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

31Copy pinpoint31. Having said that, the High Court proceeded to examine the scope and purport of the powers under Section 129D(2) of the Customs Act and held that those powers were in the very narrow compass, being essentially of revision and not of review. The High Court also observed that the Commissioner had three months’ time to pass the said order which was further extendable by thirty days; and yet, ‘he chose to pass B the order most hastily in the midst of the court proceeding keeping the court completely in the dark’. Proceeding further, the High Court summarised the reasons given by the Commissioner of Customs for taking the view against the orders-in-original in the following terms: - “29……..After narrating the facts of the case and the order-in- C original passed by the adjudicating authority, Commissioner of Customs took the view that the said order is not legal and proper for the following reasons (mentioned asgrounds):-

1. non-issuance of show cause notice by the adjudicating authority; D

2. non-addressal of the issue of suspension of import export code of theimporter;

3. adjudication order was issued proceeding on the basis that the goods were required to be released against redemption E fine whereas there were number of issues which were required to be taken into consideration, such as, suspension of import export codeetc.;

4. adjudicating authority did not give reasons as to why absolute confiscation or re-export was not considered as anoption;

F 5. adjudicating authority did not discuss as to why he reliedupon thecertificateofaccreditedlaboratoryratherthanreferringthe matter to the designated governmentagency;

6. enquiry not conducted for ascertaining market price and margin of profit for imposition of redemption fine and penalty.”

32Copy pinpoint32. Thereafter, the High Court dealt with the aforesaid grounds of the order dated 01.10.2020. 32.1. The High Court observed, as regards the first ground relating to non-issuance of show cause notice, as follows: -

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 415 ORS. [DINESH MAHESHWARI, J.]

“32.2. In the instant case, petitioner made a request not to issue A show cause notice but to give him personal hearing. This was accepted by the adjudicating authority which power admittedly he has under the first proviso to section 124 and he has given reasons for the same i.e., long pendency and perishable nature of theconsignments.” B 32.2. As regards the second ground of non-addressal of the issue of suspension of import export code of the importer, the High Court referred to the observations of this Court in Agricas (supra) that such issue was left open to be decided in the pending statutory appeal; and even otherwise, the order of suspension dated 06.12.2019 had barred the importer prospectively and such suspension in no way impacted the imports in question. The High Court said: - “33.2. In view of what the Supreme Court had observed the adjudicating authority could not have taken up and examined such order of suspension. Besides, from a perusal of the order of suspension dated 16.12.2019 it is evident that the said order has barred the petitioner from conducting any further import and export meaning thereby that it is prospective and in no way impacted the import made prior to that date which was the subject matter of adjudication in theorder-in-original.” 32.³. The third, fourth and sixth grounds aforesaid were examined together and the High Court took the view that taking exception to the order-in-original on the basis of these grounds appeared to be questionable. The High Court, inter alia, observed as under: - “34.³. The power under sub-section (1) of section 125 regarding giving option to the owner or person concerned to pay fine in lieu of confiscation is discretionary in respect of goods the importation or exportation whereof is prohibited but in respect of other goods it is mandatory. Therefore, such a power is available to the adjudicating authority and he has exercised that power. That apart, when fine is imposed in lieu of confiscation, sub-section (2) makes it abundantly clear that the owner or the person concerned would have to pay in addition to the fine, the customs duty and other charges.Non-mentioning of the duty payable in the order-in-original is therefore immaterial, as payment of the same is statutorily mandated under sub-section (2) of section125. H

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A xxx xxx xxx “34.6. In such circumstances, taking exception to theorder-in- original on the above grounds appears to be questionable. As already discussed, adjudicating authority had the power to give option to the owner or person concerned to pay fine in lieu of confiscation which power he exercised and the quantum of fine was determined after considering various aspects including the margin of profit suggested by the assessing officer.” 32.4. As regards the fifth ground, the High Court observed that the laboratory in question was accredited to the customs department and no fault could be found in the Adjudicating Authority placing reliance on its report.

33Copy pinpoint33. For what has been noticed in the preceding paragraphs, it would appear that the High Court not only questioned the propriety in passing of the order dated 01.10.2020 by the Commissioner of Customs D but also examined the grounds stated therein, for directions to challenge the orders passed by the Adjudicating Authority; and expressed its views against tenability of the grounds so suggested by the Commissioner. However, even after such detailed discussions and observations, the High Court consciously stopped short of pronouncing finally on the said grounds because the matter had already been taken in appeal pursuant to the said order dated 01.10.2020. The High Court, however, observed that the manner of passing of the said order dated 01.10.2020 was definitely questionable and further observed that the contents of the said order and the grounds given, as examined prima facie, did not make out that the order passed by the Adjudicating Authority was suffering from any such illegality and impropriety that suo motu revisional powers under Section 129D(2) should have been exercised. The High Court iterated that on prima facie examination of the stated grounds, the orders- in-original could not be said to be unlawful or inappropriate or unjust or beyond the bounds of the Adjudicating Authority. However, it was reiterated that since application had been filed which would be decided as an appeal, the High Court was limiting its examination to the justification or otherwise of not releasing the goods on the strength of the order dated 01.10.2020. These observations of the High Court, occurring in paragraph 36 of the impugned order read as under: - “36. We have examined the grounds given in the order dated H 01.10.2020 not as an appellate authority over the Commissioner

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 417 ORS. [DINESH MAHESHWARI, J.]

but only to satisfy ourselves as to whether on such grounds a A bona fide satisfaction can be arrived at that the order-in-original suffers from illegality or impropriety. Even on that aspect also, we refrain from expressing our final views since it is stated that application has been filed pursuant to the order dated 01.10.2020 which shall now be treated as an appeal, but the manner in which the order has been passed is definitely questionable and the contents of the order dated 01.10.2020 particularly the grounds given as examined prima faciedo not make out a case that the order-in-original suffers from such illegality and impropriety that suo-motu revisional power under section 129 D(2) should be exercised. Prima-facie, on examination of the grounds as above, we cannot say that the order-in-original is unlawful or inappropriate or unjust or that the adjudicating authority acted beyond the bounds of his authority. However, since application has been filed which will now be decided by the Commissioner (Appeals) D as an appeal, we only limit our examination to the justification or otherwise of not releasing the goods of the petitioner on the strength of the order dated 01.10.2020.” (emphasis in bold supplied)

34Copy pinpoint34. Thereafter, the High Court recounted the factors that the order- E in-original was already holding the field; the respondents admitted that redemption fine and personal fine were levied proportionately to the quantity declared; the petitioner had complied with the terms and conditions of the order-in-original and had made the necessary payments; out of charge had been issued; and the petitioner was incurring substantial expenditure because of warehousing of the goods. Taking note of these factors, the High Court expressed its views that withholding of imported goods of the petitioner would not be just and proper; and their release could not be denied on the basis of the order dated 01.10.2020. Having said that, the High Court concluded on the writ petitions with the findings and conclusions occurring in paragraph 37 to 39 of the impugned order, which read as under: - “37. We have already discussed and noted that the order-in-original is holding the field. The same has neither been set aside nor stayed. Interestingly, respondent Nos.4 to 6 in para 16 of theiraffidavit have themselves admitted that the redemption fine and personal H

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A fine were levied proportionately to the quantity declared in the bills of entry. Petitioner has complied with the terms and conditions of the order-in-original and made the necessary payments. Out of charge has been issued. Because of warehousing of the goods under section 49 of the Customs Act, petitioner is required to pay a substantial amount to the customs authority. In the above context and after thorough consideration of all aspects of the matter, we are of the view that non-release or withholding of the imported goods of the petitioner any further would not be just and proper. At least the grounds given in the order dated 01.10.2020, which order itself was passed in a highly improper manner, do not justify that the goods should be withheld or denied release notwithstanding the order-in-original and compliancethereto. Conclusion

38. Consequently, we direct the respondents more particularly respondent Nos.4 to 7 to forthwith release the goods of the petitioner covered by bills of entry bearing Nos.5720040, 5720192, 572069, 5722458, 5722730, 5719772, 5722243 and 5722456, all dated 18.11.2019. Similar direction also follows in Writ Petition No.3502 of 2020 in respect of bills of entry bearing Nos.5520732, 5520871 and 5520536, all dated01.11.2019.

E 39. Both the writ petitions are accordingly allowed. We thought of imposing cost in this case but we have refrained ourselves from doing so.”

35Copy pinpoint35. As noticed, the appellants had approached this Court against the aforesaid order dated 15.10.2020 on 26.11.2020 by way of SLP(C) F Nos. 14633-34 of 2020 but the SLPs did not come up for consideration and, in the meantime, the importer M/s. Raj Grow Impex moved an application before the High Court for modification of the order dated 15.10.2020 and for incorporating the left-over bills of entry, which did not occur in paragraph 38 of the original order dated 15.10.2020. Though it was pointed out before the High Court that SLPs had already been filed in this Court against the order dated 15.10.2020 but it was also an admitted position that until then, no stay had been granted by this Court. Having noticed the submissions, the High Court deemed it just and proper to issue the modification order on 09.12.2020 in the following terms: - “10. Having heard learned Counsel for the parties and on due consideration, we modify our judgment and order dated 15th

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 419 ORS. [DINESH MAHESHWARI, J.]

