2021 (12) TMI 198 - HC - Customs

Court Orders Timely Assessment of Imported Arecanuts

The court directed the proper officers to complete the assessment of the imported Arecanuts within 15 days and decide on the release of the goods. The ... Proper officer - Power of officers of DRI - Power to investigation versus power to assessment - Classification of imported goods - Areca Nuts - to be classified under Chapter 0802 or under Sub Heading 2106 of the Customs Tariff Act,1975? - Seeking to release the Arecanuts imported from Myanmar - waiver of demurrage and detention charges - proper officer to issue SCN for the purpose of assessment the third and the fourth respondents as defined under Section 2(34) of the Customs Act, 1972 - HELD THAT:- The Hon'ble Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [2021 (3) TMI 384 - SUPREME COURT] observed that Additional Director General of DRI was not a “Proper Officer” to exercise the power under Section 28(4) of the Customs Act, 1962 and the initiation of the recovery proceedings was held without jurisdiction and liable to be set aside. As far as the assessment of imported consignment is concerned, it is the Deputy Commissioner or the Assistant Commissioner of Customs and Central Excise namely, the first and the second respondents and/or the Appraiser of Customs who are competent authority albeit the “Proper Officer” to determine the correct classification. The Hon’ble Supreme Court in CANON INDIA PRIVATE LIMITED has held that, if it was intended that officers of the Directorate of Revenue Intelligence who are officers of Central Government should be entrusted with functions of the Customs officers, it was imperative that the Central Government should have done so in exercise of its power under Section 6 of the Act. The Court further observed that the reason why such a power is conferred on the Central Government is obvious and that is because the Central Government is the authority which appoints both the officers of the Directorate of Revenue Intelligence which is set up under the Notification dated 04.12.1957 issued by the Ministry of Finance and Customs officers who, till 11.5.2002, were appointed by the Central Government. The court held that the notification which purports to entrust functions to a “proper officer” under the Customs Act has been issued by the Central Board of Excise and Customs in exercise of non-existing power under Section 2 (34) of the Customs Act. The Court further held that the notification is obviously invalid having been issued by an authority which had no power to do so in purported exercise of powers under a section which does not confer any such power. There is a prohibition of goods falling under Heading 0802 of Customs Tariff Act, 1975, if the value is below vide Notification No. No.20/2015-2020 dated 25.07.2018 of the Ministry of Commerce and Industry, Department of Commerce, New Delhi, if the value is below a specified value. Thus, under Notification No.20/2015-2020 dated 25.07.2018 of the Ministry of Commerce and Industry import of goods falling under 0802 of the Customs Tariff Act, 1975 is deemed to have been prohibited under a Notification issued under Section 11 of the Customs Act, 1962 - it should be emphasized that it is no part of the duty or function of the third and fourth respondents and their counterparts in Chennai to stall an assessment proceeding by a “proper officer” designated under the Customs Act and the Notification No.40/2012- Cus(NT) dated 2.5.2012. There has to be a proper determination as to whether there is prohibition of the imported goods. This exercise can be carried only by a “Proper Officer” and cannot be usurped by the third or fourth respondents or their counter parts in Chennai - Merely because the officers of the third and the fourth respondents have powers to investigate by itself means will not mean that they can insist on a “hands off approach” by a competent officer who have been given the powers to assess Bill of Entry filed by an importer. Even if the jurisdictional officer of the DRI from Chennai i.e., the counter parts of the third and the fourth respondents felt that the import was without proper licence and that there was an attempt to import prohibited goods, it is their duty to merely inform the assessing officers namely The Additional Commissioner of Customs, The Assistant Commissioner of Customs, Superintendent of Central Excise and Customs or the appraiser of customs who are the “assessing officer’s “ to make proper assessment to safeguard the interest of the Revenue. If the Proper Officer is of the view that the goods fall under Heading 0802 of the Customs Tariff Act, 1975 and there is a misdeclaration by the petitioner by disguising the classification in the respective Bills of Entries under Heading 2106 of the Customs Tariff Act, 1975, a quick decision should be taken and proceed in accordance with law - A “proper officer” can also initiate proceeding under Section 111(d) read with Section 124 of the Customs Act, 1962 to confiscate the consignment and impose penalty under Section 112 of the Custom Act, 1962. Since the imported goods are natural products and are prone to deterioration due to exposure to elements and natural causes with efflux of time and humid & inclement weather condition in