UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & ORS.

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 383 ORS. [DINESH MAHESHWARI, J.]

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2Copy pinpoint2. 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- B 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 C 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.

3Copy pinpoint3. 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 G 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 1 The order dated 15.10.2020 is to be read with the modification order dated 09.12.2020 in I.A. (L) No. 5735 of 2020 in Writ Petition (L) No. 3502 of 2020. 2 Hereinafter also referred to as ‘the FTDR Act’. 3 H Hereinafter also referred to as ‘the DGFT’ for short.

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 385 ORS. [DINESH MAHESHWARI, J.]

Court heard the matters on merits so as to finally deal with the challenge A 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. B 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 C 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.

4Copy pinpoint4. Immediately after the decision of this Court dated 26.08.2020, D 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 E 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, F the importers made certain payments towards customs duty, redemption fine and penalty and obtained out of charge 7; 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 G to the import policy. Consequent to this and other communications, the 4 Since reported as 2020 SCC OnLine SC 675; hereinafter also referred to as the case of ‘Agricas’. 5 Hereinafter also referred to as ‘the Customs Act’. 6 Hereinafter also referred to as the ‘Adjudicating Authority’. 7 ‘OOC’ for short. H

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A customs authorities requested Mumbai Port Trust not to issue delivery order of the consignments in question and hence, the other consignments were not released.

5Copy pinpoint5. Feeling aggrieved by such communications and stoppage of release of the goods in question, the importers (private respondents herein) B 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 C 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. D 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 E 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 F 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.

6Copy pinpoint6. Seeking to challenge the aforesaid order dated 15.10.2020, the G 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 8 H Hereinafter also referred to as ‘the Appellate Authority’.

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 387 ORS. [DINESH MAHESHWARI, J.]

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 E 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.

7Copy pinpoint7. 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.

8Copy pinpoint8. The outline foregoing makes it clear that in the case of Agricas (supra), while deciding on the validity of the notifications and the trade H

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A 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. D 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 E 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 F

9Copy pinpoint9. 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

10Copy pinpoint10. 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 9 This introduction of persons/entities is to broadly co-relate the parties with the points to be taken up for determination; and is not intended to be an exhaustive list of H the parties involved.

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 389 ORS. [DINESH MAHESHWARI, J.]

Customs (Import-I), Mumbai and other authorities related with customs. A 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

11Copy pinpoint11. 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 E 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 F 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 G 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 10 The Director General of Foreign Trade, the Zonal Additional Director General of Foreign Trade, and the Mumbai Port Trust are proforma respondents in the appeals against the common order passed by the High Court on 15.10.2020. H

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A 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 B 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

12Copy pinpoint12. Apart from the above, two other importers have filed C 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:- D 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, E 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 F 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.

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 391 ORS. [DINESH MAHESHWARI, J.]

Relevant factual aspects and background A

13Copy pinpoint13. 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. B

14Copy pinpoint14. 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 9 th, 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 G 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 H

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A 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 B were dismissed. An attempt to challenge one of the decisions in this Court also failed with dismissal of the special leave petition.

15Copy pinpoint15. 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 C 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 D 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 E 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-

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 393 ORS. [DINESH MAHESHWARI, J.]

2. This notification shall come into force from the date of its A publication in the official Gazette.

xxx xxx xxx

S.O. 1479(E).–In exercise of powers conferred by section 3 of the Foreign Trade (Development and Regulation) Act, 1992 (22 B 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 amends the Import Policy Conditions of items of Chapter 7 of the Indian Trade Classification (Harmonized System), 2017, Schedule-1 (Import Policy), as under - C

2. This notification shall come into force with effect from the 1st April, 2019. F xxx xxx xxx

S.O. 1480(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 G 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-

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A Exim Code Item Existing Policy Revised Policy Description condition condition 0713 31 90 Beans of the Restricted. Import of Urad shall be SPP Vigna subject to an annual Radiata (L.) (fiscal year) quota of 1.5 Wilezek lakh MT as per 0713 90 10 Split procedure to be notified 0713 90 90 Other by Directorate General B of Foreign Trade: - Provided that this restriction shall not apply to Government’s import commitments under any Bilateral or Regional Agreement or Memorandum of C Understanding.

2. This notification shall come into force from the date of its publication in the official Gazette. xxx xxx xxx D S.O. 1481(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, E Schedule-1 (Import Policy), as under -

H 2. This notification shall come into force from the 1st April, 2019.”

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 395 ORS. [DINESH MAHESHWARI, J.]

15.1. The trade notice dated 16.04.2019 issued by the DGFT laid down the modalities for making the applications for import of the commodities in question and carried the following amongst other stipulations: - “a. Applications are invited online from the intending millers/refiners (having own refining/processing capacity) of pulses/peas for its import as per ANF-2M of FTP 2015-20 to DGFT, at policy2- dgft@nic.in besides the concerned jurisdictional Regional Authorities …..”

16Copy pinpoint16. Seeking to challenge the said notifications dated 29.03.2019 and the trade notice dated 16.04.2019, about 90 writ petitions were filed before the Rajasthan High Court, Bench at Jaipur. Various akin writ petitions were filed before the High Courts of Delhi, Punjab and Haryana, Andhra Pradesh, Bombay and Calcutta. In several such writ petitions, interim orders were passed, permitting the importers to import the said peas/pulses, notwithstanding the fact that they had not been issued the import licences, as also the fact that the total imports with such interim orders would exceed the maximum quantity fixed by way of the impugned notifications.