October, 2020 by insertion/addition of the following sentence in paragraph 4.1 as well as in paragraph 38 thereof. The last line in paragraph 38 would thus read as under:- “In addition, respondent Nos.4 to 7 are also directed to forthwith release the goods of the petitioner covered by seven Bills of Entry bearing Nos. 5520537, 5520538, B 5520539, 5520540, 5520541, 5520872 and 5521191 on payment of redemption fine, penalty, customs duty and any other dues that may be payable as per law.”

36Copy pinpoint36. As noticed, the High Court, even while making several observations and comments that the Commissioner had acted wholly C improper in issuing the order dated 01.10.2020; and even while indicating its views that the grounds stated by the Commissioner may not be tenable, did not return final findings on such grounds and made this aspect repeatedly clear in paragraph 36 of the order dated 15.10.2020 that the matter (on merits) would be examined in appeal by the Commissioner (Appeals). D

37Copy pinpoint37. The Appellate Authority i.e., the Commissioner of Customs (Appeals), dealt with the matter in separate appeals registered in the individual cases of the private respondents and decided the same by way of separate orders-in-appeal dated 24.12.2020. Having regard to the questions involved, it would also be appropriate to take note of the E salient features of the orders so passed by the Appellate Authority on 24.12.2020. Orders dated 24.12.2020 by the Appellate Authority: Orders-in-original set aside with enhancement of penalty F

38Copy pinpoint38. In the order-in-appeal dated 24.12.2020 in relation to the case of M/s. Raj Grow Impex, the Appellate Authority thoroughly examined the contents of the order-in-original dated 28.08.2020 and the grounds of appeal as also the submissions and counter submissions of the parties; and thereafter, formulated the issues requiring determination as follows:- G “52.2. From the plain reading of the submissions dated 16.12.2020 made by the Respondents, I have observed that there has been some technical/peripheral issues raised by them, which includes maintainability of the present appeal on the grounds like Additional Commissioner being equivalent to the Commissioner of Customs and hence, the appeal, if any, will not lie with Commissioner H

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A (Appeals) and the issue of Review Vs Revision as dealt by Hon’ble High Court in its order. Further, from the grounds of appeal, the major issues which needs to be decided are (i) whether Additional Commissioner of Customs was correct in going ahead with the adjudication despite non issue of show cause notice, cancellation of IEC, etc. (ii) whether the impugned goods is liable for absolute confiscation or redemption under Section 125(1) of the Act should have been considered or should have been redeemed for the purpose of re-export to the original supplier and (iii) whether Redemption Fine and Penalty imposed is adequate looking into the gravity of the offense. In my discussions below, I will deal with these issues.” 38.1. After rejecting the peripheral/technical issues raised by the importer, as regards maintainability of the appeal and his jurisdiction to deal with the same, the Appellate Authority entered into the determination of major issues involved in the matter. It would be relevant to notice that one of the arguments urged before the Appellate Authority in opposition to the appeal was that all the grounds of appeal had been examined by the High Court in its order dated 15.10.2020 and, therefore, the appeal merited rejection. This contention was countered on behalf of the appellant with the submission that only the implementation of the order dated 28.08.2020 was the issue for consideration before the High Court; and any prima facie observation by the High Court on the grounds stated in the order dated 01.10.2020 cannot be treated as final views of the High Court, particularly when the entire matter was left open for adjudication by the Appellate Authority. The Commissioner (Appeals) rejected this objection of the importer while observing as under: - F “52.7. I agree with the above submissions of the Appellant and it has forcefully rebutted the contentions of the Respondent that since the Hon’ble High Court has already examined all the grounds of appeal, the same may not be open for examination again. What basically is pleaded by the respondent is that the order dated G 15.10.2020 of Hon’ble Bombay High Court has shut down appellate mechanism and consequently, would bar Revenue from pursuing the present appeal before Commissioner (Appeals). This plea is both incorrect, misdirected and misconceived for the following reasons:

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 421 ORS. [DINESH MAHESHWARI, J.]

a) What is before the present Appellate Authority is the review of A the Adjudication order dated 28.08.2020, purely on merits. Whereas what was decided by the order dated 15.10.2020 of Hon’ble High Court of Bombay is one relating to the release of the goods and not the merits of the adjudication order, which was not even assailed before Hon’ble Court. B b) The Hon’ble High Court of Bombay had ordered release of goods by virtue of the Adjudication Order dated 28.08.2020 but has vide para 36 of the very same order allowed this Appellate Authority to hear the appeal on merits and pass appropriate orders. c) Hon’ble High Court of Bombay having allowed this Appellate C Authority to decide the appeal, this authority had provided adequate opportunities of hearing, exchange of written submission and receiving the rejoinder submissions and therefore now can proceed to pass final orders and once final order gets passed, the Order of Adjudication would merge into the same. The said process has not been barred by the Hon’ble High Court. D

Considering the above facts, I have decided to exercise my appellate jurisdiction in this matter and therefore, the contentions of the Respondent in this regard is not acceptable.” 38.2. After taking note of the findings of this Court in Agricas E (supra), the Appellate Authority proceeded to deal with the grounds of appeal in the following manner: - a. As regards non-issuance of show cause notice, the Appellate Authority observed that the respondent-importer had expressly waived the right to show cause notice and though the Adjudicating Authority F was entitled to proceed with adjudication, the order passed by him ought to be in syncwith the law in terms of Sections 111 and 125 of the Customs Act read with the ratio in Agricas (supra). b. As regards non-addressal of the issue of suspension of IEC, the Appellate Authority observed that by an order dated 05/06.12.2019, G the IEC of the said importer was suspended and the ASG, Rajasthan by his letter dated 06.12.2019, had informed the appellant that the firm was non-existent and some other firm dealing with the aviation business was running its office as tenant for last 10 years. The Appellate Authority observed that as per the directions of this Court in Agricas (supra), the statutory appeal, if any, preferred against suspension or termination of H

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A IEC, was to be decided in accordance with law. The Appellate Authority took note of the fact that proceedings having been taken up rather at a brisk pace after the decision of this Court in Agricas (supra) and the material aspects having been omitted from consideration but, left this aspect of the matter at that, while observing as under: - B 54.2. Non-addressal of the issue of suspension of IEC of the importer ………….In this regard, I observe that there has been a tearing hurry to adjudicate the matter as the time lines of the case suggests. Though what the Respondent says has merits at the same time C the reasons of cancellation of IEC by the order of DGFT as contended vide Para 6 of their order should have raised concerns in the minds of the adjudicating authority. If there has been a mis- declaration whereby the bonafide of the importer has been in question, the same should have been considered in the right earnest and to say the least, the OIO should not have been passed in a D tearing hurry. So on one side there has been waiver of show cause notice and on the other side, there has been a hurry to adjudicate the matter despite the fact that there has been mis-declaration on the part of the importer as brought out in the order of DGFT. If a full-fledged investigation by the Customs authorities would have been launched it may have brought out the facts like mis- declaration, etc., but since it is not a subject matter of this appeal, hence refrain to discuss about it any further.” c. After the aforesaid, the Appellate Authority dealt with the core questions, as regards operation of Section 125 of the Customs Act and exercise of discretion by the Adjudicating Authority in this case. The Appellate Authority took note of the ratio in the decisions of this Court in the cases of Garg Woollen Mills (P) Ltd. v. Addl. Collector of Customs, New Delhi:(1999) 9 SCC 175,Sant Raj and Anr. v. O.P. Singla and Anr.: (1985) 2 SCC 349 andReliance Airport Developers (P) Ltd. v. Airports Authority of India and Ors.: (2006) 10 SCC 1 as also the relevant provisions of the Customs Act and the FTDR Act and stated its findings against the proposition of the release of goods and in favour of their absolute confiscation, inter alia, in the following words: - “54.³. Non-consideration of various issues in allowing redemption of goods H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 423 ORS. [DINESH MAHESHWARI, J.]

xxx xxx xxx A e. The Revenue seems to have made a strong case of absolute confiscation which is in sync with the decision of the Hon’ble Supreme Court dated 26.08.2020 on the grounds that on one hand the Hon’ble Supreme Court upholds the vires of the Notfn. imposing a restriction on import quantities while on the other hand the adjudicating authority defeats the objective of constitutionally valid Notifications by allowing the goods to mingle in the Indian markets on payment of a Redemption Fine and Penalty. In the above submissions of the Appellant, they have countered the submissions of the Respondent in detail and on the basis of Case Laws. Section 125 of the Act makes clear distinction between prohibited goods and other goods and obligates release of other goods on payment of Redemption Fine………… f)Hence the law is settled that restricted goods under the Act are deemed to be prohibited goods if the conditions subject to these goods have not been complied with. The Hon’ble Supreme Court D in the case of M/s Agrica’s LLP & others has already held that the steps can be initiated as per the Customs Act 1962 and the subject goods should be dealt with under the provision of FT (D&R) Act, 1992. Since the DGFT notification dated 29.02.2019 has been issued under section 3(2) of FT(D&R) Act, 1992, has imposed restriction upon the import of the goods, the subject goods under section 3(3) of FT(D&R) Act,1992 goods deemed to be prohibited under section 11 of the Customs Act, 1962. Although under Section 125 of the Customs Act, 1962 in the case goods imported a discretion is conferred on the Customs authorities to release the goods which are even prohibited on payment on fine in lieu of confiscation the same provision mandates reasonable exercise thereof and requires taking into consideration circumstances relevant of such exercises of discretion. Therefore, in these cases the adjudicating authority needs to exercise his discretion diligently and free from arbitrariness and unfairness……. g) Further, the Hon’ble Supreme Court in its judgment dated 26.08.2020, in Para 34 has given quantitative details that “However, in view of the interim orders by various High Courts where the actual imports were to the tune of 8.51 Lakh H

