2021 (4) TMI 367 - HC - Customs

Court upholds validity of import certificate for Pigeon Peas, directs customs to clear goods

Rika Global Impex Limited Versus Union of India and Ors.

The court held in favor of the petitioner, finding the Registration Certificate (RC) for import of Pigeon Peas valid until the entire quantity was ... Star Trading House - Seeking clearance of Pigeon Peas for home consumption - valid registration of Advance Payment Certificate is there - perishable goods - change in status from free to restricted/ prohibited goods - Foreign Trade Policy 2015-2020 - HELD THAT:- Paragraph No.1.01 of chapter 1 of the FTP states that the FTP shall come into force with efect from the date of notifcation and shall remain in force upto 31.03.2020, unless otherwise specifed as stated; the said policy now stands extended upto 31.03.2021. Paragraph No.1.05 relates to transitional arrangements and clause (b) thereof states that in case of change of policy from 'free' to restricted / prohibited / state trading or otherwise regulated, the import / export already made before the date of such regulation / restriction will not be afected. It further states that any import / export on or after the date of such regulation / restriction will be allowed for the importer / exporter if he has a commitment through Irrevocable Commercial Letter of Credit (ICLC) before the date of imposition of such restriction / regulation. Clause (b) however does not apply to the case of an importer / exporter whose commitment is through advance payment which needs to be noted in the present case. From N/N. 18/2015-20 dated 05.08.2017, amendment in the import policy of Pigeon Peas under chapter 7 of the Indian Trade Classifcation (HS) 2017 for the FTP is made specifcally in respect of import of Pigeon Peas whereby the import is changed from free to restricted category. A further condition is incorporated stating that import shall be subject to an annual (fscal year) quota of 2 lakh MT as per the procedure to be notifed. Condition No.2 states that import shall be subject to an annual quota of 2 lakh MT. From this it can be safely inferred that the import under the FTP is for the duration of the FTP and not for the fscal year 2017-2018 - By trade notice No.13/2015-2020 dated 11.08.2017 it was made mandatory for importers having an Irrevocable Letter of Credit opened prior to 05.08.2017 to register with the jurisdictional Regional Authority as per the provisions of paragraph 1.05 of the FTP for permitting their import. This was because as 2 lakh MT of Pigeon Peas had already been imported during the said fscal year (2017- 2018). In the facts of the present case the RC is binding on the respondents until the completion of the import quota mentioned therein and considering that the petitioner has imported the import item before 31.03.2021, petitioner's import is required to be declared as valid import under the FTP - On perusal of the notifcation dated 05.08.2017 it cannot be said that it imposed restriction to complete the import of goods only during the fscal year 2017-18; though there is a reference to the fscal year appearing in condition No.2 of the said notifcation as regards the quota of 2 lakh MT per annum; this reference is merely for the purposes of procedure to be notifed for such import in terms of para 2.08 of the FTP; however the subsequent trade notice dated 31.08.2017 which directly concerns the petitioner's case in hand does not mention its applicability to the fscal year 2017-2018 and categorically specifies its applicability to the contract under the FTP. It is clearly discernible that petitioner's import of 22000 MTs of Pigeon Peas under the RCs issued to the petitioner is valid upto 31.03.2021 and the case of the respondents that the same is restricted only to the fscal year 2017-18 is clearly untenable. Respondents shall allow clearance of 2650 MT of Pigeon Peas for home consumption to the petitioner forthwith - Considering the lapse of time from the date of fling of the petition, the respondents shall allow clearance of the balance 8350 MT of Pigeon Peas if imported by the petitioner for home consumption upto a period of 6 weeks from the date of passing of the present order - petition allowed. Issues Involved:1. Validity of the Registration Certificate (RC) for import of Pigeon Peas.2. Applicability of the Foreign Trade Policy (FTP) and related notifications.3. Legality of the non-clearance of imported goods by customs authorities.4. Entitlement of the petitioner to import the goods under the RC.5. Responsibility of the respondents as statutory authorities.Detailed Analysis:1. Validity of the Registration Certificate (RC) for import of Pigeon Peas:The petitioner sought a writ of mandamus for the clearance of 2,650 MTs of Pigeon Peas under various Bills of Entry, based on a valid RC issued on 06.09.2017 by the DGFT. The RC did not specify a validity period or expiry date, and the petitioner argued that it remained valid until the entire quantity was imported, co-terminus with the FTP. The respondents contended that the RC was valid only for the fiscal year 2017-18 and expired on 31.03.2018.2. Applicability of the Foreign Trade Policy (FTP) and related notifications:The FTP 2015-2020, extended till 31.03.2021, governed the import and export of goods. Notification No.19/2015-20 dated 05.08.2017 amended the import policy for Pigeon Peas, changing its status from 'free' to 'restricted' with an annual fiscal quota of 2 lakh MT. Trade notices dated 11.08.2017 and 31.08.2017 allowed importers with irrevocable letters of credit or advance payments made before 05.08.2017 to register their contracts for import. The petitioner complied with these requirements, registering their contract and obtaining the RC.3. Legality of the non-clearance of imported goods by customs authorities:The petitioner’s shipments were delayed due to the COVID-19 pandemic and arrived in September 2020. Customs authorities did not clear the goods, leading to demurrage and detention charges. The petitioner sought clarification from the DGFT and customs authorities regarding the validity of the RC. Despite the RC’s compliance with the FTP and related notifications, the customs authorities rejected the petitioner’s request for conversion of the bills of entry from home consumption to warehousing, leading to the present writ petition.4. Entitlement of the petitioner to import the goods under the RC:The court found that the RC did not specify any validity period or expiry date, and the petitioner’s import was continuous from the date of issuance of the RC. The court noted that the FTP and related notifications did not restrict the import to the fiscal year 2017-18. The petitioner’s contract and addendums were duly notified to the DGFT, and the RC was valid under the FTP. The court held that the petitioner was entitled to clearance of the imported goods under the RC, and the non-clearance by customs authorities was illegal and contrary to the FTP provisions.5. Responsibility of the respondents as statutory authorities:The court criticized the respondents for not acting responsibly as statutory authorities. The DGFT’s role as a facilitator of exports and imports was emphasized, and the respondents’ actions were found to be against the spirit of the FTP. The court directed the respondents to allow clearance of the 2,650 MT of Pigeon Peas and the balance 8,350 MT if imported by the petitioner within six weeks from the date of the order.Conclusion:The court allowed the writ petition, directing the respondents to clear the imported Pigeon Peas and criticized the respondents for their lack of facilitation in international trade as required by the FTP. The petitioner’s claim for reimbursement of costs was not addressed due to lack of material and pleadings, but the petitioner was given liberty to pursue such claims in an appropriate forum.