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2022 DIGILAW 1675 (GUJ)

Valbaux Minetech v. Union Of India

2022-12-01

MAUNA M.BHATT, SONIA GOKANI

body2022
ORDER : SONIA GOKANI, J. 1. By way of this petition under Article 226 of the Constitution of India, the petitioners are before this Court seeking the directions against the respondents to forthwith release the goods imported pursuant to the bill of entry No.7015597 dated 25.02.2020. It is a partnership firm and the petitioner No.2 is a part of petitioner No.1 and respondent Nos.2 and 3 are the Officers of the Union of India interested with the task of collecting duty under the Customs Act, 1962 (‘the Customs Act’ hereinafter). 2. The petitioners placed the order of import of Magnesium Carbonate from M/s.Sea Hawk International LLC located in the United Arab Emirates (‘the UAE’ hereinafter). The advanced payment of 11,050 USD had been made to the vendor on 03.06.2019. 2.1 The vessel when arrived at Mundra Port from Jabel Ali Port, Dubai, the Customs Broker filed bill of entry in accordance with the provisions of the Customs Act. The five containers carried the goods as imported by the petitioners, which arrived at Mundra Port on 26.02.2020. 2.2 It is the say of the petitioners that Deputy Commissioner of Customs vide its letter dated 06.03.2020 permitted the storage of the imported goods in custom’s bonded warehouse pending the clearance. 2.3 The respondent No.3-Superintendent issued notice to the petitioners on 06.03.2020 requiring to submit documents and they responded on the very next date on 07.03.2020 and provided the documents and other details as required. 2.4 In petitioners’ case, the documents had indicated the Country-of-Origin certificate having been issued by the Dubai Chamber of Commerce and Industry which mentioned that the Country-of-Origin of goods was Turkey. The petitioners made payment of 4360 USD on 17.03.2020. As the Deputy Commissioner on 14.05.2020 had communicated that the Country-of-Origin was mentioned as Turkey, the movement documents submitted to the Turkey Customs were required to be furnished. 2.5 The reply of the petitioners on 02.06.2020 was to the effect that the Country-of-Origin Certificate was issued by the Dubai Chamber of Commerce as permitted by the UAE. It is also their say that function of the Dubai Chamber of Commerce provided under Article 11 empowers it to issue all types of certificate for the origin of goods and products imported or re-exported from UAE in accordance with the relevant rules and procedure adopted by the Dubai Chamber of Commerce. It is also their say that function of the Dubai Chamber of Commerce provided under Article 11 empowers it to issue all types of certificate for the origin of goods and products imported or re-exported from UAE in accordance with the relevant rules and procedure adopted by the Dubai Chamber of Commerce. However, once again, it insisted for the movement documents on 09.07.2020 submitted to the Turkey Customs, the petitioners on 23.07.2020 insisted that all the documents which were at its command. 2.6 The petitioners attended the summons and got the statements recorded, since it was issued under Section 108 of the Customs Act for recording the statements with regard to the shipment in question. 2.7 Once again, the Deputy Commissioner had issued a letter on 25.04.2021 showing the transportation of the goods from Turkey to Dubai. The number of correspondences thereafter also had followed. Two years have lapsed since the goods have reached this country, the petitioners pray for the release of the goods under Section 110A of the Customs Act, which envisages the provisional release of the goods by the Custom Authority on the ground that they are not fly-by-night operators, they needs to be given the benefit and therefore, the reliefs claimed are as follow: “34… A. This Hon’ble Court may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to forthwith release goods imported vide Bill of Entry No.7015597 dated 25.02.2020; B. Without prejudice to the above and in the alternative, this Hon.Court may be pleased to issue a writ of mandamus or writ in the naure of mandamus or any other appropriate writ or order directing the Respondents to forthwith provisionally release goods imported vide Bill of Entry No.7015597 dated 25.02.2020; C. Pending notice, admission and final hearing of this petition, this Hon’ble Court may be pleased to direct the Respondents to forthwith release goods imported vide Bill of Entry No.7015597 dated 25.02.2020 upon furnishing of bond by the Petitioners; D. Ex parte ad interim relief in terms of prayer C may kindly be granted; E. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray.” 3. On issuance of the notice, learned senior standing counsel, Mr.Nikunt Raval has appeared for the respondents. 4. The affidavit-in-reply is filed by the Deputy Commissioner working at Mundra District Kutch. He has denied all allegations, however, he has pointed out that the import is made under the bill of entry No.7015597 on 25.02.2022 declaring the goods under the import as “Raw Magnesium Carbonate Lumps” falling under the CTH 25191000, the value declared is of Rs.11,32,131/-. It is loaded from the UAE with its origin from Turkey. As per the provisions and the rules made under the Customs Act, the goods attracted Basic Customs Duty (BCD)@ 5% and Integrated Goods and Service Tax (IGST) @ 5% along with the Social Welfare Surcharge @ 10% of BCD. The total tax worked out is Rs.1,21,987.2 paise. The number of reminders and communications have been referred to urge that the petitioners have been asked to submit all original documents and other requisite documents, however, they have not tendered any of them. The reason again tendered by the petitioners is due to COVID-19, nobody is answering from Dubai. 4.1 It is also the case of the respondents that during the on going investigation, a letter had been addressed on 09.07.2020 informing the petitioners that they had not produced any movement documents submitted to Turkey Customs as a case is required to carry on further investigation. But, if the release of the goods under the provisional assessment is needed, requisition letter would be necessary. During the pendency of the investigation regarding the origin of goods, the petitioners have addressed a letter on 14.12.2021 with a request to release the Cargo at the earliest. 