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A MT and 6.52 Lakh MT in 2018-19 and 2019-20, though the annual quota for these two years was 1/1.5MT only. Gram is being sold at Rs. 4000-4200 per quintal which is below the MSP which is Rs. 4875 per quintal, whereas the imported CIF value of yellow peas is 2028 per quintal”. Further in Para 48 the Hon’ble Supreme Court has held that imports, if any made, relying on interim orders would be contrary to the notifications and the trade notices issued under the FTDR Act, 1992. And in Para 46 the Hon’ble Court held that the importers cannot be said to have had bonafide belief and took their chance for personal gains and profits importing under interim orders and accordingly have to face the consequences in law. So the Hon’ble Supreme Court has noted that quantities much more than annual quota have already been imported by the importers on the strength of interim orders and I agree with the contention of the Appellant that under these circumstances allowing any import inside the country, even if against fine and penalty, is patently perverse. Further, as detailed earlier, the domestic production of pulses and therefore, the Govt. has imposed restrictions giving only a small window of annual import under defined quota prices. The Govt. has also procured peas and pulses under various schemes at Minimum Support Price. Consequently, E the buffer stock with the Govt. is very high. Therefore, any additional supply of peas and pulses would be against the interest of the farmers and it would have an adverse impact on the economy and would defeat the very purposes of import restrictions. Based on these findings I observe that the impugned goods merited absolute confiscation.” F (emphasis in bold supplied) d. The Appellate Authority also found the assessment of margin of profit and quantum of penalty in the order-in-original wanting in the requisite analysis and assessment; and observed as under: - G “h. Further, the Revenue has raised objection in the manner of calculating the quantum of margin of profit and the way the same has been divided between fine and penalty and has contended that the order stands on flimsy grounds and beyond the accepted principles of law. The Revenue explained that how the Redemption H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 425 ORS. [DINESH MAHESHWARI, J.]

Fine and Penalty serves the mutually exclusive purposes i.e. while A the Redemption Fine nullifies the margin of profit, the penalty acts as a deterrent. But the manner in which the adjudicating authority has conveniently divided the margin of profit between Redemption Fine and Penalty is questionable and is bad in law. Further, Revenue has also objected on quantum of Redemption B Fine and Penalty and pleads that the same is abysmally low. On a plain reading of Para 12 of the order of the adjudicating authority, any person of average intelligence can notice that how perfunctorily the margin of profit has been decided in this case. The adjudicating authority places complete reliance on the submissions made by the importer and takes them as gospel truth forgetting the fact that he is also obligated to look into the interests of revenue. The adjudicating authority should have been much more diligent, cautious, vigilant, meticulous and should have been more circumspect in his approach in understanding the letter and spirit of the judgment of the Hon’ble Supreme Court. Looking into the gravity of the offence, I observe that the quantum of penalty imposed in the OIO under Section 112(a)(i) of the Customs Act, 1962, is on a much lower side and it is needed to be enhanced substantially.” 38.³. In view of the above, the Appellate Authority allowed the appeal, ordered absolute confiscation of the goods covered by seven bills of entry that had not been released while observing that the goods covered by other three bills of entry (which had already been released) were not available for absolute confiscation and accepted that as fait accompli while directing appropriation of the redemption fine paid in this regard. The Appellate Authority also enhanced the penalty from Rs. F 1.485 crores to a sum of Rs. 5 crores under Section 112(a)(i) of the Customs Act and passed the final order in the following terms: - “57. Accordingly, I pass the following order : ORDER G i. I order absolute confiscation of the goods covered in Bill of Entry Nos.5520537, 5521191, 5520538, 5520539, 5520540, 5520541 and 5520872 all dated 01.11.2019 under Section 111(d) of the Customs Act, 1962 read with Section 3(3) of Foreign Trade (Development & Regulations) Act, 1992. H

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A ii. I order absolute confiscation of the goods covered under Bills of Entry Nos.5520732, 5520871 and 5520536 all dated 01.11.2019 under Section 111(d) of the Customs Act, 1962 read with Section 3(3) of Foreign Trade (Development & Regulations) Act,1992. But, since the goods covered under these 03 Bills of Entry have already been cleared and not available for absolute confiscation, I B am constrained to accept it as fait accompli and Redemption Fine already paid, if any, in this regard, is ordered to be appropriated. iii. I set aside the Penalty of Rs.1.485 Crores imposed by the lower authority and impose a Penalty of Rs.5,00,00,000/- ( Rupees Five Crores only ) on M/s Raj Grow Impex LLP, 114, First Floor, C Jaipur Tower, MI Road, Jaipur, under Section 112(a)(i) of Customs Act 1962, and any Penalty paid, if any, against the impugned Order- in-Original is ordered to be appropriated towards this new enhanced Penalty.”

39Copy pinpoint39. From the submissions made and the material placed on record, it is noticed that a similar order-in-appeal in relation to the other importer M/s. Harihar Collections was also passed by the Appellate Authority on 24.12.202013. On the facts of that case, the Appellate Authority found that the goods covered by the said eight bills of entry had already been cleared and were not available for absolute confiscation. This was also accepted by the Appellate Authority as fait accompli while directing appropriation of the redemption fine paid in this regard but the penalty of Rs. 2.35 crores in that case, as imposed by the Adjudicating Authority, was enhanced to a sum of Rs. 10 crores under Section 112(a)(i) of the Customs Act. The operative portion of the order-in-appeal concerning the importer M/s. Harihar Collections reads as under: - F “ORDER i. I order absolute confiscation of the goods covered under Bills of Entry Nos. 5720040, 5720192, 5720693, 5722458, 5722730, 5719772, 5722243 and 5722456 all dated 18.11.2019 under Section G 111(d) of the Customs Act, 1962 read with Section 3(3) of Foreign Trade (Development & Regulation) Act, 1992. But, since the goods covered under these 08 Bills of Entry have already been cleared and not available for absolute confiscation, I am constrained to 13 Placed on record as Annexure R-1 (p. 255) in the counter affidavit on behalf of this importer.

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 427 ORS. [DINESH MAHESHWARI, J.]

accept it as fait accompli and Redemption Fine already paid, if any, in this regard, is ordered to be appropriated. ii.I set aside the Penalty of Rs.2.35 Crores imposed by the lower authority and impose a Penalty of Rs.10,00,00,000/- ( Rupees Ten Crores only ) on M/s Harihar Collections, 47, Hathi Babu Ka Baug, Bani Park, Jaipur, Rajasthan – 302016, under Section B 112(a)(i) of Customs Act 1962, and any Penalty paid, if any, against the impugned Order-in-Original is ordered to be appropriated towards this new enhanced Penalty. iii. The order of the lower authority dated 28.08.2020 is modified to the above extent and the Appeal filed by the Revenue stands disposed off accordingly.” Another round in High Court: Challenge to the order-in- appeal dated 24.12.2020 and stay order by the High Court dated 05.01.2021

40Copy pinpoint40. Though the person aggrieved by the said orders-in-appeal could have preferred statutory appeal under Section 129A of the Customs Act before the Customs, Excise and Service Tax Appellate Tribunal 14 but, the respondent-importer M/s. Raj Grow Impex approached the High Court against the order-in-appeal by way of Writ Petition (ST) No. 24 of 2021 and also filed a contempt petition stating willful disobedience of the E High Court’s (modification) order dated 09.12.2020 because the goods covered by the said order had not been released.

41Copy pinpoint41. Taking up the writ petition so filed by the importer, the High Court referred to its previous orders dated 15.10.2020 and 09.12.2020 and took exception against the impugned order-in-appeal dated 24.12.2020 F while observing that the observations made and the directions issued by the Appellate Authority were not correct and were running contrary to its directions. The High Court stayed the operation of the order-in-appeal dated 24.12.2020 and also directed the authorities concerned to comply with the directions contained in the orders dated 15.10.2020 and 09.12.2020; and while placing the matter on 27.01.2021, the High Court G required the counsel for the Department to state compliance. The relevant part of the order dated 05.01.2021 in the fresh writ petition so filed by the importer M/s. Raj Grow Impex reads as under: -

14 ‘CESTAT’ for short. H

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A “6. Prima facie the above directions of respondent No.2 are totally in contravention to the order of this court. That apart, view taken by respondent No.2 that the decision of this court while directing release of the goods was prima facie is not correct. When the High Court had directed release of the goods forthwith, it is beyond comprehension as to how a lower appellate authority can nullify B such direction by ordering absolute confiscation of such goods. It is not only unacceptable but contumacious as well which aspect we may deal with at a later stage.

7. In view of the above, we stay operation of the order dated 24th December, 2020 until further orders.

C 8. Respondent Nos.³ and 4 shall comply with the directions of this court dated 15th October, 2020 and 9th December, 2020.

9. List on 27th January, 2021, on which date Mr. Jetly shall inform the court about compliance of today’s order.” 41.1. This order dated 05.01.2021 is challenged by the appellants D in the appeal arising out of SLP(C) No. 1037 of 2021.

42Copy pinpoint42. The High Court also entertained the contempt petition, being Contempt Petition (L) No. 9351 of 2020 by a separate order dated 05.01.2021 and while issuing notice therein, directed the authorities concerned to remain personally present in the Court on 21.01.2021. The E order so passed by the High Court in contempt petition was challenged in separate appeal by the appellants; and, as noticed, on 18.³.2021, this Court found no reason for continuation of contempt proceedings in the High Court and closed the same while allowing the appeal so filed by the appellants15.

