Gujarat High Court
Ed And F Man Commodities India Pvt Ltd vs Union Of India on 5 January, 2022
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 20727 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/-
and
HONOURABLE MS. JUSTICE NISHA M. THAKORE Sd/-
================================================================
1 Whether Reporters of Local Papers may be allowed Yes
to see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
================================================================
ED AND F MAN COMMODITIES INDIA PVT LTD
Versus
UNION OF INDIA
================================================================
Appearance:
MR MANAV A MEHTA, ADVOCATE for the Petitioner(s) No. 1
MR D K TRIVEDI, ADVOCATE for the Respondent(s) No. 5
MR DEVANG VYAS, ADDL.SOLICITOR GENERAL OF INDIA for the
Respondent(s) No. 1
MR NIKUNT K RAVAL, ADVOCATE for the Respondent(s) No. 2
MR. PARTH H BHATT, ADVOCATE for the Respondent(s) No. 4
NOTICE SERVED BY DS for the Respondent(s) No. 3
==========================================================
CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 05/01/2022
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) Page 1 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022
1. By this writ-application under Article 226 of the Constitution of India, the writ-applicant, a private limited company, has prayed for the following reliefs :
"(a) Issue a writ of mandamus or any other appropriate writ, order or direction, directing respondent no.4 to extend the period of completion of export obligation in respect of advance license no.0510402686 dated 24.05.2017 issued in favour of respondent no.5 and be further pleased to direct respondent no.4 to relax the condition of 'Actual User' in respect of the said advance license and permit the purchaser or its nominee holding a valid advance license to process and re-export the cargo;
(b) Issue a writ of mandamus or any other appropriate writ, order or direction to permit the petitioner to re-export the cargo 'as is; and direct respondent no.4 to waive requirement of processing and re-export under advance license no.0510402686 dated 24.05.2017;
(c) Issue appropriate writ, order or direction to restrain respondent no.3 from seizing the cargo currently lying in a warehouse at Gandhidham or demanding and/or enforcing customs duty in respect of the subject cargo against the petitioner;
(d) That pending the hearing and final disposal of this petition, this Hon'ble Court be pleased to restrain the respondent no.3 from taking any coercive measures including taking steps to seize the cargo;Page 2 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022
C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022
(e) That pending the hearing and final disposal of this petition, that this Hon'ble Court be pleased to restrain the respondent no.3 from taking any coercive measures and forcing the petitioner to pay customs duty on the cargo;
(f) That pending the hearing and final disposal of this petition, this Hon'ble Court be pleased to direct respondent no.3 to grant a personal hearing to the petitioner;
(g) for ad-interim reliefs in terms of prayer clause (d), (e) and (f) above;
(h) for costs of this petition and the orders made thereon, and
(i) for such further and other reliefs as this Hon'ble Court may deem fit in the facts and circumstances of the case."
2. The facts giving rise to this litigation may be summarised as under :
2.1 The writ-applicant is a private limited company registered under the Companies Act, 1956 (for short, the 'Act 1956'). The writ-applicant is a wholly owned subsidiary of M/s.ED&F Man Holdings Limited, having its registered office in the United Kingdom. The ED&F Man group is a shareholder in the respondent no.5 company.
2.2 The writ-applicant is engaged in the business of trading in sugar and allied agricultural products. The respondent no.5 is engaged in the business of refining raw sugar for the purpose of Page 3 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 sale/export in the international market. The respondent no.5 obtained an Advance License Authorization bearing No.0510402686 dated 24th May 2017 in terms of the Notification bearing No.41/2016-Customs dated 6th July 2016 issued by the Union of India.
2.3 Under the Customs Tariff Act, 1975 (for short, the 'Act 1975'), Serial No.63 of the Tariff Item No.1701, the customs duty payable on the sugar exported against the valid advance authorization issued by the Regional Authority/Director General of Foreign Trade is NIL.
2.4 The writ-applicant and the respondent no.5 respectively entered into a contract dated 13 th June 2017 for the sale of 4200 MTS of raw sugar on credit basis.
2.5 It appears from the materials on record that the understanding between the parties was that the cargo would be purchased by the respondent no.5 in terms of the advance authorization held by it. The relevant clauses of the Bond to Bond contract is reproduced herein below :
"Special Conditions :
a) it is expressly understood that the sugar being purchased against ALS (Advanced License Scheme) Clearance.
Clause 7 : Payment :
The Buyer agrees that 100% of the final contract value shall be paid to the seller's nominated bank by BANK TRANSFER Page 4 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 as per a copy of the seller's invoice without any offset and deductions, within 4 weeks against lifting of the cargo.
Seller undertakes to provide the following documents for the purposes of customs clearance of the contractual cargo.
a) Bill of Lading
b) Original Supplies Invoice Copy
c) Weight and Quality Certificate at Load Port
d) The Certificate of Origin.
The seller will try to provide any other documents required by the buyer on a written/email request from the buyer. For any other document per the actual costs/charges shall be on the buyer's account. The additional documents shall not in any way form a precondition for payment.
Clause-12 : General Conditions :
a) Any amendments and supplements to the contract are valid only if they are agreed upon by the parties in writing and signed by authorized representative of both parties and delivered to the parties;
b) The risk in the goods shall pass to the buyer upon the same having been cleared by customs. Buyer shall be responsible for covering insurance after De-bonding of the cargo or as soon as the cargo has been lifted on to the trucks for shifting to the refineries.
c) It is understood that the transfer of ownership agreement is being executed solely for customs purposes. In Page 5 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 the event of any conflict between the terms of this contract and the transfer of ownership agreement, the terms of this contract shall prevail.
d) The title of goods shall not pass to the buyers unless the sellers are in receipt of 100% payment for the quantity to be lifted without any offset and deduction."