4.2 It is the grievance on the part of the respondent that the exporters at Dubai are reluctant to share the details of the supplier from Turkey or any documents related to goods movement. The petitioners have been twice offered to get their goods under import released under the provisional assessment. 5. The petitioner No.1 has also pointed out that it is reasonably belief that the goods could be of Pakistan origin and all consignments of “Raw Magnesium Carbonate Lumps” were being imported from Iran/Turkey, which were previously being imported from Pakistan. 6. Affidavit-in-rejoinder is filed, which may not be necessary to be further dilated. 7. 5. The petitioner No.1 has also pointed out that it is reasonably belief that the goods could be of Pakistan origin and all consignments of “Raw Magnesium Carbonate Lumps” were being imported from Iran/Turkey, which were previously being imported from Pakistan. 6. Affidavit-in-rejoinder is filed, which may not be necessary to be further dilated. 7. We have heard the learned advocate, Mr.Uchit Sheth appearing for the petitioner and learned senior standing counsel, Mr.Nikunt Raval for the respondents and at the threshold the matter is decided to be taken up for final hearing. 8. Noticing the fact that for the two years the goods have arrived and also because the investigation has not been completed as yet, the provisional release of the goods as requested for is reconsidered. What we find is the doubt lurking in the mind of the authority concerned with regard to the certificate of Country-of-Origin. According to the authorities, they have reason to believe that the Country-of-Origin is not shown in the certificate of Dubai Chamber of Commerce which has been given an authority by the UAE Government to issue all types of certificates for origin of goods and products exported or re-exported from UAE in accordance with the relevant rules and procedures adopted by the Dubai Chamber of Commerce. Number of correspondences we could see where inquiry has been made with the petitioners seeking various documents. 8.1 Attempt is made on the part of the learned senior standing counsel, Mr.Raval to point out that the onus is on the petitioners to prove the document of Country-of-Origin. According to him, it is also a must for the petitioners to fulfill the requirement of law when the authority concerned inquires and sends the requisition for some of those vital documents. 8.2 Here, the hitch is that the petitioner’s version is clear that it has given all what it had with it and the Country-of-Origin certificate issued by the Dubai Chamber of Commerce would govern their case. This certificate is being questioned by the respondent authority. The easiest way for them to question the genuineness is by inquiring with the counter part and this will be feasible only at the level of the Union Ministry or the concerned authority that may have specified by the Union Ministry. This certificate is being questioned by the respondent authority. The easiest way for them to question the genuineness is by inquiring with the counter part and this will be feasible only at the level of the Union Ministry or the concerned authority that may have specified by the Union Ministry. The individual at the best can produce the certificate of Country-of-Origin or any other certificate as may be available with him to prove the negative is not feasible for any person. 8.3 Without curtailing the right of the authority concerned to go into the root of this matter, we are constrained to also observe one aspect, at this stage, that there is no seizure in the instant case, although the goods have been detained for the period of more than two years. The exercise of power under Section 110A under the Customs Act, one can take recourse to provided there is a seizure of goods, documents and things under Section 110 of the Customs Act. Sub-section (1A) of Section 110 of the Customs Act provides that when any goods have been seized by the proper officer, the inventory is to be prepared of such goods containing the details relating to quality, quantity, marks, numbers, description, etc. which also includes the Country-of-Origin, as the proper officer may consider relevant to the identity of the goods and an application can be made to the Magistrate for the purpose of certifying the correctness of inventory, taking the photographs of such goods in presence of the Magistrate and allowing to draw representative sample of such goods in presence of the Magistrate. 8.4 Sub-section (2) of Section 110 of the Customs Act provides that 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. Provided that the Principal Commissioner of Customs or Commissioner of Customs may, for the reasons to be recorded in writing, extend such period to a further period not exceeding six months and inform the person from whom such goods were seized before the expiry of the period so specified. When provisional release is made of such seized goods under section 110A of the Customs Act, the specified period of six months shall not apply. When provisional release is made of such seized goods under section 110A of the Customs Act, the specified period of six months shall not apply. 8.5 What one finds here is that the goods are not of a perishable nature nor of hazardous character. They are the goods which could have been seized and in that eventuality, the petitioners could have taken recourse to the provision of Section 110A of the Customs Act for the provisional release of the goods, the extension could have been also possible with six months and further six months by the authority of the Principal Commissioner of Customs or Commissioner of Customs, after reasons to be recorded in writing, who would choose to extend the period. Instead of following this, the goods have been simply detained and the inquiry has been initiated, which is continuing for the period of two years. This would surely defeat the right of the party concerned to even take recourse to the provision of Section 110A of the Customs Act and ask for the provisional release of the goods. This continuous detention without requesting to the act of seizure by the authority concerned surely is not what has been contemplated under the law. This procedure adopted by the authority is wholly unknown to the statute. This could be done only with a purpose of not allowing the party concerned to take recourse to Section 110A of the Customs Act and in absence of any seizure, there is no show cause notice even given within a period of six months which is mandatory in nature. 