UNION OF INDIA & ORS. versus M/S. RAJ GROW IMPEX LLP & ORS. on 17 June 2021

[2021] 12 S.C.R. 371

UNION OF INDIA & ORS.

v.

M/S. RAJ GROW IMPEX LLP & ORS.

(Civil Appeal No(s). 2217-2218 of 2021)

JUNE 17, 2021

[A. M. KHANWILKAR, DINESH MAHESHWARI ANDKRISHNA MURARI, JJ.]

Customs Act, 1962 – ss.2(33), 11(1) and 111(d) – Import –‘prohibited goods’ – Appellants aggrieved of directions issued byHigh Court in its writ jurisdiction for compliance of orders-in-original dated 28.08.2020 passed by the Additional Commissionerof Customs and consequently, for release of goods imported byprivate respondents though the goods in question, according toappellants, were liable to absolute confiscation – Nature of the goodsin question – Held: On facts, import of the referred goods wasrestricted to a particular quantity and could be made only againsta licence – The letter and spirit of the restriction was that, anyimport beyond the specified quantity was clearly impermissible andprohibited –The goods in question, having been imported incontravention of the notifications dated 29.03.2019 issued by theCentral Government as also the trade notice dated 16.04.2019,issued by the DGFT; and being of import beyond the permissiblequantity and without licence, were ‘prohibited goods’ for the purposeof the Customs Act – Foreign Trade (Development and Regulation)Act, 1992 – s.3.

Customs Act, 1962 – s.125 – Import – ‘prohibited goods’ and‘other goods’ – Distinction between – Latter part of s.125 obligatesthe release of confiscated goods (i.e., other than prohibited goods)against redemption fine but, the earlier part of this provision makesno such compulsion as regards the prohibited goods; and it is leftto the discretion of the Adjudicating Authority that it may give anoption for payment of fine in lieu of confiscation – If theAdjudicating Authority does not choose to give such an option, theresult would be of absolute confiscation – Principles to be appliedfor exercise of discretion so available in the first part of s.125(1) –Held: Exercise of discretion is a critical and solemn exercise, to be A

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Aundertaken rationally and cautiously and guided by law; accordingto rules of reason and justice; and based on relevant considerations– The purpose behind leaving such discretion with the AdjudicatingAuthority in relation to prohibited goods is to ensure that all thepros and cons shall be weighed before taking a final decision forrelease or absolute confiscation of goods – On facts, orders-in-Boriginal dated 28.08.2020 of the Adjudicating Authority cannot besaid to have been passed in a proper exercise of discretion – TheAdjudicating Authority did not even pause to consider if the otheralternative of absolute confiscation was available to it in its discretion

as per the first part of s.125(1) of the Customs Act and proceededCas if it has to give the option of payment of fine in lieu of confiscation– Such exercise of discretion by the Adjudicating Authority wasmore of assumptive and ritualistic nature rather than of a consciousand cautious adherence to the applicable principles – When personalbusiness interests of importers clash with public interest, the formerhas to, obviously, give way to the latter – Further, if excessiveDimproperly imported goods are allowed to enter the country’s market,the entire purpose of the notifications would be defeated – Discretionin cases of present nature, involving far-reaching impact on nationaleconomy, cannot be exercised only with reference to the hardshipsuggested by the importers, who made such improper imports onlyEfor personal gains – The imports in question suffer from the vicesof breach of law as also lack of bona fide and accordingly heldliable to absolute confiscation but with a relaxation of allowing re-export, on payment of necessary redemption fine and subject to theimporter discharging other statutory obligations – No leniency inthe name of equity can be claimed by the importers – Respondent-Fimporters being responsible for improper imports as also for thepresent litigation, apart from other consequences, also deserve tobe saddled with heavier costs – Respondent-importers to pay costsof litigation to appellants, quantified at Rs. 2,00,000/- each.

Import-Export – Adjudicating Authority, while orderingGconfiscation, gave option to the importers to redeem the goods inquestion on payment of fine in lieu of confiscation u/s.125(1) of theCustoms Act – However, the DGFT took exception against releaseof the goods stating that the same were restricted items – Importers(private respondents) approached the High Court by way ofHseparate writ petitions, seeking mandamus for clearance of the goods

in question – While the writ petitions were pending, the Commissionerof Customs passed order dated 01.10.2020 in exercise of his powersu/s.129D(2) of the Customs Act, pointing out the alleged deficienciesin the adjudication orders; and directed filing of appeals beforethe Commissioner (Appeals) – Meanwhile, the High Court by orderdated 15.10.2020 held that, prima facie, the grounds stated in theorder dated 01.10.2020 did not make out any such case of illegalityor impropriety as to call for exercise of suo motu revisional powersby the Commissioner under s.129D(2) of the Customs Act – Havingsaid that, the High Court left the matter to be decided by theCommissioner (Appeals) – However, thereafter, the High Courtissued directions to the respondents to forthwith release the goodsof the importers – Legality and validity of the orders passed by theHigh Court – Held: Order dated 15.10.2020 passed by High Courtsuffers from inherent contradictions and inconsistencies; and cannotbe approved – Significantly, if the purport of the order dated15.10.2020 of the High Court had been that even if Commissioner(Appeals) would be deciding the matter in appeal, he could notorder absolute confiscation of the goods because the High Courthad ordered their release, it would immediately lead to the positionthat the order dated 15.10.2020 of the High Court carried inherentcontradictions – If release of goods was the only option availablewith the authorities, the material part of consideration of theAppellate Authority had already been rendered redundant – Whenthe matter was left for decision by the Commissioner (Appeals), therewas neither any occasion nor any justification for the High Courtto pass the order for release of the goods for the simple reason thatany order for release of goods was to render the material part ofthe matter a fait accompli – This, simply, could not have been done–Apart from the fundamental flaws of contradictions, the orderpassed by the High Court on 15.10.2020 further suffers from theshortcomings that while issuing mandamus for release of goods,the High Court omitted to take into account the relevant facts asalso the material factors concerning the imports in question –Impugned order dated 15.10.2020, having been passed whileignoring the relevant considerations, cannot be approved.

Equity – Claim of – Held: Once the Court has reached to theconclusion that a particular action is wanting in bona fide, theperpetrator cannot claim any relief in equity in relation to the same AB

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Aaction – Absence of bona fide in a claimant and his claim of equityremain incompatible and cannot stand together.

Interim relief – Grant of – Matter of discretion –Considerations – Held: In matters of grant of interim relief,satisfaction of the Court only about existence of prima facie caseBin favour of the suitor is not enough – The other elements i.e.,balance of convenience and likelihood of irreparable injury, carrytheir own relevance; and while exercising its discretion in the matterof interim relief and adopting a particular course, the Court needsto weigh the risk of injustice, if ultimately the decision of main matterruns counter to the course being adopted at the time of granting orCrefusing the interim relief.

Allowing the appeals, the Court

HELD:

Whether the goods in question are of ‘prohibited goods’Dcategory?

1. The categorical findings in the case of Agricas by thisCourt, read with the provisions above-quoted, hardly leaveanything to doubt that sub-section (3) of Section 3 of the FTDRAct applies to the goods in question and, for having been importedEunder the cover of the interim orders but, contrary to thenotifications and the trade notice issued under the Foreign Trade(Development and Regulation) Act, 1992 and without the requisitelicence, these goods shall be deemed to be prohibited goods underSection 11 of the Customs Act; and all the provisions of theFCustoms Act shall have effect over these goods and their importaccordingly. [Para 65][451-C-E]

2.1. The contention on the part of the importers, that thesubject goods fall in ‘restricted’ category and not ‘prohibited’category, is baseless and required to be rejected. [Para 66][451-E]G

2.2. In the present case import of the referred peas/pulseshas been restricted to a particular quantity and could be madeonly against a licence. The letter and spirit of this restriction, isthat, any import beyond the specified quantity is clearly H

impermissible and is prohibited. This Court has highlighted theadverse impact of excessive quantity of imports of thesecommodities on the agricultural market economy in the case ofAgricas. In the present case, the underlying feature for restrictingthe imports by quantum has been the availability of excessivestocks and adverse impact on the price obtainable by the farmersof the country. [Para 67.4.3][455-E-G]

2.3. The goods in question, having been imported incontravention of the notifications dated 29.03.2019 and tradenotice dated 16.04.2019; and being of import beyond thepermissible quantity and without licence, are ‘prohibited goods’for the purpose of the Customs Act. Even in the orders-in-originaldated 28.08.2020 by the Adjudicating Authority, it was clearlyheld that the goods in question were prohibited goods.[Para 68][455-H; 456-A]

2.4. The unnecessary and baseless arguments raised onbehalf of the importers that the goods in question are of ‘restricted’category, with reference to the expression ‘restricted’ havingbeen used for the purpose of the notifications in question or withreference to the general answers given by DGFT or otherprovisions of FTDR Act are, therefore, rejected. The goods inquestion fall in the category of ‘prohibited goods’. [Para 68.1][456-B]

Whether the goods in question are liable to absoluteconfiscation?

3. Once it is clear that the goods in question are improperlyimported and fall in the category of ‘prohibited goods’, theprovisions contained in Chapter XIV of the Customs Act, 1962come into operation and the subject goods are liable toconfiscation apart from other consequences. [Para 69][456-C-D]

4. A bare reading of Section 125(1) of the Customs Actmakes it evident that a clear distinction is made between‘prohibited goods’ and ‘other goods’. The latter part of Section125 obligates the release of confiscated goods (i.e., other thanprohibited goods) against redemption fine but, the earlier part ofthis provision makes no such compulsion as regards theprohibited goods; and it is left to the discretion of the Adjudicating AB

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AAuthority that it may give an option for payment of fine in lieu ofconfiscation. It is innate in this provision that if the AdjudicatingAuthority does not choose to give such an option, the result wouldbe of absolute confiscation. [Paras 69 and 69.1][456-G; 457-A-B]

5.1. The exercise of discretion is a critical and solemnBexercise, to be undertaken rationally and cautiously and has tobe guided by law; has to be according to the rules of reason andjustice; and has to be based on relevant considerations. The questhas to be to find what is proper. Moreover, an authority actingunder the Customs Act, when exercising discretion conferred bySection 125 thereof, has to ensure that such exercise is inCfurtherance of accomplishment of the purpose underlyingconferment of such power. The purpose behind leaving suchdiscretion with the Adjudicating Authority in relation to prohibitedgoods is, obviously, to ensure that all the pros and cons shall beweighed before taking a final decision for release or absoluteDconfiscation of goods. [Para 79][465-F-H]

5.2. It is but evident that the orders-in-original dated28.08.2020 passed by the Additional Commissioner of Customs(the Adjudicating Authority) cannot be said to have been passedin a proper exercise of discretion. The Adjudicating AuthorityEdid not even pause to consider if the other alternative of absoluteconfiscation was available to it in its discretion as per the firstpart of Section 125(1) of the Customs Act and proceeded as if ithas to give the option of payment of fine in lieu of confiscation.Such exercise of discretion by the Adjudicating Authority wasmore of assumptive and ritualistic nature rather than of a consciousFas also cautious adherence to the applicable principles. TheAppellate Authority, on the other hand, has stated various reasonsas to why the option of absolute confiscation was the only properexercise of discretion in the present matter. The reasons assignedby the Appellate Authority, in the order-in-appeal datedG24.12.2020 are fully in accord with the principles of exercise ofdiscretion. [Para 80][466-A-D]

5.3. The prohibition involved in the present matters, of notallowing the imports of the commodities in question beyond aparticular quantity, was not a prohibition simpliciter. It was H

provided with reference to the requirements of balancing theinterests of the farmers on the one hand and the importers onthe other. Any inflow of these prohibited goods in the domesticmarket is going to have a serious impact on the market economyof the country. The cascading effect of such improper imports inthe previous year under the cover of interim orders was amplynoticed by this Court in Agricas. This Court also held that theimports were not bona fide and were made by the importers onlyfor their personal gains. [Para 81][466-D-F]

6. The sum and substance of the matter is that as regardsthe imports in question, the personal interests of the importerswho made improper imports are pitted against the interests ofnational economy and more particularly, the interests of farmers.This factor alone is sufficient to find the direction in whichdiscretion ought to be exercised in these matters. When personalbusiness interests of importers clash with public interest, theformer has to, obviously, give way to the latter. Further, ifexcessive improperly imported peas/pulses are allowed to enterthe country’s market, the entire purpose of the notifications wouldbe defeated. The discretion in the cases of present nature,involving far-reaching impact on national economy, cannot beexercised only with reference to the hardship suggested by theimporters, who had made such improper imports only for personalgains. The imports in question suffer from the vices of breach oflaw as also lack of bona fide and the only proper exercise ofdiscretion would be of absolute confiscation and ensuring thatthese tainted goods do not enter Indian markets. Imposition ofpenalty on such importers; and rather heavier penalty on thosewho have been able to get some part of goods released is,obviously, warranted. [Para 82][466-F-H; 467-A-B]

7. On the facts and in the circumstances of the present case,the discretion could only be for absolute confiscation with levy ofpenalty. At the most, an option for re-export could be given tothe importers and that too, on payment of redemption fine andupon discharging other statutory obligations. The orders-in-original dated 28.08.2020 cannot be approved. As a necessarycorollary, the orders-in-appeal dated 24.12.2020 deserve to beapproved. [Paras 84 and 85][467-G-H; 468-A-B]

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378SUPREME COURT REPORTS

AInvocation of equity by the importers

8. Various submissions invoking equity were made on behalfof the importers while submitting that they have already sufferedhuge losses and that even re-export of subject goods is not afeasible option. However, no leniency in the name of equity canBbe claimed by these importers. In fact, any invocation of equity inthese matters is even otherwise ruled out in view of specificrejection of the claim of bona fide imports by this Court in Agricas.Once this Court has reached to the conclusion that a particularaction is wanting in bona fide, the perpetrator cannot claim anyrelief in equity in relation to the same action. Absence of bonaCfide in a claimant and his claim of equity remain incompatible andcannot stand together. [Para 86, 86.1][468-B-E]

Prayer for keeping issues open for statutory appeal

9. A prayer was made for keeping the opportunity of furtherDstatutory appeal to CESTAT open for the importers. Though inordinary circumstances, such a prayer might have been of nodifficulty but, having regard to the background and the relevantcircumstances, any liberty for further rounds of litigation, at leastin relation to the respondents, is not called for; and the mattersought to be given a finality. There is no reason to allow any prayerEfor filing appeal against the orders-in-appeal dated 24.12.2020.[Paras 87, 90][468-H; 469-A; 470-A-B]

