2025 (10) TMI 72 - HC - Customs

Respondents must decide 3 Aug 2025 application under Instruction F. No.528/109/2011-STO(TU) within four weeks; demurrage and BIS remitted

Kamlesh Kumar Agarwal Versus Principal Commissioner Of Customs And Ors.

HC directed respondents to consider the petitioner's application dated 3 August 2025 in light of the Ministry of Finance instruction F. ... Prayer for direction for release of goods - seeking direction upon the respondents to forthwith issue demurrage waiver certificate under 6(1)(l) of Handling of Cargo in Customs Area Regulation, 2009 - requirement of road tyre, to be in conformity with BIS standard 15636:2022 and should bear the BIS mark which is necessary under the Control Order - entitlement for benefit of the instruction being F. No.528/109/2011-STO(TU) dated 30th January, 2012 - HELD THAT:- tHE instruction appears to have been issued by the Ministry of Finance (Department of Revenue), Central Board of Excise and Customs, New Delhi. Although, such instruction may not be binding on the Court, however, the Department cannot ignore such instruction. As such without going into the issue as to whether the petitioner is entitled to the benefit of the instruction for release of the goods, having regard to the petitioner’s application filed on 3rd August, 2025, the same can be considered by the respondents. As such, the respondents should consider such application by taking note of the instruction being no. F. No. 528/109/2011-STO(TU) dated 30th January, 2012. Decision in this regard must be taken by the respondents within a period of four weeks from the date of communication of this order. So far as the claim for issuance of demurrage waiver certificate is concerned, I am of the view that such issue is also to be decided by the appropriate authority and the appropriate authority shall also take a decision on the same. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the respondents are obligated to release imported tyres declared as off-the-road (OTR)/mining tyres that lack BIS marking and have been seized on suspicion of misdeclaration. 2. Whether the instruction F. No. 528/109/2011-STO(TU) dated 30th January, 2012 (issued under the Pneumatic Tyre and Tubes for Automotive Vehicle (Quality Control Order), 2009) is binding on the respondents and/or must be taken into account in deciding release of the goods. 3. Whether a demurrage waiver certificate ought to be issued under Regulation 6(1)(l) of the Handling of Cargo in Customs Area Regulation, 2009 in respect of the detained consignments. 4. Whether the 'predominant user' test (for distinguishing OTR/mining tyres from road tyres) governs the classification and release decision and whether potential misuse on road affects entitlement to release or attracts penal consequences. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Release of seized imported tyres declared as OTR/mining tyres despite absence of BIS marking and allegation of misdeclaration Legal framework: The Control Order (Pneumatic Tyre and Tubes for Automotive Vehicle (Quality Control Order), 2009) notified under the BIS Act requires certain tyres to conform to BIS standard 15636:2022 and bear the BIS mark. The respondents rely on powers under customs and enforcement to seize goods on suspicion of misdeclaration. Precedent Treatment: The petitioner relied on the Goodyear precedent invoking the 'predominant user' principle; the Court referenced that authority as submitted by counsel but did not engage in an extensive factual re-adjudication in the writ petition. Interpretation and reasoning: The Court noted the factual contention that the imported tyres bore side-wall markings indicative of OTR use and were described by the importer as mining tyres with high ply rating suitable for off-road service. The respondents, however, point to absence of BIS marking and tests indicating suitability for on-road use up to speed category F. The Court declined to finally resolve the factual dispute on classification or misdeclaration in the writ jurisdiction. Instead, it directed administrative reconsideration of the petitioner's application in the light of the relevant instruction (see Issue 2), recognising the Department's duty to consider that instruction even if not strictly binding on the Court. Ratio vs. Obiter: The directive to the administrative respondents to reconsider release is ratio - the Court's operative remedy. Detailed factual conclusions on whether misdeclaration occurred were not determined and remain obiter/left undecided for administrative proceedings. Conclusions: The Court ordered the respondents to consider the petitioner's application for release of goods and to take a decision within four weeks, without prejudging the merits of seizure or classification; no final judicial determination on misdeclaration was