43Copy pinpoint43. After the narration of all the material factual and background aspects as also the orders passed at different stages by different authorities and Courts, we may now refer to the rival submissions to specify the stand of the respective parties in these appeals. Rival submissions

44Copy pinpoint44. The learned ASG appearing for the appellants has forcefully argued against the orders so passed by the High Court while asserting that the goods in question are liable to absolute confiscation. 44.1. Assailing the orders passed by the High Court, the learned ASG would submit that the High Court has erred in entertaining the writ 15 H Being C.A. No. 985 of 2021 arising out of SLP(C) No. 1097 of 2021.

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 429 ORS. [DINESH MAHESHWARI, J.]

petitions and in passing the order dated 15.10.2020 for implementing the A orders-in-original dated 28.08.2020 and thereby, for release of the subject goods though the orders so passed by the Adjudicating Authority were not final and were subject to appeal; and, in fact, the appeals had indeed been filed pursuant to the review orders dated 01.10.2020. With reference to the observations and directions of the High Court in the order dated B 15.10.2020, the learned ASG has pointed out that on one hand, the High Court permitted the Commissioner (Appeals) to proceed with the appeals filed by the Department but, at the same time, also directed that the goods be released. According to the learned ASG, the directions for release of the goods rather defeated the purpose of adjudication before the Commissioner (Appeals) on the question as to whether or not the goods were liable to be confiscated absolutely. On the same lines, it has also been contended that when the Appellate Authority passed the orders- in-appeal on 24.12.2020 and one of the importers preferred another writ petition, the High Court entertained the same and granted stay but, omitted to consider that the order-in-appeal could have been challenged in regular statutory appeal before CESTAT under Section 129A of the Customs Act. 44.1.1. As regards the power under Section 129D of the Customs Act, the learned ASG has submitted that thereunder, the higher authority only performs the function of reviewing on grounds relating to legality or propriety and directs the lower authority to file an application for appeal; and exactly that was done in the orders dated 01.10.2020. 44.2. As regards the question as to whether the subject goods are to be treated as ‘restricted’ or ‘prohibited’, the learned ASG has referred to sub-sections (2) and (3) of Section 3 of the FTDR Act and Sections 2(33) and 11 of the Customs Act and has submitted that the notifications in question, placing a quantitative restriction on the import of certain pulses, which were upheld by this Court by the judgment dated 26.08.2020 in Agricas (supra), had been issued under sub-section (2) of Section 3 of the FTDR Act; and since the goods imported by the respondent are covered by the said notification, they are deemed to be ‘prohibited’ goods under Section 11 of the Customs Act, by virtue of sub-section (3) of Section 3 of the FTDR Act. While emphasizing on Section 2(33) of the Customs Act, the learned ASG has also submitted that through the notifications in question, an upper limit of 1.5 lakh MTs of import quantity was placed and, therefore, any import within the cap of 1.5 lakh MTs will be the import of restricted goods but, in excess of H

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A the cap of 1.5 lakh MTs, the goods would lose the character as restricted goods and would become prohibited goods. The learned ASG has particularly relied upon the enunciation on the amplitude of the words ‘any prohibition’ in Section 111(d) of the Customs Act in the case of Sheikh Mohd. Omer v. Collector of Customs, Calcutta and Ors:(1970) 2 SCC 728 holding, inter alia, that the wide words ‘any prohibition’ mean ‘every prohibition’; and restriction is also a type of prohibition. The learned ASG has further referred to the decision in the case Commissioner of Customs, New Delhi v. Brooks International & Ors : (2007) 10 SCC 396 to submit that if the conditions for import and export of goods are not complied with, it would be considered to be the case of prohibited goods. Another decision of this Court in Om Prakash Bhatia v. Commissioner of Customs, Delhi:(2003) 6 SCC 161 has also been referred. 44.³. The learned ASG has also addressed the issue pertaining to the mode of monitoring the limit specified in the notifications and has submitted thatevery importer has to apply and obtain a licence for importing restricted goods; and the goods could be cleared from the port only upon obtaining such a licence. Every importer is allotted a quota to be imported; the approving authority has to apply his mind and approve the licence; and only upon such satisfaction of the approving authority and issuance of licence that an importer gets a right to import and else, right to import is not a vested right, as held in P.T.R. Exports (Madras) Pvt. Ltd. and Ors. v. Union of India and Ors.:(1996) 5 SCC 268. It has been argued that obtaining the licence being a condition precedent for importing restricted goods, any violation of this condition would render the goods as prohibited goods. On the importance of obtaining a valid licence wherever required in the context of import/export related transactions, the learned ASG has referred to the decision in S.B. International Ltd. and Ors. v. Asstt. Director General of Foreign Trade and Ors.:(1996) 2 SCC 439. 44.4. On the question regarding treatment of the subject goods, the learned ASG has made elaborate submissions on the scope of Section 125 of the Customs Act and has contended that thereunder, a clear distinction is made between ‘prohibited goods’ and ‘other goods’ inasmuch as in the case of ‘other goods’, Section 125 obligates release of the same against redemption fine, whereas there is no such compulsion when it comes to the ‘prohibited goods’. The Adjudicating Authority under the H

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Customs Act can absolutely confiscate the prohibited goods using its A judicial discretion. The learned ASG would argue that both, in terms of provisions of the Customs Act and the decisions rendered, restricted goods under the Customs Act are deemed to be prohibited goods, if the conditions attached to restricted goods are breached, as in the present case. The learned ASG has strongly relied upon the decision of this B Court in the case of Garg Woollen Mills (supra) and has contended that while deciding a similar customs matter with presence of the elements of breach of law, trade violations and lack of bona fide, this Court approved the directions for absolute confiscation. The learned ASG has also submitted that the orders passed by the Adjudicating Authority, as directed to be implemented by the High Court, in fact, defeat the purpose C of the notifications in question as also the findings and effort of this Court in rendering the judgment dated 26.08.2020 in the case of Agricas (supra). 44.5. While dealing with the question of exercise of judicial discretion, the learned ASG has referred to the decisions in Sant Raj D and Reliance Airport Developers Pvt. Ltd. (supra) to submit that the imports in question, being patently illegal and against the object of the constitutionally valid notifications, cannot be allowed to be cleared in any manner into India for further sale in the Indian market even after the imposition of duty and redemption fine. While maintaining that the goods in question deserve to be confiscated absolutely, the learned ASG E has submitted that the notifications have put an embargo on the quantity of pulses that can be imported into the country and allowing any import over and above the restriction would be against the very purpose of the restriction. The learned ASG has referred to the observations made by this Court in Agricas (supra), as regards the excessive quantity having F been imported under the cover of the interim orders in the past, much beyond the annual quota fixed as also the observations that the present importers had worked only for personal gains and had not acted bona fide. Thus, the exercise of discretion by the Adjudicating Authority being not in accord with law, cannot be approved. G 44.6. As regards the decision in the case of Commissioner of Customs v. Atul Automations Private Limited: (2019) 3 SCC 539, strongly relied upon by the importers, the learned ASG has argued that therein, this Court upheld the decision for release of the goods for the same being not prohibited goods and for the reasons, inter alia, that: (i) H

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A the goods in question were MFDs (Multi-Function Devices, Photocopiers and Printers) and they had a utility/shelf life for 5-7 years; and (ii) the Central Government permitted the import of used MFD’s that had utility for 5 years because MFDs were not manufactured locally in India. It has been argued that in contrast to the fact situation in the case of Atul Automations (supra), in the present case, this Court had held that excess B imports will not be in the interest of the farmers, and the excess imports made in contravention of the notifications but under the cover of the interim orders were not bona fide; and further that such imports were made with the motive to earn profits and gains and therefore, the importers should suffer the consequences. Thus, according to the learned ASG, C the judgment in Atul Automations (supra), proceeding on its own facts, will not have a bearing on the facts and circumstances of the present case. 44.7. The learned ASG has also referred to a decision of the Kerala High Court in the case of Shri Amman Dhall Mill v. D Commissioner of Customs:(2021) SCC OnLine Ker 362 to submit that the said High Court, as regards similar imports, has upheld the orders for absolute confiscation; and the goods imported by the respondent deserve the same treatment. 44.8. The learned ASG would, therefore, submit that the fine and E penalty imposed by the Commissioner (Appeals) may be upheld; the importers may be allowed to re-export the goods out of India on payment of redemption fine of 5%; and the appellants may be permitted to absolutely confiscate the goods, of such of the importers who do not opt for re-export within the time stipulated by this Court.

45Copy pinpoint45. Per contra, the learned senior counsel appearing for the respondent-importer M/s. Raj Grow Impex has strenuously argued in support of the orders-in-original and the orders passed by the High Court while asserting that release of goods with payment of redemption fine is in accord with law.

