Patna High Court
M/S Om Sai Trading Company vs The Union Of India on 5 September, 2019
Equivalent citations: AIRONLINE 2019 PAT 1447
Author: Rajeev Ranjan Prasad
Bench: Rajeev Ranjan Prasad
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.10109 of 2019
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1. M/s Om Sai Trading Company House No.25,Thane
Road,Rupahi,Nagaon,Assam through its Authorized Signatory Ramashankar
Maurya,aged about 44 years,Male,son of Jairam Maurya,resident of Babri
Complex,A B C Gali,Athgaon,P.S. Bharauli Mukh,Dist.-Guwahati,Assam
2. M/s Maa Kamakhya Traders, Plot No.82, Brahmputra Industrial Park, Sila,
Sendurighopa, District Kamru, Assam, through its Authorized Signatory
Ramashankar Maurya, aged about 44 years, Male, son of Jairam Maurya,
resident of Babri Complex, A B C Gali, Athgaon, P.S. Bharauli Mukh,Dist.-
Guwahati, Assam
... ... Petitioner/s
Versus
1. The Union of India through the Chief Commissioner of Customs, Central
Revenue Building Beer Chand Patel Path, Patna
2. The Commissioner of Customs (Preventive), HQRS, 5th. Floor, Central
Revenue Building Beer Chand Patel Path,Patna
3. The Additional Commissioner, (Adjudication), Office of the Commissioner
of Customs, Central Revenue Building Beer Chand Patel Path,Patna
4. The Assistant Commissioner, (Adjudication), Customs (Preventive),
HQRS,Office of the Chief Commissioner, Central Revenue Building Beer
Chand Patel Path,Patna
5. The Assistant Commissioner, (Preventive), Division Forbesganj, Dist.-
Araria,Bihar.
6. The Inspector cum Seizing Officer, Customs (P), Forbesganj, Division
Forbesganj, Dist.-Araria,Bihar.
... ... Respondent/s
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Appearance :
For the Petitioner/s : Mr.Prabhat Ranjan, Advocate
For the Respondent/s : Mr. Anshuman Sinh, C.G.C.
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CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
C.A.V. JUDGMENT
Date : 05-09-2019
The petitioners in the present case are seeking the
following reliefs:
"(i) Quashing of the Memo of Seizure dated
06.02.2019(Annexure-2) whereby 15865 Kgs. Of Betel Nuts contained in 328 bags valued at Rs. Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 2/34 4514862/- and along with the truck bearing Registration No. KA 01B-8691 valued at Rs. 5 Lakhs has been seized for alleged violation of Notification No. 9/96 (NT) - Cus, dated 22.01.96 issued under Section 11 of the Customs Act, 1962 read with Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992;
(ii) Quashing of the Consequential Letter No. 2647 dated 02.04.2019 (Annexure 4) whereby, on the basis of an exparte Sample Test report from Officer in Charge, Central Food Laboratory, Kolkata (Extension Centre, Raxaul), reporting the samples to be non confirming to the Food Safety and Standards (Food Products Standards and Food Additives) Regulation 2011, the application for provisional release of the Betel Nutes has been rejected;
(iii) Quashing of the consequential order of provisional release dated 04.04.2018 (Annexure 5) vide Letter No. 2707 to the extent that provisional release has been ordered on submission of the cash security of 20 % of the value of the Truck;
and
(iv) Direction upon the respondents to release the goods pending disposal of the instant writ application."
2. It is the case of the petitioners that they are the registered dealers under the provisions of the Goods and Services Taxes (GST) Act and in course of day to day business the petitioners dispatched a consignment of 15865 Kgs. Betel Nuts Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 3/34 contained in 325 bags to one M/s Mahaveer Traders of Coimbatore (Tamilnadu) by the Truck bearing Registration No. KA-01-8691 through M/s Ajay Goods Carrier on 01.02.2019 along with the requisite documents in support of the same including e- way Bill. Out of the total consignment of 15865 kgs of Betel Nuts, 10350 Kgs. Contained in 208 bags belongs to petitioner no. 1 and 5516 Kgs. contained in 117 bags belongs to petitioner no. 2.
3. It is stated that in course of transportation the truck was detained by the officers of the Forbesganj Customs Preventive Division near a Toll Plaza on 06.02.2019, the same were taken to office of the Assistant Commissioner, Customs (P) Division, Forbesganj for verificaton of the papers. The documents were said to have been produced before the respondents but without considering the same and without even verifying its veracity the Betel Nuts of the truck have been seized by the Inspector / Customs (P), Forbesganj for the alleged violation of Notification No. 9/96 (NT)-Cus, dated 22.01.1996 issued under Section 11 of the Customs Act, 1962 read with Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992. A copy of the seizure Memo dated 06.02.2019 was handed over to the Truck Driver.
Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 4/34
4. The petitioners when approached the jurisdictional officers along with their representations and all documents as contained in Annexure '3' to the writ application and also filed applications to the Chairman, Central Board of the Indirect Taxes and Customs, Chief Commissioner of Customs and Commissioner of Customs for early release of the goods, the petitioners have been served with a Letter Dated 02.04.2019 as contained in Memo No. 2647 whereby on the basis of Sample Test Report of the seized Betel Nuts it has been held that the same is not fit for human consumption and therefore, cannot be provisionally released and thus, the application for provisional release has been rejected vide Annexure '4' to the writ application.
5. The truck in question has, however, been released provisionally vide Annexure '5' to the writ application on a condition to deposit Rs. 5 lakhs and execution of a bond for full seizure value and cash security of 20 % of the seized vehicle.
6. Learned counsel for the petitioners submits that the Sample Test Report obtained from the Central Food Laboratory, Kolkata (hereinafter in short 'CFL' )on which reliance has been placed by the respondents to reject the application of the provisional release has been obtained without any prior notice to the petitioners for purpose of collection of sample and if the Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 5/34 samples have been collected behind the back of the petitioners, the Sample Test Report cannot be relied upon.
