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2015 DIGILAW 2439 (MAD)

BUNGE India Pvt. Ltd. v. Authorised Officer

2015-07-08

M.SATHYANARAYANAN

body2015
Order M. Sathyanarayanan, J. 1. The petitioner, in the affidavit filed in support of this petition, would state that it is a Private Limited Company incorporated under the provisions of the Companies Act, 1956 and is an agribusiness and food company and doing business of importing and processing oil in India since 2003. The petitioner claims that he is the single largest supplier of bottle oils to consumers in the world and is a frequent importer of edible oil through the Port of Madras and since January 2014, the petitioner has imported over 1,00,000 Metric Tonnes ("Mts.") of edible oil through the Port of Madras alone without any issues from either the second respondent or the customs authorities. The petitioner imports oil primarily in crude form and then refines the oil in its factories before selling the same to consumers and would state that it is a responsible corporate entity and would not under any circumstances knowingly import any sub-standard material into this country. 2. It is stated by the petitioner that it recently imported approximately 6,000 Mts. of three different types of edible oils via the vessel/ship, namely MT. AN RUN 3v 1414, which reached the Port of Madras on 15.11.2014 and out of three different categories of edible oils that were imported 1,999.993 Mts. was of Crude Palm Kernel Oil [CPKO], 2449.98 Mts. of Crude Palm Oil [CPO] and 1,249.96 Mtrs. was of Refined Bleached Deodorized Palmolein [RBDP]. It is the case of the petitioner that the entire consignment of CPKO was purchased from the same seller and shipped in a co-mingled state in Ship Tank Nos. 2P (1002.253 Mts.) and 2S (996.218 Mts.) and the same is evident from 8 Bills of Lading dated 07.11.2014, which would clearly state that the entire consignment of CPKO was stored in Ship Tank: Nos. 2S and 2P with no segregation. The ship arrived in the Port of Madras on 15.11.2014 and on account of paucity of storage space at the port, the consignment of CPKO was stored in two separate tanks i.e., amount of 1250 Mts. of CPKO in Shore Tank No. 11 of Ruchi Infrastructure Limited and an amount of 749.99 Mts. in Shore Tank No. 107 of IMC limited and therefore, the petitioner filed two Bills of Entry dated 14.11.2014. of CPKO in Shore Tank No. 11 of Ruchi Infrastructure Limited and an amount of 749.99 Mts. in Shore Tank No. 107 of IMC limited and therefore, the petitioner filed two Bills of Entry dated 14.11.2014. It is the categorical stand of the petitioner that the import of consignments were duly cleared under ITC (HS) Code 15132110 and the import restrictions under the import policy are the same for CPO, CPKO and RBDP and that they cannot be imported through Kerala. 3. After the consignment was moved to the shore tanks, the petitioner, through its clearing agent, has sought No Objection Certificate in respect of each of the consignments of oil imported as through the Food Import Clearance System [FICS] and pursuant to the same, two sets of samples were drawn on 18.11.2014 i.e., one set from each of ship tanks 2P and 2S for the purpose of testing in a notified laboratory and the other sample from each of the tank was retained by the first respondent. It is further stated by the petitioner that samples for BE No. 73832999 dated 14.11.2014 pertaining to 1250.00 Mts. of CPKO was correctly drawn and in respect of sample drawn from 7411 Mts. of CPKO (disputed consignment), sample was wrongly drawn or mislabeled. The second respondent has released the consignment of 1250 Mts. of CPKO and similarly other consignments of oil i.e., CPO and RBDP were also released, however No Objection Certificate was refused with regard to the above said disputed consignment on 20.11.2014 on the ground that the tested sample did not confirm to the specifications laid down under Regulation 2.2.1 (21) of the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 [in short "Food Safety Regulations"]. 4. The petitioner was shocked to hear the said information for the reason that one part of the same consignment met the relevant standards and was issued with No Objection Certificate, while the other part was not cleared on the ground of not adhering to the specifications and hence, applied for retesting of the disputed consignment under Food Import Clearance System [FICS] and retesting was also rejected on 06.12.2014. The petitioner would state that it apprehends that the samples that were drawn for the purpose of testing of disputed consignment were in fact samples of RBDP and not CPKO and in para 13 of the affidavit has cited the reasons for the same under: a. The RBDP was stored in Ship Tanks 3P and 3S while CPKO was stored in Ship Tanks 2P and 2S. These tanks are situated side by side and thus it is quite likely that the samples for the Disputed Consignment were drawn from one of the RBDP tanks rather than a CPKO tank. b. The Test Reports attained from independent 3rd party laboratories both at the time of loading as well as discharge dated 12.11.2014 and 21.11.2014 respectively indicate that the Disputed Consignment meets the relevant standards prescribed in the Regulations. It may be noted that with regard to the test report dated 21.11.2014, the same specifically mentions that the (i.e. 2W) that comprises of both Ship Tank 2P and Ship Tank 2S. Further