Union of India and Ors. Vs Raj Grow Impex LLP and Ors (Supreme Court of India)
Conclusion: The Court ordered the absolute Confiscation of Peas and Pulses but if the importer concerned opted for re-export, within another period of two weeks from today, such a prayer for re- export might be granted by the authorities after recovery of the necessary redemption fine and subject to the importer discharging other statutory obligations. If no such option was exercised within prescribed time, the goods should stand confiscated absolutely.
Held: Assessee were essentially aggrieved of the directions issued by the High Court for compliance of the orders-in-original dated 28.08.2020 passed by the Additional Commissioner of Customs, Group-I, Mumbai and consequently, for release of the goods imported by the private respondents though the goods in question were, according to the appellants, liable to absolute confiscation. The genesis of the present litigation lied in the notifications issued by the Central Government under the Foreign Trade (Development and Regulation) Act, 1992 as also the consequential trade notices issued by the Directorate General of Foreign Trade, making provisions for restricting the import of certain beans, peas and pulses. The relevant background aspects of the matter were that the Central Government had issued notifications dated 05.08.2017 and 21.08.2017, revising the policy for import of urad/moong and pigeon peas/toor dal from “free” to “restricted” with a stipulation as to annual quota and requirement of a prior licence from DGFT. Then, by the notification dated 25.04.2018, import of the said beans/pulses was to remain restricted requiring a prior licence and with a stipulation as to annual quota for the fiscal year 2018-2019. One of the importers, M/s. H preferred a writ petition before the Madras High Court, challenging the notification dated 25.04.2018 and trade notices issued on 9th, 16th and 18th May, 2018 respectively. The said assessee also prayed for interim relief, of permission to import peas as per the contracts. By the interim order dated 28.06.2018, the High Court stayed the operation of the notification dated 25.04.2018 and thereby, permitted imports without the requisite licence. Several other writ petitions were filed before different High Courts challenging the restrictions on import of these beans/peas/pulses and various interim orders were passed, staying the notifications; and leading to the effect of permitting imports without any restrictions as to quota or licence. The main plank of submissions in the said writ petitions was that DGFT, the statutory authority under the FTDR Act, was not authorised to issue an order amending the EXIM policy and such a power vested only in the Central Government in terms of Section 3(2) read with Section 6(3) of the FTDR Act. It was held that in the present cases question as to whether the importers (assesses) were likely to suffer irreparable injury in case the interim relief was denied and they were to ultimately succeed in the writ petitions. A direct answer to this question would have made it clear that their injury, if at all, would have been of some amount of loss of profit, which could always be measured in monetary terms and, usually, could not be regarded as an irreparable one. Another simple but pertinent question would have been concerning the element of balance of convenience; and a simple answer to the same would have further shown that the inconvenience which the importers were going to suffer because of the notifications in question was far lesser than the inconvenience which assessees were going to suffer (with ultimate impact on national interest) in case operation of the notifications was stayed and thereby, the markets of India were allowed to be flooded with excessive quantity of the said imported peas/pulses. These appeals deserve to be allowed and, while setting aside the orders passed by High Court and approving the orders-in-appeal, the goods in question were to be held liable to absolute confiscation but with a relaxation of allowing reexport, on payment of the necessary redemption fine and subject to the importer discharging other statutory obligations. The importers being responsible for the improper imports as also for the present litigation, apart from other consequences, also deserved to be saddled with heavier costs. The court ordered that the subject goods were held liable to absolute confiscation but, in continuity with the order in these appeals, it was provided that if the importer concerned opted for re-export, within another period of two weeks from today, such a prayer for re- export might be granted by the authorities after recovery of the necessary redemption fine and subject to the importer discharging other statutory obligations. If no such option was exercised within two weeks from today, the goods should stand confiscated absolutely.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Leave granted.
2. In this set of appeals, the Union of India and the authorities related with customs have questioned the orders dated 15.10.2020 and 05.01.2021, passed by the High Court of Judicature at Bombay in Writ Petition (L) Nos. 3502-3503 of 2020 and Writ Petition (ST) No. 24 of 2021 respectively1. The appellants are essentially aggrieved of the directions issued by the High Court for compliance of the orders-in-original dated 28.08.2020 passed by the Additional Commissioner of Customs, Group-I, Mumbai and consequently, for release of the goods imported by the private respondents though the goods in question are, according to the appellants, liable to absolute confiscation.
