TaxTMI 
TaxTMI 
2011 (3) TMI 1381
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.... and Export Code number and the said business concern was also registered with DGFT. Pursuant to an intelligence information that fertilizer grade Potassium Chloride (Muriate of Potash) was being smuggled out of the country in the guise of Industrial Salt, the Assistant Commissioner of Customs, Docks Intelligence Unit, Customs House, Chennai issued instructions to all the Container Freight Stations directing them to detain all export consignments bearing the description Industrial Salt. Pursuant to same, on 28-7-2009, representative samples were drawn from the goods meant for export by M/s. Zandra Trading Company covered by Shipping Bill Nos. 3439419, 3439432, 3439395, 3439421 and 3439424 dated 23-7-2009, under a mahazar at the export godown of M/s. A.S. Shipping Container Freight Station, Numbal Village, Maduravoyal, Chennai. The samples thus drawn, were sent to M/s. Coramandel Fertilizers Limited, Ennore, Chennai. After analysis, it gave a Report dated 3-8-2009 to the effect that the samples contained not less than 60% of water soluble potash showing the samples to be Potassium Chloride (Muriate of Potash). Pursuant to the receipt of the said Analysis Report, the Customs official....
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....n from the Dy. Director, Regional Fertilizer Control Laboratory at Madhavaram Milk Colony, Chennai should be obtained. Accordingly samples were sent to the Regional Fertilizer Control Laboratory, Madhavaram, Chennai. But the Deputy Director, Fertilizer Control Laboratory, Madhavaram Chennai returned the sample without any opinion stating that the samples could not be tested in the said laboratory since they were not drawn in accordance with the Fertilizer Control Order, 1985. (iv) Meanwhile, the detenu was arrested on 12-8-2009 and produced before the learned Additional Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai and was remanded to judicial custody. On a petition filed for his release on bail, the learned Additional Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai, passed an order on 18-8-2009 directing his release on bail and he was released on bail with a condition to stay at Chennai and sign before the Superintendent of Customs daily. Subsequently, the said condition was also relaxed and modified by an order dated 1-9-2009 replacing the said condition with a new condition that the detenu should appear before the Superintendent of Customs, Chennai, wh....
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....izer Control laboratory for an expert opinion as to whether the contraband is Muriate of Potash. In this regard, the first respondent has acted based on inconclusive reports that have been given by the laboratories not notified as per rules and on that ground alone the order of detention is liable to be vitiated. (ii) The total quantity of the contraband seized by the customs authorities, namely 175 MTs, was valued at Rs. 62,72,000/-, whereas the value declared in the shipping bills by the exporter was only Rs. 30,72,197.50P. The valuation was not done in accordance with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The Detaining Authority failed to note that none of the three types of valuation provided under Rule 4 to 6 of the said rules had been followed and consequently, failed to seek clarification from the sponsoring authority regarding the same. The grounds of detention also reveals the absence of awareness of the detaining authority as to he declared value of the goods. As such there is non-application of mind on the part of the Detaining Authority which will vitiate the order of detention. (iii) There was a de....
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....rs Observation (% bt wt.) Moisture Content Insolubles Ca as CaCl2 Mg as MgCl2 Na as NaCl KCl 27.52 K2O 61.60 K 51.14 Cl 46.37 It does not contain the name of the laboratory in which the product was analysed. Hence, one cannot come to a definite conclusion that the said product is Muriate of Potash on the basis of the said certificate. 8. The samples drawn from the consignment detained at M/s. A.S. Shipping Container Freight Station, Maduravoyal, Chennai covered by shipping Bill Nos. 3439419, 3439432, 3439395, 3439421 and 3439424 dated 23-7-2009 were first sent to Coromandel Fertilizers Limited. The copy of the Test Report of the Coromandel Fertilizer Limited dated 3-8-2009 is found in page 6 of the booklet. Out of the 26 samples sent for analysis, items branded as samples 11 to 15 pertain to the goods covered by export bill Nos. 3439419, 3439432, 3439395, 3439421 and 3439424 dated 23-7-2009, which were sought to be exported by the petitioner/detenu. Of course it is true that if the water soluble potash present in Potassium Chloride is not less than 60%, then it shall be called the Muriate of Potash, as per the Fertilizer Control Order, 1985. The test report rela....
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..../25558328. Regarding Industrial salt, no literature is available in this Laboratory." 10. A reading of the said report will make it clear that the Joint Director of Customs House laboratory has not given any definite opinion as to whether the samples conformed to the definition of Muriate of Potash and on the other hand, he wanted the sponsoring authority to get an expert opinion from the Dy. Director of Regional Fertilizer Control Laboratory, Madhavaram, Chennai. It seems, pursuant to the report of the Joint Director of Customs House laboratory, Chennai, the samples were referred to the Dy. Director of Regional Fertilizer Control Laboratory, Madhavaram Milk Colony, Chennai-51 to find out whether the representative samples could be termed as fertilizer Trade Muriate of Potash (MOP). When the samples were thus sent to the Dy. Director of Regional Fertilizer Control laboratory, Madhavaram Milk Colony, Chennai-600 051, they were returned without being analysed in the said laboratory stating that the samples declared as Industrial Salt were not drawn by the Fertilizer Inspector of the said Institute in accordance with the statutory Rules. The rule referred to in the said report ....
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....ed under Clause 29 of the Fertilizer (Control) Order, 1985 and hence they are unreliable. The Detaining Authority, namely the first respondent has failed to advert to the said fact that the Dy. Director of the authorised laboratory has declined analysis of the contraband and the reports produced by the Sponsoring Authority were of the reports of laboratories, which are not mentioned in or notified under Clause 29 of the Fertilizer (Control) Order, 1985. Therefore, the subjective satisfaction of the Detaining Authority that the consignments sought to be exported were fertiliser grade Muriate of Potash is based on materials, which cannot be relied on and to the said extent there is non-application of mind on the part of the Detaining Authority. It is also pertinent to note that the samples drawn from the consignments at M/s. Viking Warehousing Container Freight Station, Chennai, was not sent for test to any laboratory and the Detaining Authority has omitted to notice the same and the same will also exhibit non-application of mind on the part of the Detaining Authority. 12. The second ground pertains to the valuation of the consignment as determined by the customs authorities. T....
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....(S.C.) Department, Fort St. George, Ch-9 and others reported in 2010 (2) TNLJ 51 (Criminal) = 2010 (259) E.L.T. 655 (Mad.) dealt with a similar case on similar grounds and held that the order of detention therein was vitiated on both the grounds raised therein, namely unreliable and inconclusive test reports and valuation of the export goods without particulars regarding which no clarification was sought for by the Detaining Authority. 13. So far as the contention based on delay in clamping the order of detention is concerned, factually the last of the reports, namely the report of the Dy. Director of Regional Fertilizer Control Laboratory was obtained on 3-8-2009. Thereafter the proposal was placed before the Detaining Authority and the Detaining Authority passed the impugned order of detention on 8-10-2009. Therefore, the contention that the order of detention stands vitiated on the ground of delay in clamping the order of detention is not well founded and the same deserves to be rejected. So far as the other part of the delay, namely the execution of the order of the detention is concerned, it took about 10 months to effect execution of the order of detention. It is obviou....