Incidentally: principles relating to the grant or refusal ofinterim reliefF10.1. The root cause of the present controversy had notbeen that much in the notifications in question as it had been inthe interim orders passed by the High Court of Rajasthan, Benchat Jaipur. Only under the cover of such interim orders that theimporters ventured into the import transactions which resultedin excessive quantities of peas/pulses than those permitted byGthe notifications reaching the Indian ports. As has been noticedin the present cases, some of the goods so imported got releasedand the Commissioner (Appeals) had to take that aspect as faitaccompli. For what has been held by this Court in Agricas, andfurther for what has been held in this judgment, the goods inquestion were not to mingle in the Indian market. Such mingling,H

obviously, has an adverse impact on the agricultural marketeconomy and defeats the policy of the Government of India. Thisstate of affairs was an avoidable one; and would have been avoidedif, before passing interim orders, the respective Courts wouldhave paused to consider the implications and impact of suchinterim orders, which were, for all practical purposes, going tooperate as mandatory injunction, whereby the appellants werebound to allow the goods to reach the Indian ports, even if thenotifications were prohibiting any such import. Even thoughgranting of an interim relief is a matter of discretion, such adiscretion needs to be exercised judiciously and with due regardto the relevant factors. [Paras 91, 91.1][470-B-F]

10.2. In the matters of grant of interim relief, satisfactionof the Court only about existence of prima facie case in favour ofthe suitor is not enough. The other elements i.e., balance ofconvenience and likelihood of irreparable injury, are not of emptyformality and carry their own relevance; and while exercising itsdiscretion in the matter of interim relief and adopting a particularcourse, the Court needs to weigh the risk of injustice, if ultimatelythe decision of main matter runs counter to the course beingadopted at the time of granting or refusing the interim relief.[Para 92][470-G-H; 471-A]

10.3. One of the simple questions to be adverted to at thethreshold stage in the present cases was, as to whether theimporters (writ petitioners) were likely to suffer irreparable injuryin case the interim relief was denied and they were to ultimatelysucceed in the writ petitions. A direct answer to this questionwould have made it clear that their injury, if at all, would havebeen of some amount of loss of profit, which could always bemeasured in monetary terms and, usually, cannot be regarded asan irreparable one. Another simple but pertinent question wouldhave been concerning the element of balance of convenience;and a simple answer to the same would have further shown thatthe inconvenience which the importers were going to sufferbecause of the notifications in question was far lesser than theinconvenience which the appellants were going to suffer (withultimate impact on national interest) in case operation of thenotifications was stayed and thereby, the markets of India were AB

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Aallowed to be flooded with excessive quantity of the said importedpeas/pulses. [Para 93][472-E-G]

10.4. In fact, the repercussion of the stay orders passed inthe earlier years were duly noticed by this Court in Agricas; andunfortunately, more or less same adverse consequences had beenBhovering over the markets because of the imports made underthe cover of the interim orders passed in relation to thenotifications dated 29.03.2019. This was not likely to happen ifthe material factors relating to balance of convenience andirreparable injury were taken into account while dealing with theprayers for interim relief in the writ petitions. This Court had, inCunequivocal terms, declared in Agricas, that the importers cannotbe said to be under any bona fide belief in effecting the importsunder the cover of interim orders; and they would face theconsequences in law. It gets, perforce, reiterated that all thiswas avoidable if the implications were taken into account beforeDgranting any interim relief in these matters. [Para 94][472-H;473-A-B]

Summation

11. The goods in question are held liable to absoluteconfiscation but with a relaxation of allowing re-export, onEpayment of the necessary redemption fine and subject to theimporter discharging other statutory obligations. The respondent-importers being responsible for the improper imports as also forthe present litigation, apart from other consequences, alsodeserve to be saddled with heavier costs. The respondent-Fimporters shall pay costs of this litigation to the appellants,quantified at Rs. 2,00,000/- (Rupees two lakhs) each. [Paras 96,99][473-D-E; 474-D]

Commissioner of Customs v. Atul Automations PrivateLimited, (2019) 3 SCC 539 – held inapplicable.

GHargovind Das K. Joshi and Ors. v. Collector ofCustoms and Ors., (1987) 2 SCC 230 – explained.

Commissioner of Customs (Import), Mumbai v. FinesseCreation Inc., (2009) 248 ELT 122 – distinguished.Union of India and Ors. v. Agricas LLP and Ors., 2020HSCC OnLine SC 675 – relied on.

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

Garg Woollen Mills (P) Ltd. v. Addl. Collector ofCustoms, New Delhi, (1999) 9 SCC 175; Sant Raj andAnr. v. O.P. Singla and Anr., (1985) 2 SCC 349 : [ 1985]3 SCR 623; Reliance Airport Developers (P) Ltd. v.Airports Authority of India and Ors. (2006) 10 SCC 1: [2006] 8 Suppl. SCR 39; Sheikh Mohd. Omer v.Collector of Customs, Calcutta and Ors: (1970) 2 SCC728 : [ 1971] 2 SCR 35; Commissioner of Customs, NewDelhi v. Brooks International & Ors: (2007) 10 SCC396 : [2007] 7 SCR 791; Om Prakash Bhatia v.Commissioner of Customs, Delhi: (2003) 6 SCC 161 :[2003] 1 Suppl. SCR 412; P.T.R. Exports (Madras) Pvt.Ltd. and Ors. v. Union of India and Ors., (1996) 5 SCC268 : [1996] 2 Suppl. SCR 662; S.B. International Ltd.and Ors. v. Asstt. Director General of Foreign Tradeand Ors., (1996) 2 SCC 439 : [1996] 1 SCR 910; ShriAmman Dhall Mill v. Commissioner of Customs, (2021)SCC OnLine Ker 362; U.P. State Road TransportCorporation and Anr. v. Mohd. Ismail and Ors., (1991)3 SCC 239 : [1991] 2 SCR 274; Assistant Commissioner(CT) LTU, Kakinada and Ors. v. Glaxo Smith KlineConsumer Health Care Limited, 2020 SCC OnLine SC440 and Dorab Cawasji Warden v. Coomi Sorab Wardenand Ors., (1990) 2 SCC 117 : [1990] 1 SCR 332 –referred to.

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Horizon Ferro Alloys Pvt. Ltd. and Ors. v. Union ofIndia and Ors., (2016) 340 ELT 27 – referred to.

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Rover International Ltd. and Ors. v. Cannon Film SalesLtd., [1986] 3 All ER 772 – referred to.

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A[2003] 1 Suppl. SCR 412referred toPara 44.2[1996] 2 Suppl. SCR 662referred toPara 44.3[1996] 1 SCR 910referred toPara 44.3(2019) 3 SCC 539held inapplicablePara 44.6B(1987) 2 SCC 230explainedPara 45.6[1991] 2 SCR 274referred toPara 47.1.2[1990] 1 SCR 332referred toPara 92.1

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2217-C18 of 2021.

From the Judgment and Order dated 15.10.2020 of the High Courtof Judicature at Bombay in Writ Petition 3502-3503 of 2020.

With

DCivil Appeal No. 2219 of 2021.

N. Venkataraman, ASG., Ms. B. Sunita Rao, V. Chandra ShekaraBharathi, Liz Mathew, Mukesh Kumar Maroria, B. Krishna Prasad, B.V. Balaram Das, Advs. for the Appellants.

Ranjit Kumar, Neeraj Kishan Kaul, Sr. Advs., Sanjay Bansal, Ms.ESwati Bansal, Ms. Vaishali Gupta, G. K. Bansal, Sujay Kantawalla,Samsher Garud, Sandeep Sudhakar Deshmukh, Ms. Juhi Valia, BuddyA Ranganadhan, A. V. Rangam, Animesh Kumar, Anantha NarayanaM. G., V. C. Shukla, Ambuj Dixit, Rishabh Prasad, Sujit Ghosh, NishantKumar, Ms. Utkarsha Sharma, Neeraj Shekhar, Advs. for theFRespondents.

The Judgment of the Court was delivered by DINESH MAHESHWARI, J.

Contents*

GPreliminary and brief outline ............................................... 2

The parties and their respective interests in the matter...........10

Relevant factual aspects and background............................14

Judgment dated 26.08.2020 of this Court in Agricas............ 20

H*The Contents is as per the Original Judgment.

1. Leave granted.

A2. In this set of appeals, the Union of India and the authoritiesrelated with customs have questioned the orders dated 15.10.2020 and05.01.2021, passed by the High Court of Judicature at Bombay in WritPetition (L) Nos. 3502-3503 of 2020 and Writ Petition (ST) No. 24 of2021 respectively[1]. The appellants are essentially aggrieved of thedirections issued by the High Court for compliance of the orders-in-Boriginal dated 28.08.2020 passed by the Additional Commissioner ofCustoms, Group-I, Mumbai and consequently, for release of the goodsimported by the private respondents though the goods in question are,according to the appellants, liable to absolute confiscation.

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2.1. Looking to the subject-matter of the present appeals involvingCa multitude of issues and several of the background aspects, we mayprofitably draw a brief outline and sketch of the matter at the outset.

3. The genesis of the present litigation lies in the notificationsissued by the Central Government under the Foreign Trade (Developmentand Regulation) Act, 1992[2] as also the consequential trade notices issuedDby the Directorate General of Foreign Trade[3], making provisions forrestricting the import of certain beans, peas and pulses.

3.1. In the preceding years, such notifications and trade noticeswere put to challenge in different High Courts by way of writ petitionswherein, different interim orders were passed and the importers effectedEvarious imports on the strength of such interim orders. However, thesaid writ petitions were ultimately dismissed by the High Courts and onepetition seeking special leave to appeal was also dismissed by this Court.Similar notifications and trade notice issued in the subsequent year, onrestriction of import of certain beans, peas and pulses, were againFchallenged in different High Courts and, notwithstanding the rejection ofa similar challenge in the past by other High Courts, various interimorders were again passed; and the importers again proceeded to effectvarious imports under the cover of such interim orders.

3.2. Faced with such challenges and interim orders in differentGHigh Courts, the Union of India filed various transfer petitions, seekingtransfer of the cases relating to the same subject-matter to this Court.Having regard to the nature of controversy and surrounding factors, this 1 The order dated 15.10.2020 is to be read with the modification order dated 09.12.2020in I.A. (L) No. 5735 of 2020 in Writ Petition (L) No. 3502 of 2020.

2 Hereinafter also referred to as ‘the FTDR Act’.

H3 Hereinafter also referred to as ‘the DGFT’ for short.

Court heard the matters on merits so as to finally deal with the challengeto the notifications and the trade notice in question. This led to the judgmentdated 26.08.2020 by this Court in the case of Union of India and Ors.v. Agricas LLP and Ors.[4] upholding such notifications dated 29.03.2019,issued by the Central Government as also the consequential trade noticedated 16.04.2019, issued by the DGFT.

3.3. In the said judgment dated 26.08.2020, this Court, apart fromother findings, held that the importers cannot be said to be under anybona fide belief in effecting the imports under the cover of interimorders; and they would face the consequences in law. While dismissingthe writ petitions, this Court held that the imports made while relying onthe interim orders were contrary to the said notifications and trade noticeissued under the FTDR Act; and would be so dealt with under theprovisions of the Customs Act, 1962[5]. However, this judgment has alsonot given a quietus to the litigation and the events taking place after thisdecision have given rise to the present appeals.

4. Immediately after the decision of this Court dated 26.08.2020,the private respondents of these appeals, M/s. Raj Grow Impex LLPand M/s. Harihar Collections, whose imported goods covered by thesaid notifications had not been released, addressed respectivecommunications to the Additional Commissioner of Customs, Group-I,Mumbai[6], on the very day of judgment i.e., 26.08.2020, requesting forwaiver of show cause notices and for urgent personal hearing. TheAdjudicating Authority took up their cases in priority and, by his almostidentical orders-in-original dated 28.08.2020, while ordering confiscation,gave an option to the importers to redeem the goods in question onpayment of fine in lieu of confiscation under Section 125(1) of the CustomsAct. While acting upon the orders so passed by the Adjudicating Authority,the importers made certain payments towards customs duty, redemptionfine and penalty and obtained out of charge[7]; and some of theconsignments were released. However, the DGFT took exception againstrelease of the goods in question as the same were restricted items andstated in its letter dated 01.09.2020 that such release would be contrary to the import policy. Consequent to this and other communications, the 4 Since reported as 2020 SCC OnLine SC 675; hereinafter also referred to as the case of ‘Agricas’.

5 Hereinafter also referred to as ‘the Customs Act’.

6 Hereinafter also referred to as the ‘Adjudicating Authority’.

7 ‘OOC’ for short.

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Acustoms authorities requested Mumbai Port Trust not to issue deliveryorder of the consignments in question and hence, the other consignmentswere not released.

5. Feeling aggrieved by such communications and stoppage ofrelease of the goods in question, the importers (private respondents herein)Bapproached the High Court by way of separate writ petitions, essentiallyseeking mandamus for clearance of the goods in question. While thesaid writ petitions were pending, the Commissioner of Customs (Import-II) passed an order dated 01.10.2020 in exercise of his powers underSection 129D(2) of the Customs Act, pointing out the alleged deficienciesin the adjudication orders; and directed filing of appeals before theCCommissioner (Appeals)[8]. The appeals so filed were ultimately allowedby the Appellate Authority on 24.12.2020. However, before such decisionin appeals, the High Court heard the said writ petitions of the importerson 06.10.2020 and proceeded to decide the same by the common orderdated 15.10.2020.D5.1. In its order dated 15.10.2020, the High Court took the viewthat, prima facie, the grounds stated in the order dated 01.10.2020 didnot make out any such case of illegality or impropriety as to call forexercise of suo motu revisional powers by the Commissioner underSection 129D(2) of the Customs Act. Having said that, the High CourtEleft the matter to be decided by the Commissioner (Appeals). However,thereafter, the High Court proceeded to examine the question as to thejustification or otherwise for not releasing the goods in question. In thisregard, the High Court was of the view that when the orders-in-originalwere holding the field and the importers had complied with the termsand conditions thereof; and where the importers were incurringFexpenditure because of warehousing, any further withholding of theimported goods was not justified. Thus, the High Court issued directionsto the respondents to forthwith release the goods of the importers coveredby the bills of entry mentioned in paragraph 38 of the order.

6. Seeking to challenge the aforesaid order dated 15.10.2020, theGUnion of India and its authorities related with customs approached thisCourt on 26.11.2020 but, before their SLPs were taken up forconsideration, three major events took place in these matters. First suchevent related to an application made by one of the importers M/s. RajGrow Impex to the High Court for modification of the order datedH8 Hereinafter also referred to as ‘the Appellate Authority’.

