Murugula Shabbir Shaik Vs Additional Commissioner of Customs (Madras High Court)
HC found Rs. 1 Cr Bank Guarantee on Rs. 18L Import onerous on rejection of animal feed as agricultural nuts, remanded back for reconsideration
Conclusion: An order of the Customs Department for rejecting agricultural nuts that were intended for use as animal feed triggering higher import restrictions and duties for the provisional release of animal feed cargo was remanded back for not providing an opportunity for assessee to submit his explanation and had been passed in violation of principles of natural justice.
Held: Assessee had imported the goods through Chennai Port in November 2024. However, the Customs Department classified the cargo under Chapter 8 of the Customs Tariff Act, which pertained to edible nuts, and imposed conditions for provisional release under Section 110-A of the Customs Act, 1962. These included a bank guarantee of ₹1 crore and a bond for ₹1.76 crore, despite the declared value of the goods being only ₹18.3 lakhs. The importer contended that the cargo was unfit for human consumption and should rightly fall under Chapter 23, which governed animal feed and carried far less regulatory and duty burdens. Assessee argued that the customs officers acted arbitrarily and with total non-application of mind. He contended that their reliance on Chapter 8 and a now-quashed CBIC Circular was unjustified. In addition, assessee submitted a test report dated January 2025 that confirmed the goods were unfit for human use and asserted that there was no legal basis to impose minimum import price (MIP) restrictions or classify the goods as edible nuts. He also submitted that he was not granted a personal hearing before such extreme conditions were imposed a clear violation of principles of natural justice. The Customs Department, on the other hand, contended that they had discretion under Section 110-A to impose such conditions and claimed that in earlier imports, similar goods from assessee had been diverted for human consumption. It was held that the goods in question were agricultural rejected nuts and used as an animal feed, which are perishable items. The goods had arrived at Chennai port on 29.11.2024. In view of the fact that the subject goods were perishable in nature and the subject goods had arrived at Chennai port in the month of November 2024 itself, necessarily Revenue would have to reconsider the impugned order at the earliest. This Court considering the nature of the cargo and considering the facts that the said cargo had arrived at Chennai Port on 29.11.2024, deemed it fit to direct Revenue to reconsider the impugned order within a period of three weeks from the date of receipt of a copy of this order. Since the impugned order had been passed without considering the contentions of assessee as raised in this writ petition and without affording any personal hearing to assessee and also by not providing an opportunity for assessee to submit his explanation and had been passed in violation of principles of natural justice, this Court had to necessarily quash the impugned order by remanding the matter back for a fresh consideration.
