2024 (5) TMI 1008 - HC - Customs

High Court quashes Legal Metrology Act proceedings against duty-free shops at international airport for lack of territorial jurisdiction

M/s. Flemingo Duty Free Shop Pvt. Ltd. & Ors. Versus Shri Kaushik Bhattacharya & Anr.

The HC allowed the criminal revision and quashed proceedings under Legal Metrology Act, 2009 against petitioners operating duty-free shops at ... Revision Application - Alternative remedy - seizure of goods - Operation of duty-free shops at an international airport - deemed to be outside the territory of India - commission of offences punishable u/s 36 (1) the Legal Metrology Act, 2009 - license agreement with the Airport Authority of India - HELD THAT:- The present proceeding has been initiated in 2016 and this criminal revision has preferred in the 2019. Thus the petitioner herein should have first exhausted equally efficacious alternative statutory remedy as provided under the act before approaching this Court. But keeping with the view taken by the Apex Court in Hotel Ashoka (Indian Tour. Dev. Cor. Ltd.) vs Assistant Commissioner of Commercial Taxes and Ors. [2012 (2) TMI 62 - SUPREME COURT] and considering that 9 (nine) long years have passed, the present revision is being disposed of on merit without directing the petitioners to move the statutory appellate authority, only in the interest of justice. The complainant in this case did not have the authority to initiate the present proceedings against the petitioners in respect of the alleged offences which admittedly took place in a duty free shop at an international airport which is beyond/outside the custom frontiers of India. Accordingly the proceedings in this case, being not in accordance with law and thus an abuse of the process of Court/law, is liable to be quashed. CRR 819 of 2019 is allowed. The proceedings u/s 36 (1) the Legal Metrology Act, 2009 read with Rule 32 (3) of the Legal Metrology (Packaged Commodities) Rules, 2011 pending before the Learned Additional Chief Judicial Magistrate, is hereby quashed in respect of the petitioners herein. Issues Involved:1. Quashing of the proceeding in Case No. C-163 of 2016.2. Jurisdiction and authority of the complainant.3. Applicability of the Legal Metrology Act, 2009 to duty-free shops.4. Compliance with Legal Metrology (Packaged Commodities) Rules, 2011.5. Role of customs authorities in duty-free shops.Summary:Issue 1: Quashing of the proceeding in Case No. C-163 of 2016The petitioners sought the quashing of the proceeding in Case No. C-163 of 2016 u/s 36(1) of the Legal Metrology Act, 2009 read with Rule 32(3) of the Legal Metrology (Packaged Commodities) Rules, 2011. The High Court quashed the proceedings, stating that the complainant did not have the authority to initiate the proceedings as the alleged offences took place in a duty-free shop at an international airport, which is beyond/outside the customs frontiers of India.Issue 2: Jurisdiction and authority of the complainantThe court found that the complainant, an Inspector of Legal Metrology, lacked the jurisdiction to initiate proceedings against the petitioners. The proceedings were deemed not in accordance with the law and an abuse of the process of court/law.Issue 3: Applicability of the Legal Metrology Act, 2009 to duty-free shopsThe court held that the Legal Metrology Act, 2009, which extends to the whole of India, does not apply to goods sold in duty-free shops at international airports, as these shops are deemed to be outside the customs frontiers of India. This conclusion was supported by the Supreme Court's decision in Hotel Ashoka (Indian Tour. Dev. Cor. Ltd.) vs Assistant Commissioner of Commercial Taxes and Ors.Issue 4: Compliance with Legal Metrology (Packaged Commodities) Rules, 2011The petitioners argued that the goods sold at duty-free shops do not qualify as imports for home consumption and are for export purposes only. They stated that the packaging of goods is done by foreign manufacturers/packers, and it is not possible to change the packaging to comply with the Legal Metrology (Packaged Commodities) Rules, 2011. The court noted that the offences alleged, such as the lack of details on the packages, are serious and have an adverse effect on consumers.Issue 5: Role of customs authorities in duty-free shopsThe court highlighted that duty-free shops are under the supervision of customs authorities, and the appropriate authorities are not carrying out their duties diligently, leading to non-compliance with rules. The court directed that a copy of the judgment be sent to the Commissioner of Customs, Kolkata, and the Commissioner, Central Board of Excise and Customs, Ministry of Finance, Department of Revenue, New Delhi, for necessary action.Conclusion:The proceedings in Case No. C-163 of 2016 were quashed due to the lack of jurisdiction of the complainant. The court emphasized the importance of compliance with legal requirements for the safety of consumers and directed the customs authorities to take necessary action.