15.10.2020 because some of its bills of entry had not been includedtherein. The High Court accepted this application and issued modificationorder dated 09.12.2020 accordingly. The second relevant event had beenthat by the orders-in-appeal dated 24.12.2020, the Commissioner(Appeals) proceeded to allow the appeals preferred by the Departmentagainst the aforesaid orders-in-original dated 28.08.2020 and orderedabsolute confiscation of the goods in question while enhancing the amountof penalty; of course, the Appellate Authority found that some of thegoods in question had since been released and treated that part of thematter a fait accompli. In the third major event, the said importer M/s.Raj Grow Impex challenged the order-in-appeal dated 24.12.2020 byway of another writ petition in the High Court. While considering thisfresh writ petition on 05.01.2021, the High Court took exception againstthe observations made and directions issued by the Appellate Authoritywhich, according to the High Court, were running contrary to its decisiondated 15.10.2020. Accordingly, the High Court stayed the operation ofthe order-in-appeal and directed the authorities concerned to complywith the directions of the orders dated 15.10.2020 and 09.12.2020. Anancillary part of the third event was that the said importer also moved acontempt petition stating willful disobedience of the aforesaid order dated09.12.2020 whereupon, by a separate order dated 05.01.2021, the HighCourt issued show cause notice to the authorities concerned and directedthem to remain personally present in the Court on 21.01.2021. Againaggrieved, the Union of India and its authorities concerned approachedthis Court against these orders dated 05.01.2021, as passed by the HighCourt, respectively in the fresh writ petition and in the contempt petition.

7. The aforementioned SLPs against the orders so passed by theHigh Court were considered analogously on 20.01.2021 and, while issuingnotice, this Court stayed the operation of the order impugned. Later on,these matters were taken up for hearing in priority looking to the natureof controversy and the goods involved. During the course of hearing, on18.03.2021, this Court found no reason for continuation of contemptproceedings in the High Court and closed the same. On 18.03.2021, yetanother observation was made by this Court with reference to thesubmission of learned ASG appearing for the appellants, that it was opento the private respondents to opt for re-export of perishable importedgoods lying in the customs warehouse to outside India.

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

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Anotice, this Court did not accept that the imports in question, as made onthe basis or under the cover of the interim orders passed by the HighCourts, could be regarded as bona fide; but, in the given circumstancesand the issues raised, this Court left those goods to be dealt with underthe Customs Act. Now, dealing of the goods in question under theCustoms Act has given rise to this litigation. On one hand, the appellantsBmaintain that the subject goods are required to be confiscated absolutelyor else, the entire purpose of the said notifications and trade notice shallbe frustrated; and hence, they question the legality and validity of theorders passed by the Adjudicating Authority and the High Court wherebyand whereunder, the goods in question are required to be released withCpayment of fine in lieu of confiscation. On the other hand, the importersmaintain that the goods in question are not falling in the category ofbanned or totally prohibited goods and hence, they have rightly beenordered to be released with payment of fine in lieu of confiscation andother charges. They, thus, support the impugned orders passed by theAdjudicating Authority and the High Court.D

8.1. Apart from the said two importers who had filed theirrespective writ petitions in the High Court and who are directly relatedwith the orders in question before us, two more importers have movedimpleadment/intervention applications while asserting that they have alsoimported under the cover of the interim orders of the High Court andEtheir matters were pending at different stages with the authorities but,they are also likely to be affected by the decision in this set of appeals.They also support the stand that the goods in question are available forrelease and are not liable to absolute confiscation.

The parties and their respective interests in the matterF

9. Having drawn a brief sketch indicating the salient features ofthis case and the issues involved, we may narrate, in brief, the relevantparticulars of the parties before us in these appeals[9].

The appellantsG10.

10. The Union of India through the Secretary, Ministry ofCommerce and the Secretary, Department of Revenue, Ministry ofFinance is the appellant before us; and is joined by the Commissioner of 9 This introduction of persons/entities is to broadly co-relate the parties with thepoints to be taken up for determination; and is not intended to be an exhaustive list ofHthe parties involved.

Customs (Import-I), Mumbai and other authorities related with customs.The Commissioner of Customs (Appeal), Mumbai (Zone-I), who hadpassed the order dated 24.12.2020 as Appellate Authority, has joined asa party only in the appeal against the order dated 05.01.2021[10]. Theseappellants are aggrieved of the respective orders passed by the HighCourt of Judicature at Bombay in the respective writ petitions; andmaintain that the goods in question could not have been released and areliable to absolute confiscation.

The contesting respondents

11. The two importers, in whose relation the impugned ordershave been passed by the authorities concerned and the High Court arethe contesting respondents of these appeals. Their relevant particularsare as under:

11.1. M/s. Raj Grow Impex LLP

This importer is said to be a partnership firm having its registeredoffice at Jaipur in the State of Rajasthan. This firm had filed ten bills ofentry dated 01.11.2019 for clearance of 24,815 MTs of yellow peas, saidto have been imported under the cover of interim order dated 20.07.2019,as passed by the Rajasthan High Court, Bench at Jaipur in WP No.11974 of 2019. Its efforts to get the goods released with payment of fineled to the order-in-original dated 28.08.2020. This importer had obtainedOOC for three bills of entry and got released 7,500 MTs of the goods inquestion but the remaining were not released. This importer had filedWP (L) No. 3502 of 2020 before the High Court of Judicature at Bombayseeking mandamus which was decided by the common order dated15.10.2020. This importer has also filed WP (ST) No. 24 of 2021questioning the order-in-appeal dated 24.12.2020 wherein, the High Courtof Judicature at Bombay passed the interim order dated 05.01.2021.

11.2. M/s. Harihar Collections

This importer is said to be a proprietorship concern having itsregistered office at Jaipur in the State of Rajasthan. This importer hadfiled eight bills of entry dated 18.11.2019 for clearance of 38,500 MTs ofyellow peas, said to have been imported under the cover of interim orderdated 10.07.2019, as passed by the Rajasthan High Court, Bench at 10 The Director General of Foreign Trade, the Zonal Additional Director General ofForeign Trade, and the Mumbai Port Trust are proforma respondents in the appealsagainst the common order passed by the High Court on 15.10.2020.

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AJaipur in WP No. 11752 of 2019. Similar to the above, the efforts of thisimporter to get the goods released with payment of fine in lieu ofconfiscation led to another order-in-original dated 28.08.2020. Thisimporter had filed WP (L) No. 3503 of 2020 before the High Court ofJudicature at Bombay seeking mandamus which was decided by thecommon order dated 15.10.2020. In relation to this importer, the AppellateBAuthority passed another order-in-appeal dated 24.12.2020, which hasnot been challenged but, the importer has stated its desire to do so in duecourse.

The intervenors

12. Apart from the above, two other importers have filedCimpleadment applications with the submissions that they have alsoimported a substantial quantity of goods pursuant to the interim orderspassed by the Rajasthan High Court in their respective writ petitions;and that they have substantial interest in the present proceedings becauseany final judgment herein shall have impact on their interests. Theirrelevant particulars are as under:-D

Nikhil Pulses Pvt. Ltd.

12.1. This importer is said to be a private limited company havingits registered office at Jaipur in the State of Rajasthan. This company issaid to have imported 1,02,550 MTs of yellow peas under the cover ofinterim order dated 02.08.2019, as passed by the Rajasthan High Court,EBench at Jaipur in WP No. 12283 of 2019. This company had receiveda notice dated 20.11.2020 from the Principal Commissioner of Customs,Mundra requiring to show cause as to why the goods in question are notliable to confiscation.

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F12.2. This importer is said to be a partnership firm having itsregistered office at Jaipur in the State of Rajasthan. This firm is said tohave imported, inter alia, 27,775 MTs of black mapte under the coverof interim order dated 14.08.2019, as passed by the Rajasthan HighCourt, Bench at Jaipur in WP No. 13392 of 2019; and out of the quantityimported, 14,366 MTs of goods got released but not the remaining. It isGstated by this importer that pursuant to the show cause notice dated05.10.2020, the Commissioner of Customs, Nhava Sheva found the goodsto be prohibited and liable to confiscation whereafter it had filed a writpetition bearing No. 525 of 2021 before the High Court of Judicature atBombay against the non-clearance of the goods but in the meantime, theHmain issue has been taken up by this Court in these appeals.

Relevant factual aspects and background

13. Having taken note of the salient features of the case, therelevant particulars of the parties before us with their respective interests,we may now enter into the relevant factual aspects and background innecessary details but while avoiding the facts which may not have bearingon determination of the real issues involved.

14. The relevant background aspects of the matter are that theCentral Government had issued notifications dated 05.08.2017 and21.08.2017, revising the policy for import of urad/moong and pigeon peas/toor dal from “free” to “restricted” with a stipulation as to annual quotaand requirement of a prior licence from DGFT. Then, by the notificationdated 25.04.2018, import of the said beans/pulses was to remain restrictedrequiring a prior licence and with a stipulation as to annual quota for thefiscal year 2018-2019. One of the importers, M/s. Hira Traders, preferreda writ petition before the Madras High Court, challenging the notificationdated 25.04.2018 and trade notices issued on 9[th], 16[th] and 18[th] May,2018 respectively. The said petitioner also prayed for interim relief, ofpermission to import peas as per the contracts. By the interim orderdated 28.06.2018, the said High Court stayed the operation of thenotification dated 25.04.2018 and thereby, permitted imports without therequisite licence. Several other writ petitions were filed before differentHigh Courts challenging the restrictions on import of these beans/peas/pulses and various interim orders were passed, staying the notifications;and leading to the effect of permitting imports without any restrictionsas to quota or licence.

14.1. The main plank of submissions in the said writ petitions wasthat DGFT, the statutory authority under the FTDR Act, was notauthorised to issue an order amending the EXIM policy and such a powervested only in the Central Government in terms of Section 3(2) readwith Section 6(3) of the FTDR Act.

14.2. The writ petitions so filed in challenge to the said and akinnotifications and trade notices were dismissed by different High Courts.The writ petition by M/s. Hira Traders was dismissed by the MadrasHigh Court on 04.04.2019. The Bombay High Court had dismissed similarwrit petitions on 03.07.2018. Similarly, the Madhya Pradesh High Courthad dismissed such petitions on 25.10.2018; and the Gujarat High Courthad also dismissed similar writ petitions on 19.12.2018. The order passedby the Gujarat High Court was sought to be challenged in this Court in A

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ASpecial Leave Petition (C) No. 1922 of 2019 but, the same was alsodismissed by the order dated 28.01.2019.

14.3. Thus, to put in a nutshell, it is evident that even though theHigh Courts initially took up the challenge to the said notifications andtrade notices and granted interim orders but, ultimately, the writ petitionsBwere dismissed. An attempt to challenge one of the decisions in thisCourt also failed with dismissal of the special leave petition.

15. Thereafter, in the month of March, 2019, the CentralGovernment, in exercise of its power under Section 3 of the FTDR Actread with paragraphs 1.02 and 2.01 of the Foreign Trade Policy 2015-2020, amended the import policy conditions relating to various items ofCChapter 7 of the Indian Trade Classifications (Harmonized System) 2017,Schedule I by way of S.O. Nos. 1478(E), 1479(E), 1480(E) and 1481(E)dated 29.03.2019. These were followed by the trade notice dated16.04.2019 by the DGFT. These notifications are at the core ofcontroversy involved in these matters and hence, it would be just andDappropriate to reproduce the same as under: - “S.O. 1478(E).–In exercise of powers conferred by section 3 ofthe Foreign Trade (Development and Regulation) Act, 1992 (22of 1992), read with paragraphs 1.02 and 2.01 of the Foreign TradePolicy, 2015-2020, as amended from time to time, the CentralGovernment hereby notifies the Import Policy of items of ChapterE7 of the Indian Trade Classification (Harmonized System), 2017, Schedule-1 (Import Policy), as under- F

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UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &393ORS. [DINESH MAHESHWARI, J.]2. This notification shall come into force from the date of itsApublication in the official Gazette.

S.O. 1479(E).–In exercise of powers conferred by section 3 ofthe Foreign Trade (Development and Regulation) Act, 1992 (22Bof 1992), read with paragraphs 1.02 and 2.01 of the Foreign TradePolicy, 2015-2020, as amended from time to time, the Centralgovernment hereby amends the Import Policy Conditions of itemsof Chapter 7 of the Indian Trade Classification (HarmonizedSystem), 2017, Schedule-1 (Import Policy), as under - C

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

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S.O. 1480(E).–In exercise of powers conferred by section 3 ofthe Foreign Trade (Development and Regulation) Act, 1992 (22of 1992), read with paragraphs 1.02 and 2.01 of the Foreign TradePolicy, 2015-2020, as amended from time to time, the CentralGovernment hereby notifies the Import Policy of items of Chapter7 of the Indian Trade Classification (Harmonized System), 2017,Schedule-1 (Import Policy), as under- G

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Exim Code Item Existing Policy Revised Policy Description condition condition 0713 31 90 Beans of the Restricted. Import of Urad shall be SPP Vigna subject to an annual Radiata (L.) (fiscal year) quota of 1.5 Wilezek lakh MT as per 071390 10Splitprocedure to be notified 0713 90 90 Other by Directorate General of Foreign Trade: - Provided that this restriction shall not apply to Government’s import commitments under any Bilateral or Regional Agreement or Memorandum of Understanding.

2. This notification shall come into force from the date of itspublication in the official Gazette.

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S.O. 1481(E).–In exercise of powers conferred by section 3 ofthe Foreign Trade (Development and Regulation) Act, 1992 (22of 1992), read with paragraphs 1.02 and 2.01 of the Foreign TradePolicy, 2015-2020, as amended from time to time, the CentralGovernment hereby notifies the Import Policy of items of Chapter7 of the Indian Trade Classification (Harmonized System), 2017,Schedule-1 (Import Policy), as under -

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

15.1. The trade notice dated 16.04.2019 issued by the DGFT laiddown the modalities for making the applications for import of thecommodities in question and carried the following amongst otherstipulations: - “a. Applications are invited online from the intending millers/refiners(having own refining/processing capacity) of pulses/peas for itsimport as per ANF-2M of FTP 2015-20 to DGFT, at [REDACTED] besides the concerned jurisdictional RegionalAuthorities …..”

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

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

Judgment dated 26.08.2020 of this Court in Agricas

18. In the case of Agricas (supra), a variety of issues, essentiallyrelating to the validity of notifications and the corresponding trade noticesimposing restrictions on import of peas and pulses, were dealt with bythis Court on the anvil of the FTDR Act, particularly Sections 3 and 9Athereof. We need not dilate on all the issues examined and dealt with bythis Court in Agricas but, a few salient features of the said decisionneed to be accentuated, for the purpose of the issues involved in theseappeals.