Chennai and are lying at Balmer Lawrie CFS, Chennai since the end of September, 2021 the 1st and the 2nd respondents and/or such other officers vested with the powers to assess the Bills of Entries are directed to exercise their powers under the Customs Act, 1962 one way or the other - The initial exercise regarding the determination of classification may be completed within 15 days from the date of hosting of this Order in the website. In case, the “proper officer” is of the primafacie view that the goods are liable for confiscation, seizure order may be issued followed by confiscating the imported goods if they are found to be prohibited in terms of the Notification of the Commerce Ministry. If not, the imported goods can be allowed to be redeemed. This should be decided within a period of 30 days thereafter. The proper officer shall bring a closure to the issue one way of the other within a period 30 days thereafter after duly following the safe guards under the Customs Act,1962 and principle of natural justice. Petition disposed off. Issues Involved:1. Jurisdiction of the third and fourth respondents.2. Classification of imported Arecanuts.3. Provisional assessment and release of goods.4. Financial losses due to demurrage and detention charges.5. Compliance with Food Safety and Standards Authority of India (FSSAI) standards.6. Notification and prohibition under the Customs Act, 1962 and Foreign Trade (Development and Regulation) Act, 1992.7. Role of Directorate of Revenue Intelligence (DRI).Detailed Analysis:Jurisdiction of the Third and Fourth Respondents:The petitioner argued that the third and fourth respondents from Nagpur, Maharashtra, were not the 'proper officers' as defined under Section 2(34) of the Customs Act, 1962, and thus lacked jurisdiction to interfere with the assessment of the imported consignments. The court noted that the proper officers for assessment are the Deputy Commissioner or Assistant Commissioner of Customs and Central Excise, as per Notification No.40/2012-Cus (N.T) dated 02.05.2012. The third and fourth respondents' role should be limited to passing intelligence to the proper officers.Classification of Imported Arecanuts:The petitioner classified the imported Arecanuts under Heading 2106, Sub Heading 2106 90 30 of the Customs Tariff Act, 1975. However, the third and fourth respondents argued that the correct classification was under Heading 0802 of the Customs Tariff Act, 1975, which would make the goods prohibited under Notification No.20/2015-2020 dated 25.07.2018 if the value is below a specified amount. The court directed the proper officers to complete the assessment and determine the correct classification.Provisional Assessment and Release of Goods:The petitioner requested provisional assessment and release of the goods, citing Circular No.22/2004-Cus dated 03.03.2004, which mandates that in case of classification disputes, the goods should be allowed for provisional assessment. The court directed the proper officers to complete the assessment within 15 days and decide on the release of the goods.Financial Losses Due to Demurrage and Detention Charges:The petitioner claimed financial losses due to demurrage and detention charges as the goods were not cleared. The court acknowledged the potential financial impact and directed the proper officers to expedite the assessment process to mitigate further losses.Compliance with Food Safety and Standards Authority of India (FSSAI) Standards:The third and fourth respondents argued that the imported Arecanuts did not meet FSSAI standards and were unfit for human consumption. The petitioner countered that the test reports were manipulated. The court directed the proper officers to consider FSSAI compliance during the assessment.Notification and Prohibition under the Customs Act, 1962 and Foreign Trade (Development and Regulation) Act, 1992:The court noted that Notification No.20/2015-2020 dated 25.07.2018 prohibits the import of Arecanuts under Heading 0802 if the value is below a specified amount. The court emphasized that only the proper officers have the authority to determine if the goods are prohibited and take appropriate action.Role of Directorate of Revenue Intelligence (DRI):The court highlighted the role of DRI as an investigative body and clarified that their function is to pass intelligence to the proper officers rather than interfere with the assessment process. The court also referenced the Supreme Court's decision in Canon India Pvt. Ltd. vs. Commissioner of Customs, which held that DRI officers are not proper officers for issuing show cause notices under Section 28(4) of the Customs Act, 1962.Conclusion:The court directed the proper officers to complete the assessment of the imported Arecanuts within 15 days and decide on the release of the goods. The assessment should consider the correct classification, compliance with FSSAI standards, and whether the goods are prohibited under the relevant notifications. The court emphasized that the third and fourth respondents should not interfere with the assessment process and should focus on their investigative role. The petitioner may be given an option to re-export the goods if they are found to be prohibited. The writ petition was disposed of with these observations and directions.