2.6 On 16th June 2017, the writ-applicant and the respondent no.5 entered into an Addendum to the sales contract, wherein the quantity of cargo to be sold by the writ-applicant was increased from 4200 MTS to 7337 MTS.
2.7 In accordance with the contract, the respondent no.5 was to refine the cargo into white refined sugar at its sugar refinery situated at the village Versamedi, Tehsil Anjar, District Bhuj (Kutch) and process the same for re-export within a period of six (6) months from the date of ex-bond clearance of the Bill of Entry and thereafter export the refined white sugar to the world market.
2.8 It is the case of the writ-applicant that the respondent no.5 took delivery of approximately 4099.55 MTS of raw sugar and it raised the corresponding invoices for the cargo.
2.9 The respondent no.5 filed the Ex-bond Bill of Entry bearing No.2159975 dated 20th June 2017 (for short, the 'Bill of Entry') in respect of the balance 3137 MTS of the cargo with the respondent no.2 herein, which was cleared on 21 st June 2017 by way of a debit in the advance license of the respondent no.5.
Page 6 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 2.10 It appears that on account of the financial difficulties that the respondent no.5 had to face, it failed to lift the 3137 MTS of the cargo and thereby did not take the delivery of the same after De-bonding.
2.11 As the respondent no.5 got entangled into financial problems, the corporate insolvency resolution process came to be initiated on 29th May 2018 under the Insolvency and Bankruptcy Code, 2016 (for short, the 'Code 2016'). A moratorium was declared against the respondent no.5 vide the order passed by the National Company Law Tribunal at Allahabad that the refinery has been shut down. The management of the respondent no.5 was also brought under the supervision of the Resolution Professional.
2.12 In view of the aforesaid, the respondent no.5 conceded that it was not in a position to operate the refinery and process/refine the cargo referred to above lying at the warehouse at Kandla and export the same in accordance with the stipulation of the contract.
2.13 In view of the aforesaid, it is the case of the writ-applicant that in accordance with Clause 12(C) of the Bond to Bond contract, the title of the goods remains with the writ-applicant. The goods, as on date, are lying at Gandhidham and the same are in physical custody of the writ-applicant.
2.14 It appears that on 9th October 2018, the respondent no.5 addressed a representation to the Policy Relaxation Committee Page 7 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 (operating under the respondent no.4), wherein the respondent no.5 made itself very clear that the contract stood frustrated as it failed to make payment towards the purchase consideration. It further appears that the request made by the respondent no.5 for extension of the time limit to comply with its obligations under the advance authorization in relation to the process for re- export of the cargo within a period of six months from the date of the ex-bond clearance also came to be rejected by the respondent no.4.
2.15 The writ-applicant, claiming the title and possession of the cargo, requested that it may be permitted to reprocess the cargo through an alternative entity holding the advance authorization and/or amending the bill of entry for re-export into the world market.
2.16 In the aforesaid context, the respondent no.3 made a demand for the payment of the entire customs duty.
3. In such circumstances referred to above, the writ-applicant is here before this Court with the present writ-application.
SUBMISSIONS ON BEHALF OF THE WRIT-APPLICANT :
4. Mr.Mihir Joshi, the learned senior counsel assisted by Mr.Manav A.Mehta, the learned advocate appearing for the writ- applicant, vehemently submitted that the writ-applicant is an unpaid seller under the provisions of the Sale of Goods Act. Being an unpaid seller, the writ-applicant is well within its right to withhold the delivery of such goods and retain the possession Page 8 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 of the goods. In this regard, Mr.Joshi invited the attention of this Court to Sections 45 and 46(2) respectively of the Sale of Goods Act. Mr.Joshi submitted that the cargo is still lying at the bonded warehouse nominated by the writ-applicant even after the ex-bond bill of entry was filed. The possession of the balance 3137 MTS of cargo still remains with the writ-applicant and, therefore, the transaction in question cannot be said to have been completed. In such circumstances, the respondent no.3 is not justified in threatening to seize the cargo as such action on the part of the respondent no.3 may cause serious prejudice and hardship to the writ-applicant.
5. Mr.Joshi would submit that if the respondent no.3 proceeds to confiscate the goods, then in such circumstances the writ-applicant would lose the goods without receiving any sale consideration. The transaction in question cannot be said to be contrary to law and the ownership of the goods in question continue to remain with the writ-applicant as the respondent no.5 has not paid to the writ-applicant.
6. Mr.Joshi invited the attention of this Court to the decision of the Supreme Court in the case of Union of India vs. Sampat Raj Dugar, reported in (1992) 2 SCC 66, wherein the Supreme Court took the view that in a situation like the one on hand, the title of the goods would not vest with the importer and the importer would become the owner only at a later stage, that is, when he makes the full payment towards the sale consideration and obtain the relevant documents. Mr.Joshi would submit that since the ownership of the goods remains with the writ-applicant and the respondent no.5, being the importer, could be said to Page 9 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 have abandoned the goods, the writ-applicant is entitled to seek re-export of the entire cargo subject to imposition of some charges towards the re-export.
SUBMISSIONS ON BEHALF OF THE RESPONDENT NO.2:
7. Mr.Nikunt Raval, the learned standing counsel appearing for the Commissioner of Customs, Kandla, State of Gujarat, on the other hand, has vehemently opposed this writ-application. Mr.Raval would submit that the respondent no.5 obtained the advance license dated 24th May 2017 under the provisions of the Foreign Trade Policy as enacted under the Foreign Trade (Development and Regulation) Act, 1992, which permits importation of goods waiving the general preconditions of import on fulfillment of such conditions as are, inter alia, enumerated in the Notification No.41/2016. He would submit that the respondent no.5 imported a total of 7337 MTS of raw sugar based on an agreement entered into with the writ-applicant with an understanding that the raw sugar would be processed and further exported within a period of six months from the date of import as required under the advance license. The imports are the bills of entry indisputably filed in the name of the respondent no.5. The entire stock could be said to be of the ownership of the respondent no.5 and is de-bonded.