18.1. In Agricas (supra), this Court specifically took note of thestand of the Union of India, as regards the purpose and purport of thenotifications in question, which could be usefully reproduced as under: - A

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A“53. The Union of India, in their affidavit filed on 26[th] June2020, have pleaded that they were required to strike abalance between the farmers and the importers aslargescale imports would adversely impact the interests ofthe farmers due to fall in prices in the local market. Referencewas made to the Minimum Support Price (MSP) for Moong,BUrad and Toor dal and Gram fixed on the recommendation ofthe Commission for Agricultural Costs and Prices. Further, theCentral Government under the schemes being run hadprocured 85 lakh MT of pulses directly from 53 lakh farmersby paying them MSP in the last five years. There was alsoCincrease in production of pulses from 25.42 Million MTs in2017-18 to 26.66 Million MTs in 2020-21. Imported YellowPeas are the perfect substitute for Gram in making of Besanwhich is primarily used in preparation of Indian savouries.As the price of imported Yellow Peas in India is cheaperthan the domestic price of Gram, a huge shift in industryDusage from Gram to Yellow Peas has taken place. In thesecircumstances that the government has imposedrestrictions from April, 2018 onwards with a small window ofannual quota for permitted imports. However, in view of theinterim orders passed by the various High Courts, the actualEimports of peas were to the tune of 8,51,408 MT and6,52,607 MTs in 2018-2019 and 2019-2020 respectively,though the annual quota for these two years was 1/1.50 lakhMTs. The Government is presently holding a buffer stock of 26.94lakh MT of Gram, against the target quantity of 3 lakh MTs. TheGram is being sold at Rs.4,000 - 4,200 per quintal, which is belowFthe MSP of Rs.4,875/- per quintal. Imported CIF value of YellowPeas is Rs.2,028/- per quintal. Due to the pandemic, the farmerscould be compelled to make panic disposal at much lower prices.In the further affidavit filed on 1[st] July 2020, the Union ofIndia has stated that they had not issued any quota for Peas,GYellow Peas etc. as inspite of restricted quota of 1 lakh and1.5 lakh MTs for Peas in the Financial Years 2018-19 and2019-20, due to interim orders passed by the various HighCourts, the actual import was 8.51 lakh MTs and 6.67 lakhMTs during the Financial Years 2018-19 and 2019-20,respectively. Consequently, it has been decided not to import H

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Yellow Peas in the current Financial Year 2020-21. In the affidavitfiled on 6[th] July 2020, with reference to Section 9A of the FTDRAct, the Union of India has stated that the said section is attractedonly when the goods are imported into India in increased quantityand under such conditions as to cause or threaten to cause seriousinjury to domestic industry. Section 9A is enacted as a safeguardmechanism in terms of Article XIX of the GATT-1994 and ArticleII of the WTO Agreement on Safeguards vide the AmendmentAct, 2010. The notifications under challenge have been issuedwithin the express terms of Section 3 of the FTDR Act whichpermits the Central Government to impose restrictions withoutany qualification of the nature specified in Section 9A. Power ofthe Central Government to restrict imports to limited quantitiesunder Section 3 and quantitative restrictions under Section 9A ofthe FTDR Act are completely distinct and have no connection orinterplay. The power under Section 3(2) of the FTDR Act is of awide amplitude. Reference is also made to Rule 5(2) to assertthat there is necessity of evidence that the imports had increasedas a result of ‘unforeseen developments’ in addition to the necessityfor evidence disclosing serious injury or threat of serious injury todomestic industry and a causal link between imports and seriousinjury. The restrictions have been imposed not due toincreased quantities of imports but to prevent panic disposalby farmers as the prices of Gram would come down. It issubmitted that special provisions like 9A of the FTDR Act wouldbe limited to areas within its scope leaving the general provisionfree to operate in other areas.”

18.2. Another line of over-ambitious but rather misconceivedarguments on the interpretation of the impugned notification wassuggested on behalf of the importers as if each licencee could import thequantity mentioned in the notification. Such a baseless contention had, infact, been rejected at the outset by this Court. The relevant finding inthat regard may also be usefully noticed as follows:

“17. We would also without any hesitation reject the contentionraised by some of the importers that the impugned notification isillegal because of vagueness or allows restricted quantity of 1/1.5lakh MT of Peas (Pisum Sativum) including Yellow Peas, Green AB

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APeas, Dun Peas and Kaspa Peas as against a licence, meaningthereby each licensee is allowed to import the maximum quantityspecified in the notification. In other words, the total quantityspecified in the notification is per licensee and not for the totalimports of the commodity specified in the notification. Thesubmission has no merit as the notification expressly uses theBexpression ‘total quantity’ of the commodity specified which couldbe imported. There is no ambiguity or vagueness in thenotifications, relevant portions of which have been quoted above.Even otherwise the expression ‘total quantity’ cannot be construedas quantity per licence issued as the number of licences issuedCconcerning the subject goods could be numerable (as per the Unionof India 2248, 1016 and 2915 licences were issued in 2019-20 forimport of Tur, Moong and Urad dals against restricted quota of4, 1.5 and 4 lakh MT, respectively). If each licence holder isallowed to import 1/1.5 lakh MT of Peas, the total import wouldwell exceed the total annual consumption after we account forDthe production within India. In our opinion, the plea andinterpretation of the importers if accepted will not only be contraryto the express language of the notification but would frustrate theintent and object of restricting the imports of the stated goods byprescribing a quota. We decline and would not accept thisEfarfetched and somewhat drivel interpretation of simple and straightforward words.”

18.3. After dealing with the interpretation of Section 9A of theFTDR Act and its co-relation with Article XI and Article XIX of GATT-1994 as also Section 3 of the FTDR Act, this Court held the notifications

Fin question to be valid, for having been issued in accordance with thepowers conferred on the Central Government in terms of sub-section(2) of Section 3 of the FTDR Act. This Court, inter alia, observed andheld as under: - “61. This being the position, Section 9A has to be interpreted asGan escape provision when the Central Government i.e. the Unionof India may escape the rigours of paragraph (1) of Article XIXof GATT-1994. Section 9A is not a provision which incorporatesor transposes paragraph (1) of Article XI into the domestic laweither expressly or by necessary implication. To hold to the contrary,we would be holding that the Central Government has no rightH

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

62. In other words, the impugned notifications would bevalid as they have been issued in accordance with the powerconferred in the Central Government in terms of sub-section (2) to Section 3 of the FTDR Act. The powers of theCentral Government by an order imposing restriction on importsunder sub-section (2) to Section 3 is, therefore, not entirely curtailedby Section 9A of the FTDR Act.”

18.4. As noticed, before the said writ petitions were withdrawnto this Court, various interim orders had been passed by the High Courts.It was stated before this Court that, relying upon such interim orders, theimporters had imported various quantities of peas and pulses; and it wascontended on behalf of the importers that those had been bona fideimports under the interim orders of the Courts. This Court specificallyrejected such contentions and held that despite the High Courts of Madras,Bombay, Gujarat and Madhya Pradesh having dismissed the writ petitionsof similar nature while upholding the notifications and trade notices, theimporters took their chance, obviously for personal gains and they would,accordingly, face the consequences in law. This Court, in no uncertainterms, rejected the submissions that the importers had acted in bonafide belief. The relevant observations and findings of this Court in Agricas(supra) in this regard could be usefully extracted as under: - “D. Contention of the importers of bona fide imports underinterim orders and prayer for partial relief.

65. Learned counsel for some of the importers had placed relianceon Raj Prakash Chemical v. Union of India, which judgment,in our opinion, has no application. In Raj PrakashChemical(supra), the petitioner had acted under a bona fide beliefin view of judgments and orders of High Courts and theinterpretation placed by the authorities. In this background,observations were made to giving benefit to the importers, despite A

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Athe contrary legal interpretation. In the instant case, the importersrely upon the interim orders passed by the High Court’s whereason the date when they filed the Writ Petitions and had obtainedinterim orders, the Madras High Court had dismissed the WritPetition upholding the notification. Similarly, the High Court ofadjudicature at Bombay, High Court of Gujarat and the High CourtBof Madhya Pradesh had dismissed the Writ Petitions filed beforethem and upheld the notifications and the trade notices.Notwithstanding the dismissals, the importers took their chance,obviously for personal gains and profits. They would accordinglyface the consequences in law. In these circumstances, theCimporters it cannot be said had bona fide belief in the rightpleaded.”

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18.5. Only one aspect of the matter was not decided by this Courtand that related to the pending appeals against the orders suspending orterminating the import-export code[11] of some of the parties. This CourtDleft the statutory appeals in that regard to be decided in accordance with law.

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

67. Accordingly, we uphold the impugned notifications and thetrade notices and reject the challenge made by the importers. TheGimports, if any, made relying on interim order(s) would be held tobe contrary to the notifications and the trades notices issued underthe FTDR Act and would be so dealt with under the provisions ofthe Customs Act 1962. The Writ Petitions subject matter of theTransfer Petitions, subject to E above (What is not decided) are dismissed. Writ Petitions filed by the intervenors before therespective High Courts shall stand dismissed in terms of thisdecision. Pending application(s), if any, also stand disposed of inthe above terms. No order as to costs.”

20. Therefore, it is beyond a shadow of doubt that in Agricas(supra), this Court took note of raison d’être that the notificationswere fundamentally intended to protect the domestic agriculturemarket and also pronounced on the true meaning and import ofthese notifications; and while rejecting the far-stretchedinterpretation suggested on behalf of the importers that eachlicencee was entitled to import the quantity mentioned in thenotifications, this Court not only upheld the notifications and thetrade notice in question but also held that any import made underthe cover of the interim order cannot be regarded as bona fide;and being contrary to the applicable notifications and trade notice,would be so dealt with under the provisions of the Customs Act.However, what has happened after the aforesaid decision of thisCourt dated 26.08.2020 in Agricas has given rise to the presentround of litigation.

Orders-in-original dated 28.08.2020: The AdjudicatingAuthority allows release of goods on payment of redemption fine

21. As noticed, within no time after the decision of this Courtdated 26.08.2020 in Agricas (supra), the private respondents of theseappeals, M/s. Raj Grow Impex LLP and M/s. Harihar Collections, whohad made certain imports of the goods covered by the said notificationsbut their imported goods had not been released, took up the proceedingsin the manner that the eventuality of absolute confiscation could beobviated and they could get the goods released by payment of fine. Inthis regard, they addressed respective communications on 26.08.2020,requesting for waiver of show cause notices under Section 124 of theCustoms Act and for urgent personal hearing. The Adjudicating Authoritytook up their cases in priority and, by his almost identical orders-in-originaldated 28.08.2020, while ordering confiscation under Section 111(d) ofthe Customs Act, gave an option to the importers to redeem the goods inquestion on payment of fine in lieu of confiscation under Section 125(1)thereof. Having regard to the questions involved, the relevant featuresof the said orders-in-original dated 28.08.2020, in relation to the individualimporter may be taken note of.

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AM/s. Raj Grow Impex LLP

22. On 01.11.2019, the importer M/s Raj Grow Impex LLP filedten bills of entry bearing numbers 5520536, 5520537, 5520538, 5520539,5520540, 5520541, 5520732, 5520871, 5520872 and 5521191, forclearance of 24,815 MTs of yellow peas, said to have been importedBunder the cover of interim order passed by the Rajasthan High Court on20.07.2019 in WP No. 11974 of 2019. However, the goods were notreleased, particularly for the objections against their release by the officersof DGFT. The goods were stored in a warehouse under Section 49 ofthe Customs Act.

C22.1. On the very day of the decision of this Court in the case ofAgricas (supra) on 26.08.2020, this importer sent a letter to theAdjudicating Authority with the request that show cause notice underSection 124 of the Customs Act be waived and personal hearing may beprovided expeditiously. Accepting this request, the Adjudicating Authoritygranted expedited hearing because of perishable nature of the goods;Dand proceeded to pass the order-in-original on 28.08.2020 (which wasissued on 03.09.2020).

22.2. The Adjudicating Authority observed in its order-in-originaldated 28.08.2020 that the goods were imported by the importer in themonth of November 2019 under the protection of the interim order grantedEby the Rajasthan High Court but, when held to have been imported incontravention of the applicable notifications, they became prohibited goodsunder Section 11 of the Customs Act read with Section 3 of the FTDRAct; and hence, the goods were liable to confiscation under Section111(d) of the Customs Act. Further, the importer was also held liable forpenalty under Section 112(a)(i) of the Customs Act. The relevant findingsFof the Adjudicating Authority could be usefully extracted as under: - “9. The impugned goods were imported in contravention of theDGFT notifications No. S.O. 1478(E), 1479(E), 1480(E) and1481(E) dated 29.03.2019 and subsequent trade notice No. 06/2019-2020 Dated 16.04.2019. Thereby, the impugned goodsGbecame prohibited under section 11 of the Customs Act, 1962read with section 3 of the FOREIGN TRADE (DEVELOPMENTAND REGULATION) ACT, 1992. Hence, I hold that the goodsare liable for confiscation u/s. 111(d) for the Customs Act, 1962.

10. For the above acts of omission and commission which renderHthe impugned goods liable for confiscation u/s. 111(d) of the Customs Act, 1962, I hold that the importer is liable for penalty u/s. 112(a)(i) of the Customs Act, 1962.”

22.3. However, after having held that the goods were liable toconfiscation and the importer was liable for penalty, the AdjudicatingAuthority proceeded to determine the quantum of redemption fine andpenalty to be levied on the importer. In this regard, the AdjudicatingAuthority took into account the alleged margin of profit of the importer,market price of the goods, and the expenditure incurred on storage andtransportation etc. The Adjudicating Authority also took into accountvarious other factors for which the quality of goods, being perishable innature, had deteriorated, like poor condition of warehouses, excessiverainfall, humidity, exposure and pest attacks. It was, however, observedby the Adjudicating Authority that the goods in question, though havinglost much of their market value, were still fit for human consumption, asper the certificate from the accredited laboratory. On these considerations,the Adjudicating Authority considered it appropriate to impose fine andpenalty while calculating the margin of profit @ Re. 1 per Kg; andconcluded on the matter with the following order: - “12. In view of the above discussion and findings, I pass thefollowing order:-

Order

i. I confiscate the impugned goods u/s. 111(d) of the Customsact, 1962. Whereas I give an option to the importer to redeemthe impugned goods on payment of the redemption fine ofRs. 1.0 crores (Rupees One Crores only) in lieu ofconfiscation u/s 125(1) of the Customs Act, 1962.

ii. I, also impose a penalty of Rs. 1.485 crores (RupeesOne Crore Forty Eight Lakhs Fifty Thousand only) on M/s.Raj Grow Impex LLP, Jaipur u/s. 112(a)(i) of the CustomsAct, 1962.

13. This order is passed without prejudice to any other action thatmay be contemplated against the importer or any other person interms of any provision of the Customs Act, 1962 and/or any otherlaw for the time being in force.”

M/s. Harihar Collections

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A23. The case of the other importer M/s. Harihar Collections is notmaterially different except for a few individual facts. This importer had,on 18.11.2019, filed eight bills of entry on 18.11.2019 bearing numbers5720040, 5720192, 5720693, 5722458, 5722730, 5719772, 5722243 and5722456 for clearance of 38,500 MTs of yellow peas, said to have beenimported under the cover of interim order passed by the Rajasthan HighBCourt on 10.07.2019 in WP No. 11752 of 2019. In this case too, thegoods were not released in view of objections and were stored in awarehouse.