2.1. Looking to the subject-matter of the present appeals involving a multitude of issues and several of the background aspects, we may profitably draw a brief outline and sketch of the matter at the outset.
3. The genesis of the present litigation lies in the notifications issued by the Central Government under the Foreign Trade (Development and Regulation) Act, 19922 as also the consequential trade notices issued by the Directorate General of Foreign Trade3, making provisions for restricting the import of certain beans, peas and pulses.
3.1. In the preceding years, such notifications and trade notices were put to challenge in different High Courts by way of writ petitions wherein, different interim orders were passed and the importers effected various imports on the strength of such interim orders. However, the said writ petitions were ultimately dismissed by the High Courts and one petition seeking special leave to appeal was also dismissed by this Court. Similar notifications and trade notice issued in the subsequent year, on restriction of import of certain beans, peas and pulses, were again challenged in different High Courts and, notwithstanding the rejection of a similar challenge in the past by other High Courts, various interim orders were again passed; and the importers again proceeded to effect various imports under the cover of such interim orders.
3.2. Faced with such challenges and interim orders in different High Courts, the Union of India filed various transfer petitions, seeking transfer of the cases relating to the same subject-matter to this Court. Having regard to the nature of controversy and surrounding factors, this Court heard the matters on merits so as to finally deal with the challenge to the notifications and the trade notice in question. This led to the judgment dated 26.08.2020 by this Court in the case of Union of India and Ors. v. Agricas LLP and Ors.4 upholding such notifications dated 29.03.2019, issued by the Central Government as also the consequential trade notice dated 16.04.2019, issued by the DGFT.
3.3. In the said judgment dated 26.08.2020, this Court, apart from other findings, held that the importers cannot be said to be under any bona fide belief in effecting the imports under the cover of interim orders; and they would face the consequences in law. While dismissing the writ petitions, this Court held that the imports made while relying on the interim orders were contrary to the said notifications and trade notice issued under the FTDR Act; and would be so dealt with under the provisions of the Customs Act, 19625. However, this judgment has also not given a quietus to the litigation and the events taking place after this decision have given rise to the present appeals.
4. Immediately after the decision of this Court dated 26.08.2020, the private respondents of these appeals, M/s. Raj Grow Impex LLP and M/s. Harihar Collections, whose imported goods covered by the said notifications had not been released, addressed respective communications to the Additional Commissioner of Customs, Group-I, Mumbai6, on the very day of judgment i.e., 26.08.2020, requesting for waiver of show cause notices and for urgent personal hearing. The Adjudicating Authority took up their cases in priority and, by his almost identical orders-in-original dated 28.08.2020, while ordering confiscation, gave an option to the importers to redeem the goods in question on payment of fine in lieu of confiscation under Section 125(1) of the Customs Act. While acting upon the orders so passed by the Adjudicating Authority, the importers made certain payments towards customs duty, redemption fine and penalty and obtained out of charge7; and some of the consignments were released. However, the DGFT took exception against release of the goods in question as the same were restricted items and stated in its letter dated 01.09.2020 that such release would be contrary to the import policy. Consequent to this and other communications, the customs authorities requested Mumbai Port Trust not to issue delivery order of the consignments in question and hence, the other consignments were not released.
5. Feeling aggrieved by such communications and stoppage of release of the goods in question, the importers (private respondents herein) approached the High Court by way of separate writ petitions, essentially seeking mandamus for clearance of the goods in question. While the said writ petitions were pending, the Commissioner of Customs (Import-II) passed an order dated 01.10.2020 in exercise of his powers under Section 129D(2) of the Customs Act, pointing out the alleged deficiencies in the adjudication orders; and directed filing of appeals before the Commissioner (Appeals)8. The appeals so filed were ultimately allowed by the Appellate Authority on 24.12.2020. However, before such decision in appeals, the High Court heard the said writ petitions of the importers on 06.10.2020 and proceeded to decide the same by the common order dated 15.10.2020.