thus test report tests the sample against the relevant Indian Standards. In such circumstances, it is inconceivable that the Disputed Consignment would not meet the relevant standards prescribed in the Regulations. c. The entire consignment of CPKO (i.e. both the Disputed Consignment and the consignment that passed the test and was released) were purchased from the same Seller and shipped in a co-mingled condition. Thus, it is chemically impossible that one portion of the consignment would meet the standards and the other would not." 5. The petitioner would further state that since FICS system does not provide for any re-sampling, it made several representations to the second respondent highlighting the above said facts and made a request for drawing fresh samples and tested again and initially there was no response and the disputed consignment is lying at the Port of Madras ever since November, 2014 and consequently, the petitioner has to incur charges for storage tank which approximately works out to Rs. 2,25,000/- per month and it is also losing money as a significant amount of its working capital is tied up in the disputed consignment. 2,25,000/- per month and it is also losing money as a significant amount of its working capital is tied up in the disputed consignment. The petitioner had made numerous representations and also sent an e-mail, however the respondents has rejected the request made by the petitioner, vide impugned order dated 24.03.2015 stating that as per Section 47(1)(c) of the Food Safety Act, the report of the referral laboratory would be final and therefore, resampling is not allowed in respect of the said consignment on the basis of the presumption drawn by the petitioner. The petitioner, challenging the legality of the said order, has filed this writ petition and pending disposal of the same, has filed this miscellaneous petition praying for appropriate direction to take fresh samples on the disputed consignment and test the same as against the standards laid down under the relevant regulations and place the report before this Court. 6. The matter was listed for hearing on 24.04.2015 and on that date, the learned Central Government Standing Counsel accepted notice on behalf of the respondents 1 and 2 and the matter was directed to be called on 27.04.2015 and thereafter, listed for healing on three dates and on 12.06.2015, counter affidavit of the respondents 1 and 2 was filed and after hearing the rival submissions, this Court has reserved orders in this miscellaneous petition. 7. Mr. J. Sivanandaraaj, learned counsel appearing for the petitioner has invited the attention of this Court to the typed set of documents and would submit that the apprehension expressed by the petitioner is justified by the fact that a part of CPKO consignment was cleared and the disputed consignment was offloaded and stored in store tank No. 107 of IMC Limited on 18.11.2014 and subsequently moved to tank No. 105 and remains under the control of the third respondent ever since and while the entire consignment was brought in a ship and CPKO was stored in ship tank Nos. 2P and 2S situated side by side and there is every possibility that the samples for the disputed consignment were drawn from one of the RBDP tank rather than CPKO tank, of which part of it has passed the test and released and part of which is the disputed consignment, were purchased from the same seller and the shipped in a co-mingled condition from the Port of export and therefore, it is chemically impossible that one portion of the consignment would meet the standards and the other would not. It is the further submission of the learned counsel appearing for the petitioner that the petitioner is willing to meet the entire cost in the event of this petition being ordered and the results may not be declared and shall be produced before this Court for passing appropriate orders. The petitioner, on legal plea, would submit that the Act does not specifically bar from drawing of the sample once again for the purpose of testing and this Court, in appropriate cases, based on facts and circumstances, can order so and hence, prays for appropriate orders. The learned counsel appearing for the petitioner, in support of his submissions, placed reliance upon the Delhi High Court judgment in Nihal Khan v. The State (Govt. of NCT of Delhi) [2007 Crl. L. J. 2074]. 8. Per contra, Mr. K. Surendranath, learned counsel appearing for the respondents 1 and 2 has drawn the attention of this Court to the counter affidavit of the respondents 1 and 2 and would contend that sampling and testing was done in accordance with the statute/rules and regulations in FSSAI notified Laboratory, Chennai and reached the conclusion that the sample of CPKO in bulk did not conform to the standards laid down under 2.2.1(21) of the FSS Act, 2006, Rules and Regulations, 2011 and sample was forwarded to the Referral Food Laboratory, CFTRI, Mysore and was subjected to analysis and was also opined that the sample does not conform to the standards laid down under the above said Act, rules and regulations framed thereunder. It is further contended that this miscellaneous petition is filed purely based on surmises and conjectures and CPKO was stored in ship tank Nos. It is further contended that this miscellaneous petition is filed purely based on surmises and conjectures and CPKO was stored in ship tank Nos. 2P and 2S and there is no possibility