7. It is submitted that the seizure of the Betel Nuts by the respondents is beyond their jurisdiction and the same is arbitrary and contrary to the provisions of the Customs Act, 1962. Referring to Section 110 of the Customs Act, learned counsel submits that it is subject to the statutory sine qua non viz reasons to believe that the goods are liable to confiscation under the Act. In the present case it is submitted that there is absolutely no reason to believe that the goods i.e. Betel Nuts are liable to confiscation under any of the provisions of the Customs Act, 1962.
8. So far as the Notification No. 9/96 issued under Section 11 of the Customs Act, 1962 is concerned, it is submitted that the same has no application because the said notification imposes restrictions on import from Nepal and is concerned with only those goods which have been exported to Nepal from countries other than India except machinery and equipment used in Nepal for the execution of a project. It is submitted that the notification applies only when goods are "Notified Goods" within the meaning of Section 11B of Chapter IVA of the Customs Act, 1962. According to learned counsel, there is no notification declaring Betel Nuts as notified goods under Section 11 of the Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 6/34 Customs Act. According to him, the burden lies upon the Department to prove that the Betel Nuts being a non-notified item was being smuggled.
9. It is submitted that the samples have not been sent to the 'CFL' in accordance with the provisions of Section 47 of the Act read with Rule 2.4 of the Food Safety and Standards Rule, 2011 (hereinafter referred to as the 'Regulation 2011'). According to him, the Betel Nuts which have been subjected to the analysis under the Food Safety and Standards Act, 2006 (hereinafter referred to as the 'Act of 2006') was in course of transportation, from Assam to Coimbtore and was not being offered for sale at the stage in which samples have been drawn. These Betel Nuts are raw materials which require sufficient further processing to be done and only thereafter, they may be packed in terms of the provisions of the Regulations, 2011 for purpose of sale. Therefore, to say that those were not fit for consumption by public at this stage is not correct.
10. Referring to the earlier proceedings of similar nature learned counsel relied upon the order dated 17.01.2013 passed by a learned co-ordinate Bench of this Court in C.W.J.C. No. 317 of 2012 and C.W.J.C. No. 3784 of 2013. It has been submitted that this Court sitting in its writ jurisdiction had directed for Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 7/34 provisional release of the Betel Nuts directed for release of the Betel Nuts. [A perusal of the order dated 17.01.2013 passed in C.W.J.C. No. 317 of 2012 would show that although in the said case initially the writ application was filed for quashing of the seizure list and other consequential reliefs, in course of argument the whole emphasis remained centered around the provisional release of the Betel Nuts and the vehicle involved therein.] The learned co-ordinate Bench directed the authorities of the Customs Department to release the Betel Nuts and the vehicle of the petitioner after due verification in terms of Section 110-A of the Customs Act after fixing a reasonable value for the Bank Guarnatee to be produced by the petitioner in that regard. This order was passed in the light of an earlier order dated 08.05.2012 passed in C.W.J.C. No. 21849 of 2011 and other analogous cases (M/s. Assam Agro Traders vs. Union of India & Ors.) in which also the Court had directed for provisional release of the Betel Nuts and the vehicles.
11. Again in C.W.J.C. No. 3784 of of 2013 the writ application was disposed of vide order dated 04.03.2012 on agreement of the parties with a direction to release the Betel Nuts and the vehicle of the petitioner in terms of order dated 17.01.2013 passed in C.W.J.C. no. 317 of 2012. The Department of Customs, Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 8/34 thereafter, moved a modification application being M.J.C. No. 2185 of 2013 (Annexure '7') in which a detail order dated 24.07.2013 was passed by the learned co-ordinate Bench. The operative portion of the judgment dated 24.07.2013 passed in M.J.C. No. 2185 of 2013 reads as under:
"I have considered the submissions of learned counsels for the parties. On a consideration of the various provisions it is evident that betel nut or supari has not been enumerated under the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011. Thus as per the submission of learned counsel for the petitioners it would be a proprietary food that has not been standardized under the said Regulations. It would thus be required to follow the labelling requirements specified under the Regulations and must also conform to the requirement of describing as clearly as possible the nature and composition of food, the category in which it falls in the said Regulations and also comply with all other regulatory provisions. It is further clear that supari has to be sold in a package in terms of the Food Safety and Standards (Packaging and Labelling) Regulations, 2011 and such packaging is required to carry the statutory warning that "chewing of supari is injurious to health". The same will also have to comply with the Food Safety and Standards (Contaminants, Toxins and Residues) Regulations, 2011 which lays down the limits for such contaminants in different food articles. However, the stage for such sample, etc. can only arise after the processing has been made of the raw supari by processing units or in case it is used as an ingredient of produces like Pan Masala, etc. by testing of such food products. That stage had not come into existence when the sample was sent by the Customs authorities to the CFL, Kolkata (Extension Centre, Raxaul) Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 9/34 for analysis as the same had not yet been put up for sale for human consumption and required various processing to be done before it was fit for the same.
From the materials placed on the record by learned counsels for the parties I am also of the view that the sample has not been drawn in accordance with the provisions of Section 47 and Rule 2.4 of the Food Safety and Standards Act and Rules. So far as the reliance on the report by M/s. Arecanut Research & Development Foundation, Mangalore is concerned, the petitioners have totally failed to bring on record any material to show that it is an accredited laboratory by a competent authority under the Act and Rules. Hence no legal liability can flow from the report of such an institution.
