Imported Goods Need Not Be Absolutely Confiscated And Shall Be Provisionally Released U/s. 110-A Of Customs Act: Reiterates Madras HC

While grating relief to M.R.J. Trading (petitioner), the Madras High Court allowed the provisional release of a consignment of black pepper imported from Sri Lanka, which was prohibited under Notification No. 21/2015-2020 dated July 25, 2018 issued by the Directorate General of Foreign Trade.

A Single Judge Bench of Justice C. Saravanan observed that “there is no mandate that the goods shall be absolutely confiscated and vested with the Government. They can be released provisionally under Section 110-A of the Act pending adjudication. Taking note of the above view of the Madurai Bench of this Court, Court is inclined to order a provisional release of the imported consignment of black pepper subject to petitioner furnishing suitable securities in the form of guarantee and subject to the meeting standards prescribed by the Food Safety Authority under the provisions of the Food Safety and Standards Act, 2006”.

Advocate Hari Radhakrishnan appeared for the Petitioner, whereas Advocate K.S. Ramasamy appeared for the Respondent.

As per the brief facts, the petitioner had imported consignments of black pepper from Sri Lanka. The petitioner had declared the value of the black pepper at Rs. 435 per kg. According to Notification No. 21/2015-2020 dated July 25, 2018, black pepper with an import value below Rs. 500 per kg was prohibited.

The counsel for the petitioner argued that although the validity of Notification No. 21/2015-2020 dated July 25, 2018 had been upheld by the Kerala High Court, it was still possible to allow the clearance of the imported black pepper. It was contended that even if it was eventually concluded that import was prohibited under Section 125 of the Customs Act, 1962, there was discretion to allow the goods upon payment of a redemption fine.

After considering the submission, the Bench noted that the petitioner had an alternate remedy through an appeal before the Appellate Commissioner. However, it was observed that the Appellate Commissioner, as a statutory authority, would be guided by the Board in Circular No. 35/2017-Cus., dated Aug 16, 2017, bearing reference F.No.394/13/2016-Cus (AS), which left no discretion with the Appellate Commissioner.

The Bench highlighted that the said circular, prima facie, contradicted the proviso to Section 151A of the Customs Act, and therefore, it would not serve any useful purpose to send the petitioner to pursue the remedy before the Appellate Commissioner unless the circular itself was challenged in this Court.

The Bench remarked that Circulars issued by the Board are not binding on the Courts, as established by the Supreme Court in the case of Commissioner of Central Excise, Bolpur v. M/s. Ratan Melting & Wire Industries [2008 (231) E.L.T. 22 (SC)].

The Bench further relied on the case of M/s. AI Qahir International Vs. The Commissioner of Customs and others [W.A(MD) No.1782 of 2021] and pointed out that there is no requirement for the goods to be absolutely confiscated and vested with the Government. They can be provisionally released under Section 110-A of the Act pending adjudication.

As a result, the High Court ordered for provisional release of the imported consignment of black pepper, provided that the petitioner furnished suitable securities in the form of a guarantee and ensured that the consignment met the standards prescribed by the Food Safety Authority under the provisions of the Food Safety and Standards Act, 2006.

The High Court further specified that the Customs department should send the sample of the imported consignment of black pepper to approved testing laboratories recognized by the Food Safety Authorities under the Food Safety and Standards Act.

If the consignment meets the safety requirements under the said Act, it shall be allowed to be provisionally cleared at Rs.500 per kg, subject to payment of Customs duty, and the petitioner shall provide the necessary security for any potential redemption fine that may be imposed after proper adjudication under Section 125 of the Customs Act, added the Court.

Cause Title: M.R.J. Trading v. The Additional Commissioner of Customs

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