AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 114
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....on and safety of goods so as to prevent deterioration in it's value as the seized goods is a perishable goods; And/or iii) To issue a writ in the nature of Certiorari for quashing the Seizure Order / Seizure Memo dated 06.02.2019 whereby and where under 20,650 Kgs. of Betel Nuts (Arecanuts) as evaluated at Rs. 58,76,577/- and a truck bearing Registration No. TN 25 BC/5209 as evaluated at Rs. 23,64,000/- was seized on 06.02.2019 and all consequential proceedings in pursuance of same' And/or iv) To grant any other relief or reliefs to which the petitioners are entitled in the facts and circumstances of the case." 3. The case of the petitioner is that the petitioner no. 1 is engaged in business of trade of Betel Nuts grown in North Eastern Region of the country and the petitioner no. 2 is Transporter of goods. On 06.02.2019 when a vehicle bearing Registration No. TN 25 BC / 5330 engaged by petitioner no. 2 for carrying the Betel Nuts of petitioner no. 1, it was detained by the officials of the Customs, Forbesganj under the office of the Commissioner of Customs (Prev), Patna near Bhabtiyahi towards Kosi Mahasetu and seized the Betel Nuts approximately 20,650 kg val....
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....ing the shape and colour of Betel Nut their country of origin cannot be determined. Further it is submitted that even samples sent by the respondent authorities to 'ADRF' have failed to determine it's country of origin. In this regard learned counsel refers Annexure 'R/4' and 'R/5' to the counter affidavit. 7. Further relying upon the judgment of the Hon'ble Division Bench of this Court in the case of Rara Brotheres Vs.M.L. Dey reported under [2000 (126) E.L.T. 425 (425)], Angou Golmei Vs Vizovolie Chakha Sang reported under [1996 (81) E.L.t. 440 (Pat.)] and that by the Division Bench of Bombay High Court in the case of M.G. Abrol, Additional Collector of Customs., Bombay Vs. Amichand Vallamji reported under [2002 (149) E.L.T. 32 (Bom.)]. Learned counsel submits that when the respondents are not able to fulfil the legal requirement of valid search and seizure, having resorted to the contention that the sample of seized Areca Nuts were tested and found to be unsafe for food and human consumption and those are not confirming the standards under the Regulation No. 2.12 and 2.3.47 (5) of the Food Safety and Standards (Food Products Standards & Food Additives) Regulations, 2011. 8....
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.... As the nuts are harvested in tender nut stage it is difficult to identity the country of origin". 9. That the final conclusion is that the sample of Arecanuts provided by the Assistant Commissioner, Office of the Assistant Commissioner, Customs (Prev.) Division, Goriyare Chowk, Forbesganj, Araria Bihar vide letter C.No. VIII(10) 319/Cus/Seiz/DPU/FBG/18-19/1524 dated 07.02.2019 under its seal has been tested and find that it is difficult to identify the country of origin. 10. That Central Food Laboratory, Kolkata, Extension Centre Raxaul, Bihar in vide their Certificate No. INF/CFL/KOL/RXL/19/FEB-70 provided the test report: "The sample of Betel Nut were tested as per Standard Food Safety norms falling under regulation No. 2.12 & 2.3.47 (5) of Food Safety Standards (Food Products Standards & Food Additives) Regulations, 2011 and found non-conforming to the standards due to presence of Damaged Betel Nuts and presence of Insects. Thus the sample is 'unsafe food' under Section 3(I)(ZZ)(ix) of Food Safety and Standards (Food Products Standards & Food Additives (FSS) Act, 2006.". 11. That to ascertain the country of origin of the seized goods, further....
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....the identity of the goods in any proceedings under this Act and shall make an application to a Magistrate for the purpose of - (a)certifying the correctness of the inventory so prepared; or (b)taking, in the presence of the Magistrate, photographs of such goods, and certifying such photographs as true; or (c) allowing to draw representative samples of such goods, in the presence of the Magistrate, and certifying the correctness of any list of samples so drawn. (1-C) Where an application is made under sub-section (1- B), the Magistrate shall, as soon as may be, allow the application.] (2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: 1. Inserted by Act 80 of 1985, S. 8 (w.e.f. 27-2-1985) Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the ^1[Principal Commissioner of Customs or Commissioner of Customs] for a period not exceeding six months. ....
