CESTAT erred in releasing Canadian Green Peas on payment of redemption fine: Kerala High Court

CESTAT erred in releasing Canadian Green Peas on payment of redemption fine: Kerala High Court

The Coram consisting of Justices S.V. Bhatti and Bechu Kurian Thomas noted of the Kerala High Court (HC) held in the case of M/s Shree Amman Dhal Mill (Importer) v. the Commissioner of Customs, Kochi (Revenue) that the CEST Appellate Tribunal, Bangalore, ignored relevant notifications and the mandate of the Foreign Trade (Development and Regulation) Act, (FTDR Act) and Customs Act, 1962 was not followed

The HC observed "The adjudication of a dispute in these matters is neither on the pedestal of the travesty of justice or we have so much discretion for doing proverbial justice to an importer. In matters of this nature, such an approach would go contrary to the object sought to be implemented by the authorities, in whom power is conferred particularly in matters of import, export, price, etc."

The facts of the case are that the importer before actual grant of license imported goods and filed a Bill of Entry for clearance of goods declared as Canadian Green Peas henceforth referred to as the "subject goods". The Bill of Lading was dated 27 April 2020. The subject good is Green Peas and presently treated as 'restricted' by the Revenue and Union of India. According to the declaration in the Bill of Entry the quantity declared is 210 metric tonnes with a declared assessable value of Rs.79,28,444.

The Commissioner of Customs, Kochi through Order made on the request of the importer for release of goods noted that DGFT Notification No.37/2015-2020 dated December 18, 2019, revised the import policy for the import of Peas (Pisum sativum) including Yellow Peas, Green Peas, Dun peas, and Kaspa peas.

The importer imported the subject goods after the issue of the notification dated 18 December 2019 and 28 March 2020. According to the Customs Commissioner is not needed or detrimental to the interest of farmers.

The Appellate Tribunal held that the release of goods is the only option to the Customs Commissioner in the case on hand the language of Section 125 of Customs Act is fully liberalized.

Issues before the HC

- Whether the order of Tribunal under appeal directing the release of subject goods on payment of redemption fine conforms to the scheme of Sections 2(33), 111(d) and 135 of Customs Act, 1962, Section 3 of FTDR Act, 1992 read with the notification dated 18 December 2019 and 28 March 2020, issued by Union of India?

- Whether the levy of penalty of Rs. 4 lakh is warranted in the circumstances of the case or the penalty is levied capriciously and arbitrarily?

While dealing with the first issue the HC held, "The Tribunal fell in a clear error of law. By holding that release of goods is the only option to Customs Commissioner in the case on hand the language of Section 125 of Customs Act is fully liberalized.

The reasoning of Tribunal is adopted both by other primary authority/Appellate Tribunal, then Exim policy, notifications are defeated and opens floodgates of the import Green Peas, and such contingencies are commented by Supreme Court in Union of India and others v. Agricas LLP and others, 2020 SCC Online SC 675." Hence, the first issue was decided in favour of the revenue and against the importer by the HC.

While dealing with the second issue the HC held, "We agree with the view taken by the Appellate Tribunal for sustaining the levy of penalty on the importer." The issue was answered against the importer and in favour of Revenue.