of samples being drawn from the other consignments and it is wrong to suggest that the respondents had conducted the analysis on the basis of wrong samples or labeled it incorrect. It is also contended that the petitioner also did not raise any objection at any stage before the rejection report dated 05.12.2014 and has already been overseen the sampling process and cannot later on contest the validity of the sampling process. It is also submitted by the learned counsel appearing for the respondents 1 and 2 that unless Food Safety Act, 2006 and rules and regulations permit redrawing of samples and retesting, the petitioner is not having any vested right to seek for such a direction and he was also granted the option of having his products retested with the referral laboratory on his own request and the referral laboratory Mysore also opined that the sample tested does not pass the required standards and therefore, the impugned order came to be passed correctly and prays for dismissal of this writ petition. The learned counsel appearing for the respondents 1 and 2 relied upon the judgment of the Hon'ble Supreme Court of India in Centre for Public Interest Litigation v. Union of India and Others [Order dated 22.10.2013 made in W.P. (c) No. 681 of 2004]. 9. The Court heard the submissions of the learned counsel appearing for the third respondent, who would submit that after the consignment was offloaded, it was stored in shore tanks in proper manner. 10. This Court has carefully considered the rival submissions and also perused the materials placed before it. 11. It is not in dispute that after the ship reached the Port of Madras, 1999.993 Mts. of CPKO which was stored in Ship Tank Nos. 2P and 2S respectively had been split and stored in two separate shore tanks. One portion of 1250 Mts. of CPKO was stored in Shore Tank No. 11 of Ruchi Infrastructure Limited and the remaining quantity of 749.99 Mts. was stored in Shore Tank No. 107 of IMC Limited. The consignment of CPKO, being 2250 Mts., was tested and cleared and No Objection Certificate was granted, however balance of 749.99 Mts. One portion of 1250 Mts. of CPKO was stored in Shore Tank No. 11 of Ruchi Infrastructure Limited and the remaining quantity of 749.99 Mts. was stored in Shore Tank No. 107 of IMC Limited. The consignment of CPKO, being 2250 Mts., was tested and cleared and No Objection Certificate was granted, however balance of 749.99 Mts. of was not cleared as it did not pass the standard specifications. It is the specific case of the petitioner that the entire consignment of 1999.993 Mts. of CPKO was purchased from the same seller and shipped together in Ship Tank Nos. 2P and 2S with no segregation. The apprehension expressed by the petitioner as to the non-passing of the test relating to standard specifications regarding the disputed consignment prima facie appears to be sustainable, as major portion of the consignment passed the test, whereas the balance did not and in para 13 of the affidavit has also given the reasons. 12. In Nihal khan v. The State (Govt. of NCT of Delhi) [2007 Cri. L. J. 2074], the issue arose for consideration was whether a case under the Narcotic Drugs and Psychotropic Substances Act, 1985 [NDPS Act], a direction can be given for the sending of a second sample for testing after taking the same from the remaining case property. The petitioner therein filed such an application before the Trial Court and it was dismissed on 07.07.2006 after considering the decision of the Delhi High Court in the matter of Kailash Singh v. State 37 (1998) DLT 45 and Directorate of Revenue Intelligence v. Vinod Kumar 144 (2004) DLT 475. The Delhi High Court, after considering its earlier decisions, observed that Kailash Singh case does not, in any way, prohibit the taking of a fresh sample for being sent for testing. Insofar as Vinod Kumar case is concerned, held that the said decision is held to be per incuriam. The Delhi High Court has also considered the decision of the Hon'ble Supreme Court in Commissioner of Customs v. Punjab Stainless Steel Industries [ 2001 (132) ELT 10 (SC)], which considered the question with regard to the rejection of the request of the respondents therein for retesting the samples on the ground that there was no such provision under the Act and extracted para 5 of the said decision and it is relevant to extract the same: "13... 5. 5. Regarding the first reason, noticing the contention urged on behalf of the Revenue that three is no provision which persist retesting of sample the Tribunal states that there is also no provision under the Customs Act which prohibits retesting of the samples, and accordingly holding that the denial of opportunity to retest the sample was violative of principles of natural justice. No specific provision has been brought to our notice which permits retesting of samples, but, for the present case, without going into that aspect, we would assume that there was no bar in granting opportunity to retest the samples. At the same time, however, it had to be born in mind that the purpose of retesting the samples was to demolish the report of the Chemical Examiner on consideration whereof the charge of misstatement and suppression regarding quality and grade of the input had been established against the respondent. In this regard, the Tribunal failed to notice the main aspect of the case that option was granted to the respondent to cross-examine the