5.1. In its order dated 15.10.2020, the High Court took the view that, prima facie, the grounds stated in the order dated 01.10.2020 did not make out any such case of illegality or impropriety as to call for exercise of suo motu revisional powers by the Commissioner under Section 129D(2) of the Customs Act. Having said that, the High Court left the matter to be decided by the Commissioner (Appeals). However, thereafter, the High Court proceeded to examine the question as to the justification or otherwise for not releasing the goods in question. In this regard, the High Court was of the view that when the orders-in-original were holding the field and the importers had complied with the terms and conditions thereof; and where the importers were incurring expenditure because of warehousing, any further withholding of the imported goods was not justified. Thus, the High Court issued directions to the respondents to forthwith release the goods of the importers covered by the bills of entry mentioned in paragraph 38 of the order.
6. Seeking to challenge the aforesaid order dated 15.10.2020, the Union of India and its authorities related with customs approached this Court on 26.11.2020 but, before their SLPs were taken up for consideration, three major events took place in these matters. First such event related to an application made by one of the importers M/s. Raj Grow Impex to the High Court for modification of the order dated 15.10.2020 because some of its bills of entry had not been included therein. The High Court accepted this application and issued modification order dated 09.12.2020 accordingly. The second relevant event had been that by the orders-in-appeal dated 24.12.2020, the Commissioner (Appeals) proceeded to allow the appeals preferred by the Department against the aforesaid orders-in-original dated 28.08.2020 and ordered absolute confiscation of the goods in question while enhancing the amount of penalty; of course, the Appellate Authority found that some of the goods in question had since been released and treated that part of the matter a fait accompli. In the third major event, the said importer M/s. Raj Grow Impex challenged the order-in-appeal dated 24.12.2020 by way of another writ petition in the High Court. While considering this fresh writ petition on 05.01.2021, the High Court took exception against the observations made and directions issued by the Appellate Authority which, according to the High Court, were running contrary to its decision dated 15.10.2020. Accordingly, the High Court stayed the operation of the order-in-appeal and directed the authorities concerned to comply with the directions of the orders dated 15.10.2020 and 09.12.2020. An ancillary part of the third event was that the said importer also moved a contempt petition stating willful disobedience of the aforesaid order dated 09.12.2020 whereupon, by a separate order dated 05.01.2021, the High Court issued show cause notice to the authorities concerned and directed them to remain personally present in the Court on 21.01.2021. Again aggrieved, the Union of India and its authorities concerned approached this Court against these orders dated 05.01.2021, as passed by the High Court, respectively in the fresh writ petition and in the contempt petition.
7. The aforementioned SLPs against the orders so passed by the High Court were considered analogously on 20.01.2021 and, while issuing notice, this Court stayed the operation of the order impugned. Later on, these matters were taken up for hearing in priority looking to the nature of controversy and the goods involved. During the course of hearing, on 18.03.2021, this Court found no reason for continuation of contempt proceedings in the High Court and closed the same. On 18.03.2021, yet another observation was made by this Court with reference to the submission of learned ASG appearing for the appellants, that it was open to the private respondents to opt for re-export of perishable imported goods lying in the customs warehouse to outside India.
8. The outline foregoing makes it clear that in the case of Agricas (supra), while deciding on the validity of the notifications and the trade notice, this Court did not accept that the imports in question, as made on the basis or under the cover of the interim orders passed by the High Courts, could be regarded as bona fide; but, in the given circumstances and the issues raised, this Court left those goods to be dealt with under the Customs Act. Now, dealing of the goods in question under the Customs Act has given rise to this litigation. On one hand, the appellants maintain that the subject goods are required to be confiscated absolutely or else, the entire purpose of the said notifications and trade notice shall be frustrated; and hence, they question the legality and validity of the orders passed by the Adjudicating Authority and the High Court whereby and whereunder, the goods in question are required to be released with payment of fine in lieu of confiscation. On the other hand, the importers maintain that the goods in question are not falling in the category of banned or totally prohibited goods and hence, they have rightly been ordered to be released with payment of fine in lieu of confiscation and other charges. They, thus, support the impugned orders passed by the Adjudicating Authority and the High Court.