17Copy pinpoint17. In the given set of circumstances, Union of India approached this Court with several transfer petitions. Having regard to the circumstances and submissions sought to be made, such writ petitions concerning the notifications in question were withdrawn to this Court and were ultimately dismissed by the said judgment dated 26.08.2020, in the case of Agricas (supra). Judgment dated 26.08.2020 of this Court in Agricas F

18Copy pinpoint18. In the case of Agricas (supra), a variety of issues, essentially relating to the validity of notifications and the corresponding trade notices imposing restrictions on import of peas and pulses, were dealt with by this Court on the anvil of the FTDR Act, particularly Sections 3 and 9A thereof. We need not dilate on all the issues examined and dealt with by this Court in Agricas but, a few salient features of the said decision G need to be accentuated, for the purpose of the issues involved in these appeals. 18.1. In Agricas (supra), this Court specifically took note of the stand of the Union of India, as regards the purpose and purport of the notifications in question, which could be usefully reproduced as under: - H

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A “53. The Union of India, in their affidavit filed on 26th June 2020, have pleaded that they were required to strike a balance between the farmers and the importers as largescale imports would adversely impact the interests of the farmers due to fall in prices in the local market. Reference was made to the Minimum Support Price (MSP) for Moong, B Urad and Toor dal and Gram fixed on the recommendation of the Commission for Agricultural Costs and Prices. Further, the Central Government under the schemes being run had procured 85 lakh MT of pulses directly from 53 lakh farmers by paying them MSP in the last five years. There was also increase in production of pulses from 25.42 Million MTs in 2017-18 to 26.66 Million MTs in 2020-21. Imported Yellow Peas are the perfect substitute for Gram in making of Besan which is primarily used in preparation of Indian savouries. As the price of imported Yellow Peas in India is cheaper than the domestic price of Gram, a huge shift in industry usage from Gram to Yellow Peas has taken place. In these circumstances that the government has imposed restrictions from April, 2018 onwards with a small window of annual quota for permitted imports. However, in view of the interim orders passed by the various High Courts, the actual imports of peas were to the tune of 8,51,408 MT and 6,52,607 MTs in 2018-2019 and 2019-2020 respectively, though the annual quota for these two years was 1/1.50 lakh MTs. The Government is presently holding a buffer stock of 26.94 lakh MT of Gram, against the target quantity of 3 lakh MTs. The Gram is being sold at Rs.4,000 - 4,200 per quintal, which is below the MSP of Rs.4,875/- per quintal. Imported CIF value of Yellow Peas is Rs.2,028/- per quintal. Due to the pandemic, the farmers could be compelled to make panic disposal at much lower prices. In the further affidavit filed on 1st July 2020, the Union of India has stated that they had not issued any quota for Peas, G Yellow Peas etc. as inspite of restricted quota of 1 lakh and 1.5 lakh MTs for Peas in the Financial Years 2018-19 and 2019-20, due to interim orders passed by the various High Courts, the actual import was 8.51 lakh MTs and 6.67 lakh MTs during the Financial Years 2018-19 and 2019-20, respectively. Consequently, it has been decided not to import H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 397 ORS. [DINESH MAHESHWARI, J.]

Yellow Peas in the current Financial Year 2020-21. In the affidavit filed on 6th July 2020, with reference to Section 9A of the FTDR Act, the Union of India has stated that the said section is attracted only when the goods are imported into India in increased quantity and under such conditions as to cause or threaten to cause serious injury to domestic industry. Section 9A is enacted as a safeguard mechanism in terms of Article XIX of the GATT-1994 and Article II of the WTO Agreement on Safeguards vide the Amendment Act, 2010. The notifications under challenge have been issued within the express terms of Section 3 of the FTDR Act which permits the Central Government to impose restrictions without any qualification of the nature specified in Section 9A. Power of the Central Government to restrict imports to limited quantities under Section 3 and quantitative restrictions under Section 9A of the FTDR Act are completely distinct and have no connection or interplay. The power under Section 3(2) of the FTDR Act is of a wide amplitude. Reference is also made to Rule 5(2) to assert that there is necessity of evidence that the imports had increased as a result of ‘unforeseen developments’ in addition to the necessity for evidence disclosing serious injury or threat of serious injury to domestic industry and a causal link between imports and serious injury. The restrictions have been imposed not due to increased quantities of imports but to prevent panic disposal by farmers as the prices of Gram would come down. It is submitted that special provisions like 9A of the FTDR Act would be limited to areas within its scope leaving the general provision free to operate in other areas.” (emphasis in bold supplied) F 18.2. Another line of over-ambitious but rather misconceived arguments on the interpretation of the impugned notification was suggested on behalf of the importers as if each licencee could import the quantity mentioned in the notification. Such a baseless contention had, in fact, been rejected at the outset by this Court. The relevant finding in G that regard may also be usefully noticed as follows: “17. We would also without any hesitation reject the contention raised by some of the importers that the impugned notification is illegal because of vagueness or allows restricted quantity of 1/1.5 lakh MT of Peas (Pisum Sativum) including Yellow Peas, Green H

