2022 (4) TMI 218 - HC - Customs

Court orders retesting of seized goods to determine product nature. Compliance emphasized.

The court directed the respondent to retest the goods in line with Customs Circular No.30/2017 and the applicant's request. The vessel was seized due to ... Retest of seized goods - classification: GTL Light Paraffin vs Light Diesel Oil - priority testing by Central Excise and Customs Laboratory (CRCL) - duty of agency to comply with court direction - provisional release under Section 110A of the Customs ActRetest of seized goods - duty of agency to comply with court direction - priority testing by Central Excise and Customs Laboratory (CRCL) - Direction to forward samples for retest and allocation of responsibility for obtaining the report - HELD THAT: - The Court recorded its earlier direction to have the samples retested (order dated 03.03.2022) and found non-compliance by the DRI in not forwarding the samples. Acting on that failure, the Court directed that the samples shall, by the following day, be dispatched to the CRCL, Delhi with a request that testing be accorded top priority and the report be furnished within one week of receipt. The Court specifically placed responsibility on Mr. Vikram Meena, Senior Intelligence Officer of the DRI, to pursue transmission of the samples to CRCL, obtain the test report and produce it by the next date of hearing. The Court also stated that if the DRI receives the report earlier it must be shared with the writ applicants. The instruction for prompt compliance and prioritisation of testing was imposed because of the prior non-compliance and the centrality of the retest to resolution of the dispute. [Paras 1, 4, 5, 6, 14]Samples to be dispatched to CRCL, Delhi by tomorrow with request for top-priority testing; Mr. Vikram Meena to ensure receipt of report within one week and to produce it on next hearing; DRI to share any earlier report with the writ applicants.Classification: GTL Light Paraffin vs Light Diesel Oil - Scope of retest and remand for determination of product classification - HELD THAT: - The core controversy concerns whether the imported product is GTL Light Paraffin (HSN: 27101990) as claimed by the writ applicants or Light Diesel Oil as concluded by the Chemical Examiner in the Vadodara laboratory. The Court directed that the samples forwarded to CRCL, Delhi for retest must expressly request verification on that precise question - whether the samples are GTL Light Paraffin or Light Diesel Oil. The determination of classification is left for adjudication after receipt of the retest report; the matter is adjourned for further hearing and the Court indicated it would proceed to pass an appropriate order on the next date of hearing whether or not the retest report is available. [Paras 3, 9, 10, 11, 12]Reclassification issue referred to CRCL, Delhi for retest to verify whether product is GTL Light Paraffin or Light Diesel Oil; final decision deferred to the next hearing (21.04.2022) after consideration of the report.Provisional release under Section 110A of the Customs Act - Status of prior provisional release order and requirement of security - HELD THAT: - The Court took note of an earlier order dated 03.12.2021 granting provisional release of the seized vessel under Section 110A of the Customs Act, which remains subject to the writ applicants furnishing a bond for the insured value and a bank guarantee. The Court observed that the applicants have practical difficulties in furnishing a bond while being a foreign company, and permitted the applicants to consider the issue and revert to the Court on the next date of hearing. [Paras 7, 8]Existing provisional release under Section 110A stands recorded as subject to the prescribed bond and bank guarantee; applicants to address practical difficulty in furnishing the bond and inform the Court on the next date.Final Conclusion: Court directed immediate dispatch of seized-goods samples to CRCL, Delhi for top-priority retest expressly to determine whether the goods are GTL Light Paraffin or Light Diesel Oil; responsibility placed on the Senior Intelligence Officer to secure the report within one week and produce it at the next hearing; the classification question is reserved for decision after the retest, and the existing provisional release under Section 110A remains subject to the security conditions with applicants to address bond-related difficulties. Issues:1. Retest of goods-in-question as per Customs Circular.2. Seizure of a foreign flag vessel by Customs Department.3. Discrepancy in goods declaration - Paraffin vs. Light Diesel Oil.4. Non-compliance with court order for retesting.5. Provisional release of the seized vessel.6. Bond requirement for provisional release.7. Dispute over the nature of the imported product - GTL Light Paraffin vs. Light Diesel Oil.8. Correct approach for testing the nature of the product.Issue 1 - Retest of goods-in-question:The court had directed the respondent to conduct a retest of the goods in accordance with Customs Circular No.30/2017 and the applicant's request. The vessel was seized based on doubts raised by the DRI regarding the nature of the goods declared as Paraffin but tested as Light Diesel Oil by the Central Excise and Customs Laboratory. The court expressed concern over the non-compliance with the retesting order and gave the DRI a final opportunity to forward the samples to CRCL, Delhi, for retesting within a week.Issue 2 - Seizure of the vessel:The vessel, a foreign flag vessel registered in Singapore, was seized by the Customs Department under DRI instructions and is currently at Kandla. The dispute arose due to discrepancies in the declaration of goods and the subsequent testing results, leading to the court's intervention for a retest to determine the actual nature of the goods.Issue 3 - Discrepancy in goods declaration:The applicant claimed the goods were GTL Light Paraffin, while the Revenue contended they were Light Diesel Oil. The court noted the need for proper testing to ascertain the exact nature of the product, emphasizing the importance of verifying whether the samples are GTL Light Paraffin or Light Diesel Oil during the retesting process.Issue 4 - Non-compliance with court order:The court expressed dissatisfaction with the DRI's failure to comply with the retesting order despite specific directions. The Senior Intelligence Officer's lack of explanation for the delay prompted the court to give a final opportunity for the samples to be sent for retesting within a specified timeline.Issue 5 - Provisional release of the vessel:An order for the provisional release of the seized vessel had been passed, subject to the applicant furnishing a Bond and a bank guarantee. The court acknowledged the difficulty faced by the applicant in providing the Bond due to their operations being based in Singapore, allowing time for the issue to be discussed and resolved before the next hearing.Issue 6 - Dispute over the nature of the imported product:The core dispute revolved around the exact nature of the imported product, with conflicting claims between the applicant and the Revenue regarding whether it was GTL Light Paraffin or Light Diesel Oil. The court stressed the importance of accurate testing to determine the true nature of the goods.Issue 7 - Correct approach for testing the nature of the product:The court directed that the retesting process should focus on verifying whether the samples are GTL Light Paraffin or Light Diesel Oil. It emphasized the need for the CRCL, Delhi, to carry out the test promptly and provide the report within a week, with the Senior Intelligence Officer responsible for ensuring the timely completion of the retesting process.This detailed analysis covers the various issues addressed in the judgment, highlighting the key legal aspects and actions taken by the court to resolve the dispute surrounding the seized vessel and the nature of the imported goods.