2023 (9) TMI 1300 - HC - Customs

Court upholds legality of search by Revenue Intelligence; seizure of Ethephon goods valid. Customs Act compliance required.

M/s Gold Ripe International Private Limited Versus Directorate Of Revenue Intelligence And 4 Others

The court upheld the legality of the search conducted by the Directorate of Revenue Intelligence at the petitioner's premises. It ruled that the seizure ... Seeking release of detained goods - legality of search conducted at the factory premises, office premises as well as the residential premises of one of the directors of the Petitioner Company - import of the commodity Ethephon - prohibited goods or not - HELD THAT:- It is an admitted fact, Ethephon is a scheduled commodity under the Insecticides Act. Therefore, by virtue of the language of section 17(1)(c) read with Section 3(e)(i) of the Insecticides Act, a stipulation in law does arise on the import of Ethephon to allow its import only upon fulfillment of conditions of prior registration obtained under Section 9 of the Insecticides Act. To that extent, the second submission advanced by learned counsel for the petitioner that the requirement to obtain a prior registration under the Insecticides Act is only a regulatory measure not provided with any consequence (for its non-compliance), is misconceived. It would be premature for the writ Court to reach a fact conclusion whether Ethephon is an insecticide that may not cause any of the specified harm to any form of plant or animal life, generally. Neither the Court is an expert in the science of chemistry or environment, nor it has any expert jurisprudential material available to it as may safely lead it to the conclusion that import and/or manufacture of Ethephon may not cause the effect of preventing or destroying or repelling or mitigating any insect or rodent or fungi or weed or any other form of plant or animal life. 35. A fact enquiry would be required to be conducted before the contention being canvassed by the learned counsel for the petitioner may be accepted. That consideration has become necessary in the face of the claim of exemption set up by the petitioner. That claim must arise and be tested before the fact-finding authority i.e., the statutory authorities. At present, Ethephon being a scheduled commodity under the Insecticides Act, it falls outside the scope of any fruitful discussion if it is an insecticide for the purpose of the Insecticide Act. Clearly, it is. In absence of any further fact proven to establish any exemption available to it under section 38 of the Insecticides Act, prima facie it stands made out that Ethephon is a regulated insecticide. It may not be imported or manufactured, except under a valid Registration Certificate etc. and upon fulfilment of the conditions thereto - in the absence of any further legislative and/or executive declaration expressed, at present, the only authority that may deal with the issue of claim of exemption being made by the petitioner would be the quasi-judicial authority under the Act. At present, the proceedings initiated under Section 124 of the Act are pending. The FSSAI established under the Food Safety and Standards Act, 2006 seeks to guard the health interests of the human species only. On the other hand, the Insecticides Act seeks to guard the minimum existential interest of all life forms, from the harmful effects that may be caused by use of an insecticide. To that extent and for that reason, the Insecticides Act is both a special Act and an enactment with wider outreach and spread than the Food Safety and Standards Act, 2006. There are no good ground to set aside the seizure memorandum and remit the matter to the seizing authority to pass a fresh order, at this stage. Under the scheme of the Act, the seizure memorandum would remain subject to outcome of the confiscation proceeding. Those being pending before the adjudicatory authority, keeping in mind the further fact that the adjudication on the issue whether Ethephon is exempt under the Insecticide Act, would have a direct bearing on all subsequent transactions of import and manufacture of that commodity, by the petitioner, it is deemed desirable and in the interest of justice that the adjudication proceedings be expedited and concluded without further delay. The writ petition is disposed of with a direction, in case the petitioner files its reply to the show cause notice dated 21.12.2021 within a period of four weeks from today, the adjudicating authority may ensure expeditious conclusion of the adjudication proceedings, after due opportunity of hearing etc. to the petitioner, preferably within a period of three months therefrom. Issues Involved:1. Legality of the search conducted at the factory, office, and residential premises.2. Detention and seizure of goods under the Customs Act, 1969.3. Applicability and exemption under the Insecticides Act, 1968.4. Jurisdiction of Customs authorities in the absence of a specific notification under Section 11(3) of the Customs Act.Summary:1. Legality of the Search:The petitioner initially challenged the search conducted by the Directorate of Revenue Intelligence at its premises. However, due to urgency, the petitioner's counsel chose not to press this challenge, acknowledging that it would require summoning original records to determine the existence of 'reason to believe' for the search authorization.2. Detention and Seizure of Goods:The petitioner argued that under Section 110 read with Section 111(d) of the Customs Act, only goods imported contrary to any prohibition could be seized or confiscated. The petitioner contended that no prohibition existed on importing Ethephon under the Customs Act. However, the court noted that the Insecticides Act, 1968, which was in force at the time of import, imposed conditions on the import of Ethephon, thus making it subject to seizure under Section 111(d) of the Customs Act.3. Applicability and Exemption under the Insecticides Act:The petitioner argued that Ethephon, though an insecticide, did not fall under the regulatory provisions of the Insecticides Act due to its use as a ripening agent. The court, however, held that Ethephon is a scheduled commodity under the Insecticides Act, and its import required prior registration under Section 9 of the Act. The court further clarified that Section 38(1)(b) of the Insecticides Act did not exempt Ethephon from regulation as it could potentially harm plant and animal life.4. Jurisdiction of Customs Authorities:The petitioner contended that no proceedings under the Customs Act could be initiated based on prohibitions under other laws unless specifically notified under Section 11(3) of the Customs Act. The court noted that Section 11(3) had not been enforced, and thus, the Customs authorities had jurisdiction to proceed under the Customs Act against the import of Ethephon without the need for a specific notification.Conclusion:The court found no grounds to set aside the seizure memorandum, noting that the issue of exemption could be contested in the pending adjudication proceedings under Section 124 of the Customs Act. The court directed the adjudicating authority to expedite the proceedings and conclude them within three months if the petitioner filed its reply to the show cause notice within four weeks.