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A Peas, Dun Peas and Kaspa Peas as against a licence, meaning thereby each licensee is allowed to import the maximum quantity specified in the notification. In other words, the total quantity specified in the notification is per licensee and not for the total imports of the commodity specified in the notification. The submission has no merit as the notification expressly uses the expression ‘total quantity’ of the commodity specified which could be imported. There is no ambiguity or vagueness in the notifications, relevant portions of which have been quoted above. Even otherwise the expression ‘total quantity’ cannot be construed as quantity per licence issued as the number of licences issued concerning the subject goods could be numerable (as per the Union of India 2248, 1016 and 2915 licences were issued in 2019-20 for import of Tur, Moong and Urad dals against restricted quota of 4, 1.5 and 4 lakh MT, respectively). If each licence holder is allowed to import 1/1.5 lakh MT of Peas, the total import would well exceed the total annual consumption after we account for the production within India. In our opinion, the plea and interpretation of the importers if accepted will not only be contrary to the express language of the notification but would frustrate the intent and object of restricting the imports of the stated goods by prescribing a quota. We decline and would not accept this farfetched and somewhat drivel interpretation of simple and straight forward words.” 18.3. After dealing with the interpretation of Section 9A of the FTDR Act and its co-relation with Article XI and Article XIX of GATT- 1994 as also Section 3 of the FTDR Act, this Court held the notifications in question to be valid, for having been issued in accordance with the powers conferred on the Central Government in terms of sub-section (2) of Section 3 of the FTDR Act. This Court, inter alia, observed and held as under: - “61. This being the position, Section 9A has to be interpreted as an escape provision when the Central Government i.e. the Union of India may escape the rigours of paragraph (1) of Article XIX of GATT-1994. Section 9A is not a provision which incorporates or transposes paragraph (1) of Article XI into the domestic law either expressly or by necessary implication. To hold to the contrary, we would be holding that the Central Government has no right H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 399 ORS. [DINESH MAHESHWARI, J.]

and power to impose ‘quantitative restrictions’ except under A Section 9A of the FTDR Act. This would be contrary to the legislative intent and objective. Section 9A of the FTDR Act does not elide or negate the power of the Central Government to impose restrictions on imports under sub- section (2) to Section 3 of the FTDR Act. B

62. In other words, the impugned notifications would be valid as they have been issued in accordance with the power conferred in the Central Government in terms of sub- section (2) to Section 3 of the FTDR Act. The powers of the Central Government by an order imposing restriction on imports under sub-section (2) to Section 3 is, therefore, not entirely curtailed C by Section 9A of the FTDR Act.” (emphasis in bold supplied) 18.4. As noticed, before the said writ petitions were withdrawn to this Court, various interim orders had been passed by the High Courts. D It was stated before this Court that, relying upon such interim orders, the importers had imported various quantities of peas and pulses; and it was contended on behalf of the importers that those had been bona fide imports under the interim orders of the Courts. This Court specifically rejected such contentions and held that despite the High Courts of Madras, Bombay, Gujarat and Madhya Pradesh having dismissed the writ petitions E of similar nature while upholding the notifications and trade notices, the importers took their chance, obviously for personal gains and they would, accordingly, face the consequences in law. This Court, in no uncertain terms, rejected the submissions that the importers had acted in bona fide belief. The relevant observations and findings of this Court in Agricas F (supra) in this regard could be usefully extracted as under: - “D. Contention of the importers of bona fide imports under interim orders and prayer for partial relief. 65.Learned counsel for some of the importers had placed reliance on Raj Prakash Chemical v. Union of India, which judgment, G in our opinion, has no application. In Raj Prakash Chemical(supra), the petitioner had acted under a bona fide belief in view of judgments and orders of High Courts and the interpretation placed by the authorities. In this background, observations were made to giving benefit to the importers, despite H

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A the contrary legal interpretation. In the instant case, the importers rely upon the interim orders passed by the High Court’s whereas on the date when they filed the Writ Petitions and had obtained interim orders, the Madras High Court had dismissed the Writ Petition upholding the notification. Similarly, the High Court of adjudicature at Bombay, High Court of Gujarat and the High Court B of Madhya Pradesh had dismissed the Writ Petitions filed before them and upheld the notifications and the trade notices. Notwithstanding the dismissals, the importers took their chance, obviously for personal gains and profits. They would accordingly face the consequences in law. In these circumstances, the C importers it cannot be said had bona fide belief in the right pleaded.” 18.5. Only one aspect of the matter was not decided by this Court and that related to the pending appeals against the orders suspending or terminating the import-export code11 of some of the parties. This Court D left the statutory appeals in that regard to be decided in accordance with law.