G 45.1. The learned senior counsel has referred to the material background aspects as noticed hereinbefore and has pointed out that ultimately, after the order dated 15.10.2020 of the High Court of Judicature at Bombay, the appellants permitted the release of goods covered by three bills of entry for which, redemption fine and penalty had been paid and OOC had been issued but, the goods covered by other seven bills of entry, for which payment of duty, fine and penalty

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was made later, were not released. The learned counsel has also referred to the proceedings relating to appeal before the Commissioner (Appeals) and the objections taken by the respondent against jurisdiction of the said Appellate Authority but, according to the learned counsel, the Appellate Authority, within three days of hearing, hurriedly proceeded to pass the order-in-appeal dated 24.12.2020, setting aside the order-in- B original dated 28.08.2020 and ordering absolute confiscation of the goods while enhancing the penalty. 45.2. While supporting the order-in-original dated 28.08.2020 as also the orders passed by the High Court on 15.10.2020, 09.12.2020 and 05.01.2021, the learned senior counsel would argue that in true operation of the provisions of the Customs Act and the FTDR Act read with the C pronouncement of this Court in Agricas (supra), the goods in question were not liable to be confiscated absolutely and had rightly been ordered to be released on payment of redemption fine. 45.³. With reference to the decision of this Court in Agricas (supra), the learned counsel has strenuously argued that once this Court D has held, in unequivocal terms, that the notifications in question were issued imposing restrictions, may be not under Section 9A of the FTDR Act but under Section 3(3) thereof, the question does not arise to interpret the same as prohibition on import of the subject goods. 45.4. Again, with reference to the notifications in question, the learned counsel would argue that the contentions of the appellants are very much against the spirit of the said notifications dated 29.³.2019 and the trade notice inasmuch as under the said notifications, the policy conditions qua the goods in question were not revised and they were not placed in the ‘prohibited’ category. The DGFT’s interpretation on its own website has also been referred where, in answer to a query as to ‘what is a restricted item’, the DGFT stated that all goods, import of which is permitted only with an Authorisation/ Permission/ License or in accordance with the procedure prescribed in a notification/ public notice are ‘Restricted’ goods. It has, thus, been contended that whenever a licence is required for import of certain goods, the same is a G ‘restricted’ item and not a ‘prohibited’ one; and that the appellants are not right in their contentions that the peas were a ‘prohibited’ item. 45.5. The learned senior counsel has elaborated on his submissions with reference to the connotation of the terms ‘prohibited’ and ‘restricted’, particularly with reference to Section 2(33) of the Customs Act and H

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A Clause 9.47 of the Trade Policy as also Schedule I thereof. Further, while placing strong reliance on the decision of this Court in Atul Automations (supra), the learned counsel has submitted that this Court has clearly underscored the difference between what is ‘prohibited’ and what is ‘restricted’. It is submitted that in Atul Automations, the goods imported without authorisation were found to be restricted goods; and B redemption of the consignment on payment of the re-assessed market price with fine was upheld. The learned counsel would submit that the restricted goods have the option of being redeemed and do not deserve the treatment of absolute confiscation, which could be applied only to absolutely prohibited goods. C 45.6. In the alternative line of submissions, it has been contended that even if the goods in question are treated to be ‘prohibited’, the discretion to allow their redemption/release on fine had been with the Adjudicating Authority and such a discretion, as exercised in the present case, calls for no interference. The contentions have been elaborated with reference to the use of the expression ‘may’ in regard to the prohibited goods in Section 125 of the Customs Act; and it has been argued that it is not the expression that the Adjudication Authority ‘shall not’ give an option to pay fine in lieu of confiscation. It is submitted that Adjudicating Authority is to exercise the discretion provided to him under Section 125 of the Customs Act objectively and this discretion cannot be taken away through a judicial proceeding. In regard to this line of argument, strong reliance has been placed on the decision of this Court in the case of Hargovind Das K. Joshi and Ors. v. Collector of Customs and Ors.:(1987) 2 SCC 230. Further, with reference to the decision of this Court in the case of Sant Raj (supra), it has been argued that whenever something has to be done within the discretion of the authority then, that thing has to be done according to the rules of reasons and justice and not according to private opinion. In other words, discretion means sound discretion guided by law. 45.7. It has also been contended that only 17,000 MTs of yellow peas imported by this respondent are to be released out of the total imported quantity of 24,815 MTs. This respondent is ready and willing to pay duty and redemption fine as deemed fit and proper by this Court but the option of re-export may not be a feasible option at this stage for, it is a time-consuming process with logistical and transportation issues and more particularly, in the present pandemic situation; and the respondent H

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has already suffered huge losses by way of detention, demurrage, rent, interest, insurance and other related costs. With these submissions, the fervent plea on behalf of this respondent-importer has been to allow the redemption of remaining goods.

46Copy pinpoint46. The learned counsel appearing for the other respondent- importer M/s. Harihar Collections, while arguing in tandem with the aforesaid contentions of the senior counsel, has made yet further submissions against the proposition of absolute confiscation 16. 46.1. With reference to sub-sections (2) and (3) of Section 3 of the FTDR Act and Section 11 of the Customs Act, it is submitted that all goods to which an order under sub-section (2) of Section 3 applies shall be deemed to be the goods of which import has been ‘prohibited’ under Section 11 of the Customs Act but in the present case, no such order under sub-section (2) prohibiting the subject goods having been issued, sub-section (3) of Section 3, creating the deeming fiction is not attracted in the present case. It has been contended that although there is specific power to prohibit specified classes of goods by an order to be published in the official gazette but no such gazette has been placed by the appellants before this Court. Equally, no such notification under Section 11 of the Customs Act prohibiting the subject goods, either absolutely or subject to any condition, has been placed on record; and no notification in terms of Sections 11A and 11B of the Customs Act, notifying the subject goods, has been shown. Further, with reference to the decision of this Court in Agricas (supra), it has been submitted that by the notifications in question, the import of peas was revised from ‘free’ to ‘restricted’ category; and the goods were clearly mentioned as ‘restricted’. Yet further, it has been pointed out that such restriction was not applicable to the Government of India’s import commitments under any treaty, agreement or MoU. With reference to these factors, the 16 During the course of submissions, a line of argument was sought to be adopted with reference to sub-section (3) of Section 11 of the Customs Act that any prohibition or restriction or obligation relating to import of goods provided in any other law for the time being in force shall be executed only if such prohibition or restriction or obligation is notified under the provisions of this Act and no such notification having been made, the contentions of the appellants were required to be rejected. However, the learned ASG pointed out that the said sub-section (3) of Section 11 of the Customs Act, as proposed to be inserted by the Finance Act, 2018, was to come into force from a date to be notified but the same has not been notified as yet. Accepting this position, the said argument has been withdrawn on behalf of the respondent with apology. Having regard to the circumstances, we would leave this aspect of the matter at that only. H

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A contention has been that the goods in question, meant for human consumption, were not absolutely prohibited for import, unlike specifically notified prohibited goods. Simply put, according to the learned counsel, goods in question were not of ‘absolutely prohibited’ category from any point of view. B 46.2. It has further been submitted that since the imports in question were not covered by the import licence, the goods in question were to be dealt with under Section 125 of the Customs Act; and had rightly been so dealt with by the Adjudicating Authority, who held them liable to confiscation and to be redeemed on payment of redemption fine and duty, which the Adjudicating Authority indeed levied apart from personal penalty. It has been pointed out that pursuant to the payment of the entire duty, fine and penalty, aggregating to a sum of about Rs. 44.21 crores, OOC was given and the goods were allowed clearance after the authority was satisfied that they were fit for human consumption. The order-in-appeal dated 24.12.2020 in relation to this importer has also been referred with the submissions that therein, the Commissioner of Customs (Appeals) has enhanced the penalty to Rs. 10 crores from Rs. 2.35 crores and the importer is desirous of availing statutory remedy of challenging this enhancement of penalty before the CESTAT; and it is prayed that the opportunity to avail the appropriate remedy may not be curtailed for this importer. In this regard, it has also been submitted that the High Court, in its order dated 15.10.2020, never injuncted the Department from proceeding with their statutory appeal and, following the same thread, the respondent-importer may also be allowed to exercise its right of appeal before the CESTAT; and, for that matter, any observation made in the present matter may not prejudice such right of appeal. 46.³. It has further been argued that the entire quantity of 38,500 MTs, as imported by this respondent-importer, was finally allowed to be cleared by the authorities concerned after the order of the Bombay High Court dated 15.10.2020 and hence, when the goods are not available for confiscation, no redemption fine could be imposed. A decision of Bombay High Court in the case of Commissioner of Customs (Import), Mumbai v. Finesse Creation Inc.:(2009) 248 ELT 122 has been referred and it has also been pointed out that an SLP against the said decision was dismissed by this Court on 12.05.2010.

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46.4. With reference to the provisions of the FTDR Act and the A Customs Act as also the decisions of this Court in Hargovind Das K. Joshi and Atul Automations (supra) and that of Punjab and Haryana High Court in Horizon Ferro Alloys Pvt. Ltd. and Ors. v. Union of India and Ors.: (2016) 340 ELT 27, it has been argued that the subject goods are not falling under the category of absolutely prohibited goods, B as they are not having tainted character such as fake currency, pornographic material etc.; and only the quantity restrictions having been violated, they were rightly taken by the Adjudicating Authority as acquiring the tag of being deemed to be prohibited; and hence, the discretion of ‘may’ as given in Section 125 of the Customs Act was rightly applied. It is submitted that even the order ultimately passed in the case of Om C Prakash Bhatia (supra) rather operates against the stand of the appellants.