Chemical Examiner who after taking the samples had given the report. The respondent had, thus, ample, opportunity to demolish his report. The respondent did not avail that appertained. It stands establish that the adjudicating officer had given an offer to the respondent to cross-examine the Chemical Examiner. The respondent did not dispute that such an offer was made. The only objection of the respondent was that such an offer was made suo moto and the respondent had not asked for it. The objection was frivolous and misconceived. Therefore, we fail to understand, how the respondent having failed to avail the opportunity to cross-examine the Chemical Examiner could urge that there was violation of principles of natural justice by non-grant of request of the respondent for retesting of the samples. Unfortunately, in the order of the Tribunal there is not even a whisper about the offer given to the respondent to cross-examine the Chemical Examiner. Thus, the first reason given by the Tribunal for coming to the conclusion that there has been violation of the principles of natural justice is not sustainable. 14. It is clear that the case before the Supreme Court was one under the Customs Act and the Supreme Court proceeded on the ground that there was also no bar in granting an opportunity for having the samples re-tested. 14. It is clear that the case before the Supreme Court was one under the Customs Act and the Supreme Court proceeded on the ground that there was also no bar in granting an opportunity for having the samples re-tested. So, it was not in issue before the Supreme Court as to whether in the absence of any provision permitting re-testing, such a re-retesting could be ordered by a court. It must also be understood that the purpose of re-testing of samples in the case before the Supreme Court was for demolishing the report of the Chemical examiner and the Supreme Court disallowed such a request holding that the disallowance of such a request was in order, particularly because the respondent in that case had failed to even avail of the opportunity to cross-examine the Chemical Examiner. It is, therefore, clear that the reference to the decision of the Supreme Court by the prosecution is not appropriate and would not be applicable to the issue being considered by this Court." The Hon'ble Supreme Court, of India found that the respondent therein have failed to avail the opportunity to cross examine the Chemical Examiner and the Delhi High Court found that it was not in issue before the Hon'ble Supreme Court as to whether in the absence of any provision permitting re-testing, such a re-testing could be ordered by a Court and found that purpose of retesting of samples in the case before the Supreme Court was for demolishing the report of the Chemical Examiner and the Supreme Court disallowed such a request on the ground that the respondents therein did not avail the opportunity to cross examine the Chemical Examiner. The Delhi High Court, on the facts of the case, found that there was no bar under the NDPS Act to move an application for re-testing of samples, at the same time it does not mean that every such application moved by any accused under the NDPS Act ought to automatically result in the court allowing the same and the Court has the power to allow or not to allow such an application and it has to consider the facts and circumstances of the case and to see whether re-testing would be necessary to secure the ends of justice and to afford a fair trial to the accused. The Delhi High Court ultimately concluded that there may be other situations where it would be necessary for the Court to direct a fresh sample being taken from the case, property and being sent for testing if it feels that it would secure the ends of justice and help the Court in arriving at the truth and citing the said reason, has set aside the order and remanded the matter to the respective Courts for consideration of the applications afresh. 13. In the considered opinion of the Court, the said decision is applicable to the case on hand for the reason that major portion of the consignment has passed the test and the remaining portion, according to the laboratory report, did not confirm to the specifications laid down under the Food Safety Act. The petitioner has also undertook to incur the entire cost in the event this petition being ordered and it also does not want the report to be made public, but to be produced before this Court for consideration. 14. This Court, in the light of the facts of the case, is inclined to order this petition and therefore, it cannot be cited as a precedent. 15. In the result, this miscellaneous petition is ordered and the respondents 1 and 2 shall draw fresh samples from the consignment of Crude Palm Kernel Oil bearing B.E. No. 7382976 dated 14.11.2014 and now stored in Shore Tank No. 105 of IMC limited in the Port of Madras, in the presence of the authorized representatives of the petitioner and test the same in a notified laboratory in terms of the provisions of the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2013 and submit the report in a sealed cover before this Court. It is made clear that this order is only an interim measure and is subject to the result of this writ petition. The respondents 1 and 2 are directed to carry out the necessary exercise in this regard within a period of six weeks from the date of receipt of a copy of this order.