ICFAI LAW SCHOOL

ICFA UNIVERSITY
DEHRADUN

Law of Foreign Trade and Exchange

Assignment

Submitted To: Mr. Parth Upadhyay

Submitted By: Jaya Vats

Enrollment no. : 18FLICDDNO1049

Program: BBA LLB (H)

Section: A
 1. TITLE OF THE CASE

Union of India & Ors. Vs. M/s. Raj Grow Impex

LLP &Ors.

Case Number:- Civil Appeal No(s). 2217-2218 of

2021 arising out of S.L.P. (C) Nos. 14633-14634 of

2020

2.PROVIsIONS OF THE ACT INVOKED

Section 3of the ForeignTrade (Development and 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 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
 and all the provisions of that Act shall have
the Customs Act, 1962 (52 of 1962)
effect accordingly.

(4) without prejudiceanything contained in any other law, rule, regulation,

to
for import or export
notification or order, no permit or licence shall be necessary
as
of any goods, nor any goods shall be prohibited for import or export except,
rules orders made thereunder."
may be required under this Act, or or

Section 2 (33) of the Customs Act, 1962:

which is
"(33) "prohibited goods" means any goods the import or export of
the time being in
subject to any prohibition under this Act or any other law for
force but does not include any such goods in respect of which the conditions

exported, have been

subject to which the goods are permitted to be imported or

complied with;"

Section 11(1) ofthe CustomsAct, 1962

"11. Power to prohibit importation or exportation of goods.-(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 6azette, 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 goods of

any specified description.

Whether the goodsin question are of prohibited goods'category?

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 Agricas (supra), this Court,
after dealing with a variety of issues relating to the validity of the notifications
dated 29.03.2019 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 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 '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.

3.FACTS OF THE CASE

The Director General of Foreign Trade (DGFT) issued notifications for restricting
the import of certain beans, peas and pulses (Goods) under the Foreign Trade
(Development and Regulation) Act, 1992 (the Act). The Respondents, M/s. Raj
Grow Impex LLP and M/s. Harihar Collections, had imported the Goods covered
under the above said notification. The Additional Commissioner of Customs,
Mumbai vide Order dated 28-08-2020 ordered for confiscation of the Goods in
view of the said Notifications. The Respondents had to pay fine, customs duty and

penalty to redeem the Goods. However, DGFT in its letter dated 01.09.2020
refused to release the said Goods as they were restricted items and the Customs
Authority did not release the Goods.
 the Respondents approached
the Bombay High Court seeking
Aggrieved,
The Commissioner of customs
mandamus for clearance of the Goods in question.
by its order dated 01.10.2020 pointed out the alleged deficiencies in the said
Order and directed the said Authority to file an appeal before the Commissioner

Court in its common order dated 15.10.2020 and

(Appeals). The Bombay High
held that the Respondents had complied with the terms and conditions of the

Customs Authority and were incurring warehousing expenditure. The Hon'ble

High Court issued directions Authority to release the Goods and
to the Customs

left the matter to be decided by the Commissioner (Appeals).

Meanwhile, the

allowed the order dated 24.12.2020

appeals by the
Commissioner (Appeals)
ordered for absolute confiscation of the Goods and enhanced
the amount of

penalty.
Commissioner
The Respondents challenged the order dated 24.12.2020 of the
Court. The Hon'ble
(Appeals) in another Writ Petition before the Bombay High
High Court observed that the directions issued by the Commissioner (Appeals)
Court in its Order
were contrary to the directions issued by the Bombay High
dated 15-10-2020. the Hon'ble High Court stayed the operation of the
Therefore,
Court directed
Order of the Commissioner (Appeals). Further The Hon'ble High
the Authorities to comply with the Orders of the Bombay High Court. The High
notice to
Court passed a separate order dated 05.01.2021 and issued show cause

the authorities concerned.

The Union of India and the Customs Authorities filed an Appeal before the
15-10-2020 and 05-01-2021
Supreme Court and questioned the orders dated
passed by the Bombay High Court.

4. DECISION OF CONCERNING AUTHORITY

The Hon'ble Supreme Court held that the order of the High Court to release the
Goods was clearly in contradiction with the Order of the Commissioner (Appeals)
for absolute confiscation of Goods. The Hon'ble Court further observed that the
reason behind the notifications issued by DGFT is to safeguard the agricultural
 Hon'ble high failed to consider the
economy of India and held that the
court

same.

It further observed that the High Court failed to consider that the Respondents
had an alternative remedy to the customs, Excise and Service tax
approach
Order for
appellate Tribunal against the Customs Adjudicating Authority's
confiscation of the Goods.

In view of the above, the Hon'ble Supreme Court allowed the appeals and set

aside the earlier order.

POINT OF DETERMINATION
The narration and the recounts foregoing make it evident that the root question
in these matters is as to whether the goods in question are liable to absolute
contiscation or they could be released with payment of fine in lieu of

confiscation?

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 (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.

5. OBSERVATION

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 oly 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 or

the matter at that only. For what has been discussed hereinabove, these
appeals deserve to be allowed and, while setting aside the orders passed by
the High Court and approving the orders-in-appeal, the goods in question
are to be held liable to absolute confiscation but with a relaxation of

allowing re-export, on payment of the necessary redemption fine and

subject to the importer discharging other statutory obligations. The
respondent-importers being responsible for the improper imports as also
for the present litigation, apart from other consequences, also deserve to

be saddled with heavier costs.

6. SUGGESTION
The subject goods are held liable to absolute confiscation but, in continuity
with the order in these appeals, it is provided that if the importer
concerned opts for re-export, within another period of two weeks from
today, such a prayer for re-export may be granted by the authorities after
recovery of the necessary redemption fine and subject to the importer
discharging other statutory obligations. If no such option is exercised within
two weeks from today, the goods shall stand confiscated absolutely. The
matters relating to the interveners shall also be governed by the findings of
this judgement and appropriate orders in their regard shall be passed by
the authorities/Courts, wherever their matters relating to the subject goods
are pending but, their options of further appeal, only in relation to the
quantum of amount payable, including that of penalty, is left open.