8. Mr.Raval would submit that the respondent no.5 failed to satisfy the preconditions under the advance license, and in such circumstances, the respondents nos.2 and 3 respectively would be justified to initiate appropriate confiscation proceedings under the provisions of the Customs Act, 1962. He further Page 10 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 pointed out that moratorium has been imposed and the request for extension of the time limit beyond the period of six months has been rejected as a policy decision by an expert body, i.e. the Policy Relaxation Committee of the Union of India. He would submit that the claim of the writ-applicant under the resolution plan came to be rejected on merits by the committee of creditors being a related party. Such decision has become final in accordance with the order passed by the NCLT dated 17 th March 2021 approving the resolution plan.
9. In the last, Mr.Raval submitted that the writ-applicant is not entitled in law to seek amendment of the advance license in his favour as the same is not envisaged under the provisions of the Foreign Trade (Development and Regulation) Act, 1992, and the license also in the name of the respondent no.5 has elapsed.
SUBMISSIONS ON BEHALF OF THE RESPONDENT NO.4:
10. Mr.Parth Bhatt, the learned standing counsel appearing on behalf of the Director General of Foreign Trade, New Delhi, has also vehemently opposed the present writ-application, submitting that the writ-applicant in the first instance has no locus standi to challenge the action of the respondent no.4 in not accepting the request of the respondent no.5 for extension of the time period for completion of the export obligations under the Advance Authorization License. He would submit that the Advance Authorization License was issued in the name of the respondent no.5 on 24th May 2017. In October 2018, the respondent no.5 had prayed for extension of the time period to complete the export obligations as the respondent no.5 was Page 11 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 undergoing corporate insolvency resolution proceedings before the NCLT at Allahabad.
11. Mr.Bhatt submitted that even otherwise the policy relaxation cannot be claimed as a matter of right. The Policy Relaxation Committee would consider each case on its own merits and grant relaxation only in cases where the committee is of the view that the applicant has been suffering genuine hardships resulting in adverse impact on trade, as provided in para-2.58 of the Foreign Trade Policy 2015-20.
12. In such circumstances referred to above, Mr.Bhatt prays that there being no merit in the present writ-application, the same be rejected.
ANALYSIS :
13. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is, whether the respondents are justified in demanding the customs duty on the goods in question for the purpose of re-export at the instance of the writ-applicant.
14. Before adverting to the rival submissions canvassed on either side, we must first look into few relevant provisions of the Customs Act, 1962.
Section 2(4) defines "bill of entry" as under :
Page 12 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 "'bill of entry' means a bill of entry referred to in section 46;"
Section 2(5) defines "bill of export" as under :
"'bill of export' means a bill of export referred to in section 50;"
Section 2(23) defines "import" as under :
"'import', with its grammatical variations and cognate expressions, means bringing into India from a place outside India;"
Section 2(25) defines "imported goods" as under :
"'imported goods' means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption;"
Section 2(26) defines "importer" as under :
"'importer', in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer;"
Section 2(27) defines "India" as under :
"'India' includes the territorial waters of India;"
15. Section 12 fall within Chapter V. Chapter V is with respect to levy of, and exemption from, customs duties.
Page 13 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 Section 12 reads thus :
"12. Dutiable goods.--(1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods imported into, or exported from, India.
(2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government."
Section 14 talks about valuation of goods.
Section 14 reads thus :
"14. Valuation of goods.--(1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject Page 14 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 to such other conditions as may be specified in the rules made in this behalf:
Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf:
Provided further that the rules made in this behalf may provide for,-
(i) the circumstances in which the buyer and the seller shall be deemed to be related;
(ii) the manner of determination of value in respect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case;
(iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section:Page 15 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022
C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under section 46, or a shipping bill of export, as the case may be, is presented under section 50.
(2) Notwithstanding anything contained in sub-section
(i), if the Board is satisfied that it is necessary or expedient so to do, it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value.
Explanation.--For the purposes of this section-
(a) 'rate of exchange' means the rate of exchange-
(i) determined by the Board, or
(ii) ascertained in such manner as the Board may direct, for the conversion of Indian currency into foreign currency or foreign currency into Indian currency;
(b) 'foreign currency' and 'Indian currency' have the meanings respectively assigned to them in clause (m) Page 16 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 and clause (q) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999)."
16. Section 15 is with respect to the date for determination of rate of duty and tariff valuation of imported goods.
Section 15 reads thus :
"15. Date for determination of rate of duty and tariff valuation of imported goods.--(1) The rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force,-
(a) in the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section;
(b) in the case of goods cleared from a warehouse under section 68, on the date on which [a bill of entry for home consumption in respect of such goods is presented under that section];
(c) in the case of any other goods, on the date of payment of duty :
[Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft by which the goods are imported, Page 17 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be.] (2) The provisions of this section shall not apply to baggage and goods imported by post."
17. We now come to Chapter VII of the Act, 1962.
18. Section 45 is with respect to restrictions on custody and removal of imported goods.
Section 45 reads thus:
"45. Restrictions on custody and removal of imported goods.--(1) Save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII.
(2) The person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force,-Page 18 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022
C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022
(a) shall keep a record of such goods and send a copy thereof to the proper officer;
(b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer.
[(3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilfered after unloading thereof in a customs area while in the custody of a person referred to in sub- section (1), that person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an import manifest or, as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods were carried.]"