I may here also point out that at a subsequent stage the petitioners have sought to rely upon the definition of "unsafe food" as contained in Section 3(1)(zz) of the Act, particularly of sub clause (ix) thereof stating that it would include article having been infected or infested with worms, weevils or insects. The said definition by itself does not mean anything as in fact standards with respect to weevils, etc. are to be found with respect to different food articles in the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 itself including general standards whether in the context of food grains or of different other vegetable products, etc. It is thus evident that it is not open to the petitioners to straightaway rely upon Section 3(1)(zz)(ix) of the Act without any reference to the standards laid down in the different Regulations. I am in agreement with the submission of learned counsel for the respondents that the case regarding samples being found adulterated is not borne out from the actual data obtained from the analysis as there is no reference to any adulterant in the course of such analysis. Moreover, I find that the prescribed standards column has not been filled up Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 10/34 which would be the relevant point for consideration of the different data obtained from the examination of the sample of betel nut by the laboratory. Be that as it may, it is evident that the stage for taking out sample for its analysis had not yet come when the same was being transported for delivery to the processing unit for its processing by the respondents. Thus, on a consideration of the aforesaid facts and circumstances and the submissions of learned counsels for the parties, I am of the view that no modification is required to be made in the order dated 4.3.2013 passed in CWJC No.3784 of 2013. The modification application is, accordingly, rejected. The petitioners are directed to comply with the order passed in the writ petition in its own terms."
12. Recently this Court while passing judgment dated 24.01.2019 in C.W.J.C. No. 7589 of 2018 relied upon the said judgment of the learned co-ordinate Bench of this Court and allowed the writ application. In the said case, this Court had formed an opinion that once the learned co-ordinate Bench of this Court had held that in absence of there being any material to show that M/s Arecanut Research & Development Foundation, Mangalore (in short 'ARDF, Manglore) is an accredited laboratory by a competent authority under the Act and Rules, it's report cannot have a consequence of fastening of any legal liability therefore, no legal liability can flow from the report of such an institutions. It was held that the respondent authorities were not Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 11/34 justified in relying upon the ARDF, Mangalore's report to justify the seizure in question.
13. In this case a counter affidavit has been filed on behalf of respondents. A stand has been taken therein that upon examination of the goods loaded in the Truck it was found that Cut Dried Areca Nuts were appearing as dark pink in colour. The kind of appearance and colours are not the characters of Indian origin Areca Nuts. The Areca Nuts of Indian origin are normally oval in shape. The Betel Nuts and the Truck were seized under Section 110 of the Customs Act on a reasonable belief that the said Cut Dried Areca Nuts were illegally smuggled into India. Panchanama dated 06.02.2019 and seizure memo dated 06.02.2019 have been prepared to this effect on the spot.
14. It is further stated that to ascertain the country of origin of the seized Areca Nuts, samples were sent to (1) Arecanut Research & Development Foundation, Varanashi Towers, Mission Street, Mangalore, Karnataka and (2) Central Food Laboratory, Kolkata, Extension Centre Raxaul, Bihar. The ARDF, Mangalore submitted a test report, according to which samples of arecanuts pieces and coated with some colouring materials. The 'CFL' reported that "the sample of Betel Nut were tested as per Standard Food Safety norms falling under regulation No. 2.12 & 2.3.57(5) Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 12/34 of Food Safety and Standards (Food Products Standard &Food Additives) Regulations, 2011 and found non-conforming to the standards due to presence of Damaged Betel Nuts and Added Colouring matter. Thus, the sample is "unsafe food" under section 3(1) (ZZ) (ix) of FSS Act, 2006." Both the reports are Annexure 'C' and 'D' respectively to the counter affidavit.
15. It is further submitted that to ascertain the country of origin of the seized goods further notification viz verification of buyer / seller and their actual work profile from jurisdictional commissionerate, verification of documents submitted by the Truck driver are being done by the Divisional office, Forbesganj.
16. It is in the aforementioned background the respondents submit that the seized goods being unfit for human consumption cannot be provisionally released. Annexure 'E' to the counter affidavit is the order of the Assistant Commissioner Customs (P) Division, Forbesganj by which he has refused to release the seized Arecanuts provisionally. It is stated that further investigation in the mater is still going on and therefore, it would not be desirable to release the Betel Nuts at this stage.
17. In paragraph 23 of the counter affidavit the respondents have stated that as regards the country of origin, ARDF's report is as follows:
Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 13/34 "The sample of arecanuts contain very small cut pieces (Chips), boiled, dried and coated with some colouring material. The colour is red and very shiny. It is not the natural colour of arecanut or its extract. They suspect that the arecanut pieces are coated with some artificial colouring materials."
18. It is stated that further investigation of the case is under process. The respondents have denied that the Department has said that the seized goods were imported from Nepal. According to the respondents, the exact country of origin of the seized goods is yet to be ascertained. They have taken a stand that though the burden of proof is upon the Department, however, the investigation in the instant case is still under process, hence, the respondents are verifying the country or origin of the seized goods.
19. It is further stated that the respondents have reasons to believe that the Betel Nuts being carried on the Truck in question was being illegally imported and were of foreign origin as the said truck was loaded near the boarder area near Gauhati.
CONSIDERATION
20. Having heard learned counsel for the petitioner as well as for the Union of India, this Court finds that the whole argument of the petitioner for purpose of quashing of the seizure list revolves around the provision of Section 110 of the Customs Act. Section 110 of the Customs Act is quoted hereunder for a ready reference:
Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 14/34 "110. Seizure of goods, documents and things. -(1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods :
Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer.1
[ (1-A) The Central Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification in the Official Gazette, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (1), be disposed of by the proper officer in such manner as the Central Government may, from time to time, determine after following the procedure hereinafter specified. (1-B) Where any goods, being goods specified under sub-section (1- A), have been seized by a proper officer under sub-section (1), he shall prepare an inventory of such goods containing such details relating to their description, quality, quantity, mark, numbers, country of origin and other particulars as the proper officer may consider relevant to the identity of the goods in any proceedings under this Act and shall make an application to a Magistrate for the purpose of -
(a)certifying the correctness of the inventory so prepared; or
(b)taking, in the presence of the Magistrate, photographs of such goods, and certifying such photographs as true; or
(c) allowing to draw representative samples of such goods, in the presence of the Magistrate, and certifying the correctness of any list of samples so drawn.