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23.1. Soon after the decision of this Court in the case of Agricas(supra) on 26.08.2020, this importer also sent a similar communicationCon the same day to the Adjudicating Authority, seeking waiver of showcause notice under Section 124 of the Customs Act and for expeditiouspersonal hearing. This case was also considered expeditiously andanother order-in-original of similar nature was passed by the AdjudicatingAuthority on 28.08.2020 (issued on 03.09.2020).D

23.2. Almost on the similar considerations as noticed above inthe case of M/s. Raj Grow Impex, the Adjudicating Authority held thatthe goods in question became prohibited goods under Section 11 of theCustoms Act read with Section 3 of the FTDR Act; and hence, wereliable to confiscation under Section 111(d) of the Customs Act; and theEimporter was also liable for penalty under Section 112(a)(i) of theCustoms Act. Again, on similar lines, the Adjudicating Authorityproceeded to determine the quantum of redemption fine and penaltyto be levied on the importer; and, on similar considerations as above,proceeded to impose fine and penalty while calculating the margin ofprofit @ Re. 1 per Kg and concluded on the matter with the followingForder: - “13. In view of the above discussions and findings, I pass thefollowing order: -

Order

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i. I confiscate the impugned goods u/s. 111(d) of the Customsact, 1962. Whereas I give an option to the importer to redeemthe impugned goods on payment of the redemption fine of Rs.1.5 crores (Rupees One Crores Fifty Lakhs Only) in lieu ofconfiscation u/s 125(1) of the Customs Act, 1962.

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

14. This order is passed without prejudice to any other actionthat may be contemplated against the importer or any otherperson in terms of any provision of the Customs Act, 1962and/ or any other law for the time being in force.”

Immediate sequels to the orders-in-original

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

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

25. Being aggrieved by the said communications and denial ofrelease of the goods, the respondent-importers approached the HighCourt of Judicature at Bombay on 15.09.2020, seeking mandamus forclearance of the goods imported by them while also questioning thecommunications denying them the release of the goods in question. TheCwrit petitions so filed by the importers, being Writ Petition (L) No. 3502of 2020 (M/s. Raj Grow Impex LLP v. Union of India and Ors.) andWrit Petition (L) No. 3503 of 2020 (M/s. Harihar Collections v. Union ofIndia and Ors.), were decided by the impugned common order dated15.10.2020. We shall be dilating on the relevant features of the orderDdated 15.10.2020 a little later but, at this juncture, we may take note ofthe reliefs claimed in the respective writ petitions which read as under: - In Writ Petition (L) No. 3502 of 2020 by M/s. Raj Grow Impex “36. The Petitioner therefore prays that:

E(a) This Hon’ble Court be pleased to issue a writ of certiorari ora writ in the nature of certiorari or any other appropriate writ,order or direction for calling for the records of the present caseand after going through the legality and validity thereof be pleasedto quash and set aside the Letters issued by Respondent Nos.5and 6 on 02.09.2020 (“Exhibits O & P”); F

(b) This Hon’ble Court be pleased to issue a writ of mandamus ora writ in the nature of mandamus or any other appropriate writororder or direction under Article 226 of the Constitution of Indiaordering and directing the Respondents and in particular theRespondent No.7and Respondent No. 4 itself, its officers,Gsubordinates, servants and agents to clear the goods imported bythe Petitioner vide Bills of Entry Nos. 5520732, 5520871 and5520536 all dated 01.11.2019;

(c) this Hon’ble Court be pleased to issue a writ of mandamus ora writ in the nature of mandamus or any other appropriate writorHorder or direction under Article 226 of the Constitution of India ordering and directing the Respondent No. 4 itself, its officers,subordinates, servants and agents torelease the goods importedvide 7 Bills of Entry bearing Nos. 5520537, 5520538, 5520539,5520540, 5520541, 5520872 and 5521191 on payment ofRedemption Fine and Penalty; (d) that pending the hearing and final disposal of this Petition, thatthis Hon’ble Court be pleased to-

i. restrain the Respondent Nos.3 and 4 itself, its officers,subordinates, servants and agents from taking any further actionto stop the clearance of the goods imported by the Petitionervide Bills of Entry Nos. 5520732, 5520871 and 5520536 alldated 01.11.2019;

ii. direct the Respondent No.4 ,itself, its officers, subordinates,servants and agents to clear the goods imported by thePetitioner vide Bills of Entry Nos. 5520732, 5520871 and5520536 all dated 01.11.2019;

iii. direct the Respondent No.7 and Respondent No. 4 itself, itsofficers, subordinates, servants and agents to release the goodsimported vide 7 Bills of Entry bearing Nos. 5520537, 5520538,5520539, 5520540,5520541, 5520872 and 5521191 on paymentof Redemption Fine and Penalty; (e) for ad-interim reliefs in terms of prayer clause (d) above; (f) for costs of this Petition and the Orders made thereon, and (g) for such further and other reliefs as this Hon’ble Court maydeem fit in the facts and circumstance of the case.”

In Writ Petition (L) No. 3503 of 2020 by M/s. Harihar Collections “33. The Petitioner therefore prays that:

(a) This Hon’ble Court be pleased to issue a writ of certiorari ora writ in the nature of certiorari or any other appropriate writ,order or direction for calling for the records of the present caseand after going through the legality and validity thereof be pleasedto quash and set aside the Directions / Letter issued by RespondentNo.5 and 6 on 02.09.2020 (“Exhibit K & L”); (b) This Hon’ble Court be pleased to issue a writ of mandamus ora writ in the nature of mandamus or any other appropriate writor A

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Aorder or direction under Article 226 of the Constitution of Indiaordering and directing the Respondents and in particularRespondent No. 7 and Respondent No.4 itself, its officers,subordinates, servants and agents to clear the goods imported bythe Petitioner vide Bills of Entry bearing Nos. 5720040, 5720192,572069, 5722458, 5722730, 5719772, 5722243 and 5722456, allBdated 18.11.2019;

(c) that pending the hearing and final disposal of this Petition, thatthis Hon’ble Court be pleased to-

i.restrain the Respondent No.3 itself, its officers,Csubordinates, servants and agents from taking any further actionto stop the clearance of the goods imported by the Petitionervide Bills of Entry bearing Nos. 5720040, 5720192, 572069,5722458, 5722730, 5719772, 5722243 and 5722456, all dated18.11.2019;

ii.direct the Respondent No.4,itself, its officers,subordinates, servants and agents to clear the goods importedby the Petitioner vide Bills of Entry bearing Nos. 5720040,5720192, 572069, 5722458, 5722730, 5719772, 5722243 and5722456, all dated 18.11.2019; D

(d) for ad-interim reliefs in terms of prayer clause (d) above; E

(e) for costs of this Petition and the Orders made thereon, and (f) for such further and other reliefs as this Hon’ble Court maydeem fit in the facts and circumstances of the case.”

25.1. In the writ petitions so filed by the importers, the High CourtFissued notice and directed the respondents to file an affidavit within 10days while fixing the matter for consideration on 06.10.2020.

26. While the aforesaid writ petitions remained pending with theHigh Court, the Commissioner of Customs (Import-II), Mumbai, inexercise of his powers under Section 129D(2) of the Customs Act,Gproceeded to issue separate orders dated 01.10.2020[12], stating variousgrounds on which the said orders-in-original were questionable on legalityand propriety; and directed the authority concerned to apply to theCommissioner (Appeals) for setting aside the said orders and for passing12 Being Review Order No. 1/2020-21 in the case of M/s. Raj Grow Impex and ReviewHOrder No. 2/2020-21 in the case of M/s. Harihar Collections.

a suitable order as deemed fit. The grounds stated in the aforesaid ordersdated 01.10.2020 carry their own relevance for the issues arising inthese appeals and the same may also be noticed in the requisite details.

26.1 In the case of M/s. Raj Grow Impex, the Commissionerfound the following shortcomings: -

a. Non-issuance of show cause notice

With reference to Section 124 of the Customs Act, theCommissioner opined that the order-in-original suffered from a legalinfirmity for want of serving a detailed show cause notice incorporatingall the relevant grounds of confiscation. The Commissioner observed asfollows: - “In the present case, the oral submissions as recorded in the subjectOIO do not have any mention of grounds of confiscation beingcommunicated to the importer and their submissions regardingthe same, The recordings of personal hearing are largely withrespect to importers contention that as per the Hon’ble SupremeCourt order Customs Authorities to deal with the goods importedunder provisions of Customs Act, and with regards to deteriorationin the quality of goods. No detailed Show cause was issuedincorporating all relevant ground of prohibitions in the matter vizsuspension of IEC etc. Therefore, the subject order of ADC suffersfrom legal infirmities.”

b. Non-addressal of the issue of suspension of IEC of the Importer In regard to this aspect, the Commissioner referred to the factthat there was a question-mark about the very existence of the firm inquestion; and also referred to the statutory appeals concerning suspensionor termination of IEC. The Commissioner observed as follows: - “In the subject OIO issued by the Adjudicating Authority,mention has been made in brief facts regarding receipt ofcomplaints by Jt. DGFT doubting financial status of the importerthat it could be a shell firm and the same had to be verified atCustoms Level.

In this regard, it has been mentioned in the brief facts that thebank statement of 3 accounts of importer M/s Raj Grow Impexwas scrutinized and financial credentials were forwarded to theJt. DGFT, Jaipur vide letter dated 22.11.2019. That despite advisor A

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Afrom Jt. DGFT that the facts can be verified and put before Hon’blecourt, ADC adjudicated the matter.

There is no discussion regarding cancellation of IEC orotherwise by DGFT in respect of the said importer. The order istherefore not a speaking order and in terms of Hon’ble SupremeBCourt order, the issue of suspension of IEC has to be examined inthis case. Therefore, in order to follow due process of law, theorder merits review.”

c. The order having been passed on the assumption that the goodswere to be released against redemption fine C

The Commissioner further observed that the order in questionwas passed on the assumption that the goods were required to be releasedagainst redemption fine though various issues including those ofquantitative restrictions were to be taken into consideration. In this regard,the Commissioner referred, inter alia, to Section 2(33) of the CustomsDAct defining prohibited goods as also Sections 111 and 113 thereof. TheCommissioner further reproduced the findings of this Court in the caseof Agricas (supra) on the implication and meaning of the quantitativerestrictions in the subject notifications and observed as under: - “The adjudicating authority failed to consider the same in this order.EThe adjudication authority while addressing the question of allowingredemption of impugned goods on payment of fine, did not applyhis mind on the legislative intent for imposing restrictions on theimport of Green peas. Redemption has been allowedmechanically without going into the merits or demerits ofallowing such an option, thus circumventing the legislativeFintent behind the restrictions.”

d. No reasons were given as to why absolute confiscation or re-export was not taken into considerationGThe Commissioner further referred to the fact that the goods The Commissioner further referred to the fact that the goodsbecame prohibited under Section 11 of the Customs Act read with Section3 of the FTDR Act and found omission on the part of the AdjudicatingAuthority to take into account the relevant considerations while observingas under: - H

“19. The goods became prohibited under section 11 of the CustomsAct, 1962 read with section 3 of Foreign Trade (Developmentand Regulation) Act, 1992. Thus, the option of re-export of thesaid goods to the original supplier should also have been takeninto consideration. It is now settled law that power of discretionby the authority is to be exercised based on well-founded principlesand should not be done in a mechanical way. It is the Adjudicatingauthority’s bounden duty to give cogent reasons while exercisingdiscretion as to why goods are being released on redemption finewhich he grossly failed to do. He had an obligation to Revenueand the State, as much as he did towards the appellant whileconsidering the question of redemption. The adjudicatingauthority did not give reasons as to why absolutionconfiscation or re-export is not taken into consideration inview of the facts of the case as listed above.”

e. Apart from the above, the Commissioner also found theshortcomings that the Adjudicating Authority, (i) chose to rely on theaccredited laboratory certificate rather than referring the matter to thedesignated government agency; (ii) did not conduct an inquiry forascertaining market price and margin of profit; and (iii) did not assessthe duty payable on the consignment.

26.2. As regards the matter of M/s. Harihar Collections, theCommissioner passed an almost identical order on 01.10.2020 with onebasic difference concerning the issue of IEC. Not much of theobservations were made on this issue as were made in the other case ofM/s. Raj Grow Impex but, it was observed that the licence of this importerwas shown as cancelled and this fact was not taken into considerationby the Adjudicating Authority. Besides this, the order-in-originalconcerning this importer was also found suffering from the sameshortcomings as noticed hereinabove.

27. The aforesaid orders dated 01.10.2020 led the AdditionalCommissioner of Customs, Group-I, Mumbai to apply to theCommissioner (Appeals) and on that basis, the matters were examinedin appeal; and came to be decided by the Appellate Authority in its orders-in-appeal dated 24.12.2020. However, before such decision by theAppellate Authority, the aforementioned writ petitions filed by the A

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Aimporters were taken up for consideration by the High Court and weredecided by the common order dated 15.10.2020. This common orderhas been challenged in the appeal arising out of SLP(C) Nos. 14633-34of 2020. Therefore, before dilating on the orders-in-appeal dated24.12.2020, it is necessary to examine the impugned order dated15.10.2020 in requisite details with the relevant particulars.B

The order dated 15.10.2020 and its modification dated09.12.2020: The High Court issues mandamus for release ofgoods.

28. As noticed, the respondent-importers, before passing of theCsaid order dated 01.10.2020, had already approached the High Court on15.09.2020 seeking mandamus for clearance of the goods imported bythem while also questioning the communications denying them the releaseof the goods in question. In these writ petitions, the High Court hadissued notice and directed the respondents to file an affidavit within 10days while fixing the matter for consideration on 06.10.2020 but, in theDinterregnum, the Commissioner of Customs (Import-I), Mumbai passedthe aforesaid orders dated 01.10.2020 under Section 129D(2) of theCustoms Act.

29. When the writ petitions were heard on 06.10.2020, a submissionwas made on behalf of the respondents that after passing of the saidEorder dated 01.10.2020 by the Commissioner, the writ petitions wererendered infructuous and were also liable to be dismissed for the writpetitioners having not challenged the order so passed by the Commissioner.It was also pointed out that pursuant to the said order dated 01.10.2020,the appeals had already been filed before the Commissioner (Appeals)Fagainst the orders-in-original. Per contra, it was submitted on behalf ofthe writ petitioners that the stand so taken was not only unfair but wasuntenable too. It was submitted that the respondents of the writ petitionshad attempted to materially alter the subject matter of the petitions withouttaking leave of the Court. This apart, it was also contended that thegrounds stated by the Commissioner while directing the AdditionalGCommissioner to apply for appeal were totally frivolous; and all thegrounds given in the order dated 01.10.2020 were also countered. Itwas also submitted that the orders-in-original dated 28.08.2020, issuedon 03.09.2020, were holding the field and had neither been set aside norstayed by any appellate authority or higher authority; that the writHpetitioners had complied with all the conditions of the orders and had made the payments; that there was no justifiable reason not to releasethe goods in question; and that because of storage of goods in the customswarehouse, the writ petitioners were suffering huge expenditure.

