Read Order- M/s Modern Insecticides Limited v. Commissioner of Customs and others

LE Staff

Chandigarh, August 17, 2021: The Punjab and Haryana High Court has directed the Custom Authorities to provisionally release seized goods (Sulphur Formulation) for re-export if the petitioner company submits a bond of Rs.15 crore within seven days and complies with other formalities as per law.

This Petition had been filed against the alleged act of omission by the Customs Department in not giving effect to the order passed by the Appellate Authority whereby it was directed that the goods be released provisionally for re-export, subject to furnishing a bond equal to the value of the goods imported and after representative samples are drawn for further investigation.

The Petitioner Company, M/s Modern Insecticides Limited, claimed that it had exported what it termed to be ‘Sulphur Formulation’ to a Sister Concern in Dubai but they could not be sold because there was no demand at that time and consequently, those goods were sent back to the petitioner. 

According to the Customs Department, an ongoing investigation showed that some of the goods which were returned were actually different from the ones that had been exported and consequently, the goods were detained. 

The petitioner moved an application for provisional release of goods for re-export but it was declined. Later, the Appellate Authority allowed the plea of the petitioner on certain terms.

The main grievance of the Company was that despite that order, goods were not released. The company prayed that the goods be released and re-export of the same be permitted.

The petitioner also referred to an order passed on January 15, 2021, in which the Commissioner of Customs had in another matter permitted re-export of the goods after ordering confiscation on the grounds of suppression, mis-declaration, misclassification and import of prohibited goods.

The Authorities strongly asserted that the petitioner had misdeclared the returned goods and had consequently tried to evade the customs duty. It was also stated that the actual value of the goods which were returned was about eight times the value of those goods which had been sent abroad. 

The High Court referred to an earlier order of the Commissioner (Appeals) passed on June 9, 2021  and stated that therein it was noticed by the Commissioner that on an earlier occasion also, an identical issue had arisen and the goods of the petitioner were permitted to be cleared by a release order passed on June 20, 2018.

The Court also mentioned that the Adjudicating Authority through the said order while granting provisional release of the goods had specifically held that no duty is leviable on the goods ordered to be cleared to an export oriented unit and that the said release order had been accepted by the Department. 

The Division Bench of Justice Ajay Tewari and Justice Vikas Bahl clarified  that the goods in the instant case are in powder form and have limited shelf life and shall get deteriorated if exposed to extreme weather conditions and lose their utility as well as monetary value. 

According to the Bench, reliance in the order dated June 9, 2021 had also been placed on the judgment of the Supreme Court in the matter of Union of India and others Vs. Raj Grow Impex LLP and others, in which, even after holding that the goods were liable to absolute confiscation, an option was given to the Respondent therein to re-export the goods.

Keeping these facets in consideration, the Court affirmed that the samples with respect to the goods in question had already been taken by the Authorities. 

The Division Bench noted that the petitioner is a 100% export-oriented unit and thus, any difference in the declaration of the value of the goods to be exported by the petitioner would not make much difference, as the petitioner would be entitled to seek 100% refund of the duty paid. 

The High Court added that that the observations in this Order were only for the purpose of provisional release of the goods for re-export.

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