19. Section 46 is with respect to entry of goods on importation.
Section 46 reads thus :
"46. Entry of goods on importation.--(1) The importer of any goods, other than goods intended for transit or transhipment, shall make entry thereof by presenting [electronically] [on the customs automated system] to the proper officer a bill of entry for home consumption Page 19 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 or warehousing [in such form and manner as may be prescribed]:
Provided that the Principal Commissioner of Customs or Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically, on the customs automated system allow an entry to be presented in any other manner:
Provided that if the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub- section, the proper officer may, pending the production of such information, permit him, previous to the entry thereof (a) to examine the goods in the presence of an officer of customs, or (b) to deposit the goods in a public warehouse appointed under section 57 without warehousing the same.
(2) Save as otherwise permitted by the proper officer, a bill of entry shall include all the goods mentioned in the bill of lading or other receipt given by the carrier to the consignor.
(3) The importer shall present the bill of entry under sub-section (1) before the end of the next day following the day (excluding holidays) on which the aircraft or vessel or vehicle carrying the goods arrives at a Page 20 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 customs station at which such goods are to be cleared for home consumption or warehousing:
Provided that a bill of may be presented at any time not exceeding thirty days prior to the expected arrival of the aircraft or vessel or vehicle by which the goods have been shipped for importation into India:
Provided further that where the bill of entry is not presented within the time so specified and the proper officer is satisfied that there was no sufficient cause for such delay, the importer shall pay such charges for late presentation of the bill of entry as may be prescribed.
(4) The importer while presenting a bill of entry shall make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, [and such other documents relating to the imported goods as may be prescribed].
[(4A) The importer who presents a bill of entry shall ensure the following namely :-
(a) the accuracy and completeness of the information given therein;Page 21 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022
C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022
(b) the authenticity and validity of any document supporting it; and
(c) compliance with the restriction or prohibition, if any, relating to the goods under this Act or under any other law for the time being in force.] (5) If the proper officer is satisfied that the interests of revenue are not prejudicially affected and that there was no fraudulent intention, he may permit substitution of a bill of entry for home consumption for a bill of entry for warehousing or vice versa."
20. Section 47 is with respect to clearance of goods for home consumption.
Section 47 reads thus :
"47. Clearance of goods for home consumption.--[(1)] Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption.
Provided that such order may also be made electronically through the customs automated system Page 22 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 on the basis of risk evaluation through appropriate selection criteria:
Provided further that] the Central Government may, by notification in the Official Gazette, permit certain class of importers to make deferred payment of said duty or any charges in such manner as may be provided by rules.] (2) The importer shall pay the import duty--
(a) on the date of presentation of the bill of entry in the case of self-assessment; or
(b) within one day (excluding holidays) from the date on which the bill of entry is returned to him by the proper officer for payment of duty in the case of assessment, reassessment or provisional assessment;
or
(c) in the case of deferred payment under the proviso to sub-section (1), from such due date as may be specified by rules made in this behalf, and if he fails to pay the duty within the time so specified, he shall pay interest on the duty not paid or short-paid till the date of its payment, at such rate, not less than ten per cent. but not exceeding thirty-six per Page 23 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 cent. per annum, as may be fixed by the Central Government, by notification in the Official Gazette.] [Provided that the Central Government may, by notification in the Official Gazette, specify the class or classes of importers who shall pay such duty electronically:
Provided further that where the bill of entry is returned for payment of duty before the commencement of the Customs (Amendment) Act, 1991 and the importer has not paid such duty before such commencement, the date of return of such bill of entry to him shall be deemed to be the date of such commencement for the purpose of this section:
Provided also that if the Board is satisfied that it is necessary in the public interest so to do, it may, by order for reasons to be recorded, waive the whole or part of any interest payable under this section."
CUSTOMS ACT, 1962 Section 47 - Clearance of goods for home consumption
21. We now proceed to Chapter IX of the Act, 1962. Chapter IX is with respect to warehousing.
Page 24 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022
22. Section 57 is with respect to licensing of public warehouses.
Section 57 reads thus :
"57. Licensing of public warehouses.--The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a public warehouse wherein dutiable goods may be deposited."
23. Section 59 is with respect to warehousing bond.
Section 59 reads thus :
"59. Warehousing bond.--(1) The importer of any goods in respect of which a bill of entry for warehousing has been prescribed under section 46 and assessed to duty under section 17 or section 18 shall execute a bond in a sum equal to thrice the amount of the duty assessed on such goods, binding himself--
(a) to comply with all the provisions of this Act and the rules and regulations in respect of such goods;
(b) to pay, on or before a date specified in the notice of demand, all duties and interest payable under sub-
section (2) of section 6; and Page 25 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022
(c) to pay all penalties and fines incurred for the contravention of the provisions of this Act or the rules or regulations, in respect of such goods.
(2) For the purposes of sub-section (1), the Assistant Commissioner of Customs or Deputy Commissioner of Customs may permit an importer to execute a general bond in such amount as the Assistant Commissioner of Customs or Deputy Commissioner of Customs may approve in respect of the warehousing of goods to be imported by him within a specified period.
(3) The importer shall, in addition to the execution of a bond under sub-section (1) or sub-section (2), furnish such security as may be prescribed.
(4) Any bond executed under this section by an importer in respect of any goods shall continue in force notwithstanding the transfer of the goods to any other warehouse.