30. In its impugned common order dated 15.10.2020, the HighCourt took up the petition of M/s. Harihar Collections as the lead caseand after taking note of all the background aspects, first of all took upthe issues related with propriety in passing the order dated 01.10.2020by the Commissioner when the writ petitions were pending in the HighCourt. In this regard, a serious exception was taken that theCommissioner at all chose to pass the order when the High Court was inseisin of the matter. The High Court also observed that the suggestionfor dismissing the writ petitions because of the subsequent developmentor relegating the writ petitioners to appellate forum amounted tointerference with the administration of justice. The High Court stronglyexpressed its views in the following terms: - “26. When this Court had taken cognizance of the grievance madeby the petitioner and was in seisin of the matter fixing 06.10.2020for consideration, it was highly improper on the part ofCommissioner of Customs (Import-II) to have passed the orderdated 01.10.2020 without any intimation to or taking leave of theCourt. It needs no reiteration that when the court, that too theHigh Court, is in seisin of a matter, an administrative or executiveauthority cannot start a parallel proceeding on the very samesubject matter at its own ipse dixit and record a finding. It wouldamount to interfering with the dispensation of justice by the courts.In the instant case, when the Court was set to examine thegrievance of the petitioner regarding non-release of the goodsdespite the order-in-original, what was sought to be done was topresent the Court with an order passed in the midst of suchexamination keeping the Court totally in the dark saying that theorder-in-original suffers from illegality or impropriety directing thesubordinate authority to apply to the Commissioner (Appeals) toset aside the order-in-original andthen contending that the writpetition should be dismissed because of the subsequent developmentor that the petitioner should be relegated to the appellate forum tocontest the subsequent order. As pointed out above, this amountsto interfering with the administration of justice and is thus not atall acceptable. A view may be taken that such an order should beignored as it is contumacious.”

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A31. Having said that, the High Court proceeded to examine thescope and purport of the powers under Section 129D(2) of the CustomsAct and held that those powers were in the very narrow compass, beingessentially of revision and not of review. The High Court also observedthat the Commissioner had three months’ time to pass the said orderwhich was further extendable by thirty days; and yet, ‘he chose to passBthe order most hastily in the midst of the court proceeding keepingthe court completely in the dark’. Proceeding further, the High Courtsummarised the reasons given by the Commissioner of Customs fortaking the view against the orders-in-original in the following terms: - A

“29……..After narrating the facts of the case and the order-in-Coriginal passed by the adjudicating authority, Commissioner ofCustoms took the view that the said order is not legal and properfor the following reasons (mentioned asgrounds):-

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

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

3. adjudication order was issued proceeding on the basis thatthe goods were required to be released against redemptionEfine whereas there were number of issues which were requiredto be taken into consideration, such as, suspension of importexport codeetc.;

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

5. adjudicating authority did not discuss as to why he relieduponthecertificateofaccreditedlaboratoryratherthanreferringthematter to the designated governmentagency;

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

G32. Thereafter, the High Court dealt with the aforesaid groundsof the order dated 01.10.2020.

32.1. The High Court observed, as regards the first ground relatingto non-issuance of show cause notice, as follows: - H

“32.2. In the instant case, petitioner made a request not to issueshow cause notice but to give him personal hearing. This wasaccepted by the adjudicating authority which power admittedlyhe has under the first proviso to section 124 and he has givenreasons for the same i.e., long pendency and perishable nature oftheconsignments.”

32.2. As regards the second ground of non-addressal of the issueof suspension of import export code of the importer, the High Courtreferred to the observations of this Court in Agricas (supra) that suchissue was left open to be decided in the pending statutory appeal; andeven otherwise, the order of suspension dated 06.12.2019 had barredthe importer prospectively and such suspension in no way impacted theimports in question. The High Court said: - “33.2. In view of what the Supreme Court had observed theadjudicating authority could not have taken up and examined suchorder of suspension. Besides, from a perusal of the order ofsuspension dated 16.12.2019 it is evident that the said order hasbarred the petitioner from conducting any further import and exportmeaning thereby that it is prospective and in no way impacted theimport made prior to that date which was the subject matter ofadjudication in theorder-in-original.”

32.3. The third, fourth and sixth grounds aforesaid were examinedtogether and the High Court took the view that taking exception to theorder-in-original on the basis of these grounds appeared to bequestionable. The High Court, inter alia, observed as under: - “34.3. The power under sub-section (1) of section 125 regardinggiving option to the owner or person concerned to pay fine in lieuof confiscation is discretionary in respect of goods the importationor exportation whereof is prohibited but in respect of other goodsit is mandatory. Therefore, such a power is available to theadjudicating authority and he has exercised that power. That apart,when fine is imposed in lieu of confiscation, sub-section (2) makesit abundantly clear that the owner or the person concerned wouldhave to pay in addition to the fine, the customs duty and othercharges.Non-mentioning of the duty payable in the order-in-originalis therefore immaterial, as payment of the same is statutorilymandated under sub-section (2) of section125.

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“34.6. In such circumstances, taking exception to theorder-in-original on the above grounds appears to be questionable. Asalready discussed, adjudicating authority had the power to giveoption to the owner or person concerned to pay fine in lieu ofBconfiscation which power he exercised and the quantum of finewas 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 thatthe laboratory in question was accredited to the customs departmentCand no fault could be found in the Adjudicating Authority placing relianceon its report.

33. For what has been noticed in the preceding paragraphs, itwould appear that the High Court not only questioned the propriety inpassing of the order dated 01.10.2020 by the Commissioner of CustomsDbut also examined the grounds stated therein, for directions to challengethe orders passed by the Adjudicating Authority; and expressed its viewsagainst tenability of the grounds so suggested by the Commissioner.However, even after such detailed discussions and observations, theHigh Court consciously stopped short of pronouncing finally on the saidgrounds because the matter had already been taken in appeal pursuantEto the said order dated 01.10.2020. The High Court, however, observedthat the manner of passing of the said order dated 01.10.2020 wasdefinitely questionable and further observed that the contents of thesaid order and the grounds given, as examined prima facie, did not makeout that the order passed by the Adjudicating Authority was sufferingFfrom any such illegality and impropriety that suo motu revisional powersunder Section 129D(2) should have been exercised. The High Courtiterated that on prima facie examination of the stated grounds, the orders-in-original could not be said to be unlawful or inappropriate or unjust orbeyond the bounds of the Adjudicating Authority. However, it wasreiterated that since application had been filed which would be decidedGas an appeal, the High Court was limiting its examination to thejustification or otherwise of not releasing the goods on the strength ofthe 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 datedH01.10.2020 not as an appellate authority over the Commissioner but only to satisfy ourselves as to whether on such grounds abona fide satisfaction can be arrived at that the order-in-originalsuffers from illegality or impropriety. Even on that aspect also,we refrain from expressing our final views since it is statedthat application has been filed pursuant to the order dated01.10.2020 which shall now be treated as an appeal, butthe manner in which the order has been passed is definitelyquestionable and the contents of the order dated 01.10.2020particularly the grounds given as examined prima faciedo notmake out a case that the order-in-original suffers from suchillegality and impropriety that suo-motu revisional power undersection 129 D(2) should be exercised. Prima-facie, onexamination of the grounds as above, we cannot say thatthe order-in-original is unlawful or inappropriate or unjustor that the adjudicating authority acted beyond the boundsof his authority. However, since application has been filedwhich will now be decided by the Commissioner (Appeals)as an appeal, we only limit our examination to thejustification or otherwise of not releasing the goods of thepetitioner on the strength of the order dated 01.10.2020.”

34. Thereafter, the High Court recounted the factors that the order-in-original was already holding the field; the respondents admitted thatredemption fine and personal fine were levied proportionately to thequantity declared; the petitioner had complied with the terms andconditions of the order-in-original and had made the necessary payments;out of charge had been issued; and the petitioner was incurring substantialexpenditure because of warehousing of the goods. Taking note of thesefactors, the High Court expressed its views that withholding of importedgoods of the petitioner would not be just and proper; and their releasecould not be denied on the basis of the order dated 01.10.2020. Havingsaid that, the High Court concluded on the writ petitions with the findingsand 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-originalis holding the field. The same has neither been set aside nor stayed.Interestingly, respondent Nos.4 to 6 in para 16 of theiraffidavithave themselves admitted that the redemption fine and personal AB

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Afine were levied proportionately to the quantity declared in thebills of entry. Petitioner has complied with the terms and conditionsof the order-in-original and made the necessary payments. Out ofcharge has been issued. Because of warehousing of the goodsunder section 49 of the Customs Act, petitioner is required to paya substantial amount to the customs authority. In the above contextBand after thorough consideration of all aspects of the matter, weare of the view that non-release or withholding of the importedgoods of the petitioner any further would not be just and proper.At least the grounds given in the order dated 01.10.2020, whichorder itself was passed in a highly improper manner, do not justifyCthat the goods should be withheld or denied release notwithstandingthe order-in-original and compliancethereto.

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38. Consequently, we direct the respondents more particularlyrespondent Nos.4 to 7 to forthwith release the goods of thepetitioner covered by bills of entry bearing Nos.5720040, 5720192,572069, 5722458, 5722730, 5719772, 5722243 and 5722456, alldated 18.11.2019. Similar direction also follows in Writ PetitionNo.3502 of 2020 in respect of bills of entry bearing Nos.5520732,5520871 and 5520536, all dated01.11.2019.

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E39. Both the writ petitions are accordingly allowed. We thoughtof imposing cost in this case but we have refrained ourselvesfrom doing so.”

35. As noticed, the appellants had approached this Court againstthe aforesaid order dated 15.10.2020 on 26.11.2020 by way of SLP(C)FNos. 14633-34 of 2020 but the SLPs did not come up for considerationand, in the meantime, the importer M/s. Raj Grow Impex moved anapplication before the High Court for modification of the order dated15.10.2020 and for incorporating the left-over bills of entry, which didnot occur in paragraph 38 of the original order dated 15.10.2020. Thoughit was pointed out before the High Court that SLPs had already beenGfiled in this Court against the order dated 15.10.2020 but it was also anadmitted position that until then, no stay had been granted by this Court.Having noticed the submissions, the High Court deemed it just and properto issue the modification order on 09.12.2020 in the following terms: - “10. Having heard learned Counsel for the parties and on dueHconsideration, we modify our judgment and order dated 15th

October, 2020 by insertion/addition of the following sentence inparagraph 4.1 as well as in paragraph 38 thereof. The last line inparagraph 38 would thus read as under:- “In addition, respondent Nos.4 to 7 are also directed toforthwith release the goods of the petitioner covered byseven Bills of Entry bearing Nos. 5520537, 5520538,5520539, 5520540, 5520541, 5520872 and 5521191 on

payment of redemption fine, penalty, customs duty and anyother dues that may be payable as per law.”

36. As noticed, the High Court, even while making severalobservations and comments that the Commissioner had acted whollyimproper in issuing the order dated 01.10.2020; and even while indicatingits views that the grounds stated by the Commissioner may not be tenable,did not return final findings on such grounds and made this aspectrepeatedly clear in paragraph 36 of the order dated 15.10.2020 that thematter (on merits) would be examined in appeal by the Commissioner(Appeals).

37. The Appellate Authority i.e., the Commissioner ofCustoms (Appeals), dealt with the matter in separate appeals registeredin the individual cases of the private respondents and decided the sameby way of separate orders-in-appeal dated 24.12.2020. Having regardto the questions involved, it would also be appropriate to take note of thesalient features of the orders so passed by the Appellate Authority on24.12.2020.

Orders dated 24.12.2020 by the Appellate Authority:Orders-in-original set aside with enhancement of penalty

38. In the order-in-appeal dated 24.12.2020 in relation to the caseof M/s. Raj Grow Impex, the Appellate Authority thoroughly examinedthe contents of the order-in-original dated 28.08.2020 and the groundsof appeal as also the submissions and counter submissions of the parties;and thereafter, formulated the issues requiring determination as follows:- “52.2. From the plain reading of the submissions dated 16.12.2020made by the Respondents, I have observed that there has beensome technical/peripheral issues raised by them, which includesmaintainability of the present appeal on the grounds like AdditionalCommissioner being equivalent to the Commissioner of Customsand hence, the appeal, if any, will not lie with Commissioner A

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A(Appeals) and the issue of Review Vs Revision as dealt by Hon’bleHigh Court in its order. Further, from the grounds of appeal, themajor issues which needs to be decided are (i) whether AdditionalCommissioner of Customs was correct in going ahead with theadjudication despite non issue of show cause notice, cancellationof IEC, etc. (ii) whether the impugned goods is liable for absoluteBconfiscation or redemption under Section 125(1) of the Act shouldhave been considered or should have been redeemed for thepurpose of re-export to the original supplier and (iii) whetherRedemption Fine and Penalty imposed is adequate looking intothe gravity of the offense. In my discussions below, I will dealCwith these issues.”

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38.1. After rejecting the peripheral/technical issues raised by theimporter, as regards maintainability of the appeal and his jurisdiction todeal with the same, the Appellate Authority entered into the determinationof major issues involved in the matter. It would be relevant to notice thatDone of the arguments urged before the Appellate Authority in opposition to the appeal was that all the grounds of appeal had been examined bythe High Court in its order dated 15.10.2020 and, therefore, the appealmerited rejection. This contention was countered on behalf of the appellantwith the submission that only the implementation of the order dated28.08.2020 was the issue for consideration before the High Court; and E

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any prima facie observation by the High Court on the grounds stated inthe order dated 01.10.2020 cannot be treated as final views of the HighCourt, particularly when the entire matter was left open for adjudicationby the Appellate Authority. The Commissioner (Appeals) rejected thisobjection of the importer while observing as under: -F

“52.7. I agree with the above submissions of the Appellant and ithas forcefully rebutted the contentions of the Respondent thatsince the Hon’ble High Court has already examined all the groundsof appeal, the same may not be open for examination again. Whatbasically is pleaded by the respondent is that the order datedG15.10.2020 of Hon’ble Bombay High Court has shut down appellatemechanism and consequently, would bar Revenue from pursuingthe present appeal before Commissioner (Appeals). This plea isboth incorrect, misdirected and misconceived for the followingreasons:

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a) What is before the present Appellate Authority is the review ofthe Adjudication order dated 28.08.2020, purely on merits. Whereaswhat was decided by the order dated 15.10.2020 of Hon’ble HighCourt of Bombay is one relating to the release of the goods andnot the merits of the adjudication order, which was not evenassailed before Hon’ble Court.

b) The Hon’ble High Court of Bombay had ordered release ofgoods by virtue of the Adjudication Order dated 28.08.2020 buthas vide para 36 of the very same order allowed this AppellateAuthority to hear the appeal on merits and pass appropriate orders.

c) Hon’ble High Court of Bombay having allowed this AppellateAuthority to decide the appeal, this authority had provided adequateopportunities of hearing, exchange of written submission andreceiving the rejoinder submissions and therefore now can proceedto pass final orders and once final order gets passed, the Order ofAdjudication would merge into the same. The said process hasnot been barred by the Hon’ble High Court.

