references to laboratories of one sort or the other which, to a judicial authority concerned with applying known law to established facts, is suggestive of unappealing obduracy. Oddly, too, it is the revenue administration, whose primary authority over the impugned goods lies elsewhere, which is exhibiting fastidiousness about the alleged toxicity of 'supari' to an extent that the Food Safety and Standards Authority of India (FSSAI) does not appear to be.
7. In re Fomento Resources Pvt Ltd, and in Reliance Cellulose Products Limited v. Commissioner of Central Excise [1997 (93) ELT 646 (SC)] relied upon therein by Revenue, the dispute was about classification in which the expertise of the Central Revenue Control Laboratory is sufficiently acknowledged to be for the Hon'ble Supreme Court, in re Reliance Cellulose Products Limited, to commend the superiority of its reports except where palpably demonstrated as wrong. The present dispute has digressed from the reasonable belief of mis-classification and is all about human consumption which is entirely external to assessment and in the remit of the Food Safety and Standards Authority of India (FSSAI) C/85127/2022 8 empowered under Food Safety and Standards Act, 2006. Neither should assessing authorities, or their technical support, arrogate expertise of a statutory domain that is not extended to them. Doubtlessly, this Tribunal, too, is without authority of monitorial oversight over the Food Safety and Standards Authority of India (FSSAI) and, hence, our cautionary advice to the Commissioner of Customs on venturing into unchartered territory that his office is ill- designed to appropriate either by numerosity of test reports or from the mantle of being a government laboratory.
8. All customs procedures relating to imported goods sprout from section 47 of Customs Act, 1962 prescribing satisfaction of the 'proper officer' that appropriate duties have been discharged on imported goods which are not prohibited for import as the requisite for clearance for home consumption. Subsequent action for recovery of duties under section 28 of Customs Act, 1962 or confiscation under section 111 of Customs Act, 1962 are triggered by such tentative satisfaction having been either accorded by mistake or obtained by suppression, misrepresentation or fraud. Seizure, under section 110 of Customs Act, 1962, of goods that are liable for confiscation under section 111 of Customs Act, 1962 is warranted, inter alia, upon breach of prohibitions and the only prohibitions which lie in the exclusive domain of customs officers are such as are notified under section 11 of Customs Act, 1962; all other prohibitions, including C/85127/2022 9 restrictions under Foreign Trade Policy, devolving for enforcement on customs authorities, as the frontier agency for policing of imported goods, are contingent upon specific advisement of such other statutory authorities especially when vested with power to regulate or condone compliance. Recourse to prohibitions under other laws for confiscation of imported goods is, necessarily, circumscribed by procedures enshrined in those statues which the empowerment of customs officer to permit clearance for home consumption cannot ignore.
9. There is no allegation about the competence of, or the quality of the test undertaken by, the laboratory to which the samples drawn on the direction of this Tribunal had been forwarded. The domain expertise of Central Revenue Control Laboratory (CRCL) in relation to classification of goods does not extend to the prescriptive requirements of Food Safety and Standards Act, 2006. We cannot, in these circumstances, approve of an unending series of tests on requests and counter-requests; we did so, and with reluctance, solely owing to the procedural lacunae that strained the credibility of the conflicting reports produced before us. We now have before us a test report that is not sought for discarding except by assertion of the sanctity of Central Revenue Control Laboratory (CRCL) which has no domain expertise over food safety standards. The Food Safety and Standards Authority of India (FSSAI) has also not discredited this C/85127/2022 10 result. The denial of provisional release must be reviewed in the light of this report under section 110A of Customs Act, 1962 forthwith and, in any case, not later than ten days from the date of receipt of this order, and, as directed by the Hon'ble High Court of Bombay, strictly within the framework of the law.
10. Certification of edibles as 'unfit for human consumption' is, under Food Safety and Standards Act, 2006, in the exclusive domain of Food Safety and Standards Authority of India (FSSAI) which clothes such certification with responsibility attendant upon accountability and, when issued of its own accord in accordance with regulatory procedure governing such standards, may be taken into consideration in clearance for home consumption under section 47 of Customs Act, 1962.
11. Consequence of denial of access to impugned goods is a commercial detriment that burdens the appellant. The impugned goods are not a produce of India with nowhere else to go but have been imported from a place outside India with commercial intent. The regulatory standards of India are not mandated for implementation across the globe. Each country adopts its own and the country of origin of the impugned goods must, if necessary, be the final resting place of such as are unfit to be cleared here for home consumption. In the interest of minimizing the commercial detriment, the option of re-export, as submitted on behalf of the appellant before this Tribunal, should not C/85127/2022 11 be foreclosed and certainly before further deterioration occurs. Even if customs authorities felt obliged with, or without, justification or authority, to protect domestic consumers of arecanut/supari, the option of return to sender should have been permitted in circumstances of denial of recourse to section 110A of Customs Act, 1962 on grounds other than that which legitimized seizure. Therefore, it is only equitable that the prayer for issue of 'detention certificate' for enabling waiver of demurrage is allowed and we do so direct.
12. Accordingly, the impugned order is set aside and the respondent-Commissioner is directed to apply the law in section 110A of Customs Act, 1962, arising from seizure under section 110 of Customs Act, 1962, in the light of the report of the tests undertaken on the samples drawn in accordance with our interim order and the legal framework expounded supra.
(Pronounced in Open Court on 29/03/2022)
(AJAY SHARMA) (C J MATHEW)
Member (Judicial) Member (Technical)
*/as