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Vkl Seasoning Private Limited vs. The Commissioner Of Customs

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WP(C)/4842/2020HC KeralaGSTCNR KLHC01013180202003 March 2020Bench: HONOURABLE MR. JUSTICE AMIT RAWAL17 pages

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL TUE AY, THE 03RD DAY OF MARCH 2020 / 13TH PHALGUNA, 1941 WP(C).No.4842 OF 2020(E) PETITIONER/S: VKL SEASONING PRIVATE LIMITED, HAVING ITS REGISTERED OFFICE AT PLOT NO.R 30, TTC INDUSTRIAL AREA, MIDC RABALE NAVI MUMBAI, THANE, MAHARASHTRA-400701 REPRESENTED BY ITS MANAGER-FINANCE AND OPERATIONS, SRI.M.UDAYAKUMAR. BY ADVS. SRI.ASWIN GOPAKUMAR SRI.ANWIN GOPAKUMAR SRI.K.AMAL NATH NAIK SRI.RENOY VINCENT SRI.NIRANJAN SUDHIR SMT.FEMY ANN JOHNSON SMT.REUBEN PHILIP ABRAHAM RESPONDENT/S: 1 THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE, INDIRA GANDHI ROAD, WILLINGDON ISLAND, COCHIN-682 009. 2 THE PRINCIPAL ADDITIONAL DIRECTOR GENERAL, DIRECTORATE OF REVENUE INTELLIGENCE, DELHI ZONAL UNIT B-3 AND 4,6TH FLOOR, PT. DEENDAYAL ANTYODAYA BHAWAN CGO COMPLEX, LODHI ROAD, NEW DELHI-110 003. R2 BY ADV. SRI.S.MANU

R1 BY SRI SREELAL N WARRIER SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.4842 OF 2020 2 JUDGMENT Dated this the 3rd day of March 2020 Petitioner is a company carrying on business of manufacture and sale of a range of culinary products under about 15 registered trademarks. It is also importing certain materials from various countries, including yeast extract, Egyptian Basil, Soy Sauce Powder etc. The aforementioned materials are being imported from various countries and the duty

accordingly is placed as per the notified Customs Act, and the items defined therein. As per the averments, petitioner classified the yeast extract as IS2102. 2. The question involved in the present writ petition is whether the customs authorities are empowered to differ the classification as sought by the petitioner for the purpose of charging of the higher duty.

3.

The petitioner vide various invoices imported yeast extract, Glutamate, Egyptian

WP(C).No.4842 OF 2020 3 Basil, Soy Sauce etc. on different dates through various bill of entries, the details of which are given herein below. Sl No Supplier Item Qty. Invoic e No. Arrived on Bill of Entry No. Date of filing Bill of Entry 1 Angel Yeast (Hongkong) Co. Ltd. Yeast extract 3MT AY19IN AVKL13 02/12/ 19 592123 9 03/12/ 19 2 Angel Yeast (Hongkong) Co. Ltd. Yeast extract 3MT AY19IN AVKL14 16/12/ 20 611068 8 17/12/ 19 3 Angel Yeast (Hongkong) Co. Ltd. Yeast extractF IG12LS 3MT AY19IN AVKL15 20/01/ 20 656921 7 21/01/ 20 4 Angel Yeast (Hongkong) Co. Ltd. Yeast extractK A 65 8MT AY19IN AVKL16 14/01/ 20 648271 1 15/01/ 20 5 Arshine Pharmaceut ical Co.Ltd Monosodi um Glutamat e 22MT A91108 3AO113 42 13/01/ 20 646521 8 14/01/ 20 6 Expo Misr Trade Emt Egyptian Basil 5.010 MT 7114/1 3 20/01/ 20 655853 2 21/01/ 20 7 AIPU Food Industry Soy sauce Powder ssp-006 5MT AP2019 110401 -01 28/01/ 20 666333 9 28/01/ 20 8 BK Giulini Gmbh Brifisol

17.