8.1. Apart from the said two importers who had filed their respective writ petitions in the High Court and who are directly related with the orders in question before us, two more importers have moved impleadment/intervention applications while asserting that they have also imported under the cover of the interim orders of the High Court and their matters were pending at different stages with the authorities but, they are also likely to be affected by the decision in this set of appeals. They also support the stand that the goods in question are available for release and are not liable to absolute confiscation.
The parties and their respective interests in the matter
9. Having drawn a brief sketch indicating the salient features of this case and the issues involved, we may narrate, in brief, the relevant particulars of the parties before us in these appeals9.
The appellants
10. The Union of India through the Secretary, Ministry of Commerce and the Secretary, Department of Revenue, Ministry of Finance is the appellant before us; and is joined by the Commissioner of Customs (Import-I), Mumbai and other authorities related with customs. The Commissioner of Customs (Appeal), Mumbai (Zone-I), who had passed the order dated 24.12.2020 as Appellate Authority, has joined as a party only in the appeal against the order dated 05.01.202110. These appellants are aggrieved of the respective orders passed by the High Court of Judicature at Bombay in the respective writ petitions; and maintain that the goods in question could not have been released and are liable to absolute confiscation.
The contesting respondents
11. The two importers, in whose relation the impugned orders have been passed by the authorities concerned and the High Court are the contesting respondents of these appeals. Their relevant particulars are as under:
11.1. M/s. Raj Grow Impex LLP
This importer is said to be a partnership firm having its registered office at Jaipur in the State of Rajasthan. This firm had filed ten bills of entry dated 01.11.2019 for clearance of 24,815 MTs of yellow peas, said to have been imported under the cover of interim order dated 20.07.2019, as passed by the Rajasthan High Court, Bench at Jaipur in WP No. 11974 of 2019. Its efforts to get the goods released with payment of fine led to the order-in-original dated 28.08.2020. This importer had obtained OOC for three bills of entry and got released 7,500 MTs of the goods in question but the remaining were not released. This importer had filed WP (L) No. 3502 of 2020 before the High Court of Judicature at Bombay seeking mandamus which was decided by the common order dated 15.10.2020. This importer has also filed WP (ST) No. 24 of 2021 questioning the order-in-appeal dated 24.12.2020 wherein, the High Court of Judicature at Bombay passed the interim order dated 05.01.2021.
11.2. M/s. Harihar Collections
This importer is said to be a proprietorship concern having its registered office at Jaipur in the State of Rajasthan. This importer had filed eight bills of entry dated 18.11.2019 for clearance of 38,500 MTs of yellow peas, said to have been imported under the cover of interim order dated 10.07.2019, as passed by the Rajasthan High Court, Bench at Jaipur in WP No. 11752 of 2019. Similar to the above, the efforts of this importer to get the goods released with payment of fine in lieu of confiscation led to another order-in-original dated 28.08.2020. This importer had filed WP (L) No. 3503 of 2020 before the High Court of Judicature at Bombay seeking mandamus which was decided by the common order dated 15.10.2020. In relation to this importer, the Appellate Authority passed another order-in-appeal dated 24.12.2020, which has not been challenged but, the importer has stated its desire to do so in due course.
The intervenors
12. Apart from the above, two other importers have filed impleadment applications with the submissions that they have also imported a substantial quantity of goods pursuant to the interim orders passed by the Rajasthan High Court in their respective writ petitions; and that they have substantial interest in the present proceedings because any final judgment herein shall have impact on their interests. Their relevant particulars are as under:-
Nikhil Pulses Pvt. Ltd.
12.1. This importer is said to be a private limited company having its registered office at Jaipur in the State of Rajasthan. This company is said to have imported 1,02,550 MTs of yellow peas under the cover of interim order dated 02.08.2019, as passed by the Rajasthan High Court, Bench at Jaipur in WP No. 12283 of 2019. This company had received a notice dated 20.11.2020 from the Principal Commissioner of Customs, Mundra requiring to show cause as to why the goods in question are not liable to confiscation.