(1-C) Where an application is made under sub-section (1-B), the Magistrate shall, as soon as may be, allow the application.] (2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized:
1. Inserted by Act 80 of 1985, S. 8 (w.e.f. 27-2-1985) Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 15/34 Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the 1[Principal Commissioner of Customs or Commissioner of Customs] for a period not exceeding six months.
(3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act.
(4) The person from whose custody any documents are seized under sub-section (3) shall be entitled to make copies thereof or take extracts therefrom in the presence of an officer of customs.
2[110-A. Provisional release of goods, documents and things seized pending adjudication.- Any goods, documents, or things seized under section 110, pending the order of the 3[adjudicating authority], be released to the owner on taking a bond from him in the proper form with such security and conditions as the 3[adjudicating authority] may require.]"
21. In the facts of the present case, the counter affidavit of the respondents states that the Cut Dried Arecanuts is of dark pink colour which are not the characteristics of Indian origin Arecanuts because the Arecanuts of Indian origin are normally Oval in shape. In order to ascertain the country of origin of the seized cut dried Arecanuts, samples were sent to the two Laboratories. The test report of ARDF, Mangalore reads as under:
1. substituted by Act 25 of 2014,S. 78, for "Commissioner of Customs" (w.e.f. 1-10-2014).
2. Inserted by Act 29 of 2006 (w.e.f. 13-7-2006).
3. Substituted by Act 8 of 2011, S. 47, for "adjudicating officer" and "Commissioner of Customs".
Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 16/34 " The sample of areca nuts contain very small cut pieces (Chips), boiled, dried and coated with some colouring material. The colour is red and very shiny. It is not the natural colour of arecanut or its extract. They suspect that the arecanut pieces are coated with some artificial colouring materials".
22. Further the test report of the 'CFL' reported reads as under:
"The sample of Betel Nut were tested as per Standard Food Safety norms failing under regulation No. 2.12 & 2.3.47 (5) of Food Safety and Standards (Food Products Standard & Food Additives) Regulations, 2011 and found non- conforming to the standards due to presence of Damaged Betel Nuts and Added Colouring matter. Thus the sample is 'unsafe food' under section 3(I)(ZZ) (ix) of FSS Act, 2006".
23. The respondents have come out with a statement that in order to ascertain the country of origin of the seized goods further investigation is going on. So far as the two test reports are concerned, this Court finds that those are not saying about the country of origin of the Betel Nuts.
24. In the case of M/s Ayesha Exports Vs. The Union of India (C.W.J.C. No. 7589 of 2018), this Court has recorded the views of the learned co-ordinate Bench of this Court in M.J.C. No. 2185 of 2013 which had in fact been challenged before the Hon'ble Supreme Court in Special Leave to Appeal (Civil) No. CC7331 of 2014 but the same was dismissed on 08.05.2014 keeping the question of law open.
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25. This Court reiterated that in absence of there being any standardized laboratory test for tracing the country of origin, established under some statute and unless such Labs have been accredited by the competent authority and that the Labs could have the scientific method to come to a conclusion that the Betel Nut is of a particular country's origin, it would not be in the interest of justice to direct the petitioner to pay the custom's duty.
26. This Court finds that in the present case the request of the petitioner to release the Betel Nuts have been rejected on a totally different ground. In paragraph 26 of the counter affidavit respondents have come out with the following statements:
"26. That in the view of the statements made in paragraph no. 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67 and 68 of the writ petition under reply, it is humbly stated and submitted that it is pertinent to mention that facts and circumstance of the instant case are not identical to the facts and circumstances for the cases referred by the petitioner in his application. In the instant case respondent has placed reliance upon the test report given by the two test labs, in which it has been reported that "the sample is 'unsafe food' for human consumption; while in any of the cases referred by the petitioner no such report was available at that point of time. In view of the same it would not be appropriate to release the seized goods for human consumption."
27. Learned counsel for the Union of India has placed before this Court a Government of India's Circular No. 3 of 2011 Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 18/34 issued by Ministry of Finance in the Department of Revenue, Central Board of Excise and Customs on 6 th January, 2011. The Circular provides detailed guidelines for examination and testing of food items prior to its testing and clearance by Customs Officers under the provisions of Prevention of Food Adulteration Act, 1954 ( in short 'PFA Act, 1954'). It is submitted that in terms of the said Circular dated 6th January, 2011, the Custom Officers are competent to get the samples tested from the nearest Central Food Laboratory or a Laboratory authorized for such testing by DGHS or FSSI. Circular No. 3 of 2011 is reproduced hereinbelow for ready reference:
"Circular No. 3/2011-Customs F. No.450/115/2009-Cus.IV Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs North Block, New Delhi-1, 6th January, 2011.
To All Chief Commissioners of Customs / Customs (Prev.). All Chief Commissioners of Customs & Central Excise. All Commissioners of Customs / Customs (Prev.). All Commissioners of Customs (Appeals).
All Commissioners of Customs & Central Excise. All Commissioners of Customs & Central Excise (Appeals).
Subject: Import of edible / food products - regarding.
*** Sir / Madam, Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 19/34 Attention is invited to Board Circular No.58/2001-Cus dated 25.10.2001 which provides detailed guidelines for examination and testing of food item prior to its testing and clearance by Customs officers under the provisions of Prevention of Food Adulteration Act, 1954 (PFA Act, 1954).
2. Further, in terms of Para 8 of Chapter I A (General Notes Regarding Import Policy) of the ITC (HS) Classification of Export and Import items, import of all such edible/food products including tea, domestic sale and manufacture of which are governed by Prevention of Food Adulteration Act, 1954, shall be subject to all the conditions laid down in the aforesaid Act. Import of all these products will have to comply with the quality and packaging requirements as laid down in the Act. Compliance of these conditions is to be ensured before allowing customs clearance of the consignment.