47Copy pinpoint47. As noticed, two of the other importers have moved the applications for intervention. These importers are said to be similarly placed as the private respondents of these appeals inasmuch as they too D have imported various quantities of peas/pulses pursuant to the interim orders in their respective writ petitions by the High Court of Rajasthan but clearance of the goods remains stalled, particularly because of the present litigation. Having regard to the circumstances, we may also take note of the submissions made on their behalf. E 47.1. It has been submitted on behalf of the intervener Nikhil Pulses Pvt. Ltd. that it had similarly filed WP No. 12283 of 2019, wherein the High Court passed an interim order dated 02.08.2019 in its favour; and pursuant to the interim order, it had imported 1,02,550 MTs of yellow peas at Adani SEZ, Mundra, Gujarat under fifty-nine bills of lading of the month of September 2019 and had filed bills of entry for home F consumption but, such bills have remained unassessed. 47.1.1. Similar arguments have been advanced on behalf of this importer as regards difference between ‘restricted’ goods and ‘prohibited’ goods and their treatment under the Customs Act, the FTDR Act and the Trade Policy; and it is submitted that the goods in question are only G ‘restricted’ items and not ‘prohibited’. Again, with reference to the decision of this Court in Atul Automations (supra), it has been submitted that ‘restricted’ goods have the option of being redeemed on payment of market value and do not deserve the treatment of ‘prohibited’ goods under Section 125 of the Customs Act. Countering the submissions of H

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47.2. It has been submitted on behalf of the other intervener A Agricas LLP that it had earlier filed WP No. 9321 of 2019, wherein the High Court passed an interim order dated 24.05.2019 in its favour; and pursuant to the interim order it had imported 480.54 MTs of black mapte/ urad in July 2019 that were released on execution of bond. Further, this importer filed another writ petition bearing No. 13392 of 2019 wherein, the High Court passed interim order dated 14.08.2019 and thereafter, it had imported a quantity of 27,775 MTs of black mapte that arrived in November 2019 from which, 14,366 MTs were released and cleared on payment of requisite charges but the balance has not been released. 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 WP No. 525 of 2021 before the High Court of Judicature at Bombay against non-clearance of the goods but in the meantime, the main issue has been taken up in these appeals. 47.2.1. Almost identical arguments have been raised on behalf of this importer that the goods in question are not prohibited and, in any case, they could be released upon payment of redemption charges with reference to Section 11(9) of the FTDR Act and/or Section 125 of the Customs Act. Similar grounds of equity have also been urged, as noticed in the case of the other applicant which need not be repeated. E

48Copy pinpoint48. Before proceeding further, we may usefully summarise the principal submissions of the parties. 48.1. To put it in a nutshell, the principal submissions on behalf of the appellants are: that the High Court has erred in entertaining the writ petitions and the directions by the High Court for release of goods were F not compatible with the purpose of adjudication by the Appellate Authority; that the subject goods, being covered by Section 3(2) of the FTDR Act and having been imported without licence as also in excess of the cap of 1.5 lakh MTs, became prohibited goods under Section 11 of the Customs Act by virtue of the deeming fiction in Section 3(3) of the FTDR Act; that in view of the purpose of notifications and the observations of this G Court in Agricas, such prohibited goods were liable to be confiscated absolutely and could not have been released to mingle in the Indian market; and that the case of Atul Automations has no application to the facts of the present case. H

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A 48.2. On the other hand, the principal submissions on behalf of the importers are: that the notifications in question placed quantitative restrictions and there had not been any order or notification prohibiting the subject goods and hence, they could not have been treated as absolutely prohibited goods but were only restricted goods; that in Atul Automations, the goods imported without authorisation were held by this Court to be restricted goods and the same principle applies to the subject goods when they have been imported without import licence; that even if the subject goods are to be treated as prohibited, discretion was nevertheless available with the Adjudicating Authority to allow their redemption on payment of fine and such discretion has rightly been exercised in the orders-in-original; that the discretion cannot be ordered to be exercised in any particular manner; that re-export of the subject goods is not a feasible option and the demand and supply of the pulses in question being dynamic in nature, the release of the subject goods will not be adverse to the economy; that the orders-in-appeal could be challenged in further statutory appeal.

49Copy pinpoint49. We have given anxious consideration to the rival submissions and have perused the material placed on record with reference to the law applicable. Points for determination

50Copy pinpoint50. The narration and the recounts foregoing make it evident that E the root question in these matters is as to whether the goods in question are liable to absolute confiscation or they could be released with payment of fine in lieu of confiscation? 50.1. With intervention of the High Court of Judicature at Bombay in the writ jurisdiction and by way of the impugned orders dated 15.10.2020 F (read with the modification order dated 09.12.2020) and 05.01.2021, the issues concerning legality and validity of the orders so passed by the High Court are, obviously, interlaced with the core issues, as regards treatment of the goods in question. In the given circumstances, and looking to the nature of orders involved in the matter, it would be appropriate to examine the validity of the orders so passed by the High Court before dealing with other issues. Legality and validity of the orders passed by the High Court

51Copy pinpoint51. As noticed, the respondent-importers approached the High Court with the grievance that the goods were not being released despite the orders-in-original dated 28.08.2020 having been passed in their favour;

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and they having made the payments (in whole in the case of M/s. Harihar A Collections and partially in the case of M/s. Raj Grow Impex) and having obtained OOC. During the pendency of matters in the High Court, the Commissioner passed the orders dated 01.10.2020 in exercise of his power under Section 129D(2) and then, it was suggested before the High Court on behalf of the Department that the writ petitions were rendered infructuous because of the said orders dated 01.10.2020.

52Copy pinpoint52. A close look at the impugned order dated 15.10.2020 makes it clear that the High Court dealt with the issues before it in three major segments: (i) as regards the nature of jurisdiction under Section 129D(2) of the Customs Act; (ii) as regards the propriety in passing of the orders dated 01.10.2020 by the Commissioner and tenability of the grounds stated therein; and (iii) as regards the prayer for release of the goods.

53Copy pinpoint53. Much has been said in these matters regarding the exercise of power by the Commissioner under Section 129D(2) of the Customs Act. The High Court proceeded to observe in the impugned order dated 15.10.2020 that the Commissioner’s orders dated 01.10.2020 were termed as review orders but the jurisdiction conferred by Section 129D(2) was that of suo motu revision and not that of review; and in that regard, the High Court particularly referred to the expressions “legality or propriety” occurring in the provision. 53.1. Section 129D of the Customs Act reads as under: - E

“129D. Power of Committee of Principal Chief Commissioners of Customs or Chief Commissioners of Customs or Principal Commissioner of Customs or Commissioner of Customs to pass certain orders.—(1) The Committee of Principal Chief Commissioners of Customs or Chief F Commissioners of Customs may, of its own motion, call for and examine the record of any proceeding in which a Principal Commissioner of Customs or Commissioner of Customs as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety G of any such decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Committee of Principal Chief Commissioners of Customs or Chief Commissioners of Customs in its order: H

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A Provided that where the Committee of Principal Chief Commissioners of Customs or Chief Commissioners of Customs differs in its opinion as to the legality or propriety of the decision or order of the Principal Commissioner of Customs or Commissioner of Customs, it shall state the point or points on which it differs and make a reference to the Board which, after considering the facts of the decision or order passed by the Principal Commissioner of Customs or Commissioner of Customs, if is of the opinion that the decision or order passed by the Principal Commissioner of Customs or Commissioner of Customs is not legal or proper, may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order, as may be specified in its order. (2) The Principal Commissioner of Customs or Commissioner of Customs may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, directsuch authority or any officer of customs subordinate to him to apply to theCommissioner (Appeals) for the determination of such points arising out of thedecision or order as may be specified by the Principal Commissioner of Customs or Commissioner of Customs in his order. (3) Every order under sub-section (1) or sub-section (2), as the case may be, shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority: Provided that the Board may, on sufficient cause being shown, extend the said period by another thirty days. (4) Where in pursuance of an order under sub-section (1) or sub- G section (2), the adjudicating authority or any officer of customs authorised in this behalf by the Principal Commissioner of Customs or Commissioner of Customs makes an application to the Appellate Tribunal or the Commissioner (Appeals) within a period of one month from the date of communication of the order under sub- H section (1) or sub-section (2) to the adjudicating authority, such

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application shall be heard by the Appellate Tribunal or the A Commissioner (Appeals) as the case may be, as if such applications were an appeal made against the decision or order of the adjudicating authority and the provisions of this Act regarding appeals, including the provisions of sub-section (4) of section 129A shall, so far as may be, apply to such application.” B 53.2. For clarification, we deem it appropriate to observe that such enactments dealing with several areas of commerce and fiscal implications, like the Customs Act, 1962 and the Central Excise Act, 194417, do carry akin provisions reserving a residual power in the highest controlling authority of the Department, apart from the appellate powers of the departmental Appellate Authority or the Appellate Tribunal and apart from the powers of revision of the Central Government. Such residual power, as conferred by Section 129D of the Customs Act or Section 35E of Central Excise Act, is essentially to serve the purpose that the highest controlling authority of the Department (or a Committee of such highest authorities) satisfies itself as to the legality and propriety of any decision taken by the subordinate authority and, in case it finds any points arising from the decision in question, to direct the authority passing such order or any other subordinate authority to apply to the appellate forum for determination of such points/questions. In the scheme of the Customs Act, the power of revision is reserved for the Central Government, as per Section 129DD thereof. Similar power of revision in the Central Government could be seen in Section 35EE of the Central Excise Act. Thus, in the scheme and on the purpose of these enactments, it cannot be said that such residual power, of requiring the matter to be taken up before the appellate forum, is that of revision stricto sensu. However, it does not appear necessary to delve further on this aspect in this judgement because, as noticed, it is not in dispute that the F Commissioner could have exercised such power under Section 129D of the Customs Act. In fact, we are unable to comprehend as to what precisely was the outcome of the detailed discussion by the High Court concerning the nature of power under Section 129D(2) because it had not been the finding that the orders dated 01.10.2020 were suffering from any want of jurisdiction or if the Commissioner, while passing the G said orders, transgressed the bounds of his authority.

