2022 (6) TMI 216 - AT - Customs

Tribunal Orders Release of Seized Goods, Criticizes Customs Non-Compliance

The Tribunal granted provisional release of seized goods to M/s Excellent Betelnut Products Private Limited under Section 110A of the Customs Act, 1962. ... Seeking provisional release of seized goods - functus officio in the order impugned in the appeal - accountability in personam - section 110A of Customs Act, 1962 - import of ‘betel nut product known as “supari” - Classification of goods - Prohibited goods or not - HELD THAT:- The applicability of a decision of constitutional courts to the facts of a particular dispute is a matter be considered by the quasi-judicial authority. However, discarding of binding precedent is contrary to judicial discipline which the Hon’ble Supreme Court took note of in Union of India v. Kamlakshi Finance Corporation Ltd [1991 (9) TMI 72 - SUPREME COURT]. In the circumstances in which the cited decisions were found to be unreliable by the customs authorities, we must advise that these guidelines and guardrails, distinguishing tax administrators from brigands and highwaymen, must surely adorn the walls of every chamber in which the hallowed authority to adjudicate is exercised to immunize themselves of any inclination to delude themselves into taking the law into their hands even in face of superior wisdom. The ground of ‘unfit for human consumption’ is, as admitted by the Principal Commissioner of Customs, no longer existent as far as proceedings initiated against the appellant is concerned. As we have premised supra, the issue before us is simple enough: the extent to which the provisions of section 110A of Customs Act, 1962 are intended by law for denying an importer access to his goods pending a dispute on classification that may have import policy ramifications. Classification does not, of itself, measure the gravity of intent of importer as it is the arena within which the rules of engagement between customs authorities, in any country or across time, and importers; every misclassification may not have been with deliberate intent and that is for the adjudicating authority to evaluate before allowing or denying provisional release. It is from the acknowledgement of such obligation to evaluate that section 110A of Customs Act, 1962 was amended to accord co-terminus jurisdiction under section 124 of Customs Act, 1962 and section 110A of Customs Act, 1962. In the present instance, the Principal Commissioner of Customs has sought to distance himself from that obligation by pleading lack of propriety engendered from the possibility of binding over the ‘real adjudication authority’ who, however, did not have appear to have any scruples in ‘snatching’ a process from the Principal Commissioner of Customs; such noble tolerance of assertiveness does not, however, ennoble the omission to consider the issue remanded to him in accordance with intendment of section 110A of Customs Act, 1962. There are no reason to believe that another remand would prompt a less apathetic response to binding precedent. This is a classification dispute and, being a classification dispute, denial of provisional release would be disproportionate detriment. The appellant is a regular importer and differential duty, if any, arising upon conclusion of proceedings should be recoverable without difficulty. Breach of policy prohibition, should that be determined, is also rectifiable for such is the authority to relax vested in the Director General of Foreign Trade and, hence, not warranting denial of provisional release. In the circumstances the execution of bond to the extent of three times the differential duty is considered suffice for safeguard of revenue. The application for implementation of the order is disposed off in view of grant of provisional release on grounds of attempt to evade the order of the Tribunal without recourse to appellate challenge of it. Issues Involved:1. Denial of provisional release under Section 110A of the Customs Act, 1962.2. Compliance with judicial orders and adherence to legal procedures.3. Jurisdictional competence and authority of customs officials.4. Interpretation and application of legal precedents.5. Proportionality and fairness in the exercise of quasi-judicial powers.Detailed Analysis:1. Denial of Provisional Release under Section 110A of the Customs Act, 1962:The appellant, M/s Excellent Betelnut Products Private Limited, challenged the denial of provisional release of seized goods under Section 110A of the Customs Act, 1962. The initial order dated 30th December 2021 by the Commissioner of Customs, Nagpur, declined provisional release, which was set aside by the Tribunal for fresh determination. Subsequently, a second order dated 25th April 2022 by the Joint Commissioner of Customs again denied provisional release, citing fresh reasons. The Tribunal reiterated its unambiguous direction for reconsideration in line with the Hon’ble High Court of Bombay's order. The Principal Commissioner of Customs, Nagpur, issued a third order on 30th April 2022, maintaining the refusal to release the goods provisionally.2. Compliance with Judicial Orders and Adherence to Legal Procedures:The Tribunal noted a consistent pattern of non-compliance with judicial directions by customs authorities. Despite clear instructions from the Hon’ble High Court of Bombay and the Tribunal, the customs authorities repeatedly failed to adhere to the legal procedures and directions, leading to prolonged retention of the seized goods. The Tribunal emphasized that quasi-judicial functions do not offer a cloak for deliberate defiance of judicial orders.3. Jurisdictional Competence and Authority of Customs Officials:The Tribunal observed that the Principal Commissioner of Customs initially arrogated the jurisdiction vested in his subordinate but later attempted to delegate this authority to the Joint Commissioner of Customs. This inconsistency and the subsequent actions raised questions about the proper exercise of jurisdictional competence. The Tribunal highlighted that the Principal Commissioner of Customs should have sought modification from the Hon’ble High Court if he believed the direction was extra-legal.4. Interpretation and Application of Legal Precedents:The Tribunal referenced several legal precedents, including the decisions of the Hon’ble High Court of Delhi in Additional Director General (Adjudication) v. Its My Name Pvt Ltd and the Hon’ble High Court of Bombay in Isha Exim v. Union of India. These cases emphasized that provisional release under Section 110A of the Customs Act, 1962, should not be denied solely based on misclassification or policy infringement allegations unless there is substantial evidence of harm to public interest or revenue. The Tribunal criticized the customs authorities for disregarding binding precedents and judicial discipline.5. Proportionality and Fairness in the Exercise of Quasi-Judicial Powers:The Tribunal underscored the importance of proportionality and fairness in exercising quasi-judicial powers. It noted that the denial of provisional release in a classification dispute was disproportionate and detrimental to the appellant. The Tribunal directed the execution of a bond to the extent of three times the differential duty as sufficient safeguard for revenue, emphasizing that the appellant is a regular importer and any differential duty arising from the proceedings should be recoverable without difficulty.Conclusion:The Tribunal allowed the application for early hearing and granted provisional release of the seized goods on the terms specified, highlighting the customs authorities' failure to comply with judicial orders and legal precedents. The Tribunal directed immediate implementation of its order and emphasized the need for adherence to judicial discipline and proper exercise of quasi-judicial powers.