19Copy pinpoint19. Having upheld the validity of the notifications and trade notice and also having held that the importers, while effecting the imports by relying upon the interim orders, cannot be said to have acted bona fide, this Court concluded on the writ petitions with the observations and directions that the imports in question would be held to be contrary to the notifications and trade notices issued under the FTDR Act; and would be so dealt with under the provisions of the Customs Act. This Court dismissed all the writ petitions which were subject of the transfer petitions as also the writ petitions filed by the intervenors. The concluding part of the decision of this Court in Agricas (supra) reads as under: - “F. Conclusion

67. Accordingly, we uphold the impugned notifications and the trade notices and reject the challenge made by the importers. The G imports, if any, made relying on interim order(s) would be held to be contrary to the notifications and the trades notices issued under the FTDR Act and would be so dealt with under the provisions of the Customs Act 1962. The Writ Petitions subject matter of the Transfer Petitions, subject to E above (What is not decided) are 11 H ‘IEC’ for short.

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 401 ORS. [DINESH MAHESHWARI, J.]

dismissed. Writ Petitions filed by the intervenors before the respective High Courts shall stand dismissed in terms of this decision. Pending application(s), if any, also stand disposed of in the above terms. No order as to costs.”

20Copy pinpoint20. Therefore, it is beyond a shadow of doubt that in Agricas (supra), this Court took note of raison d’être that the notifications were fundamentally intended to protect the domestic agriculture market and also pronounced on the true meaning and import of these notifications; and while rejecting the far-stretched interpretation suggested on behalf of the importers that each licencee was entitled to import the quantity mentioned in the notifications, this Court not only upheld the notifications and the trade notice in question but also held that any import made under the cover of the interim order cannot be regarded as bona fide; and being contrary to the applicable notifications and trade notice, would be so dealt with under the provisions of the Customs Act. However, what has happened after the aforesaid decision of this D Court dated 26.08.2020 in Agricas has given rise to the present round of litigation. Orders-in-original dated 28.08.2020: The Adjudicating Authority allows release of goods on payment of redemption fine

21Copy pinpoint21. As noticed, within no time after the decision of this Court E dated 26.08.2020 in Agricas (supra), the private respondents of these appeals, M/s. Raj Grow Impex LLP and M/s. Harihar Collections, who had made certain imports of the goods covered by the said notifications but their imported goods had not been released, took up the proceedings in the manner that the eventuality of absolute confiscation could be obviated and they could get the goods released by payment of fine. In this regard, they addressed respective communications on 26.08.2020, requesting for waiver of show cause notices under Section 124 of the Customs Act 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 under Section 111(d) of the Customs Act, gave an option to the importers to redeem the goods in question on payment of fine in lieu of confiscation under Section 125(1) thereof. Having regard to the questions involved, the relevant features of the said orders-in-original dated 28.08.2020, in relation to the individual importer may be taken note of. H

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A M/s. Raj Grow Impex LLP

22Copy pinpoint22. On 01.11.2019, the importer M/s Raj Grow Impex LLP filed ten bills of entry bearing numbers 5520536, 5520537, 5520538, 5520539, 5520540, 5520541, 5520732, 5520871, 5520872 and 5521191, for clearance of 24,815 MTs of yellow peas, said to have been imported B under the cover of interim order passed by the Rajasthan High Court on 20.07.2019 in WP No. 11974 of 2019. However, the goods were not released, particularly for the objections against their release by the officers of DGFT. The goods were stored in a warehouse under Section 49 of the Customs Act.

C 22.1. On the very day of the decision of this Court in the case of Agricas (supra) on 26.08.2020, this importer sent a letter to the Adjudicating Authority with the request that show cause notice under Section 124 of the Customs Act be waived and personal hearing may be provided expeditiously. Accepting this request, the Adjudicating Authority granted expedited hearing because of perishable nature of the goods; and proceeded to pass the order-in-original on 28.08.2020 (which was issued on 03.09.2020). 22.2. The Adjudicating Authority observed in its order-in-original dated 28.08.2020 that the goods were imported by the importer in the month of November 2019 under the protection of the interim order granted by the Rajasthan High Court but, when held to have been imported in contravention of the applicable notifications, they became prohibited goods under Section 11 of the Customs Act read with Section 3 of the FTDR Act; and hence, the goods were liable to confiscation under Section 111(d) of the Customs Act. Further, the importer was also held liable for penalty under Section 112(a)(i) of the Customs Act. The relevant findings of the Adjudicating Authority could be usefully extracted as under: - “9. The impugned goods were imported in contravention of the DGFT notifications No. S.O. 1478(E), 1479(E), 1480(E) and 1481(E) dated 29.03.2019 and subsequent trade notice No. 06/ 2019-2020 Dated 16.04.2019. Thereby, the impugned goods became prohibited under section 11 of the Customs Act, 1962 read with section 3 of the FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992. Hence, I hold that the goods are liable for confiscation u/s. 111(d) for the Customs Act, 1962.

10. For the above acts of omission and commission which render the impugned goods liable for confiscation u/s. 111(d) of the

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 403 ORS. [DINESH MAHESHWARI, J.]