3. To consolidate the laws relating to food and to provide for a systematic and scientific development of Food Processing Industries, the government has enacted The Food Safety and Standards Act, 2006 (FSS Act, 2006). Under the Act, the Food Safety and Standards Authority of India (FSSAI) has been established to lay down standards and regulate/monitor the manufacturing, import, processing, distribution and sale of food. Section 97 of the FSS Act, 2006 provides that the existing Acts and Orders relating to food items such as PFA Act, 1954; Food Products Order, 1955; Meat Food Products Order, 1973; Vegetable Oil Products (Control) Order, 1947; Edible Oils Packaging (Regulation) Order, 1988; Solvent Extracted Oil, Deoiled Meal, and Edible Flour Control (Order), 1967; Milk and Milk Products Order, 1992 etc shall be repealed from a date to be notified.
4. The FSSAI has taken over PHO functions at select ports such as Nava Sheva and Mumbai with effect from 13.09.2010 with the stipulation that the existing rule and procedures will continue to be followed without any change till FSSAI regulations are notified. Thus, FSSAI has replaced PHO with its authorized officers at abovementioned ports in terms of section 47 (5) of the FSS Act, 2006.
5. Difficulties have been reported to Board by certain importers regarding delay in testing of samples and clearance of goods consequent upon implementation of FSS Act, 2006 at select ports.
6. It is also noted that vide Policy Circular 25(RE-2003)/2002-007 dated 28.01.2004 and 37(RE-2003)/2002-2007 dated 14.06.2004, Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 20/34 the DGFT has modified the procedure for sampling of imported edible/Food Products.
7. Accordingly, the procedure of clearance of food articles has been revisited by the Board, and following modified procedure has been prescribed:
(a) All consignments of high risk food items, as listed in DGFT Policy Circular No. 37(RE-2003)/2002-2007 dated 14.06.2004 (as may be modified from time to time), shall be referred to Authorised Representative of FSSAI or PHOs, as the case may be, for testing and clearance shall be allowed only after receipt of the test report as per the instructions contained in the Customs Circular No. 58/2001-Cus, dated 25.10.2001.
(b) All consignments of perishable items like fruits, vegetables, meat, fish, cheese, etc., will continue to be handled in terms of the guidelines contained in Para 2.3 of the Board's Circular No.58/2001-Customs dated 25.10.2001.
(c)In respect of food items not covered under (a) and (b) above, the following procedure would be adopted in addition to the general checks prescribed under Para 2.1 of the Circular No. 58/2001-Cus, dated 25.10.2001:
(i)Samples would be drawn from the first five consecutive consignments of each food item, imported by a particular importer and referred to Authorised Representative of FSSAI or PHOs, as the case may be, for testing to ascertain the quality and health safety standards of the consignments.
(ii) In the event of the samples conforming to the prescribed standards, the Customs would switch to a system of checking 5% -
20% of the consignments of these food items on a random basis, for checking conformity to the prescribed standards. The selection of food items for random checking and testing would be done by the Customs taking into consideration factors like the nature of the food products, its source of origin as well as track record of the importers as well as information received from FSSAI from time to time.
(iii In case, a sample drawn from a food item in a particular consignment fails to meet the prescribed standards, the Customs would place the import of the said consignment on alert, discontinue random checking for import of such food items and revert to the procedure of compulsory checking. The system of random sampling for import of such food items would be restored only if the test results of the samples drawn from the 5 Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 21/34 consecutive consignments re-establish that the food items are in conformity with the prescribed standards.
8.Authorised Officers of FSSAI will ascertain that for the imported pre-packaged good items, the language and other major requirements of the label like mention of best before date, nutrition information etc. should comply the labeling provisions under PFA Rules, failing which sample may not be drawn from such consignment for testing.
9.It is also clarified that Risk Management System (RMS) module for import consignments of edible / food items, presently does not provide for random sampling as it is one of its CCR (Compulsory Customs Requirements) targets. Accordingly, Risk Management System (RMS) shall take necessary steps to modify the RMS module to conform to the new requirements. Till such time, this modification is carried out, Customs shall take appropriate decision to waive the CCR requirements in respect of food items not covered under Para 7 (a) and 7 (b) above and to the extent mentioned under Para 7 (c) above. In terms of Circular No.43/2005-Cus dated 24th November, 2005 such a course of action shall, however, be taken only with the prior approval of the jurisdictional Commissioner of Customs or an officer authorized by him for this purpose, who shall not be below the rank of Addl./Joint Commissioner of Customs, and after recording the reasons for the same. A brief remark on the reasons and the particulars of Commissioner/ADC/JC authorization should be made by the officer examining the goods in the departmental comments in the EDI system.
10.Further, as per Para 13 of Chapter I A (General Notes Regarding Import Policy) of the ITC (HS) Classification of Export and Import items, import of all such edible/ food products, domestic sale and manufacture which are governed by PFA Act, 1954 shall also be subject to the condition that at the time of importation, the products are having a valid shelf life of not less than 60% of the original shelf life. Shelf life of the product is to be calculated based on the declaration given on the label of the product, regarding its date of manufacture and the due date for expiry. Therefore, Customs shall ensure that this condition is complied with before allowing clearance of such consignments.
11. It is clarified that at certain ports / airports / ICDs / CFSs where Port Health Officers (PHO) under PFA, 1954 or Authorised officers under FSS Act, 2006 are not available, the samples will be Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 22/34 drawn by Customs and the same may be got tested from the nearest Central Food Laboratory or a laboratory authorized for such testing by DGHS or FSSAI.
12. RMD shall develop an application software that incorporates the stipulation of testing of imported foodstuff and alerts the Customs officer to the effect the number of past shipments already tested and found fit warrants future shipments need not ordinarily be tested. This should apply regardless of port of import so long as the importer, supplier and item of import do not change. In other words, if such a shipment is imported say, at Mumbai and the previous 5 shipments imported at, say, Delhi have passed the test, then the next shipment at Mumbai need not be tested. A suitable data base would also be prepared at each Custom House to indicate the compliance history of importers.
