2022 (10) TMI 271 - HC - Customs

Court orders release of imported goods, no violation found, petitioner to pay demurrage charges

Syndicate Innovations International Limited Through Its Director Mr. Ashok Rai Versus The Office Of The Commissioner Of Customs Through Joint Secretary & Ors.

Syndicate Innovations International Limited Through Its Director Mr. Ashok Rai Versus The Office Of The Commissioner Of Customs Through Joint Secretary & ... Issues Involved:1. Whether the import of Frames and Slides fitted with additional components violated the import permission granted by the DGFT.2. Whether the petitioner was required to obtain prior permission from the Ministry of Home Affairs (MHA) under Rule 57(4) of the Arms Rules, 2016.3. The applicability of Rule 88(2) regarding the requirement of an import license in Form X.4. The liability for demurrage charges due to the delay in the release of the consignment.Detailed Analysis:Issue 1: Violation of Import PermissionThe core issue revolved around whether the import of Frames and Slides with additional components like hammers, firing pins, and extractors violated the import permission granted by the DGFT. The petitioner contended that these parts are not separately classified for import purposes and that the import license for Frames and Slides should cover them. The respondents argued that these additional components are independent parts requiring separate import permissions.The Court analyzed the definitions of 'main firearm component' and 'parts and components' under Rules 2(29) and 2(37) of the Arms Rules, 2016, and concluded that these definitions are exhaustive. The Court found no justification for interpreting these rules to mean that Frames and Slides must be devoid of any additional components. The Court also noted that the relevant provisions in the Foreign Trade Policy (FTP) and the Indian Trade Clarification based on Harmonized System (ITC (HS)) do not prohibit the import of composite parts. Therefore, the Court held that the import of Frames and Slides with additional components did not violate the import permission granted by the DGFT.Issue 2: Requirement of Prior Permission from MHAThe respondents argued that the petitioner should have obtained prior permission from the MHA under Rule 57(4) of the Arms Rules, 2016, which requires such permission for importing parts that cannot be manufactured locally. The Court noted that Rule 57(4) applies only to parts that are not possible to be manufactured locally. Since it was not contended that the imported Frames and Slides could not be manufactured locally, the Court found that Rule 57(4) did not apply in this case.Issue 3: Applicability of Rule 88(2) and Form XInitially, the respondents raised the issue of the petitioner not obtaining an import license in Form X as required under Rule 88(2). However, they later conceded that this was an inadvertent procedural lapse on their part, and the petitioner was subsequently granted the license. The Court clarified that the DGFT, having been delegated the power to issue import permissions, must ensure compliance with both the Foreign Trade (Development and Regulation) Act, 1992, and the Arms Act, 1959, along with the Arms Rules, 2016.Issue 4: Liability for Demurrage ChargesThe petitioner sought relief from demurrage charges due to the delay in the release of the consignment. The Court noted that Rule 88(6) shifts the liability for demurrage charges to the licensing and customs authorities if there is a delay in inspection. However, since the Delhi Police conducted the inspection within the stipulated time, they could not be held liable for the demurrage charges. Given the contentious nature of the issues raised, the Court declined to grant relief for demurrage charges.Conclusion:The Court allowed the writ petition, directing the respondents to release the consignments imported under the specified Bills of Entry, subject to the petitioner complying with other statutory formalities and paying the due demurrage charges. The Court found no violation of the import permission and ruled that Rule 57(4) did not apply to the imported items.