Agricas LLP
12.2. This importer is said to be a partnership firm having its registered office at Jaipur in the State of Rajasthan. This firm is said to have imported, inter alia, 27,775 MTs of black mapte under the cover of interim order dated 14.08.2019, as passed by the Rajasthan High Court, Bench at Jaipur in WP No. 13392 of 2019; and out of the quantity imported, 14,366 MTs of goods got released but not the remaining. It is stated by this importer that pursuant to the show cause notice dated 05.10.2020, the Commissioner of Customs, Nhava Sheva found the goods to be prohibited and liable to confiscation whereafter it had filed a writ petition bearing No. 525 of 2021 before the High Court of Judicature at Bombay against the non-clearance of the goods but in the meantime, the main issue has been taken up by this Court in these appeals.
Relevant factual aspects and background
13. Having taken note of the salient features of the case, the relevant particulars of the parties before us with their respective interests, we may now enter into the relevant factual aspects and background in necessary details but while avoiding the facts which may not have bearing on determination of the real issues involved.
14. The relevant background aspects of the matter are that the Central Government had issued notifications dated 05.08.2017 and 21.08.2017, revising the policy for import of urad/moong and pigeon peas/toor dal from “free” to “restricted” with a stipulation as to annual quota and requirement of a prior licence from DGFT. Then, by the notification dated 25.04.2018, import of the said beans/pulses was to remain restricted requiring a prior licence and with a stipulation as to annual quota for the fiscal year 2018-2019. One of the importers, M/s. Hira Traders, preferred a writ petition before the Madras High Court, challenging the notification dated 25.04.2018 and trade notices issued on 9th, 16th and 18th May, 2018 respectively. The said petitioner also prayed for interim relief, of permission to import peas as per the contracts. By the interim order dated 28.06.2018, the said High Court stayed the operation of the notification dated 25.04.2018 and thereby, permitted imports without the requisite licence. Several other writ petitions were filed before different High Courts challenging the restrictions on import of these beans/peas/pulses and various interim orders were passed, staying the notifications; and leading to the effect of permitting imports without any restrictions as to quota or licence.
14.1. The main plank of submissions in the said writ petitions was that DGFT, the statutory authority under the FTDR Act, was not authorised to issue an order amending the EXIM policy and such a power vested only in the Central Government in terms of Section 3(2) read with Section 6(3) of the FTDR Act.
14.2. The writ petitions so filed in challenge to the said and akin notifications and trade notices were dismissed by different High Courts. The writ petition by M/s. Hira Traders was dismissed by the Madras High Court on 04.04.2019. The Bombay High Court had dismissed similar writ petitions on 03.07.2018. Similarly, the Madhya Pradesh High Court had dismissed such petitions on 25.10.2018; and the Gujarat High Court had also dismissed similar writ petitions on 19.12.2018. The order passed by the Gujarat High Court was sought to be challenged in this Court in Special Leave Petition (C) No. 1922 of 2019 but, the same was also dismissed by the order dated 28.01.2019.
14.3. Thus, to put in a nutshell, it is evident that even though the High Courts initially took up the challenge to the said notifications and trade notices and granted interim orders but, ultimately, the writ petitions were dismissed. An attempt to challenge one of the decisions in this Court also failed with dismissal of the special leave petition.
15. Thereafter, in the month of March, 2019, the Central Government, in exercise of its power under Section 3 of the FTDR Act read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy 2015-2020, amended the import policy conditions relating to various items of Chapter 7 of the Indian Trade Classifications (Harmonized System) 2017, Schedule I by way of S.O. Nos. 1478(E), 1479(E), 1480(E) and 1481(E) dated 29.03.2019. These were followed by the trade notice dated 16.04.2019 by the DGFT. These notifications are at the core of controversy involved in these matters and hence, it would be just and appropriate to reproduce the same as under: –
“S.O. 1478(E).–In exercise of powers conferred by section 3 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the Central Government hereby notifies the Import Policy of items of Chapter 7 of the Indian Trade Classification (Harmonized System), 2017, Schedule-1 (Import Policy), as under-