13. The Board Circular 58/2001-Cus dated 25.10.2001 stands modified to above extent.
14. These instructions may be brought to the notice of all concerned by way of issuance of suitable Public Notice / Standing Order.
15. Difficulties, if any, in implementation of these instructions may be brought to the notice of the Board Yours faithfully, ( R. P. Singh ) Director (Customs)"
28. learned counsel for the Union of India, Department of Customs and Excise placed before this Court a Circular No. 35 of 2017 dated 16th August, 2017 which provides guidelines for provisional release of seized imported goods pending adjudication under Section 110 A of the Customs Act, 1962. The relevant part of the guidelines as contained in paragraph 2, 2.1., 2.2, 2.3 and 3 are quoted hereunder for a ready reference:
Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 23/34 "2. While provisional release of seized imported good is under Section 110A of the Customs Act, 1962 may normally be considered by the competent adjudicating authority upon a request made by the owner of the seized goods, provisional release shall not be allowed in the following cases -
(i) Goods prohibited under the Customs Act, 1962 or any other Act for the time being in force;
(ii) Goods that do not fulfill the statutory compliance requirements/obligations in terms of any Act, Rule, Regulation or any other law for the time being in force;
(iii) Goods specified in or notified under Section 123 of the Customs Act, 1962;
(iv) Where the competent authority, for reasons to be recorded in writing believes that the provisional release may not be in the public interest.
2.1. seized imported goods shall be released provisionally by the competent authority upon request of the owner of the seized goods, subject to executing a Bond for the full value/estimated value of the seized goods. 2.2 Further, in addition to the Bond mentioned at Para 2.1. above, the competent authority shall take a Bank Guarantee or Security Deposit to cover the following:
i. the entire amount of duty/differential duty leviable on the seized goods being provisionally released; ii.amount of fine that may be levied in lieu of confiscation under Section 125 of he Customs Act, 1962, at the time of adjudication of the case. While securing the same, the competent authority shall take into account the nature of the seized goods, the duty and charges payable on the said goods, their market price and teh estimated margin of profit;
iii. Amount of penalties that may be levied under the Customs Act, 1962, as applicable, at the time of adjudication of the case.
2.3. Depending on the specific nature of a case, the competent authority may, for reasons to be recorded in writing, increase or decrease the amount of security deposit as indicated above.
3.In this context, attention is invited to the judgment dated 28.07.2016 of the Hon'ble Madras High Court in Writ Appeal No. 377 of 2016 in the case of Malabar Diamond Gallery Pvt. Ltd. Vs Additional Director General, DRI, Chennai & Ors. Wherein the Hon'ble Court has given sufficient discretion to the adjudicating authority to deny Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 24/34 provisional release of goods in any case where the goods are smuggled or import is treated as illegal and in violation of the statutory provisions. In terms of the said judgment, by specifying the relevance and reason, the adjudicating authority may deny provisional release of any goods which are liable to confiscation under Section 111 or Section 113 as they would fall under the definition of prohibited goods, in terms of Section 2(33) of the Customs Act, 1962."
29. Further learned counsel has placed before this Court the information issued by the Director (Imports) of the Food Safety Standards Authority of India (Statutory Authority established under the Food Safety and Standards Act, 2006) which reads as under :
"File No.1-1600/FSSAI/Imports/2016 (Part18) Food Safety and Standards Authority of India (A Statutory Authority established under the Food Safety and Standards Act, 2006) FDA Bhawan, Kotla road, New Delhi-110002 20 November, 2018 Import of Betel Nut/Areca Nut Standards of areca nuts are prescribed under sub-regulation 2.3.55 of Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 and also in Chapter 2 of Food Safety & Standards (Contaminates, Toxins & Residues) Regulations 2011. Further, limits of aflatoxin as 15 ug/kg in areca nut is prescribed in the Food Safety and Standards (Contaminants, toxins and Residues) Regulation, 2011 through amendment dated 27.12.2017.
2. Areca nut, the fruit of the areca palm (Areca catechu), commonly referred to as betel nut is prone to the formation of fungal growth during various stages of its production, storage and transportation. Accordingly, it has been decided that the consignments of imported Betel/Areca Nut shall not be cleared through Risk Management System (RMS) and all the imported consignments shall be subjected to 100 % sampling and testing. Also, FSSAI's Authorised Officers and Customs officials notified as Authorised Officers by FSSAI are heareby advised to be vigilant and strictly ensure the compliance of above Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 25/34 mentioned FSS Regulations before clearance of consignments of imported areeca/betel nuts.
(Suneeti Toteja) Director (Imports)"
30. The Government of India, Ministry of Finance has issued Circular No. 30 of 2017-cus dated 18th July, 2017 which provides for a detail guidelines for re-testing of the samples, the same is produced hereunder:
"Circular No.fe /2017-Cus F.No. 450/15/2017-Cus IV Government of India Ministry of Finance Department of Revenue (Central Board of Excise & Custom) ********** New Delhi, dated the/18th July, 2017 To, All Principal Chief Commissioners/Chief Commissioners of Customs / Customs(Preventive), All Principal Chief Commissioners/Chief Commissioners of Customs and Central Excise, All Directors General, All Principal Commissioners/Commissioners of Customs / Customs (Preventive), All Principal Commissioners/ Commissioners of Customs and Central Excise.
Sir/Madam, Sub: Detailed guidelines for re-testing of samples- reg.
World Trade Organization (WTO) negotiated Trade Facilitation Agreement (TFA),which aims at simplifying the trade processes and bringing down barriers to trade has come into force w.e.f 22nd February, 2017. India is a signatory to this agreement.