10 MT 382009 9519 27/01/ 20 664823 9 27/01/ 20 9 Yangzhou Chemicals Monosodi um Glotamat e 44MT YC8VKL 191104 T 03/02/ 20 674708 0 04/02/ 20

WP(C).No.4842 OF 2020 4

4.

In the above mentioned entries, serial nos.5 to 9 are not in dispute. The question revolves around only item No.1 to 4. 5. Mr. Aswin Gopakumar, learned counsel appearing on behalf of the petitioner submits that, the consignment of the aforementioned goods was accompanied by all the documents including the certificate of original Phytosanitary etc. When the goods reached the destination, the bills of lading were submitted on 3rd & 17th December 2019 and 15th and 21st January 2020. Despite the submission thereof, bill of entry, the goods were not released owing to the classification by the Customs bringing under item No.2106 having a higher rate of duty. In the meantime, petitioner to their shock and surprise, received a summons dated 20.12.2019 from the office of the Director, Revenue Intelligence, purportedly under Section 108 of the Customs Act. It is in that background of the matter, customs authorities did not release the goods despite

WP(C).No.4842 OF 2020 5 the fact that the petitioner was willing to deposit the higher rate of duty as acceptable under item No.21069060. 6. On the introduction of GST regime, the importers were also given the benefit of Integrated Goods and Service Tax (IGST). The Managing Director of the petitioner in pursuance to the summons of DRI, appeared before the office of the DRI, New Delhi on 23.01.2020 from 10 a.m. to 8 p.m. and furnished substantial material. Since the future of the goods was in a quandary, petitioner approached this Court with the following prayer. “(i) issue a writ of mandamus or any other appropriate writ, direction or order and commanding Respondent No.1 to forthwith process and allow expeditious clearance of import goods covered by Bills of Entry numbers 5921239 dated 03.12.2019, 6110688 dated 17.12.2019,

6569217

dated 21.01.2020,

6482711

dated 15.01.2020,

6465218

dated 14.01.2020,

6558532

dated 21.01.2020,

6663339

dated

WP(C).No.4842 OF 2020 6 28.01.2020,

6648239

dated 27.01.2020,

6747080

dated 04.02.2020; and (ii) issue a writ of mandamus or any other appropriate writ, direction or order commanding Respondent NO.1 to take necessary action under the Customs Act, 1962 or any other law to facilitate the availment and utilisation of credit of payments made by the petitioner towards Integrated Goods and Services Tax on imports of Yeast Extract/Inactive Yease; and (iii) to grant such other and incidental reliefs as this Hon'ble Court may deem fit, just and necessary in the peculiar facts and circumstances of this case; and (iv) to allow this writ petition (civil) with costs to the petitioner.”

7.

However, during the interregnum, petitioner was compelled to move I.A Nos. 2 and

WP(C).No.4842 OF 2020 7 3 of 2020. In I.A No.2/20, prayer was for stay of the summons of the petitioner and I.A.No.3/20 was for permission to place on record additional documents. The DRI officers do not have any territorial juri iction to interdict the release of the goods by commanding customs officials without obtaining the No Objection Certificate, as the goods have been imported and lying in custody of the customs officials at Kochi. Petitioner though was willing to pay the higher rate of duty and also reserved right to avail and utilise IGST credit at a later point of time with a liberty to raise the claim of refund. The fact of the matter is that the goods have not been released.

8.

The import was not done for the first time, but since 2011 and during all these period it was classified to be under 2102 on payment of the applicable rate of duty.

9.

The purported enquiry of the DRI officials pertains to import of goods with

WP(C).No.4842 OF 2020 8 effect from 2017 also. The goods are perishable items and their non-release has to item Nos.5,6 & 8 as referred in the chart extracted above, which are not free to be released as they do not have yeast extract. The ongoing enquiry and investigation of the DRI cannot be disclosed to this Court for the reasons as it would not be in the interest of the revenue as well as for the petitioner company.

12.