(5) Where the whole of the goods or any part thereof are transferred to another person, the transferee shall execute a bond in the manner specified in sub-section (1) or sub-section (2) and furnish security as specified under sub-section (3)"
24. Section 61 provides for the period for which the goods may remain warehoused.
Page 26 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 Section 61 reads thus :
"61. Period for which goods may remain warehoused.--(1) Any warehoused goods may remain in the warehouse in which they are deposited or in any warehouse to which they may be removed,--
(a) in the case of capital goods intended for use in any hundred per cent export oriented undertaking or electronic hardware technology park unit or software technology park unit or any warehouse wherein manufacture or other operations have been permitted under section 65, till their clearance from the warehouse;
(b) in the case of goods other than capital goods intended for use in any hundred per cent. Export oriented undertaking or electronic hardware technology park unit or software technology park unit or any warehouse wherein manufacture or other operations have been permitted under section 65, till their consumption or clearance from the warehouse;
and
(c) in the case of any other goods, till the expiry of one year from the date on which the proper officer has made an order under sub-section (1) of section 60:
Page 27 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 Provided that in the case of any goods referred to in this clause, the Principal Commissioner of Customs or Commissioner of Customs may, on sufficient cause being shown, extend the period for which the goods may remain in the warehouse, by not more than one year at a time:
Provided further that where such goods are likely to deteriorate, the period referred to in the first proviso may be reduced by the Principal Commissioner of Customs or Commissioner of Customs to such shorter period as he may deem fit:
(2) Where any warehoused goods specified in clause
(c) of sub-section (1) remain in a warehouse beyond the period of ninety days from the date on which the proper officer has made an order under sub-section (1) of section 60, interest shall be payable at such rate as may be fixed by the Central Government under section 47, on the amount of duty payable at the time of clearance of the goods, for the period from the expiry of the said ninety days till the date of payment of duty on the warehoused goods:
Provided that if the Board considers it necessary so to do, in the public interest, it may,--
(a) by order, and under the circumstances of an exceptional nature, to be specified in such order, waive Page 28 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 the whole or part of any interest payable under this section in respect of any warehoused goods;
(b) by notification in the Official Gazette, specify the class of goods in respect of which no interest shall be charged under this section.
(c) by notification in the Official Gazette, specify the class of goods in respect of which the interest shall be chargeable from the date on which the proper officer has made an order under sub-section (1) of section
60."
25. In the last, we shall now look into Section 110(o), which falls within Chapter XIV of the Act.
26. Chapter XIV is with respect to the confiscation of goods and conveyances and imposition of penalties.
Section 111(o) reads thus :
"111. Confiscation of improperly imported goods, etc.-- The following goods brought from a place outside India shall be liable to confiscation:--
(a) to (n) xxx xxx xxx Page 29 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022
(o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer;"
27. We may also look into the two provisions of the Sale of Goods Act, 1930. Section 45 of the Act defines the term 'unpaid seller'.
Section 45 reads thus :
"45. 'Unpaid seller' defined.--(1) The seller of goods is deemed to be an 'unpaid seller' within the meaning of this Act--
(a) when the whole of the price has not been paid or tendered;
(b) when a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise.
(2) In this Chapter, the term 'seller' includes any person who is in the position of a seller, as, for instance, an agent of the seller to whom the bill of lading has been endorsed, or a Page 30 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 consignor or agent who has himself paid, or is directly responsible for, the price."
28. Section 46 of the Act talks about the unpaid rights of the seller. Sub-section (2) of Section 46 reads thus :
"46(2) Where the property in goods has not passed to the buyer, the unpaid seller has, in addition to his other remedies, a right of withholding delivery similar to and co- extensive with his rights of lien and stoppage in transit where the property has passed to the buyer."
29. We shall now look into the Advance Authorization License, which is at Page-143 of the paper-book.
30. The additional condition sheet beneath the condition sheet reads thus :
"Advance Authorisation is issued as per Para 4.13 (iii) of FTP 2015-20 with pre-import condition the export obligation period is restricted to 6 months (As in Appendix 4J - Public Notice No.62/2016 dt. 24.03.2017) from the date of clearance of each import consignment by Customs Authority.
16. Authorisation holder willing to take the finished components imported and Advance Authorisation scheme, directly from the port to the site of the recipient of deemed export supply (Project Authority) Page 31 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 shall follow the procedure laid down by DOR in this regard. For availing the facility, name of such components and the address of the site where the said components are to be supplied, should indicated in the Advance Authorisation issued by Regional Authority concerned.
17. No drawback shall be available for any duty paid material whether imported or indigenous unless such item(s) is/are endorsed on the authorisation by RA in terms of para 4.15 of the FTP 2015-20."
31. Thus, the emphasis laid on behalf of the respondents is on the fact that the advance authorization has been issued with pre-import conditions. The export obligation period was restricted to six months from the date of clearance of each consignment by the Customs authority.
32. The case put up by the respondents is that the export obligation within the period of six months as provided in the advance authorization not been complied with and the request for extension being declined, Section 111(o) referred to above would immediately come into play.
33. Section 111(o) provides that any goods brought from a place outside India, i.e. the goods imported, and such goods are exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under the Act or any other law for the time being in force, in respect of which the condition is Page 32 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 not observed unless the non-observance of the condition is sanctioned by the proper officer. To put it in other words, the condition of re-export of the raw sugar, after being processed within six months, not being complied with and the request for extension declined by the proper officer, the goods are liable to be confiscated.
34. Under the Customs Act, 1962, the person who files a 'bill of entry' under Section 46 of the Act is the importer of the goods covered under the 'bill of entry'. Such 'bill of entry' may be for home consumption (i.e. for clearing the goods from the customs station to any other place in India) or a 'bill of entry' for warehousing (i.e. for depositing the imported goods in a warehouse for a certain period of time). In any case, the person who files the bill of entry is the importer and, therefore, in the present case, the respondent no.5 is the importer of the goods in India. The stance of the respondents, that it is the respondent no.5 who has imported the goods in India and the respondent no.5 is the importer, appears to be correct and justified. The respondent no.5 holds an advance authorization and the details of such authorization are stated in the bill of entry while claiming exemption from the customs duty under the notification meant for the materials imported into India against the valid authorization. The stance of the department that the respondent no.5, as an importer, availed or claimed exemption of a notification that prescribes or lays down a condition of utilization of the imported materials and export of the resultant products for the fulfillment of the export obligation in respect of the authorization also appears to be correct.