54Copy pinpoint54. The other aspect commented upon by the High Court had been about the manner and time of passing of the said order when the matter was sub judice in the High Court. 17 Hereinafter also referred to as ‘the Central Excise Act’. H

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A 54.1. Coming to the question of propriety in passing of the orders dated 01.10.2020 by the said Commissioner despite being aware of the pendency of the writ petitions in the High Court, in our view, the comments of the High Court, even when not incorrect in general application, do not appear apt and apposite to the facts and in the circumstances of the present case. In other words, though we are at one with the High Court B that, ordinarily, when the matter is sub judice in the higher forum and that too before the Constitutional Court, the executive authorities should not attempt to bring about a new state of affairs without taking permission from the Court and/or bringing the relevant facts to the notice of the Court. However, even in this regard, before pronouncing on the impropriety C on the part of an executive authority who had done anything without prior information to the Court or without taking Court’s permission, all the relevant surroundings factors are also required to be examined so as to find as to whether such an action was calculated at interference with the administration of justice or was a bona fide exercise of power in the given circumstances. D 54.2. In the present case, though the High Court had issued notice in the writ petitions on 25.⁹.2020 and placed the petitions on 06.10.2020 but, it was clear on the face of record that the DGFT was taking serious exception to the orders-in-original dated 28.08.2020 and it was being asserted that the said orders were in the teeth of the pronouncement of E this Court in the case of Agricas (supra). Indisputably, the Commissioner had available with him three months’ time to pass the order under Section 129D(2) and thereby to ensure taking up of the matter against the orders- in-original dated 28.08.2020 by the Appellate Authority but, the importers preferred the writ petitions questioning the communication of DGFT F and the denial of release of goods; and sought mandamus for such release. Such a prayer for mandamus was effectively a prayer for execution of the orders-in-original dated 28.08.2020. The High Court found it unjustified on the part of the Department to suggest that the writ petitions were rendered infructuous because of the orders dated 01.10.2020; and to this extent, we are again at one with the High Court because, on the G strength of any order passed by the Commissioner during the pendency of the writ petitions, it could not have been claimed that the Department, by its own actions, made the writ petitions meaningless. However, such a submission on the part of the respondents of the writ petition, even if unwarranted, could not have taken the worth and value out of orders H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 445 ORS. [DINESH MAHESHWARI, J.]

dated 01.10.2020; and, at the same time, the High Court could not have ignored the other material circumstances. 54.³. One of the fundamental and material circumstance, which the High Court totally omitted to consider, was that the writ petitions were filed as if seeking execution of the orders-in-original and that if the writ, as prayed for, was to be issued and the goods were to be released, nothing much on merits was to be left for examination by the Appellate Authority; and if, for any reason, the orders-in-original were to be interfered with at a later stage in the appellate forum, irreparable damage would have been done because the goods would have been released for the domestic market. (As noticed, it has indeed happened to a large extent in present cases, with release of a substantial quantity of goods of the respondent-importers). 54.4. The purpose of our comments foregoing is that even while the High Court was right in questioning the fact that the Commissioner chose to pass the order when the matter was sub judice, the High Court missed out the relevant feature that the importers had preferred the writ petitions essentially to pre-empt any further proceedings by the statutory authority concerned under the Customs Act. In other words, the invocation of writ jurisdiction by the importers was itself questionable.

55Copy pinpoint55. Noticeable it is that the High Court, even after making some scathing comments on the question of propriety against the Commissioner, E took up the points stated in the orders dated 01.10.2020 one by one and indicated its views that the points so raised were baseless and/or untenable. However, the High Court was also conscious of the fact that the said orders dated 01.10.2020 were not in challenge before it and the appeals preferred pursuant to those orders shall have to be examined by the F Appellate Authority. Thus, the High Court qualified all its findings in paragraph 36 of the impugned order as being of its prima facie impression and specifically left the matter open for examination by the Appellate Authority. 55.1. However, when the Appellate Authority ultimately passed G the orders in setting aside the orders-in-original, one of the importers, despite being aware of the remedy of further appeal being available, chose to invoke, again, the writ jurisdiction of the High Court. This time the High Court, in its impugned interim order dated 05.01.2021, made the observations that the decision by the Appellate Authority was at H

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A loggerheads with its earlier findings and directions. The High Court even observed that its findings in the order dated 15.10.2020 could not have been regarded as prima facie finding only; and when the goods were directed to be released forthwith, it was beyond comprehension as to how a lower Appellate Authority could have nullified such directions by ordering absolute confiscation. B

56Copy pinpoint56. We find it very difficult to reconcile the observations of the High Court in these matters. Paragraph 36 of the order dated 15.10.2020 left nothing for a doubt with anyone that whatever the High Court had observed in that order as regards the orders dated 01.10.2020 was not of final determination; and the matter was left open, to be decided by the C Commissioner (Appeals). Significantly, if the purport of the order dated 15.10.2020 had been that even if Commissioner (Appeals) would be deciding the matter in appeal, he could not order absolute confiscation of the goods because the High Court had ordered their release, it would immediately lead to the position that the order dated 15.10.2020 of the D High Court carried inherent contradictions. In other words, if release of goods was the only option available with the authorities, the material part of consideration of the Appellate Authority had already been rendered redundant.

57Copy pinpoint57. For what has been discussed hereinabove, it is at onceclear E that when the matter was left for decision by the Commissioner (Appeals), there was neither any occasion nor any justification for the High Court to pass the order for release of the goods for the simple reason that any order for release of goods was to render the material part of the matter a fait accompli. This, simply, could not have been done. Putting it differently, a little pause after paragraph 36 of the impugned order F 15.10.2020 and before the directions in the next paragraph would make it clear that for what had been observed in the said paragraph 36 of the impugned order (as regards leaving of the matter for decision by the Appellate Authority), any direction for release of goods pursuant to the order-in-original could not have been issued. To put it in yet other words, G despite making several observations so as to indicate that the review orders dated 01.10.2020 were unjustified and the points stated therein were baseless or untenable, the High Court stopped short of setting aside the orders dated 01.10.2020 and also did not pronounce finally on the validity of the orders-in-original dated 28.08.2020 because the said orders-in-original were the subject matter of appeal. Having rightly left H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 447 ORS. [DINESH MAHESHWARI, J.]

the matter for decision in appeal, the High Court committed a serious error in yet issuing such a writ as if the orders-in-original dated 28.08.2020 had become rule of the Court and as if the Court was ensuring its due execution. It gets, perforce, reiterated that if the orders-in-original dated 28.08.2020 were to be executed under the mandate of the High Court, the appeals were going to be practically redundant after release of the goods and nothing material was to remain for decision by the Appellate Authority on the main subject matter of the appeal.

58Copy pinpoint58. What has been indicated from different angles hereinabove leads only to one conclusion that the order dated 15.10.2020 passed by the High Court suffers from inherent contradictions and inconsistencies; and cannot be approved. C

59Copy pinpoint59. Apart from the fundamental flaws of contradictions, the order passed by the High Court on 15.10.2020 further suffers from the shortcomings that while issuing mandamus for release of goods, the High Court omitted to take into account the relevant facts as also the material factors concerning the imports in question, including the reasons for issuance of the notifications in question that the same were to safeguard the agriculture market economy of India; and the observations and findings of this Court in the case of Agricas (supra). An examination of the impugned order dated 15.10.2020 in its entirety makes it clear that the reasons for directing release of goods in favour of the importers are to be found only in paragraph 37 thereof. Therein, the High Court has taken into account a few factors standing in favour of the importers like the orders-in-original holding the field; the importers having made the necessary payments; and the importers incurring expenditure because of warehousing. An additional factor had been the High Court’s dissatisfaction that the orders dated 01.10.2020 were passed in an improper manner and grounds given therein were not justifying the withholding of the goods. While proceeding on these reasons and considerations, it appears that the other overriding factors like the interest of domestic agriculture market economy as also the findings and observations of this Court in Agricas (supra) totally escaped the attention of the High Court. Thus, the impugned order dated 15.10.2020, having been passed while ignoring the relevant considerations, cannot be approved.

60Copy pinpoint60. For what has been observed hereinabove, the other order dated 05.01.2021 passed by the High Court in the second writ petition H

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A filed by the importer M/s. Raj Grow Impex also deserves to be disapproved. 60.1. As noticed, in the said order dated 05.01.2021, the High Court even observed that the Appellate Authority wrongly construed that its earlier decision for release of goods has been prima facie; and further questioned as to how a lower Appellate Authority could have B nullified its directions for release of goods by ordering confiscation. The construction of its own order dated 15.10.2020, as put by the High Court in its later order dated 05.01.2021, only fortifies the inconsistencies we have indicated hereinabove. This apart, the expression ‘prima facie’ in regard to the order of the High Court dated 15.10.2020 had not been a C creation of the Appellate Authority but had been stated in unequivocal terms, twice over, in paragraph 36 of the order dated 15.10.2020, where the High Court also made it clear that final views were not being expressed because the matter was to be examined in appeal. 60.2. Apart from the above, while entertaining the said second writ petition, the High Court seems to have also omitted to consider that the said writ petition was filed against the order-in-appeal passed by the Appellate Authority and the alternative remedy of regular statutory appeal to CESTAT was available to the importer. In our view, on consideration of the relevant facts and circumstances in their correct perspective, the High Court would not have entertained the writ petitions so filed in these matters.