Customs Act, 1962, I hold that the importer is liable for penalty u/ A s. 112(a)(i) of the Customs Act, 1962.” 22.3. However, after having held that the goods were liable to confiscation and the importer was liable for penalty, the Adjudicating Authority proceeded to determine the quantum of redemption fine and penalty to be levied on the importer. In this regard, the Adjudicating B Authority took into account the alleged margin of profit of the importer, market price of the goods, and the expenditure incurred on storage and transportation etc. The Adjudicating Authority also took into account various other factors for which the quality of goods, being perishable in nature, had deteriorated, like poor condition of warehouses, excessive rainfall, humidity, exposure and pest attacks. It was, however, observed by the Adjudicating Authority that the goods in question, though having lost much of their market value, were still fit for human consumption, as per the certificate from the accredited laboratory. On these considerations, the Adjudicating Authority considered it appropriate to impose fine and penalty while calculating the margin of profit @ Re. 1 per Kg; and concluded on the matter with the following order: - “12. In view of the above discussion and findings, I pass the following order:- Order E i. I confiscate the impugned goods u/s. 111(d) of the Customs act, 1962. Whereas I give an option to the importer to redeem the impugned goods on payment of the redemption fine of Rs. 1.0 crores (Rupees One Crores only) in lieu of confiscation u/s 125(1) of the Customs Act, 1962. F ii. I, also impose a penalty of Rs. 1.485 crores (Rupees One Crore Forty Eight Lakhs Fifty Thousand only) on M/s. Raj Grow Impex LLP, Jaipur u/s. 112(a)(i) of the Customs Act, 1962.

13. This order is passed without prejudice to any other action that G may be contemplated against the importer or any other person in terms of any provision of the Customs Act, 1962 and/or any other law for the time being in force.” M/s. Harihar Collections H

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23Copy pinpoint23. The case of the other importer M/s. Harihar Collections is not materially different except for a few individual facts. This importer had, on 18.11.2019, filed eight bills of entry on 18.11.2019 bearing numbers 5720040, 5720192, 5720693, 5722458, 5722730, 5719772, 5722243 and 5722456 for clearance of 38,500 MTs of yellow peas, said to have been imported under the cover of interim order passed by the Rajasthan High B Court on 10.07.2019 in WP No. 11752 of 2019. In this case too, the goods were not released in view of objections and were stored in a warehouse. 23.1. Soon after the decision of this Court in the case of Agricas (supra) on 26.08.2020, this importer also sent a similar communication C on the same day to the Adjudicating Authority, seeking waiver of show cause notice under Section 124 of the Customs Act and for expeditious personal hearing. This case was also considered expeditiously and another order-in-original of similar nature was passed by the Adjudicating Authority on 28.08.2020 (issued on 03.09.2020). D 23.2. Almost on the similar considerations as noticed above in the case of M/s. Raj Grow Impex, the Adjudicating Authority held that the goods in question became prohibited goods under Section 11 of the Customs Act read with Section 3 of the FTDR Act; and hence, were liable to confiscation under Section 111(d) of the Customs Act; and the importer was also liable for penalty under Section 112(a)(i) of the Customs Act. Again, on similar lines, the Adjudicating Authority proceeded to determine the quantum of redemption fine and penalty to be levied on the importer; and, on similar considerations as above, proceeded to impose fine and penalty while calculating the margin of profit @ Re. 1 per Kg and concluded on the matter with the following order: - “13. In view of the above discussions and findings, I pass the following order: - Order G i. I confiscate the impugned goods u/s. 111(d) of the Customs act, 1962. Whereas I give an option to the importer to redeem the impugned goods on payment of the redemption fine of Rs. 1.5 crores (Rupees One Crores Fifty Lakhs Only) in lieu of confiscation u/s 125(1) of the Customs Act, 1962. H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 405 ORS. [DINESH MAHESHWARI, J.]

ii. I, also impose a penalty of Rs. 2.35 crores (Rupees Two A Crores Thirty Five Lakhs only) on M/s. Harihar Collections, Jaipur u/s. 112(a)(i) of the Customs Act, 1962.

14. This order is passed without prejudice to any other action that may be contemplated against the importer or any other person in terms of any provision of the Customs Act, 1962 B and/ or any other law for the time being in force.” Immediate sequels to the orders-in-original

24Copy pinpoint24. The aforesaid orders-in-original dated 28.08.2020 instantly led to several actions and reactions. Acting swiftly on the orders-in-original, the respondent-importers took immediate steps for payment of redemption fine and penalty. On 29.08.2020, the respondent M/s. Raj Grow Impex made such payment in relation to three bills of entry bearing Nos. 5520732, 5520871 & 5520536 and obtained OOC. On the other hand, the respondent M/s. Harihar Collections made payment of redemption fine and penalty in respect of all its eight bills of entry on 29.08.2020 and obtained OOC. When the respondent M/s. Raj Grow Impex was in the process of making payment for the remaining seven bills of entry and when the goods for which OOC had been issued were in the process of unloading and release, the DGFT addressed its letter dated 01.09.2020 to the Chairman, Central Board of Indirect Taxes and Customs, referring to the import policy and restrictions over import of peas as also to the judgment of this Court in Agricas (supra). The DGFT stated that any release of imported peas would be contrary to the import policy; that they were in the process of obtaining legal opinion from the ASG; and till then, the field formations under the Customs may be directed not to release the consignments of peas and, if any such consignments had been released, the details may be provided. It appears that acting on this communication from DGFT, the Zonal Additional Director General of Foreign Trade at Mumbai issued necessary instructions and thereupon, the Deputy Commissioner of Customs, Import Docs (Import-I), Mumbai, issued a letter dated 02.09.2020, instructing the Mumbai Port Trust authorities to stop the release of the goods in question. This led to the stoppage of unloading and release of the goods whereupon, the respondent-importers made a request to the Commissioner of Customs (Import-I), Mumbai on 03.09.2020 to release the cargo when the requisite fine and penalty had already been paid. However, the respondent- importers received the communication from Mumbai Port Trust authorities H