8.6 Undoubtedly, Section 110(2) of the Customs Act provides for some sort of inquiry where the order for extension is to be passed applying the mind and not in a routine manner. If, otherwise, the officer is of the opinion that for some satisfactory and bona fide reasons within the time frame provided under Section 110(2) of the Customs Act, the investigation could not be completed. 9. If, otherwise, the officer is of the opinion that for some satisfactory and bona fide reasons within the time frame provided under Section 110(2) of the Customs Act, the investigation could not be completed. 9. The Apex Court in case of Assistant Collector of Customs vs. Charn Das Manhotra, reported in AIR 1972 SC 689 has also amplified the word “sufficient cause”to mean that the Commissioner must determine on material placed before him that they warrant extension of time, where the order is made in bona fide exercise of powers and within the provisions of the act which confers such power, such order undoubtedly is immune from interference by the Court of Law. And therefore, the adequacy of the cause shown may not be the ground for such interference. The legislature contemplated that ordinarily such investigation would be over within such period and the question of disclosure of sufficnecy of the cause would arise where something yet remain to be done with the bona fide reasons. 10. All these aspects and the scrutiny at the ends of the Court also would be precluded once there is no seizure and the authority concerned continues to detain the goods without taking the recourse to the statute. The time limit for fixing the detainment of the goods seized by the custom authorities as discussed under Section 110 of the Customs Act is of six month, which can be extended for further six months also. In absence of any proceeding for the seizure of the article there shall need to be returned to the person from whom they were detained. Even, when there are no confiscatory proceedings initiated after the expiry of the time period prescribed under the law, the courts have directed the seized articles to be returned to the party concerned. 10. Here, there is no seizure at all and what has happened is only the detaining of the goods on the ground of the authority concerned questioning the Country-of-Origin certificate. 11. Without further dilating the issue, the petition deserves to succeed. 12. Our attention is drawn at this stage to the Government of India, Ministry of Finance (Department of Revenue) notification dated 21.08.2020 which are known as the Customs (Administration of Rule of Origin under Trade Agreements) Rules, 2020. 11. Without further dilating the issue, the petition deserves to succeed. 12. Our attention is drawn at this stage to the Government of India, Ministry of Finance (Department of Revenue) notification dated 21.08.2020 which are known as the Customs (Administration of Rule of Origin under Trade Agreements) Rules, 2020. Rule 3 speaks of Preferential Tariff Claim for the origin related information to be possessed by importer, requisition information from the importer, verification requests where the Preferential Tariff treatment of such goods are permitted to be suspended till conclusion of the verification. 13. We notice that these are the powers given to the proper officer and any extension if needs to be done shall come with the timeline fixed in the Rules itself. We see nothing on the record to point out as to how this timeline has been also observed by the officer concerned. He has continued to inquire for the period of two years and till date, nothing is brought on the record before this Court. 14. In the aforesaid background, the petitioners would be entitled to have a release of the goods completely without any fetter, however, the goods are alleged to be from Pakistan as the Country-of-Origin Certificate is doubted. Let the inquiry be expedited and with a word of caution to all concerned to follow the statute. We are releasing the goods provisionally, where the request on the part of the respondent is to follow the decision of this Court rendered in case of Besto Tradelink Limited Versus Principal Commissioner Of Customs. Noticing the fact that the goods were lying with the custom already for seven months and by way of an interim relief the High Court had permitted 15 days of inquiry which was not completed for the Magnesium lump. The Court directed 25% of the value of the goods to be given as a Bank Guarantee or as a Security while releasing the goods. 15. Resultantly, this petition is ALLOWED where the Court would release the goods in favour of petitioners with certain conditions. Considering the value of the goods in the instant case being Rs.11,32,131/-, the Bank Guarantee of Rs.2,00,000/- is directed to be furnished by the petitioners for a period of eight weeks with the further direction to the authority concerned to complete the inquiry within a period of eight weeks from the date of receipt of a copy of this order. Considering the value of the goods in the instant case being Rs.11,32,131/-, the Bank Guarantee of Rs.2,00,000/- is directed to be furnished by the petitioners for a period of eight weeks with the further direction to the authority concerned to complete the inquiry within a period of eight weeks from the date of receipt of a copy of this order. In the event of the Country-of-Origin is Pakistan as suspected by the authority, the petitioner shall undertake to furnish the bond to fulfill his obligation under the law. 16. Over and above the regular mode of service, direct service through e-mode on official email address is also permitted.