Considering the above facts, I have decided to exercise myappellate jurisdiction in this matter and therefore, the contentionsof the Respondent in this regard is not acceptable.”

38.2. After taking note of the findings of this Court in Agricas(supra), the Appellate Authority proceeded to deal with the grounds ofappeal in the following manner: - a. As regards non-issuance of show cause notice, the AppellateAuthority observed that the respondent-importer had expressly waivedthe right to show cause notice and though the Adjudicating Authoritywas entitled to proceed with adjudication, the order passed by him oughtto be in syncwith the law in terms of Sections 111 and 125 of the CustomsAct 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,the IEC of the said importer was suspended and the ASG, Rajasthan byhis letter dated 06.12.2019, had informed the appellant that the firm wasnon-existent and some other firm dealing with the aviation business wasrunning its office as tenant for last 10 years. The Appellate Authorityobserved that as per the directions of this Court in Agricas (supra), thestatutory appeal, if any, preferred against suspension or termination of A

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AIEC, was to be decided in accordance with law. The Appellate Authoritytook note of the fact that proceedings having been taken up rather at abrisk pace after the decision of this Court in Agricas (supra) and thematerial aspects having been omitted from consideration but, left thisaspect of the matter at that, while observing as under: - B54.2. Non-addressal of the issue of suspension of IEC ofthe importer

………….In this regard, I observe that there has been a tearinghurry to adjudicate the matter as the time lines of the case suggests.Though what the Respondent says has merits at the same timeCthe reasons of cancellation of IEC by the order of DGFT ascontended vide Para 6 of their order should have raised concernsin the minds of the adjudicating authority. If there has been a mis-declaration whereby the bonafide of the importer has been inquestion, the same should have been considered in the right earnestand to say the least, the OIO should not have been passed in aDtearing hurry. So on one side there has been waiver of show causenotice and on the other side, there has been a hurry to adjudicatethe matter despite the fact that there has been mis-declaration onthe part of the importer as brought out in the order of DGFT. If afull-fledged investigation by the Customs authorities would haveEbeen 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 corequestions, as regards operation of Section 125 of the Customs Act andFexercise of discretion by the Adjudicating Authority in this case. TheAppellate Authority took note of the ratio in the decisions of this Court inthe 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 andAnr.: (1985) 2 SCC 349 andReliance Airport Developers (P) Ltd. v.Airports Authority of India and Ors.: (2006) 10 SCC 1 as also theGrelevant provisions of the Customs Act and the FTDR Act and stated itsfindings against the proposition of the release of goods and in favour oftheir absolute confiscation, inter alia, in the following words: - “54.3.Non-consideration of various issues in allowingredemption of goodsH

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e. The Revenue seems to have made a strong case of absoluteconfiscation which is in sync with the decision of the Hon’bleSupreme Court dated 26.08.2020 on the grounds that on one handthe Hon’ble Supreme Court upholds the vires of the Notfn.imposing a restriction on import quantities while on the other handthe adjudicating authority defeats the objective of constitutionallyvalid Notifications by allowing the goods to mingle in the Indianmarkets on payment of a Redemption Fine and Penalty. In theabove submissions of the Appellant, they have countered thesubmissions of the Respondent in detail and on the basis of CaseLaws. Section 125 of the Act makes clear distinction betweenprohibited goods and other goods and obligates release of othergoods on payment of Redemption Fine…………

f)Hence the law is settled that restricted goods under the Act aredeemed to be prohibited goods if the conditions subject to thesegoods have not been complied with. The Hon’ble Supreme Courtin the case of M/s Agrica’s LLP & others has already held thatthe steps can be initiated as per the Customs Act 1962 and thesubject goods should be dealt with under the provision of FT (D&R)Act, 1992. Since the DGFT notification dated 29.02.2019 has beenissued under section 3(2) of FT(D&R) Act, 1992, has imposedrestriction upon the import of the goods, the subject goods undersection 3(3) of FT(D&R) Act,1992 goods deemed to be prohibitedunder section 11 of the Customs Act, 1962. Although under Section125 of the Customs Act, 1962 in the case goods imported adiscretion is conferred on the Customs authorities to releasethe goods which are even prohibited on payment on fine inlieu of confiscation the same provision mandates reasonableexercise thereof and requires taking into considerationcircumstances relevant of such exercises of discretion.Therefore, in these cases the adjudicating authority needsto exercise his discretion diligently and free fromarbitrariness and unfairness…….

g) Further, the Hon’ble Supreme Court in its judgment dated26.08.2020, in Para 34 has given quantitative details that“However, in view of the interim orders by various HighCourts where the actual imports were to the tune of 8.51 Lakh A

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AMT and 6.52 Lakh MT in 2018-19 and 2019-20, though theannual quota for these two years was 1/1.5MT only. Gram isbeing sold at Rs. 4000-4200 per quintal which is below theMSP which is Rs. 4875 per quintal, whereas the importedCIF value of yellow peas is 2028 per quintal”. Further in Para48 the Hon’ble Supreme Court has held that imports, if any made,Brelying on interim orders would be contrary to the notificationsand the trade notices issued under the FTDR Act, 1992. And inPara 46 the Hon’ble Court held that the importers cannot be saidto have had bonafide belief and took their chance for personalgains and profits importing under interim orders and accordinglyChave to face the consequences in law. So the Hon’ble SupremeCourt has noted that quantities much more than annualquota have already been imported by the importers on thestrength of interim orders and I agree with the contentionof the Appellant that under these circumstances allowingany import inside the country, even if against fine andDpenalty, is patently perverse. Further, as detailed earlier, thedomestic production of pulses and therefore, the Govt. has imposedrestrictions giving only a small window of annual import underdefined quota prices. The Govt. has also procured peas and pulsesunder various schemes at Minimum Support Price. Consequently,Ethe buffer stock with the Govt. is very high. Therefore, anyadditional supply of peas and pulses would be against theinterest of the farmers and it would have an adverse impacton the economy and would defeat the very purposes ofimport restrictions. Based on these findings I observe that theimpugned goods merited absolute confiscation.”

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d. The Appellate Authority also found the assessment of marginof profit and quantum of penalty in the order-in-original wanting in therequisite analysis and assessment; and observed as under: - G

“h. Further, the Revenue has raised objection in the manner ofcalculating the quantum of margin of profit and the way the samehas been divided between fine and penalty and has contendedthat the order stands on flimsy grounds and beyond the acceptedprinciples of law. The Revenue explained that how the Redemption H

Fine and Penalty serves the mutually exclusive purposes i.e. whilethe Redemption Fine nullifies the margin of profit, the penaltyacts as a deterrent. But the manner in which the adjudicatingauthority has conveniently divided the margin of profit betweenRedemption Fine and Penalty is questionable and is bad in law.Further, Revenue has also objected on quantum of RedemptionFine and Penalty and pleads that the same is abysmally low. On aplain reading of Para 12 of the order of the adjudicating authority,any person of average intelligence can notice that how perfunctorilythe margin of profit has been decided in this case. The adjudicatingauthority places complete reliance on the submissions made bythe importer and takes them as gospel truth forgetting the factthat he is also obligated to look into the interests of revenue. Theadjudicating authority should have been much more diligent,cautious, vigilant, meticulous and should have been morecircumspect in his approach in understanding the letter and spiritof the judgment of the Hon’ble Supreme Court. Looking into thegravity of the offence, I observe that the quantum of penaltyimposed 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 enhancedsubstantially.”

38.3. In view of the above, the Appellate Authority allowed theappeal, ordered absolute confiscation of the goods covered by sevenbills of entry that had not been released while observing that the goodscovered by other three bills of entry (which had already been released)were not available for absolute confiscation and accepted that as faitaccompli while directing appropriation of the redemption fine paid inthis regard. The Appellate Authority also enhanced the penalty from Rs.1.485 crores to a sum of Rs. 5 crores under Section 112(a)(i) of theCustoms Act and passed the final order in the following terms: - “57.Accordingly, I pass the following order :

ORDER

i. I order absolute confiscation of the goods covered in Bill ofEntry Nos.5520537, 5521191, 5520538, 5520539, 5520540, 5520541and 5520872 all dated 01.11.2019 under Section 111(d) of theCustoms Act, 1962 read with Section 3(3) of Foreign Trade(Development & Regulations) Act, 1992.

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Aii. I order absolute confiscation of the goods covered under Billsof Entry Nos.5520732, 5520871 and 5520536 all dated 01.11.2019under Section 111(d) of the Customs Act, 1962 read with Section3(3) of Foreign Trade (Development & Regulations) Act,1992.But, since the goods covered under these 03 Bills of Entry havealready been cleared and not available for absolute confiscation, IBam constrained to accept it as fait accompli and Redemption Finealready paid, if any, in this regard, is ordered to be appropriated.

iii. I set aside the Penalty of Rs.1.485 Crores imposed by thelower authority and impose a Penalty of Rs.5,00,00,000/- ( RupeesFive Crores only ) on M/s Raj Grow Impex LLP, 114, First Floor,CJaipur Tower, MI Road, Jaipur, under Section 112(a)(i) of CustomsAct 1962, and any Penalty paid, if any, against the impugned Order-in-Original is ordered to be appropriated towards this new enhancedPenalty.”

39. From the submissions made and the material placed on record,Dit is noticed that a similar order-in-appeal in relation to the other importerM/s. Harihar Collections was also passed by the Appellate Authority on24.12.2020[13]. On the facts of that case, the Appellate Authority foundthat the goods covered by the said eight bills of entry had already beencleared and were not available for absolute confiscation. This was alsoEaccepted by the Appellate Authority as fait accompli while directingappropriation of the redemption fine paid in this regard but the penalty ofRs. 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 theCustoms Act. The operative portion of the order-in-appeal concerningthe importer M/s. Harihar Collections reads as under: -F

“ORDER

i. I order absolute confiscation of the goods covered under Billsof Entry Nos. 5720040, 5720192, 5720693, 5722458, 5722730,5719772, 5722243 and 5722456 all dated 18.11.2019 under SectionG111(d) of the Customs Act, 1962 read with Section 3(3) of ForeignTrade (Development & Regulation) Act, 1992. But, since the goodscovered under these 08 Bills of Entry have already been clearedand 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 thisHimporter.

accept it as fait accompli and Redemption Fine already paid, ifany, in this regard, is ordered to be appropriated.

ii.I set aside the Penalty of Rs.2.35 Crores imposed by the lowerauthority and impose a Penalty of Rs.10,00,00,000/- ( Rupees TenCrores only ) on M/s Harihar Collections, 47, Hathi Babu KaBaug, Bani Park, Jaipur, Rajasthan – 302016, under Section112(a)(i) of Customs Act 1962, and any Penalty paid, if any, againstthe impugned Order-in-Original is ordered to be appropriatedtowards this new enhanced Penalty.

iii. The order of the lower authority dated 28.08.2020 is modifiedto the above extent and the Appeal filed by the Revenue standsdisposed off accordingly.”

Another round in High Court: Challenge to the order-in-appeal dated 24.12.2020 and stay order by the High Court dated05.01.2021

40. Though the person aggrieved by the said orders-in-appeal couldhave preferred statutory appeal under Section 129A of the Customs Actbefore the Customs, Excise and Service Tax Appellate Tribunal[14] but,the respondent-importer M/s. Raj Grow Impex approached the HighCourt against the order-in-appeal by way of Writ Petition (ST) No. 24 of2021 and also filed a contempt petition stating willful disobedience of theHigh Court’s (modification) order dated 09.12.2020 because the goodscovered by the said order had not been released.

41. Taking up the writ petition so filed by the importer, the HighCourt referred to its previous orders dated 15.10.2020 and 09.12.2020and took exception against the impugned order-in-appeal dated 24.12.2020while observing that the observations made and the directions issued bythe Appellate Authority were not correct and were running contrary toits directions. The High Court stayed the operation of the order-in-appealdated 24.12.2020 and also directed the authorities concerned to complywith the directions contained in the orders dated 15.10.2020 and09.12.2020; and while placing the matter on 27.01.2021, the High Courtrequired the counsel for the Department to state compliance. The relevantpart of the order dated 05.01.2021 in the fresh writ petition so filed bythe importer M/s. Raj Grow Impex reads as under: - A

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A“6. Prima facie the above directions of respondent No.2 are totallyin contravention to the order of this court. That apart, view takenby respondent No.2 that the decision of this court while directingrelease of the goods was prima facie is not correct. When theHigh Court had directed release of the goods forthwith, it is beyondcomprehension as to how a lower appellate authority can nullifyBsuch direction by ordering absolute confiscation of such goods. Itis not only unacceptable but contumacious as well which aspectwe may deal with at a later stage.

7. In view of the above, we stay operation of the order dated 24[th]December, 2020 until further orders.C8. Respondent Nos.3 and 4 shall comply with the directions ofthis court dated 15th October, 2020 and 9th December, 2020.

9. List on 27th January, 2021, on which date Mr. Jetly shall informthe court about compliance of today’s order.”

41.1. This order dated 05.01.2021 is challenged by the appellantsDin the appeal arising out of SLP(C) No. 1037 of 2021.

42. The High Court also entertained the contempt petition, beingContempt Petition (L) No. 9351 of 2020 by a separate order dated05.01.2021 and while issuing notice therein, directed the authoritiesconcerned to remain personally present in the Court on 21.01.2021. TheEorder so passed by the High Court in contempt petition was challengedin separate appeal by the appellants; and, as noticed, on 18.03.2021, thisCourt found no reason for continuation of contempt proceedings in theHigh Court and closed the same while allowing the appeal so filed by theappellants[15].

F43. After the narration of all the material factual and backgroundaspects as also the orders passed at different stages by differentauthorities and Courts, we may now refer to the rival submissions tospecify the stand of the respective parties in these appeals.

Rival submissions

G44. The learned ASG appearing for the appellants has forcefullyargued against the orders so passed by the High Court while assertingthat the goods in question are liable to absolute confiscation.44.1. Assailing the orders passed by the High Court, the learnedASG would submit that the High Court has erred in entertaining the writH15 Being C.A. No. 985 of 2021 arising out of SLP(C) No. 1097 of 2021.

petitions and in passing the order dated 15.10.2020 for implementing theorders-in-original dated 28.08.2020 and thereby, for release of the subjectgoods though the orders so passed by the Adjudicating Authority werenot final and were subject to appeal; and, in fact, the appeals had indeedbeen filed pursuant to the review orders dated 01.10.2020. With referenceto the observations and directions of the High Court in the order dated15.10.2020, the learned ASG has pointed out that on one hand, the HighCourt permitted the Commissioner (Appeals) to proceed with the appealsfiled by the Department but, at the same time, also directed that thegoods be released. According to the learned ASG, the directions forrelease of the goods rather defeated the purpose of adjudication beforethe Commissioner (Appeals) on the question as to whether or not thegoods were liable to be confiscated absolutely. On the same lines, it hasalso been contended that when the Appellate Authority passed the orders-in-appeal on 24.12.2020 and one of the importers preferred another writpetition, the High Court entertained the same and granted stay but, omittedto consider that the order-in-appeal could have been challenged in regularstatutory appeal before CESTAT under Section 129A of the CustomsAct.