Page 33 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022
35. We go to the extent of observing that if the export obligation period of 18 months from the date of issue of the authorization has elapsed and no extension has been granted in favour of the respondent no.5 being the authorization holder, then the stance of the department that as the exemption from duty was granted at the time of the import of the goods subject to the conditions of the Customs Notification No.79/2017-Cus and the condition of fulfillment of export obligation within the period specified in the authorization not being complied with, the goods are liable to be confiscated under Section 111(o) of the Act, 1962, also appears to be well justified.
36. The fact that the exporter, i.e. the writ-applicant, has not been paid the price of the goods and that his goods are liable to be confiscated because of a lapse or any irregularity on the part of the respondent no.5, the same would have no impact on the legal position as regards the goods being liable to be confiscated under Section 111(o) of the Act, 1962.
37. With all that has been observed above, still the writ- applicant being the unpaid owner and exporter of the goods can claim ownership of the goods and also reshipment.
38. In the case of Unisilk vs. Commissioner of Customs, reported in 2001 (134) ELT 40 (Guj), this Court had the occasion to consider a litigation wherein a company of Hong Kong exported raw silk to various countries including India but the Indian buyers failed to make payment for the goods and they did not get the documents sent to their bankers retired. The claim of Page 34 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 the unpaid exporter as the owner of the goods and also the claim for seeking possession of the goods and for reshipment or to dispose of the goods to other licensed importers in India was considered and recognized.
39. This Court relied upon the decision of the Supreme Court in the case of Sampat Raj Dugar (supra). In Sampat Raj Dugar (supra), the purchaser of goods obtained an advance import license for importing raw silk. The license was granted on the condition that the raw silk imported would be utilized for manufacturing and exporting garments. The purchaser later received three consignments but did not fulfill the stipulated condition. Subsequently, the supplier, an Indian national residing and doing business abroad, sent certain quantities of raw silk in four lots, deliverable to the purchaser. The necessary documents were sent to the first supplier's bankers with instructions to deliver them to it on receiving payment. When the four consignments arrived in India, the overseas supplier appeared before the Customs authorities and claimed the right to take delivery of the goods. The authorities, who had come to know by then of the non-compliance of the stipulated condition with respect to the three earlier consignments and also of the alleged misrepresentation made by the buyer, while obtaining the advance import license, initiated proceedings against her and two other persons. In view of the proceedings, the purchaser failed to make the payment and receive the documents; and also did not take any steps to clear the goods, in effect abandoning them. The foreign supplier appeared in the proceedings, and contended that the title to the goods had not passed to the purchaser, and that it continued as owner; the goods could not, Page 35 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 therefore, be confiscated or proceeded against for the purchaser's transgression of the law and that since the supplier was in the dark on this aspect, he ought to be permitted to re- export the goods. The Revenue had rejected this request; the High Court granted the relief. When proceedings were pending the licenses were cancelled.
40. In the above background of facts, the Supreme Court upheld the judgment of the High Court - which like in this case, had been directly approached by the foreign supplier. The Court also discussed the relevant provisions of the prevalent Import Control Order, and observed as follows:
"19. The exporter is outside the country, while the importer, i.e. the licensee is in India. It is at the instance of the licensee that the goods are imported into this country. Whether or not he is the owner of such goods in law, the Imports (Control) Order creates a fiction that he shall be deemed to be the owner of the such goods from the time of their import till they are cleared through Customs. This fiction is created for the proper and effective implementation of the said order and the Import and Exports (Control) Act. The fiction however cannot be carried beyond that. It cannot be employed to attribute ownership of the imported goods to the importer even in a case where he abandons them, i.e. in a situation where he does not pay for and receive the documents of title. It may be that for such act of abandonment, action may be taken against him for suspension/cancellation of licence. May be, some other proceedings can also be taken against him. But certainly he Page 36 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 cannot be treated as the owner of the goods even in such a case. Holding otherwise would place the exporter in a very difficult position; he loses the goods without receiving the payment and his only remedy is to sue the importer for the price of goods and for such damage as he may have suffered. This would not be conducive to international trade. We can well imagine situations where for one or other reason, an importer chooses or fails to pay for and take delivery of the imported goods. He just abandons them. (We may reiterate that we are speaking of a case where the import is not contrary to law). It is only with such a situation that we are concerned in this case and our decision is also confined only to such a situation. Condition (ii) in sub- clause (3) of Clause 5, in our opinion, does not operate to deprive the exporter of his title to said goods in such a situation.
20. At this stage, it may be appropriate to clarify one aspect. There may be cases, where the importer opens a letter of credit and makes some other arrangement ensuring/guaranteeing payment of price of imported goods.
In such a case, it will be open to the exporter, in case of non- payment of price or abandonment by the importer, to collect the price by invoking such arrangement. In such a case, it is obvious, the exporter will not be allowed to claim title to and/or to re-export the goods. (Indeed, it is unlikely that in such a case, the importer abandons the goods ordinarily speaking.) It is therefore necessary that in all such cases, the authority should issue a notice to the importer and/or his agent before allowing the exporter to deal with or seek to re- export the goods. So far as this case is concerned, both Page 37 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 the importer and exporter (RR 2 and 1 respectively) were present before the Collector (Customs) as well as before the High Court. R2 did not plead any such arrangement."
41. It is, therefore, clear from Sampat Raj Dugar (supra) that when the goods are virtually abandoned by the importer/purchaser, as in this case, so long as ownership continues with the supplier, his request for their return through re-export cannot be turned down.