made. Issue 2 - Legal status and effect of instruction F. No. 528/109/2011-STO(TU) dated 30-01-2012 issued under the Control Order Legal framework: The instruction was issued by the Ministry of Finance (Department of Revenue), Central Board of Excise and Customs, and interprets application of tyre tread code markings for treating certain types of tyres as off-the-road. Precedent Treatment: The Court observed that such executive instructions are not strictly binding on the Court as sources of law but are relevant administrative guidance for departmental decision-making. Interpretation and reasoning: The Court held that, while the instruction may not bind the Court as law, the Department cannot ignore the instruction when making administrative decisions on release; administrative authorities are obliged to take such circulars/instructions into account in considering consignment classification and release applications. Ratio vs. Obiter: The proposition that the instruction is not binding on the Court but must be considered by the Department is ratio to the remedy ordered (remittal for administrative consideration). Any characterization of the instruction's legal weight beyond that (e.g., mandatory binding force on the Department) is obiter. Conclusions: The respondents were directed to consider the petitioner's application afresh taking note of instruction F. No. 528/109/2011-STO(TU) and to communicate a decision within four weeks from communication of the order. Issue 3 - Claim for issuance of demurrage waiver certificate under Regulation 6(1)(l) of the Handling of Cargo in Customs Area Regulation, 2009 Legal framework: Regulation 6(1)(l) provides for grant of demurrage waiver certificates by the appropriate authority in specified circumstances in customs/port custody. Precedent Treatment: No specific binding precedent was applied; parties addressed entitlement and claimed substantial demurrage accrued. Interpretation and reasoning: The Court declined to decide entitlement to demurrage waiver in the writ, holding that determination of such waiver is for the appropriate administrative authority to decide. The Court's approach was to leave the claim to the competent authority rather than to grant or refuse relief in the exercise of judicial review in this petition. Ratio vs. Obiter: The instruction that the demurrage waiver claim is for the appropriate authority to decide is ratio to the Court's disposal of the petition. Any commentary on the merits of demurrage liability is obiter. Conclusions: The appropriate authority was directed to consider and decide the petitioner's claim for issuance of demurrage waiver certificate; no judicial waiver was granted. Issue 4 - Applicability of 'predominant user' test and consequences of potential road use of tyres Legal framework: The 'predominant user' concept (as advanced from precedent) addresses classification of goods according to their principal intended use; secondary misuse may attract separate legal consequences under other statutes (e.g., Motor Vehicles Act) but does not necessarily alter classification for import/regulatory purposes. Precedent Treatment: The petitioner relied on the Goodyear authority to underline that predominant user governs classification; the Court noted the submission but did not resolve classification on predominant user grounds in this writ. Interpretation and reasoning: The Court observed that the fact that a tyre might be capable of on-road use does not ipso facto change its predominant user if it is imported and marked for OTR/mining use; however, the Court did not adjudicate this contested factual and technical question and left it to the administrative process and/or testing and classification procedures to resolve. Ratio vs. Obiter: Observations about the predominant user principle and potential separate penal consequences for misuse are obiter in so far as no final determination was made on these issues in the judgment. The operative direction to remand classification to the Department is ratio. Conclusions: The Court recorded that potential misuse on road may attract consequences under other laws but held that such potential does not justify withholding administrative consideration; classification and any consequences were remitted for administrative decision in accordance with applicable instructions and regulations. Overall Disposition and Directions The Court directed administrative reconsideration of the petitioner's application for release of the consignments, requiring the respondents to take a decision within four weeks whilst taking note of instruction F. No. 528/109/2011-STO(TU). The claim for demurrage waiver was left to the appropriate authority to decide. No costs were awarded. The Court did not finally adjudicate the factual question of misdeclaration or the technical classification of the tyres.