Having heard counsel for the parties and on perusal of the documents and judgments cited, I am of the view that there is no force in the argument of Mr. Aswin Gopakumar. On a plain and simple reading of the prayer as extracted above as well as the prayer for stay of the presence/summoning of the Managing Director by the officers of the DRI cannot be conjoined in one writ petition. Even otherwise, the provisions of Section 108 only deals with recording of the statements, nothing beyond. Any apprehension can be invoked when the entire action initiated in law except that DRI

WP(C).No.4842 OF 2020 12 officers of New Delhi do not have the territorial juri iction. I am afraid the aforementioned argument would not have any force to stand. In support of the aforementioned submission, I rely upon the judgment dated 17.10.2019 rendered in W.P. (C).No.4649/2019. I would refrain myself from commenting further as it would be taking away the legal right of the petitioner in assailing the action of the DRI in independent proceedings but close the issue for the time being.

13.

Section 110(A) leaves no manner of doubt that the petitioner is not prepared to move an application for provisional release of the goods being perishable in nature. However the writ petition do not disclose any such request so far. Mr.Warrier and Mr. Manu at this stage submits that, the customs authorities would not have any objection in considering the prayer of the petitioner in case such application is made in accordance

WP(C).No.4842 OF 2020 13 with law. In my opinion, the alleged cause of action based only on the apprehension not supported by any documents to make out the case warranting interference under Article 226 of the Constitution of India. Accordingly, the writ petition is dismissed. Interim order dated 27.02.2020 is also ordered to be set aside. AMIT RAWAL JUDGE uu