42. At this stage, we would like to clarify something important. In Dugar's case (supra), the Supreme Court has held that if the bill of entry is not filed by the importer and the importer has abandoned the goods, the title in the goods would not pass to the importer and the exporter may be entitled to re-export or return of the goods. Section 68 of the Customs Act, 1962, requires the filing of a bill of entry (ex-bond bill of entry) for clearance of any warehoused goods for home consumption. We were given to understand that over a period of time the ex-bond bills of entry are being filed with the Commissionerates having jurisdiction over the warehouses and in large number of cases, manually. The filing of ex-bond bills of entry on ICES would provide the benefits of automation to the importers availing the warehousing facility and lend efficiency to the process of clearance of the warehoused goods. The importer or owner of the warehoused goods seeking to clear the goods for home consumption under Section 68 is expected to file the ex-bond bills of entry on ICES and the customs station of import would have to assess the bill of entry for clearance of the warehoused Page 38 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 goods for home consumption. Upon the importer or owner producing the ex-bond bill of entry for home consumption, the bond officer shall - (i) verify the bill of entry particulars; and (ii) permit the removal of goods from the warehouse for home consumption in terms of regulation 8 of the Warehouse (Custody and Handling of Goods) Regulations, 2016, by affixing his dated signature on the copy of the ex-bond bill of entry. It appears that the Board has issued a circular providing that the bonds to be executed by the importer while filing a bill of entry for warehousing shall be executed at the customs station of import itself. The only reason highlight the above is that, in the case on hand it appears that the bill of entry (ex-bond bill of entry) was filed, but thereafter, the importer failed to clear the goods. Therefore, the Supreme Court decision in Dugar's case (supra) should be understood keeping in mind that in the said case the bill of entry was not filed by the importer and the importer had abandoned the goods. In such circumstances, the Supreme Court took the view that the title in the goods would not pass to the importer and the exporter would be entitled to re-export. We are of the view that mere filing of the ex-bond bill of entry, by itself, would not vest the title of the goods into the importer if ultimately such goods are not cleared by the importer, or in other words, if such goods are abandoned. In such circumstances also, the title over the imported goods would remain with the exporter and the exporter may, in peculiar facts and circumstances of the case like the one on hand, request the Commissioner to permit him to reexport the goods as an unpaid seller.
Page 39 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022
43. In the case on hand, it is not the case of the department that the goods were either misdeclared or wrongly classified or valued. The importer (respondent no.5) like in Dugar's case (supra) went under liquidation and was not able to clear the goods. There is nothing on record indicative of misdeclaration or suppression or wrongly valuation of the goods at the time they were brought in.
44. Undoubtedly, the writ-applicant herein is the unpaid seller and he has been suffering for no fault on his part. However, all these is a part of a business risk because sellers in the international trade ordinarily insist on irrevocable letter of credit of the prospective buyers for safeguarding their interest, which appears to have not been done in the present case.
45. In the aforesaid context, we may refer to and rely upon an order passed by a learned Single Judge of the Madras High Court in the case of M/s.Pacific (HK) Limited vs. The Commissioner of Customs (Airport and Air Cargo Complex), Meenambakkam, Chennai, reported in (2012) 281 ELT 522, wherein the importer had refused to clear and take delivery of the goods, and as the cost of the goods had not been paid, the petitioner therein had requested the authorities to permit re- export/reshipment of the goods. In such circumstances, a writ- application was filed before the Madras High Court under Article 226 of the Constitution of India. While disposing of the writ- application, the Court observed as under :
Page 40 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 "4. The learned counsel appearing on behalf of the petitioner had submitted that the petitioner continues to be the owner of the goods in question, when the importer or the consignee concerned abandons the goods imported on their behalf, as held by the Supreme Court, in Union of India Vs. Sampath Raj Dugar, reported in 1992(58) ELT 163 (SC).
5. It had also been stated that the seller of the goods is deemed to be an `unpaid seller', as per the terms of Section 45 of the Sale Goods Act, 1930, when the whole of the price had not been paid or tendered. Under Section 46 of the said Act it is stated that, notwithstanding the fact that the property in the goods may have passed to the buyer, the unpaid seller of the goods has a lien on the goods concerned, for the price, by implication of law. As such, the petitioner, who is an unpaid seller, has the right in respect of the goods in question. Therefore, he has the right to make a request to the respondents to re-ship or to re-export the goods in question. As per the decision of the Delhi High Court, in Agrim Sampada Ltd. Vs. Union of India, reported in 2004 (168) ELT 15 (Del), the title in respect of the goods abandoned by the importer would vest with the petitioner.
6. In the counter affidavit filed on behalf of the first respondent it has been stated that the importer has not abandoned the goods, even though he had chosen not to file the bill of entry, in order to escape from the clutches of law and in order to avoid detection of its mode of operation by the investigating agency. During the examination, it had Page 41 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 been found that the goods had been mis-declared as imitation stones, in order to evade payment of a higher duty.
Therefore, a show cause notice had been issued to the importer for the violation of the provisions of the Customs Act, 1962. Hence, the request of the petitioner for re- shipment or re-export of the goods would not arise.
7. In fact, a show cause notice, dated 8.7.2011, had been issued to M/s.Sky Way Corporation, Jaipur, and certain others, proposing confiscation of the goods, under Section 111(d) of the Customs Act, 1962, read with Section 11(1) of the Foreign Trade (Development and Regulation) Act, 1992, as the goods in question are under investigation by the authorities concerned. While so, the request of the petitioner cannot be considered, at this stage.