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A that the cargo stored in the port trust premises will not be released on account of the directions received from the customs authorities. Thereafter, they received one more letter from the Mumbai Port Trust on 11.09.2020 stating that the goods could be cleared subject to fulfilment of the Customs and Port Trust formalities. However, despite all their efforts, the importers could not secure the desired release of goods. B

25Copy pinpoint25. Being aggrieved by the said communications and denial of release of the goods, the respondent-importers approached the High Court of Judicature at Bombay on 15.09.2020, seeking mandamus for clearance of the goods imported by them while also questioning the communications denying them the release of the goods in question. The C writ petitions so filed by the importers, being Writ Petition (L) No. 3502 of 2020 (M/s. Raj Grow Impex LLP v. Union of India and Ors.) and Writ Petition (L) No. 3503 of 2020 (M/s. Harihar Collections v. Union of India and Ors.), were decided by the impugned common order dated 15.10.2020. We shall be dilating on the relevant features of the order D dated 15.10.2020 a little later but, at this juncture, we may take note of the reliefs claimed in the respective writ petitions which read as under: - In Writ Petition (L) No. 3502 of 2020 by M/s. Raj Grow Impex “36. The Petitioner therefore prays that:

E (a) This Hon’ble Court be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction for calling for the records of the present case and after going through the legality and validity thereof be pleased to quash and set aside the Letters issued by Respondent Nos.5 and 6 on 02.09.2020 (“Exhibits O & P”); F (b) This Hon’ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writor order or direction under Article 226 of the Constitution of India ordering and directing the Respondents and in particular the Respondent No.7and Respondent No. 4 itself, its officers, subordinates, servants and agents to clear the goods imported by the Petitioner vide Bills of Entry Nos. 5520732, 5520871 and 5520536 all dated 01.11.2019; (c) this Hon’ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writor order or direction under Article 226 of the Constitution of India

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 407 ORS. [DINESH MAHESHWARI, J.]

ordering and directing the Respondent No. 4 itself, its officers, subordinates, servants and agents torelease the goods imported vide 7 Bills of Entry bearing Nos. 5520537, 5520538, 5520539, 5520540, 5520541, 5520872 and 5521191 on payment of Redemption Fine and Penalty; (d) that pending the hearing and final disposal of this Petition, that this Hon’ble Court be pleased to- i. restrain the Respondent Nos.3 and 4 itself, its officers, subordinates, servants and agents from taking any further action to stop the clearance of the goods imported by the Petitioner vide Bills of Entry Nos. 5520732, 5520871 and 5520536 all dated 01.11.2019; ii. direct the Respondent No.4 ,itself, its officers, subordinates, servants and agents to clear the goods imported by the Petitioner vide Bills of Entry Nos. 5520732, 5520871 and 5520536 all dated 01.11.2019; D iii. direct the Respondent No.7 and Respondent No. 4 itself, its officers, subordinates, servants and agents to release the goods imported vide 7 Bills of Entry bearing Nos. 5520537, 5520538, 5520539, 5520540,5520541, 5520872 and 5521191 on payment of Redemption Fine and Penalty; E (e) for ad-interim reliefs in terms of prayer clause (d) above; (f) for costs of this Petition and the Orders made thereon, and (g) for such further and other reliefs as this Hon’ble Court may deem fit in the facts and circumstance of the case.” F In Writ Petition (L) No. 3503 of 2020 by M/s. Harihar Collections “33. The Petitioner therefore prays that: (a) This Hon’ble Court be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction for calling for the records of the present case G and after going through the legality and validity thereof be pleased to quash and set aside the Directions / Letter issued by Respondent No.5 and 6 on 02.09.2020 (“Exhibit K & L”); (b) This Hon’ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writor H

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A order or direction under Article 226 of the Constitution of India ordering and directing the Respondents and in particular Respondent No. 7 and Respondent No.4 itself, its officers, subordinates, servants and agents to clear the goods imported by the Petitioner vide Bills of Entry bearing Nos. 5720040, 5720192, 572069, 5722458, 5722730, 5719772, 5722243 and 5722456, all dated 18.11.2019; (c) that pending the hearing and final disposal of this Petition, that this Hon’ble Court be pleased to- i. restrain the Respondent No.3 itself, its officers, subordinates, servants and agents from taking any further action to stop the clearance of the goods imported by the Petitioner vide Bills of Entry bearing Nos. 5720040, 5720192, 572069, 5722458, 5722730, 5719772, 5722243 and 5722456, all dated 18.11.2019;

D ii. direct the Respondent No.4,itself, its officers, subordinates, servants and agents to clear the goods imported by the Petitioner vide Bills of Entry bearing Nos. 5720040, 5720192, 572069, 5722458, 5722730, 5719772, 5722243 and 5722456, all dated 18.11.2019;

E (d) for ad-interim reliefs in terms of prayer clause (d) above; (e) for costs of this Petition and the Orders made thereon, and (f) for such further and other reliefs as this Hon’ble Court may deem fit in the facts and circumstances of the case.” 25.1. In the writ petitions so filed by the importers, the High Court F issued notice and directed the respondents to file an affidavit within 10 days while fixing the matter for consideration on 06.10.2020.

