Indexone Infracon And Logistics Private LTD. vs. Union Of INDIA

Held

The Court held that the first objection regarding the restriction on import of Biodiesel under the National Policy on Biofuels – 2018 was not sufficient to permit detention of the goods at this stage. The Court noted that the Foreign Trade Policy, as per Section 5 of the Act, would not be sufficient to change a freely importable product's category without a specific notification under Section 3(2) of the Act. The DGFT had also clarified that the import of goods under the specified code is free. Regarding the second objection concerning the composition and applicable IGST rate, the Court observed that the initial communication from the authorities did not dispute the composition. While the respondents received a complaint suggesting the goods might be HSD, the complainant did not dispute the petitioner's declaration of less than 70% HSD. Laboratory reports confirmed the composition. The Court acknowledged that the Department could carry out further investigation but stated that detention of goods solely on this ground could not be permitted. The Court directed provisional clearance of the goods upon the petitioner providing a bond for the difference in duty between 12% and 18% IGST, while explicitly stating no final opinion was expressed on the nature of the goods or their importability. The matter was to be adjudicated later, with the Customs Act providing for penalties in case of misdeclaration.

Facts

The petitioner, Indexone Infracon and Logistics Private Ltd., imported 5000 Metric Tonnes of Biodiesel. The consignment arrived at Kandla Port in June 2018, and the petitioner filed a Bill of Entry. The Customs authorities processed the Bill of Entry and allowed payment of applicable Customs Duty and IGST. However, they later intercepted and prevented further clearance of goods after approximately 223 Metric Tonnes had been released. The Joint Director of Revenue Intelligence cited two reasons: import of Biodiesel is not allowed under the National Policy on Biofuels, and the goods are a mixture of Biodiesel and petroleum oil, thus attracting IGST at 18% as per Schedule III of Notification No. 01/2017, which is a higher rate than paid by the petitioner. The petitioner contended that Biodiesel under ITC (HS) Code 38260000 is free for import, as clarified by DGFT. The respondents argued that the current policy restricts import and that a complaint suggested the imported goods might be High Speed Diesel (HSD) instead of Biodiesel.

Key Issues

1. Whether the import of Biodiesel, as defined under ITC (HS) Code 38260000 and specified by the petitioner, is restricted under the prevailing import policy, particularly in light of the National Policy on Biofuels – 2018? (Question of law) 2. Whether the imported goods, a mixture containing less than 70% High Speed Diesel (HSD), are correctly classified and whether the applicable IGST rate has been correctly discharged? Petitioner's Arguments: The petitioner argued that Biodiesel under ITC (HS) Code 38260000 is free for import, as confirmed by DGFT. They contended that the National Policy on Biofuels does not prohibit import and that the goods imported meet the specified composition of less than 70% HSD, supported by laboratory reports. They also argued that other ports are allowing such imports. Revenue/State's Arguments: The respondents argued that the import of Biodiesel is restricted under the National Policy on Biofuels – 2018. They also raised a concern, based on a complaint, that the imported goods might be HSD, which is restricted, and therefore, the applicable IGST rate of 18% should apply instead of the 12% paid by the petitioner.