8. In the counter affidavit filed on behalf of the third respondent it has been stated that the amount due to be paid to the petitioner, by the third respondent, for the goods in question, could not be paid due to severe financial constraints. Therefore, the goods could not be cleared and taken by the third respondent. It had also been stated that the value of the imported goods had not been paid, till date. As such, the petitioner continues to be the owner of the goods in question, as the third respondent, being the importer of the goods, had abandoned the goods in question.
9. In view of the above contentions, raised on behalf of the petitioner, as well as the respondents, and on a perusal Page 42 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 of the records available, it is clear that the petitioner has the right to request the respondents for the necessary permission, to re-ship or to re-export the goods in question. Further, as the third respondent does not have any serious objection for the re-export of the goods in question, the respondents are directed to permit the petitioner to re-export the goods in question, as prayed for by the petitioner, in the present writ petition. However, it is made clear that it is open to the authorities concerned, to pass an appropriate order, with the view to initiate the necessary action against the parties concerned, if it is deemed to be necessary, in respect of the alleged infringement of the relevant provisions of law, if any, as expeditiously as possible, as the petitioner, has been incurring heavy demurrage charges. Further, it is made clear that the respondents are directed to consider the request of the petitioner, for the re-shipment and re-export of the goods in question, in view of the above observations made by this Court, in this order, unless there are other legal impediments, for granting such permission, as prayed for by the petitioner. The writ petition is ordered accordingly. No costs. Consequently, connected miscellaneous petition is closed."
46. We also have one order passed by the Customs, Excise and Gold Tribunal - Tamil Nadu, in the case of M.V.Marketing and Supplies vs. Commissioner of Customs (Import), reported in 2005 (98) ECC 579, throwing some light on the issue of re-export and demand of duty. The relevant observations are as under :
Page 43 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 "In the present case, the records show that the appellants have not made payment to the supplier and the supplier has agreed to take back the goods as the title has not passed to the importer. We find force in the submission of the learned Counsel for the appellants, as could be seen from the various case laws cited above, the department itself has been permitting re-export of imported goods. The co-ordinate Benches of the Tribunal throughout the country have also been taking a view that permission to re-export the goods is not contrary to law. Therefore, relying on the various decisions rendered by the Tribunal, the High Courts, and the Hon'ble Supreme Court as noted above, we hold that the plea of the Revenue that re-export of the imported goods is not permitted by law, cannot be countenanced and we reject the same. We hold that the appellants are entitled to re- export the goods on payment of fine and penalty. While coming to this conclusion, we have also taken note of the long standing practice of the Deptt. in allowing re-export of imported goods throughout the country as also the consistent view being taken by the various Benches of the Tribunal in consonance with the law laid down by the High Courts and the Apex Court in allowing re-export. In a recent decision in the case of Ajanta Watch Ltd. vs. CCE, Ahmedabad, 2004 (171) ELT 350 (Tri-Mumbai) where wrong shipment was sent by the foreign supplier, re-export was allowed by the Commissioner on payment of redemption fine of Rs. 6 lakhs and penalty of Rs. 2.5 Lakhs.
On appeal, the Tribunal while allowing re-export, reduced the redemption fine to a token level of Rs. 25,000 and Page 44 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 penalty imposed was set aside. The plea of the Revenue that even if re-export is allowed, the importer has to pay duty, in addition to redemption fine and penalty, cannot be countenanced, because once duty is paid on the goods, it would tantamount to clearance of the goods for home consumption in terms of Section 47 of the Act and once it is cleared for home consumption, that goods get merged with the mass of the goods in the country. Re-export is permitted in a situation where the importer does not want to clear that the goods for home consumption for various reasons and when the goods are permitted to be re-exported, the question of clearance of the goods for home consumption on payment of duty does not arise. Therefore, we are of the considered opinion that duty can be demanded only when the goods are cleared for home consumption and not when they are permitted to be re-exported, on payment of fine and penalty. Before parting with this case, we would also like to observe that, if an importer were to pay duty also (in addition to fine and penalty), on the goods permitted to be re-exported, he need not undergo the various complex and time consuming formalities of re-export again and he is free to dispose of the goods in the domestic market itself, once duty and other charges have been paid on it. In view of what has been discussed above and in the facts and circumstances of the case, we allow re-export of the excess quantity of goods on payment of redemption fine of Rs.1,00,000 (Rupees one lakh) and impose a penalty of Rs.25,000 (Rupees twenty-
five thousand) which would meet the ends of justice and we order accordingly. The appeal is thus disposed of in the Page 45 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022 C/SCA/20727/2018 JUDGMENT DATED: 05/01/2022 above terms. The appellants are entitled to consequential relief, if any."
47. In view of the aforesaid, we dispose of this writ-application reserving the liberty in favour of the writ-applicant to file an application addressed to the Commissioner seeking re-export of the goods. The Commissioner shall give an opportunity of hearing to the writ-applicant, and upon recording the satisfaction as regards the ownership and title to the goods, may proceed to grant the necessary permission to re-export the goods in accordance with law upon imposing reasonable duty on export of the goods. The Commissioner shall also give an opportunity to the respondent No.5 of hearing if at all the respondent No.5 has to say something as regards the request of the writ applicant for reexport of the goods.
48. We have thought fit to grant the aforesaid relief in favour of the writ-applicant keeping in mind that the terms of the contract conforms the position that the title to the goods in question would not pass until the buyer has paid the amount for the entirety of the goods. The writ-applicant thus assumes the status of an unpaid seller to continue to hold title/ownership to the assets imported. There is one another reason for granting relief to the writ-applicant, and that is, that the goods stand secured in the customs frontier and have not yet entered the domestic market.
(J. B. PARDIWALA, J.) (NISHA M. THAKORE, J.) /MOINUDDIN Page 46 of 46 Downloaded on : Sun Apr 24 08:16:09 IST 2022