26Copy pinpoint26. While the aforesaid writ petitions remained pending with the High Court, the Commissioner of Customs (Import-II), Mumbai, in exercise of his powers under Section 129D(2) of the Customs Act, G proceeded to issue separate orders dated 01.10.202012, stating various grounds on which the said orders-in-original were questionable on legality and propriety; and directed the authority concerned to apply to the Commissioner (Appeals) for setting aside the said orders and for passing 12 Being Review Order No. 1/2020-21 in the case of M/s. Raj Grow Impex and Review H Order No. 2/2020-21 in the case of M/s. Harihar Collections.

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 409 ORS. [DINESH MAHESHWARI, J.]

a suitable order as deemed fit. The grounds stated in the aforesaid orders A dated 01.10.2020 carry their own relevance for the issues arising in these appeals and the same may also be noticed in the requisite details. 26.1 In the case of M/s. Raj Grow Impex, the Commissioner found the following shortcomings: - a. Non-issuance of show cause notice B

With reference to Section 124 of the Customs Act, the Commissioner opined that the order-in-original suffered from a legal infirmity for want of serving a detailed show cause notice incorporating all the relevant grounds of confiscation. The Commissioner observed as follows: - C

“In the present case, the oral submissions as recorded in the subject OIO do not have any mention of grounds of confiscation being communicated to the importer and their submissions regarding the same, The recordings of personal hearing are largely with respect to importers contention that as per the Hon’ble Supreme D Court order Customs Authorities to deal with the goods imported under provisions of Customs Act, and with regards to deterioration in the quality of goods. No detailed Show cause was issued incorporating all relevant ground of prohibitions in the matter viz suspension of IEC etc. Therefore, the subject order of ADC suffers from legal infirmities.” b. Non-addressal of the issue of suspension of IEC of the Importer In regard to this aspect, the Commissioner referred to the fact that there was a question-mark about the very existence of the firm in question; and also referred to the statutory appeals concerning suspension or termination of IEC. The Commissioner observed as follows: - “In the subject OIO issued by the Adjudicating Authority, mention has been made in brief facts regarding receipt of complaints by Jt. DGFT doubting financial status of the importer that it could be a shell firm and the same had to be verified at G Customs Level. In this regard, it has been mentioned in the brief facts that the bank statement of 3 accounts of importer M/s Raj Grow Impex was scrutinized and financial credentials were forwarded to the Jt. DGFT, Jaipur vide letter dated 22.11.2019. That despite advisor H

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A from Jt. DGFT that the facts can be verified and put before Hon’ble court, ADC adjudicated the matter. There is no discussion regarding cancellation of IEC or otherwise by DGFT in respect of the said importer. The order is therefore not a speaking order and in terms of Hon’ble Supreme B Court order, the issue of suspension of IEC has to be examined in this case. Therefore, in order to follow due process of law, the order merits review.” c. The order having been passed on the assumption that the goods were to be released against redemption fine C The Commissioner further observed that the order in question was passed on the assumption that the goods were required to be released against redemption fine though various issues including those of quantitative restrictions were to be taken into consideration. In this regard, the Commissioner referred, inter alia, to Section 2(33) of the Customs D Act defining prohibited goods as also Sections 111 and 113 thereof. The Commissioner further reproduced the findings of this Court in the case of Agricas (supra) on the implication and meaning of the quantitative restrictions in the subject notifications and observed as under: - “The adjudicating authority failed to consider the same in this order. E The adjudication authority while addressing the question of allowing redemption of impugned goods on payment of fine, did not apply his mind on the legislative intent for imposing restrictions on the import of Green peas. Redemption has been allowed mechanically without going into the merits or demerits of allowing such an option, thus circumventing the legislative F intent behind the restrictions.” (emphasis in bold supplied) d. No reasons were given as to why absolute confiscation or re- export was not taken into consideration G The Commissioner further referred to the fact that the goods became prohibited under Section 11 of the Customs Act read with Section 3 of the FTDR Act and found omission on the part of the Adjudicating Authority to take into account the relevant considerations while observing as under: - H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 411 ORS. [DINESH MAHESHWARI, J.]

“19. The goods became prohibited under section 11 of the Customs A Act, 1962 read with section 3 of Foreign Trade (Development and Regulation) Act, 1992. Thus, the option of re-export of the said goods to the original supplier should also have been taken into consideration. It is now settled law that power of discretion by the authority is to be exercised based on well-founded principles and should not be done in a mechanical way. It is the Adjudicating authority’s bounden duty to give cogent reasons while exercising discretion as to why goods are being released on redemption fine which he grossly failed to do. He had an obligation to Revenue and the State, as much as he did towards the appellant while considering the question of redemption. The adjudicating authority did not give reasons as to why absolution confiscation or re-export is not taken into consideration in view of the facts of the case as listed above.” (emphasis in bold supplied) e. Apart from the above, the Commissioner also found the shortcomings that the Adjudicating Authority, (i) chose to rely on the accredited laboratory certificate rather than referring the matter to the designated government agency; (ii) did not conduct an inquiry for ascertaining market price and margin of profit; and (iii) did not assess the duty payable on the consignment. E 26.2. As regards the matter of M/s. Harihar Collections, the Commissioner passed an almost identical order on 01.10.2020 with one basic difference concerning the issue of IEC. Not much of the observations were made on this issue as were made in the other case of M/s. Raj Grow Impex but, it was observed that the licence of this importer F was shown as cancelled and this fact was not taken into consideration by the Adjudicating Authority. Besides this, the order-in-original concerning this importer was also found suffering from the same shortcomings as noticed hereinabove.