61Copy pinpoint61. We are, therefore, clearly of the view that the impugned orders dated 15.10.2020 (read with the modification order dated 09.12.2020) and 05.01.2021 remain unsustainable and are required to be set aside.

62Copy pinpoint62. However, merely setting aside the orders passed by the High Court does not bring finality to these appeals because, as noticed, the core issues still remain as to whether the goods in question are or were liable to absolute confiscation or could be or could have been released by recovery of fine in lieu of confiscation? 62.1. For dealing with the core issues, we need to examine in the first place as to whether the goods in question fall in the category of prohibited goods, as argued on behalf of the appellants or in the category of restricted goods, as argued on behalf of the importers. Whether the goods in question are of ‘prohibited goods’ category?

63Copy pinpoint63. For dealing with the questions relating to the treatment of the goods in question, it shall be apposite to recapitulate that in the case of

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 449 ORS. [DINESH MAHESHWARI, J.]

Agricas (supra), this Court, after dealing with a variety of issues relating to the validity of the notifications dated 29.³.2019 and the corresponding trade notice dated 16.04.2019, specifically referred to the purpose behind and the purport of the notifications; and it was noticed that the notifications were aimed at striking a balance between the farmers of the country on one hand and the importers on the other, particularly when large-scale imports were adversely impacting the interests of the farmers due to fall in prices in the local market. The repercussions of excessive imports under the cover of the interim orders in the past were taken note of and it was also noticed that the restrictions were imposed to prevent panic disposal in the local markets. As the notifications provided for quantitative restriction on import of various peas and pulses in the range of 1.5-2 C lakh MTs against licence, a rather preposterous line of arguments was adopted by the importers before this Court that the total quantities specified in each of the notifications was ‘per licence’ and not for the ‘total imports’. Such contentions were rejected by this Court after finding no ambiguity in the notifications and holding clearly that the expression D ‘total quantity’ did not refer to the ‘quantity per licence’. This Court further held in no uncertain terms that the impugned notifications were valid for having been issued in accordance with the power conferred in the Central Government in terms of sub-section (2) of Section 3 of the FTDR Act. Yet further, this Court rejected the submissions that the importers had acted bona fide in importing the goods in question; and the imports, made under the cover of interim orders, were held to be contrary to the notifications and the trade notice issued under the FTDR Act but, were left to be dealt with under the provisions of the Customs Act.

64Copy pinpoint64. In view of the findings and requirements aforesaid and in view of the contentions of the respective parties relating to the treatment of goods imported under the cover of interim orders, it is necessary to take note of the relevant statutory provisions, particularly those contained in Section 3 of the FTDR Act and Sections 2(33), 11(1) and 111(d) of the Customs Act. These relevant provisions read as under: - Section 3 of the Foreign Trade (Development and G Regulation) Act, 1992 “3. Powers to make provisions relating to imports and exports.- (1) The Central Government may, by Order published in the Official Gazette, make provision for the development and H

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A regulation of foreign trade by facilitating imports and increasing exports. (2) The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology: Provided that the provisions of this sub-section shall be applicable, in case of import or export of services or technology, only when the service or technology provider is availing benefits under the foreign trade policy or is dealing with specified services or specified technologies. (3) All goods to which any Order under sub-section (2) applies shall be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly. (4) without prejudice to anything contained in any other law, rule, regulation, notification or order, no permit or licence shall be necessary for import or export of any goods, nor any goods shall be prohibited for import or export except, as may be required under this Act, or rules or orders made thereunder.” Section 2 (33) of the Customs Act, 1962: “(33) “prohibited goods” means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported, have been complied with;” Section 11(1) of the Customs Act, 1962: “11. Power to prohibit importation or exportation of goods.– G (1) If the Central Government is satisfied that it is necessary so to do for any of the purposes specified in sub-section (2), it may, by notification in the Official Gazette, prohibit either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification, the import or export of H goods of any specified description.

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xxx xxx xxx” A Section 111(d) of the Customs Act, 1962 “111. Confiscation of improperly imported goods, etc.—The following goods brought from a place outside India shall be liable to confiscation:- B xxx xxx xxx (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; xxx xxx xxx”

65Copy pinpoint65. The categorical findings in the case of Agricas (supra) by this Court, read with the provisions above-quoted, hardly leave anything to doubt that sub-section (3) of Section 3 of the FTDR Act applies to the goods in question and, for having been imported under the cover of the interim orders but, contrary to the notifications and the trade notice issued under the FTDR Act and without the requisite licence, these goods shall be deemed to be prohibited goods under Section 11 of the Customs Act; and all the provisions of the Customs Act shall have effect over these goods and their import accordingly. However, a long deal of arguments has been advanced before us as regards the category in which these goods are to be placed, i.e., whether they are of ‘restricted’ category or ‘prohibited’ category.

66Copy pinpoint66. The gravamen of the contentions on the part of the importers, that the subject goods fall in ‘restricted’ category and not ‘prohibited’ category, is that the notifications in question placed quantitative restrictions and there had not been any other order or notification prohibiting the import of these goods. The contentions remain baseless and are required to be rejected. 66.1. A bare look at the notifications in question and the findings of this Court in Agricas (supra) make it clear that only the particular restricted quantity of the commodities covered by the said notifications could have been imported, like those upto 1.5 lakh MTs; and that too, under a licence. The learned ASG has rightly pointed out with reference to the decision in PTR Exports (supra) that an applicant has no vested right to have export or import licence; and granting of licence depends H

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A upon the policy prevalent on the date. The learned ASG has further rightly submitted, with reference to the decision in S.B. International (supra), that granting a licence to import is not a matter of formality; and the authorities have to satisfy themselves that the application satisfies all the requirements of the scheme and the applicable laws. In S.B. International, this Court observed, inter alia, as under: - B “9. It should be noticed that grant of licence is neither a mechanical exercise nor a formality. On receipt of the application, the authorities have to satisfy themselves about the correctness of the contents of the application. They also have to satisfy themselves that the application satisfies all the requirements of the scheme and the other applicable provisions of law, if any….” 66.2. As noticed, only the particular restricted quantity of the commodities covered by the said notifications could have been imported and that too, under a licence. Therefore, any import within the cap (like that of 1.5 lakh MTs) under a licence is the import of restricted goods but, every import of goods in excess of the cap so provided by the notifications, is not that of restricted goods but is clearly an import of prohibited goods.

67Copy pinpoint67. The applicable principles of law relating to the categorisation of goods as ‘prohibited’ or ‘other than prohibited’ have been clearly enunciated by this Court in the decisions referred by the learned ASG. 67.1. In the case of Sheikh Mohd. Omer (supra), a particular mare was found to be not a ‘pet animal’and, therefore, its import was found to be violative of the Imports Control Order. It was, however, an admitted position that the import of horses or mares was not prohibited as such. The question was as to whether by making such import, the appellant contravened Section 111(d) read with Section 125 of the Customs Act. While answering the question, this Court held that any restriction on import or export is to an extent a prohibition; and the expression “any prohibition” in Section 111(d) of the Customs Act includes restrictions. This Court further underscored that “any prohibition” means every prohibition; and restriction is also a type of prohibition. This Court, inter alia, said, - “11…. While elaborating his argument the learned counsel invited our attention to the fact that while Section 111(d) of the Act uses the word “prohibition”. Section 3 of the Imports and Exports H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 453 ORS. [DINESH MAHESHWARI, J.]

(Control) Act, 1947, takes in not merely prohibition of imports and exports, it also includes “restrictions or otherwise controlling” all imports and exports. According to him restrictions cannot be considered as prohibition more particularly under the Imports and Exports (Control) Act, 1947, as that statute deals with “restrictions or otherwise controlling” separately from prohibitions. We are not impressed with this argument. What clause (d) of Section 111 says is that any goods which are imported or attempted to be imported contrary to “any prohibition imposed by any law for the time being in force in this country” is liable to be confiscated. “Any prohibition” referred to in that section applies to every type of “prohibition”. That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression “any prohibition” in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947 uses three different expressions D “prohibiting”, “restricting” or “otherwise controlling”, we cannot cut down the amplitude of the word “any prohibition” in Section 111(d) of the Act. “Any prohibition” means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition…..” (emphasis in bold supplied) E

67.2. In the case of Om Prakash Bhatia (supra), over-invoicing and fraudulent claim of drawback by the exporter was held to be that of exporting prohibited goods with reference to the requirements of Foreign Exchange Regulation Act, 1973, while rejecting the contention of the exporter that Section 113(d) of the Customs Act was not applicable as the goods were not prohibited as such. A line of argument has been suggested on behalf of one of the respondents that the order ultimately passed in the case of Om Prakash Bhatia operates against the stand of the appellants. It is true that in that case, redemption fine and penalty was imposed but, the exercise of discretion in a particular manner related to the facts of that case. These aspects relating to the exercise of discretion shall be considered a little later, while dealing with the question as to whether the goods in question are liable to absolute confiscation or could be released on redemption fine. Suffice it to notice for the present purpose that the export attempted in violation of the conditions was held to be taking the goods in the category of ‘prohibited’ goods. H