2) India has placed a number of trade related measures negotiated under the TFA in Category A. Article 5.3.1 envisages granting an opportunity for a second test in case the first test result of a sampletaken upon arrival of goods declared for importation shows an adverse finding. Further Article 5.3.3makes it obligatory to consider the result of the second test, if any, for the release and clearance of goods, and, if appropriate, may accept the results of such test. The aforementioned Articles have been placed incategory A. In order to have uniformity in approach among the field formations with regard to re-testing of samples, the following procedure is prescribed:
Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 26/34 a. Customs officers may draw the samples from import consignments for testing in case of consignments wherever needed. The results of all test reports, adverse or otherwise, shall be communicated to the importer or his authorized representative/ Customs Broker immediately on its receipt. b. In case the importer or his agent intends to request the Additional/ Joint Commissioner of Customs for a re-rest, then the same shall be made in writing to the said officer within a period of ten days from the receipt of the communication of the test results of the first test. Customs officers may take a reasoned view in case the importer or his authorized representative Customs Broker is unable to do so for reasons beyond his control.
c. Where the Additional/Joint Commissioner of Customs grants an opportunity for a second test, he must clearly indicate in writing the name and address of the laboratory/institution where the second test can be carried out. Such referral for re-testing may be made only after being reasonably sure that the desired re- testing facilities exist at the laboratory/ institution.
d. Re-test should be made only on the remnants of the samples originally tested or on duplicate representative sealed samples in the custody of the Customs. Further, to avoid delays, samples for second tests shall be marked as "immediate" before sending to the laboratory. In a case it may so happen that fresh samples have to be drawn, then such sampling should be done in the presence of the importer or his representative/customs broker. e. The requests for re-test of samples on the ground that the original sample was not representative should be entertained only if the consignment is still in Customs control. At the time of drawing the samples, the importer or his representative shall be present and certify that the samples drawn are representative. f. The competent authority shall consider the results of the re-test without prejudice to the results of the first test. In case there is a variation in the results of the first test and the re-test,the competent authority shall take the decision relying upon either of the tests specifying the grounds in writing for the decision so taken. In case the competent authority is unable to decide whether to rely upon the first or the re-test results, then it may order a second re-test provided the consignment is still within the customs control. However, this option should not be resorted to in every case of variation between the first test and re-test results. g. The facility of re-testing, is a trade facilitation measure, which should generally not be denied in the ordinary course. However, there might arise circumstances where the customs officer is constrained to deny the re-testing facility. Board expects that such denial would be occasional and on reasonable grounds to be recorded in writing.
h. Where the re-testing procedure is done at the instance of the department instead of the importer, the above procedure shall be followed mutatis mutandis.3) Difficulties, if any, in implementation of this circular, should be brought to the notice of the Board.4) Hindi version of the circular will follow.
Yours faithfully (Zubair Riaz) Director (customs) Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 27/34
31. In the aforesaid background the latest development has come vide office Memorandum Dated 4th June, 2019 issued by the Government of India in its Ministry of Commerce and Industry, Department for Promotion and Industry and Internal Trade, the office Memorandum reads as under"
" No. 12013/14/2019/NPC-QCI Government of India Ministry of Commerce and Industry Department of Promotion of Industry and Internal Trade NPC-QCI Section Udyog Bhawan, New Delhi Dated 4th June, 2019 OFFICE MEMORANDUM Subject: A letter from Chairman, Central Board of Indirect Taxes & Customs regarding matter related to import of Areca Nut / Betel Nut.
The undersigned is directed to refer to D.O. letter No. 451/24/2018 Cus.V dated 05.04.2019 [copy enclosed] received from Chairman, Central Board of Indirect Taxes & Customs (CBITC), Department of Revenue, M/o Finance addressed to Secretary, DPIIT regarding matter related to import of Areca nut /Betel nut.
2. In this regard, it is stated that the matter was referred to BABL and NABL vide email dated 16.05.2019 (copy enclosed) has stated that they have contacted ARDF Mangalore and ICAR- IISR, Calicut labs and discussed regarding NABL accreditation. NABL would follow up with them and ensure their accreditation status at the earliest. NABL has attached a list of few NABL accredited labs which have accreditation as on date (about 4-5 labs for testing Arecanut /Beetal nut and about 60 labs for testing black pepper). The list of NABL accredited lab for Pepper, Areca nut and Betel nut is enclosed at Annexure-I, Annexure-II and Annexure-III respectively.
This issues with the approval of Secretary, DPIIT. Encl.: As above (Gokul Chand) Under Secretary to the Govt. of India Tel no. 2306 2906 To The Chairman, Central Board of Indirect Taxes & Customs (CBITC), Department of Revenue, Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 28/34 Ministry of Finance, North Block, New Delhi-110 001"
32. On perusal of the aforesaid materials at first instance, it would appear that these materials were not placed before the learned Writ Court in course of hearing of C.W.J.C. No. 3784 of 2013 and M.J.C. No. 2185 of 2013 whereunder the learned Writ Court took a view agreeing with the submissions of the writ petitioner and respondents that the Betel Nuts which were being sent from one place to another was not being offered for sale, at this stage, in which the samples could have been taken out and subjected to analysis under the provisions of the Food and Safety and Analysis Rules and Regulations. The learned Writ Court took a view that the Betel Nuts are raw materials which requires sufficient processing to be done and only thereafter, this would be packaged in terms of the provisions of the Food Safety and Standards (Packing and lebelling) Regulations 2011 for being put up for sale. The learned Writ Court took a view that the stage had not come into existence when the sample was sent by custom authorities to the 'CFL', Kolkata (Extension Center, Raxaul).