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....ng on. So far as the two test reports are concerned, this Court finds that those are not saying about the country of origin of the Betel Nuts. 24. In the case of M/s Ayesha Exports Vs. The Union of India (C.W.J.C. No. 7589 of 2018), this Court has recorded the views of the learned co-ordinate Bench of this Court in M.J.C. No. 2185 of 2013 which had in fact been challenged before the Hon'ble Supreme Court in Special Leave to Appeal (Civil) No. CC7331 of 2014 but the same was dismissed on 08.05.2014 keeping the question of law open. 25. This Court reiterated that in absence of there being any standardized laboratory test for tracing the country of origin, established under some statute and unless such Labs have been accredited by the competent authority and that the Labs could have the scientific method to come to a conclusion that the Betel Nut is of a particular country's origin, it would not be in the interest of justice to direct the petitioner to pay the custom's duty. 26. This Court finds that in the present case the request of the petitioner to release the Betel Nuts have been rejected on a totally different ground. In paragraph 26 of the counter aff....
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....No.58/2001-Cus dated 25.10.2001 which provides detailed guidelines for examination and testing of food item prior to its testing and clearance by Customs officers under the provisions of Prevention of Food Adulteration Act, 1954 (PFA Act, 1954). 2. Further, in terms of Para 8 of Chapter I A (General Notes Regarding Import Policy) of the ITC (HS) Classification of Export and Import items, import of all such edible/food products including tea, domestic sale and manufacture of which are governed by Prevention of Food Adulteration Act, 1954, shall be subject to all the conditions laid down in the aforesaid Act. Import of all these products will have to comply with the quality and packaging requirements as laid down in the Act. Compliance of these conditions is to be ensured before allowing customs clearance of the consignment. 3. To consolidate the laws relating to food and to provide for a systematic and scientific development of Food Processing Industries, the government has enacted The Food Safety and Standards Act, 2006 (FSS Act, 2006). Under the Act, the Food Safety and Standards Authority of India (FSSAI) has been established to lay down standards and r....
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....ted 25.10.2001: (i)Samples would be drawn from the first five consecutive consignments of each food item, imported by a particular importer and referred to Authorised Representative of FSSAI or PHOs, as the case may be, for testing to ascertain the quality and health safety standards of the consignments. (ii) In the event of the samples conforming to the prescribed standards, the Customs would switch to a system of checking 5% - 20% of the consignments of these food items on a random basis, for checking conformity to the prescribed standards. The selection of food items for random checking and testing would be done by the Customs taking into consideration factors like the nature of the food products, its source of origin as well as track record of the importers as well as information received from FSSAI from time to time. (iii In case, a sample drawn from a food item in a particular consignment fails to meet the prescribed standards, the Customs would place the import of the said consignment on alert, discontinue random checking for import of such food items and revert to the procedure of compulsory checking. The system of random sampling for import of su....
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....nts. 11. It is clarified that at certain ports / airports / ICDs / CFSs where Port Health Officers (PHO) under PFA, 1954 or Authorised officers under FSS Act, 2006 are not available, the samples will be drawn by Customs and the same may be got tested from the nearest Central Food Laboratory or a laboratory authorized for such testing by DGHS or FSSAI. 12. RMD shall develop an application software that incorporates the stipulation of testing of imported foodstuff and alerts the Customs officer to the effect the number of past shipments already tested and found fit warrants future shipments need not ordinarily be tested. This should apply regardless of port of import so long as the importer, supplier and item of import do not change. In other words, if such a shipment is imported say, at Mumbai and the previous 5 shipments imported at, say, Delhi have passed the test, then the next shipment at Mumbai need not be tested. A suitable data base would also be prepared at each Custom House to indicate the compliance history of importers. 13. The Board Circular 58/2001-Cus dated 25.10.2001 stands modified to above extent. 14. These instructions may be bro....