WP(C).No.4842 OF 2020 14 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1OF THE COMMERCIAL INVOICE DATED 21.10.2019. EXHIBIT P2OF THE PACKING LIST DATED 21.10.2019. EXHIBIT P3OF THE CERTIFICATE OF ANALYSIS DATED 21.10.2019. EXHIBIT P4OF THE HEALTH CERTIFICATE DATED 24.10.2019. EXHIBIT P5OF THE PHYTOSANITARY CERTIFICATES DATED 24.10.2019. EXHIBIT P6OF THE CERTIFICATE OF ORIGIN DATED 7.11.2019. EXHIBIT P7OF THE BILL OF LADING DATED 7.11.2019. EXHIBIT P8OF THE BILL OF ENTRY DATED 3.12.2019. EXHIBIT P9OF THE COMMERCIAL INVOICE DATED 7.11.2019. EXHIBIT P10OF THE PACKING LIST DATED 7.11.2019. EXHIBIT P11OF THE CERTIFICATE OF ANALYSIS DATED 11.11.2019. EXHIBIT P12OF THE HEALTH CERTIFICATE DATED 15.11.2019. EXHIBIT P13OF THE PHYTOSANITARY CERTIFICATE DATED 15.11.2019. EXHIBIT P14OF THE CERTIFICATE OF ORIGIN DATED 22.11.2019. EXHIBIT P15OF THE BILL OF ENTRY DATED 17.12.2019. EXHIBIT P16OF THE COMMERCIAL INVOICE DATED 9.12.2019. WP(C).No.4842 OF 2020 15 EXHIBIT P17OF THE PACKING LIST DATED 9.12.2019. EXHIBIT P18OF THE HEALTH CERTIFICATE DATED 10.12.2019. EXHIBIT P19OF THE CERTIFICATE OF ORIGIN DATED 26.12.2019. EXHIBIT P20OF THE BIL OF LADING DATED 26.12.2019. EXHIBIT P21OF THE BILL OF ENTRY DATED 21.1.2020. EXHIBIT P22OF THE COMMERCIAL INVOICE DATED 9.12.2019. EXHIBIT P23OF THE PACKING LIST DATED 9.12.2019. EXHIBIT P24OF THE HEALTH CERTIFICATE DATED 19.12.2019. EXHIBIT P25OF THE CERTIFICATE OF ORIGIN DATED 20.12.2019. EXHIBIT P26OF THE BILL OF LADING DATED 18.12.2019. EXHIBIT P27OF THE BILL OF ENTRY DATED 15.1.2020. EXHIBIT P28OF THE COMMERCIAL INVOICE DATED 10.12.2019. EXHIBIT P29OF THE WEIGH LIST DATED 10.12.2019. EXHIBIT P30OF THE PHYTOSANITARY CERTIFICATE DATED 19.12.2019. EXHIBIT P31OF THE CERTIFICATE OF ORIGIN DATED 16.12.2019. EXHIBIT P32OF THE BILL OF LADING DATED 16.12.2019. EXHIBIT P33OF THE BILL OF ENTRY DATED 14.1.2020. EXHIBIT P34OF THE COMMERCIAL INVOICE DATED 19.12.2019. WP(C).No.4842 OF 2020 16 EXHIBIT P35FO THE PACKING LIST DATED 19.12.2019. EXHIBIT P36OF THE TEST CERTIFICATE DATED 14.12.2019. EXHIBIT P37OF THE PHYTOSANITARY CERTIFICATE DATED 22.12.2019. EXHIBIT P38OF THE CERTIFICATE OF ORIGIN DATED 22.12.2019. EXHIBIT P39OF THE BILL OF LADING DATED NIL. EXHIBIT P40OF THE BILL OF ENTRY DATED 21.1.2020. EXHIBIT P41OF THE COMMERCIAL INVOICE DATED 6.11.2019. EXHIBIT P42OF THE PACKING LIST DATED 6.11.2019. EXHIBIT P43OF THE HEALTH CERTIFICATE DATED 18.12.2019. EXHIBIT P44OF THE CERTIFICATE OF ORIGIN DATED 18.12.2019. EXHIBIT P45OF THE BILL OF ENTRY DATED 28.1.2020. EXHIBIT P46OF THE COMMERCIAL INVOICE DATED 10.12.2019. EXHIBIT P47OF THE CERTIFICATE OF CONFORMITY DATED 10.12.2019. EXHIBIT P48OF THE BILL OF LADING DATED 20.12.2019. EXHIBIT P49OF THE BILL OF ENTRY DATED 27.1.2020. EXHIBIT P50OF THE COMMERCIAL INVOICE DATED 20.12.2019. EXHIBIT P51OF THE PACKING LIST DATED 20.12.2019. EXHIBIT P52OF THE PHYTOSANITARY CERTIFICATE DATED 18.12.2019. WP(C).No.4842 OF 2020 17 EXHIBIT P53OF THE CERTIFICATE OF ORIGIN DATED 6.1.2020. EXHIBIT P54OF THE BILL OF LADING DATED 30.12.2019. EXHIBIT P55OF THE AND BILL OF ENTRY DATED 4.2.2020. EXHIBIT P56OF THE COMPUTATION STATEMENT SHOWING THE DIFFERENTIAL DUTIES OF CUSTOMS AND INTEGRATED GOODS AND SERVICE TAX ("IGST") AS DEMANDED BY THE OFFICE OF RESPONDENT NO.

2.

EXHIBIT P57OF THE SUMMONS DATED 17.1.2020 ISSUED BY THE OFFICE OF THE 2ND RESPONDENT. EXHIBIT P58OF THE LETTER DATED 27.1.2020 SUBMITTED BY THE PETITIONER TO THE DEPUTY COMMISSIONER, SPECIAL INTELLIGENCE AND INVESTIGATION BRANCH, CUSTOM HOUSE, COCHIN. EXHIBIT P59OF THE LETTER DATED 4.2.2020 SUBMITTED BY THE PETITIONER TO RESPONDENT NO.

1.

EXHIBIT P59OF THE SUMMONS ISSUED BY THE 2ND RESPONDENT DATED 20.12.2019 EXHIBIT P60OF THE SUMMONS ISSUED BY THE 2ND RESPONDENT DATED 01.01.2020 EXHIBIT P61OF THE SUMMONS ISSUED BY THE 2ND RESPONDENT DATED 17.01.2020 EXHIBIT P62OF THE SUMMONS ISSUED BY THE 2ND RESPONDENT DATED 21.02.2020 EXHIBIT P 63OF THE SEIZURE MEMORANDUM DATED 19.02.2020

Reproduced from the public record of the Kerala High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.