33. As is evident from the discussions made in the judgment dated 24.07.2013 passed in M.J.C. No. 2185 of 2013, learned Writ Court hearing the modification application was not apprised of the fact that all consignment of high risk food items Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 29/34 are liable to be referred to authorized representative of FSSAI or PHOs as the case may be for testing and clearance for testing and clearance can be allowed only after testing report as per the instructions contained in the Custom Circular No. 58/2001 dated 25.10.2001 (referred the Circular No. 3/11). The Court was also not informed that the Custom authorities were authorized to take samples and get them tested from the nearest Central Food Laboratory. Further it appears that the guidelines for provisional release of the seized goods as contained in Circular No. 35 of 20017 was not placed before the learned Writ Court. The guidelines specifically provides in paragraph '2' that the request for provisional release of the seized food shall not be allowed in the given cases, one of the cases in which release shall not be allowed is where the goods do not fulfill the statutory compliance requirements /obligations in terms of any Act, Rule, Regulation or any other law for the time being enforced.
34. Further the information furnished by the Director (Imports) in the communication dated 20th November, 2018 with regard to merit of Betel/Areca Nut are also important to appreciate. It clearly provides that Areca Nuts, commonly known as Betel Nuts is capable of the formation of Fungal growth during various stages of its production, storage or transportation, Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 30/34 therefore, the consignment of imported Betel /Areca Nut shall not be cleared through risk management system and all the imported consignments shall be subjected to 100% sampling and testing.
The FSSAI's authorized officers and custom officers as authorized officers were therefore, advised to be vigilant and strictly ensure the compliance of the FSS regulations before clearance of consignments of imported Areca/Betel Nuts.
35. At this stage, this Court is getting a clarity as regards the stage of testing of the Areca Nuts / Betel Nuts. In terms of the views of the Food Safety and Standards Authority of India as stated in the information dated 20th November, 2018, Areca Nuts / Betel Nuts is to be tested strictly and it cannot be said that the Betel Nuts being a raw material unless processed and packed for sale for consumption, cannot be subjected to the laboratory test. This Court is, therefore, of the considered opinion that the plea which is being taken by learned counsel for the petitioners citing the judgment of the learned Writ Court in C.W.J.C. No. 3784 of 2013 and M.J.C. No. 2185 of 2013 cannot be accepted. It is well settled law that a judgment of the Court is always rendered in the facts placed before the Court and the submissions made in the matter. Since this Court has found that the aforesaid materials were not brought before the learned Writ Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 31/34 Court in the case of Salsar Transport Company (supra), the said decision cannot be applied on the face of the materials which have been placed before this Court in the present case. Nothing has been brought to show that the very sampling and testing of the Areca Nut was not in accordance with law.
36. The another submission of learned counsel for the petitioners that there cannot be a refusal to provisionally release the goods on the grounds stated in Annexure '4' to the writ application is also not acceptable to this Court. The Court has taken note of the detail guidelines issued by the Department of Customs to streamline the divergent procedures being followed for grant of provisional release of the goods which are seized under Section 110 of the Customs Act, 1962. The provisional release of the seized goods is to be refused when the goods do not fulfill the statutory compliance requirements of any Act, Rule, Regulation or any other law for the time being enforced.
37. In the present case, since the Food Laboratory Report has found that the Betel Nut are not fit for human consumption, in the opinion of this Court, no fault may be found with the rejection of the request of the petitioners for grant of release.
Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 32/34
38. Now coming to the another question with regard to the sustainability of the seizure. This Court had earlier occasion to deal one mater being C.W.J.C. No. 7589 of 2018 (M/s Ayesha Exports vs. The Union of India and Ors.). In the said case the solitary question which was considered by this Court was as to whether the seizure report may be allowed to sustain when it is an admitted position that M/s Areca Nut Research and Development Foundation, Manglore is not accredited laboratory and it's report has been held to be of no legal sanctity by the learned Writ Court in Salsar Transport Company (supra). In the same case the seizure of Betel Nuts was sought to be done on the sole consideration that the report of ADRF, Manglore declared that the Betel Nuts seemed to be of Indonesian Origin. This Court held that because in the case of Salsar Transport Company and Anr.
(supra) the report was not having any legal sanctity and there was not material to show that the said laboratory is an accredited laboratory by the competent authority, it's report cannot have a consequence of fastening of any legal liability. In the said case, the information received under the Right to Information Act by the petitioner were placed before this Court wherein the Directorate of Areca Nuts and Spics Development, Government of India in response to query as to whether a Betel Nut is indigenous Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 33/34 grown or of foreign origin can be determined by means of any laboratory test, the information supplied by the Government: "No laboratory test has been standardized for tracing the country of origin".
39. It appears that after the aforesaid judgment passed by this Court on 24.01.2019, the respondents came in action and the matter was taken up at the level of the Ministry of Commerce and Industry, Department for Promotion of Industry and Internal Trade. This Court has taken note of the office Memorandum dated 4th June, 2019 hereinabove which shows that about 4-5 labs have already been accredited for testing Areca Nuts / Betel Nuts and steps towards accreditation of ARDF and ICAR-IISR, Calicut Labs were under discussion and it was to be done at the earliest.
40. Learned counsel for the Union of India, Department of Customs has submitted that the developments so far may persuade this Court not to interfere with the seizure at this stage when the matter is still under investigation and a complete view may be taken as regards the foreign origin after obtaining a report from the accredited lab.
41. This Court is of the considered opinion that in the given facts and circumstances of the case, where the matter is still under investigation and even some accredited labs have come into Patna High Court CWJC No.10109 of 2019 dt. 05 -09-2019 34/34 existence, this Court need not interfere with the seizure of the Betel Nuts at this stage and this issue be kept open for consideration at appropriate stage after the investigation is over and the respondents receive a report as regards the country of origin from an accredited lab within a period of three months by following the established procedures.
42. In result, this Court finds no reason to interfere with the impugned orders. The writ application has no merit. It is dismissed accordingly.
(Rajeev Ranjan Prasad, J) avin/-
AFR/NAFR AFR CAV DATE 01.07.2019 Uploading Date 05.09.2019 Transmission Date