27Copy pinpoint27. The aforesaid orders dated 01.10.2020 led the Additional G Commissioner of Customs, Group-I, Mumbai to apply to the Commissioner (Appeals) and on that basis, the matters were examined in appeal; and came to be decided by the Appellate Authority in its orders- in-appeal dated 24.12.2020. However, before such decision by the Appellate Authority, the aforementioned writ petitions filed by the H

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A importers were taken up for consideration by the High Court and were decided by the common order dated 15.10.2020. This common order has been challenged in the appeal arising out of SLP(C) Nos. 14633-34 of 2020. Therefore, before dilating on the orders-in-appeal dated 24.12.2020, it is necessary to examine the impugned order dated 15.10.2020 in requisite details with the relevant particulars. B The order dated 15.10.2020 and its modification dated 09.12.2020: The High Court issues mandamus for release of goods.

28Copy pinpoint28. As noticed, the respondent-importers, before passing of the said order dated 01.10.2020, had already approached the High Court on 15.09.2020 seeking mandamus for clearance of the goods imported by them while also questioning the communications denying them the release of the goods in question. In these writ petitions, the High Court had issued notice and directed the respondents to file an affidavit within 10 days while fixing the matter for consideration on 06.10.2020 but, in the interregnum, the Commissioner of Customs (Import-I), Mumbai passed the aforesaid orders dated 01.10.2020 under Section 129D(2) of the Customs Act.

29Copy pinpoint29. When the writ petitions were heard on 06.10.2020, a submission was made on behalf of the respondents that after passing of the said order dated 01.10.2020 by the Commissioner, the writ petitions were rendered infructuous and were also liable to be dismissed for the writ petitioners having not challenged the order so passed by the Commissioner. It was also pointed out that pursuant to the said order dated 01.10.2020, the appeals had already been filed before the Commissioner (Appeals) F against the orders-in-original. Per contra, it was submitted on behalf of the writ petitioners that the stand so taken was not only unfair but was untenable too. It was submitted that the respondents of the writ petitions had attempted to materially alter the subject matter of the petitions without taking leave of the Court. This apart, it was also contended that the grounds stated by the Commissioner while directing the Additional G Commissioner to apply for appeal were totally frivolous; and all the grounds given in the order dated 01.10.2020 were also countered. It was also submitted that the orders-in-original dated 28.08.2020, issued on 03.09.2020, were holding the field and had neither been set aside nor stayed by any appellate authority or higher authority; that the writ petitioners had complied with all the conditions of the orders and had

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 413 ORS. [DINESH MAHESHWARI, J.]

made the payments; that there was no justifiable reason not to release the goods in question; and that because of storage of goods in the customs warehouse, the writ petitioners were suffering huge expenditure.

30Copy pinpoint30. In its impugned common order dated 15.10.2020, the High Court took up the petition of M/s. Harihar Collections as the lead case and after taking note of all the background aspects, first of all took up the issues related with propriety in passing the order dated 01.10.2020 by the Commissioner when the writ petitions were pending in the High Court. In this regard, a serious exception was taken that the Commissioner at all chose to pass the order when the High Court was in seisin of the matter. The High Court also observed that the suggestion for dismissing the writ petitions because of the subsequent development or relegating the writ petitioners to appellate forum amounted to interference with the administration of justice. The High Court strongly expressed its views in the following terms: - “26. When this Court had taken cognizance of the grievance made by the petitioner and was in seisin of the matter fixing 06.10.2020 D for consideration, it was highly improper on the part of Commissioner of Customs (Import-II) to have passed the order dated 01.10.2020 without any intimation to or taking leave of the Court. It needs no reiteration that when the court, that too the High Court, is in seisin of a matter, an administrative or executive authority cannot start a parallel proceeding on the very same subject matter at its own ipse dixit and record a finding. It would amount to interfering with the dispensation of justice by the courts. In the instant case, when the Court was set to examine the grievance of the petitioner regarding non-release of the goods despite the order-in-original, what was sought to be done was to present the Court with an order passed in the midst of such examination keeping the Court totally in the dark saying that the order-in-original suffers from illegality or impropriety directing the subordinate authority to apply to the Commissioner (Appeals) to set aside the order-in-original andthen contending that the writ petition should be dismissed because of the subsequent development or that the petitioner should be relegated to the appellate forum to contest the subsequent order. As pointed out above, this amounts to interfering with the administration of justice and is thus not at all acceptable. A view may be taken that such an order should be ignored as it is contumacious.” H

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