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....argin of profit; iii. Amount of penalties that may be levied under the Customs Act, 1962, as applicable, at the time of adjudication of the case. 2.3. Depending on the specific nature of a case, the competent authority may, for reasons to be recorded in writing, increase or decrease the amount of security deposit as indicated above. 3.In this context, attention is invited to the judgment dated 28.07.2016 of the Hon'ble Madras High Court in Writ Appeal No. 377 of 2016 in the case of Malabar Diamond Gallery Pvt. Ltd. Vs Additional Director General, DRI, Chennai & Ors. Wherein the Hon'ble Court has given sufficient discretion to the adjudicating authority to deny provisional release of goods in any case where the goods are smuggled or import is treated as illegal and in violation of the statutory provisions. In terms of the said judgment, by specifying the relevance and reason, the adjudicating authority may deny provisional release of any goods which are liable to confiscation under Section 111 or Section 113 as they would fall under the definition of prohibited goods, in terms of Section 2(33) of the Customs Act, 1962." 29. Further learned counsel....
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.... Principal Commissioners/Commissioners of Customs / Customs (Preventive), All Principal Commissioners/ Commissioners of Customs and Central Excise. Sir/Madam, Sub: Detailed guidelines for re-testing of samples- reg. World Trade Organization (WTO) negotiated Trade Facilitation Agreement (TFA),which aims at simplifying the trade processes and bringing down barriers to trade has come into force w.e.f 22nd February, 2017. India is a signatory to this agreement. 2) India has placed a number of trade related measures negotiated under the TFA in Category A. Article 5.3.1 envisages granting an opportunity for a second test in case the first test result of a sampletaken upon arrival of goods declared for importation shows an adverse finding. Further Article 5.3.3makes it obligatory to consider the result of the second test, if any, for the release and clearance of goods, and, if appropriate, may accept the results of such test. The aforementioned Articles have been placed incategory A. In order to have uniformity in approach among the field formations with regard to re-testing of samples, the following procedure is prescribed: a. Customs....
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....signment is still within the customs control. However, this option should not be resorted to in every case of variation between the first test and re-test results. g. The facility of re-testing, is a trade facilitation measure, which should generally not be denied in the ordinary course. However, there might arise circumstances where the customs officer is constrained to deny the re-testing facility. Board expects that such denial would be occasional and on reasonable grounds to be recorded in writing. h. Where the re-testing procedure is done at the instance of the department instead of the importer, the above procedure shall be followed mutatis mutandis.3) Difficulties, if any, in implementation of this circular, should be brought to the notice of the Board.4) Hindi version of the circular will follow. Yours faithfully (Zubair Riaz) Director (customs) 31. In the aforesaid background the latest development has come vide office Memorandum Dated 4th June, 2019 issued by the Government of India in its Ministry of Commerce and Industry, Department for Promotion and Industry and Internal Trade, the office Memorandum reads as under" " No. 12013/14/....
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....quires sufficient processing to be done and only thereafter, this would be packaged in terms of the provisions of the Food Safety and Standards (Packing and lebelling) Regulations 2011 for being put up for sale. The learned Writ Court took a view that the stage had not come into existence when the sample was sent by custom authorities to the 'CFL', Kolkata (Extension Center, Raxaul). 33. As is evident from the discussions made in the judgment dated 24.07.2013 passed in M.J.C. No. 2185 of 2013, learned Writ Court hearing the modification application was not apprised of the fact that all consignment of high risk food items are liable to be referred to authorized representative of FSSAI or PHOs as the case may be for testing and clearance for testing and clearance can be allowed only after testing report as per the instructions contained in the Custom Circular No. 58/2001 dated 25.10.2001 (referred the Circular No. 3/11). The Court was also not informed that the Custom authorities were authorized to take samples and get them tested from the nearest Central Food Laboratory. Further it appears that the guidelines for provisional release of the seized goods as contained....
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.... has been brought to show that the very sampling and testing of the Areca Nut was not in accordance with law. 36. The another submission of learned counsel for the petitioners that there cannot be a refusal to provisionally release the goods on the grounds stated in Annexure '4' to the writ application is also not acceptable to this Court. The Court has taken note of the detail guidelines issued by the Department of Customs to streamline the divergent procedures being followed for grant of provisional release of the goods which are seized under Section 110 of the Customs Act, 1962. The provisional release of the seized goods is to be refused when the goods do not fulfill the statutory compliance requirements of any Act, Rule, Regulation or any other law for the time being enforced. 37. In the present case, since the Food Laboratory Report has found that the Betel Nut are not fit for human consumption, in the opinion of this Court, no fault may be found with the rejection of the request of the petitioners for grant of release. 38. Now coming to the another question with regard to the sustainability of the seizure. This Court had earlier occasion to deal on....