44.1.1. As regards the power under Section 129D of the CustomsAct, the learned ASG has submitted that thereunder, the higher authorityonly performs the function of reviewing on grounds relating to legality orpropriety 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 goodsare to be treated as ‘restricted’ or ‘prohibited’, the learned ASG hasreferred to sub-sections (2) and (3) of Section 3 of the FTDR Act andSections 2(33) and 11 of the Customs Act and has submitted that thenotifications in question, placing a quantitative restriction on the importof certain pulses, which were upheld by this Court by the judgment dated26.08.2020 in Agricas (supra), had been issued under sub-section (2) ofSection 3 of the FTDR Act; and since the goods imported by therespondent are covered by the said notification, they are deemed to be‘prohibited’ goods under Section 11 of the Customs Act, by virtue ofsub-section (3) of Section 3 of the FTDR Act. While emphasizing onSection 2(33) of the Customs Act, the learned ASG has also submittedthat through the notifications in question, an upper limit of 1.5 lakh MTsof import quantity was placed and, therefore, any import within the capof 1.5 lakh MTs will be the import of restricted goods but, in excess of AB

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Athe cap of 1.5 lakh MTs, the goods would lose the character as restrictedgoods and would become prohibited goods. The learned ASG hasparticularly relied upon the enunciation on the amplitude of the words‘any prohibition’ in Section 111(d) of the Customs Act in the case ofSheikh Mohd. Omer v. Collector of Customs, Calcutta andOrs:(1970) 2 SCC 728 holding, inter alia, that the wide words ‘anyBprohibition’ mean ‘every prohibition’; and restriction is also a type ofprohibition. The learned ASG has further referred to the decision in thecase Commissioner of Customs, New Delhi v. Brooks International& Ors : (2007) 10 SCC 396 to submit that if the conditions for importand export of goods are not complied with, it would be considered to beCthe case of prohibited goods. Another decision of this Court in OmPrakash Bhatia v. Commissioner of Customs, Delhi:(2003) 6 SCC161 has also been referred.

44.3. The learned ASG has also addressed the issue pertaining tothe mode of monitoring the limit specified in the notifications and hasDsubmitted thatevery importer has to apply and obtain a licence forimporting restricted goods; and the goods could be cleared from the portonly upon obtaining such a licence. Every importer is allotted a quota tobe imported; the approving authority has to apply his mind and approvethe licence; and only upon such satisfaction of the approving authorityand issuance of licence that an importer gets a right to import and else,Eright 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. Ithas been argued that obtaining the licence being a condition precedentfor importing restricted goods, any violation of this condition would renderthe goods as prohibited goods. On the importance of obtaining a validFlicence wherever required in the context of import/export relatedtransactions, the learned ASG has referred to the decision in S.B.International Ltd. and Ors. v. Asstt. Director General of ForeignTrade and Ors.:(1996) 2 SCC 439.

44.4. On the question regarding treatment of the subject goods,Gthe learned ASG has made elaborate submissions on the scope of Section125 of the Customs Act and has contended that thereunder, a cleardistinction is made between ‘prohibited goods’ and ‘other goods’ inasmuchas in the case of ‘other goods’, Section 125 obligates release of thesame against redemption fine, whereas there is no such compulsion whenit comes to the ‘prohibited goods’. The Adjudicating Authority under theH

Customs Act can absolutely confiscate the prohibited goods using itsjudicial discretion. The learned ASG would argue that both, in terms ofprovisions of the Customs Act and the decisions rendered, restrictedgoods under the Customs Act are deemed to be prohibited goods, if theconditions attached to restricted goods are breached, as in the presentcase. The learned ASG has strongly relied upon the decision of thisCourt in the case of Garg Woollen Mills (supra) and has contendedthat while deciding a similar customs matter with presence of the elementsof breach of law, trade violations and lack of bona fide, this Courtapproved the directions for absolute confiscation. The learned ASG hasalso submitted that the orders passed by the Adjudicating Authority, asdirected to be implemented by the High Court, in fact, defeat the purposeof the notifications in question as also the findings and effort of thisCourt in rendering the judgment dated 26.08.2020 in the case of Agricas(supra).

44.5. While dealing with the question of exercise of judicialdiscretion, the learned ASG has referred to the decisions in Sant Rajand Reliance Airport Developers Pvt. Ltd. (supra) to submit that theimports in question, being patently illegal and against the object of theconstitutionally valid notifications, cannot be allowed to be cleared inany manner into India for further sale in the Indian market even afterthe imposition of duty and redemption fine. While maintaining that thegoods in question deserve to be confiscated absolutely, the learned ASGhas submitted that the notifications have put an embargo on the quantityof pulses that can be imported into the country and allowing any importover and above the restriction would be against the very purpose of therestriction. The learned ASG has referred to the observations made bythis Court in Agricas (supra), as regards the excessive quantity havingbeen imported under the cover of the interim orders in the past, muchbeyond the annual quota fixed as also the observations that the presentimporters had worked only for personal gains and had not acted bonafide. Thus, the exercise of discretion by the Adjudicating Authority beingnot in accord with law, cannot be approved.

44.6. As regards the decision in the case of Commissioner ofCustoms v. Atul Automations Private Limited: (2019) 3 SCC 539,strongly relied upon by the importers, the learned ASG has argued thattherein, this Court upheld the decision for release of the goods for thesame being not prohibited goods and for the reasons, inter alia, that: (i)

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Athe goods in question were MFDs (Multi-Function Devices, Photocopiersand Printers) and they had a utility/shelf life for 5-7 years; and (ii) theCentral Government permitted the import of used MFD’s that had utilityfor 5 years because MFDs were not manufactured locally in India. Ithas been argued that in contrast to the fact situation in the case of AtulAutomations (supra), in the present case, this Court had held that excessBimports will not be in the interest of the farmers, and the excess importsmade in contravention of the notifications but under the cover of theinterim orders were not bona fide; and further that such imports weremade with the motive to earn profits and gains and therefore, the importersshould suffer the consequences. Thus, according to the learned ASG,Cthe judgment in Atul Automations (supra), proceeding on its own facts,will not have a bearing on the facts and circumstances of the presentcase.

44.7. The learned ASG has also referred to a decision of theKerala High Court in the case of Shri Amman Dhall Mill v.

DCommissioner of Customs:(2021) SCC OnLine Ker 362 to submitthat the said High Court, as regards similar imports, has upheld the ordersfor absolute confiscation; and the goods imported by the respondentdeserve the same treatment.

44.8. The learned ASG would, therefore, submit that the fine andEpenalty imposed by the Commissioner (Appeals) may be upheld; theimporters may be allowed to re-export the goods out of India on paymentof redemption fine of 5%; and the appellants may be permitted toabsolutely confiscate the goods, of such of the importers who do not optfor re-export within the time stipulated by this Court.

F45.Per contra, the learned senior counsel appearing for therespondent-importer M/s. Raj Grow Impex has strenuously argued insupport of the orders-in-original and the orders passed by the High Courtwhile asserting that release of goods with payment of redemption fine isin accord with law.

45.1. The learned senior counsel has referred to the materialGbackground aspects as noticed hereinbefore and has pointed out thatultimately, after the order dated 15.10.2020 of the High Court ofJudicature at Bombay, the appellants permitted the release of goodscovered by three bills of entry for which, redemption fine and penaltyhad been paid and OOC had been issued but, the goods covered byHother seven bills of entry, for which payment of duty, fine and penalty was made later, were not released. The learned counsel has also referredto the proceedings relating to appeal before the Commissioner (Appeals)and the objections taken by the respondent against jurisdiction of thesaid Appellate Authority but, according to the learned counsel, theAppellate Authority, within three days of hearing, hurriedly proceeded topass the order-in-appeal dated 24.12.2020, setting aside the order-in-original dated 28.08.2020 and ordering absolute confiscation of the goodswhile enhancing the penalty.

45.2. While supporting the order-in-original dated 28.08.2020 asalso the orders passed by the High Court on 15.10.2020, 09.12.2020 and05.01.2021, the learned senior counsel would argue that in true operationof the provisions of the Customs Act and the FTDR Act read with thepronouncement of this Court in Agricas (supra), the goods in questionwere not liable to be confiscated absolutely and had rightly been orderedto 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 Courthas held, in unequivocal terms, that the notifications in question wereissued imposing restrictions, may be not under Section 9A of the FTDRAct but under Section 3(3) thereof, the question does not arise to interpretthe same as prohibition on import of the subject goods.

45.4. Again, with reference to the notifications in question, thelearned counsel would argue that the contentions of the appellants arevery much against the spirit of the said notifications dated 29.03.2019and the trade notice inasmuch as under the said notifications, the policyconditions qua the goods in question were not revised and they were notplaced in the ‘prohibited’ category. The DGFT’s interpretation on itsown 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 ofwhich is permitted only with an Authorisation/ Permission/ Licenseor in accordance with the procedure prescribed in a notification/public notice are ‘Restricted’ goods. It has, thus, been contended thatwhenever a licence is required for import of certain goods, the same is a‘restricted’ item and not a ‘prohibited’ one; and that the appellants arenot right in their contentions that the peas were a ‘prohibited’ item.

45.5. The learned senior counsel has elaborated on his submissionswith reference to the connotation of the terms ‘prohibited’ and ‘restricted’,particularly with reference to Section 2(33) of the Customs Act and AB

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AClause 9.47 of the Trade Policy as also Schedule I thereof. Further,while placing strong reliance on the decision of this Court in AtulAutomations (supra), the learned counsel has submitted that this Courthas clearly underscored the difference between what is ‘prohibited’ andwhat is ‘restricted’. It is submitted that in Atul Automations, the goodsimported without authorisation were found to be restricted goods; andBredemption of the consignment on payment of the re-assessed marketprice with fine was upheld. The learned counsel would submit that therestricted goods have the option of being redeemed and do not deservethe treatment of absolute confiscation, which could be applied only toabsolutely prohibited goods.C

45.6. In the alternative line of submissions, it has been contendedthat even if the goods in question are treated to be ‘prohibited’, thediscretion to allow their redemption/release on fine had been with theAdjudicating Authority and such a discretion, as exercised in the presentcase, calls for no interference. The contentions have been elaboratedDwith reference to the use of the expression ‘may’ in regard to theprohibited goods in Section 125 of the Customs Act; and it has beenargued that it is not the expression that the Adjudication Authority ‘shallnot’ give an option to pay fine in lieu of confiscation. It is submitted thatAdjudicating Authority is to exercise the discretion provided to him underSection 125 of the Customs Act objectively and this discretion cannot be Etaken away through a judicial proceeding. In regard to this line ofargument, strong reliance has been placed on the decision of this Courtin the case of Hargovind Das K. Joshi and Ors. v. Collector ofCustoms and Ors.:(1987) 2 SCC 230. Further, with reference to thedecision of this Court in the case of Sant Raj (supra), it has been arguedFthat whenever something has to be done within the discretion of theauthority then, that thing has to be done according to the rules of reasonsand justice and not according to private opinion. In other words, discretionmeans sound discretion guided by law.

45.7. It has also been contended that only 17,000 MTs of yellowGpeas imported by this respondent are to be released out of the totalimported quantity of 24,815 MTs. This respondent is ready and willing topay duty and redemption fine as deemed fit and proper by this Court butthe option of re-export may not be a feasible option at this stage for, it isa time-consuming process with logistical and transportation issues andmore particularly, in the present pandemic situation; and the respondentH

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

46. The learned counsel appearing for the other respondent-importer M/s. Harihar Collections, while arguing in tandem with theaforesaid contentions of the senior counsel, has made yet furthersubmissions against the proposition of absolute confiscation[16].

46.1. With reference to sub-sections (2) and (3) of Section 3 ofthe FTDR Act and Section 11 of the Customs Act, it is submitted that allgoods to which an order under sub-section (2) of Section 3 applies shallbe deemed to be the goods of which import has been ‘prohibited’ underSection 11 of the Customs Act but in the present case, no such orderunder sub-section (2) prohibiting the subject goods having been issued,sub-section (3) of Section 3, creating the deeming fiction is not attractedin the present case. It has been contended that although there is specificpower to prohibit specified classes of goods by an order to be publishedin the official gazette but no such gazette has been placed by theappellants before this Court. Equally, no such notification under Section11 of the Customs Act prohibiting the subject goods, either absolutely orsubject to any condition, has been placed on record; and no notificationin terms of Sections 11A and 11B of the Customs Act, notifying thesubject goods, has been shown. Further, with reference to the decisionof this Court in Agricas (supra), it has been submitted that by thenotifications 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 wasnot applicable to the Government of India’s import commitments underany 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 withreference to sub-section (3) of Section 11 of the Customs Act that any prohibition orrestriction or obligation relating to import of goods provided in any other law for thetime being in force shall be executed only if such prohibition or restriction or obligationis 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 learnedASG pointed out that the said sub-section (3) of Section 11 of the Customs Act, asproposed to be inserted by the Finance Act, 2018, was to come into force from a dateto be notified but the same has not been notified as yet. Accepting this position, thesaid argument has been withdrawn on behalf of the respondent with apology. Havingregard to the circumstances, we would leave this aspect of the matter at that only.

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Acontention has been that the goods in question, meant for humanconsumption, were not absolutely prohibited for import, unlike specificallynotified prohibited goods. Simply put, according to the learned counsel,goods in question were not of ‘absolutely prohibited’ category from anypoint of view.B46.2. It has further been submitted that since the imports in questionwere not covered by the import licence, the goods in question were to bedealt with under Section 125 of the Customs Act; and had rightly beenso dealt with by the Adjudicating Authority, who held them liable toconfiscation and to be redeemed on payment of redemption fine andduty, which the Adjudicating Authority indeed levied apart from personalCpenalty. It has been pointed out that pursuant to the payment of theentire duty, fine and penalty, aggregating to a sum of about Rs. 44.21crores, OOC was given and the goods were allowed clearance after theauthority was satisfied that they were fit for human consumption. Theorder-in-appeal dated 24.12.2020 in relation to this importer has alsoDbeen referred with the submissions that therein, the Commissioner ofCustoms (Appeals) has enhanced the penalty to Rs. 10 crores from Rs.2.35 crores and the importer is desirous of availing statutory remedy ofchallenging this enhancement of penalty before the CESTAT; and it isprayed that the opportunity to avail the appropriate remedy may not becurtailed for this importer. In this regard, it has also been submitted thatEthe High Court, in its order dated 15.10.2020, never injuncted theDepartment from proceeding with their statutory appeal and, followingthe same thread, the respondent-importer may also be allowed to exerciseits right of appeal before the CESTAT; and, for that matter, anyobservation made in the present matter may not prejudice such right ofFappeal.

46.3. It has further been argued that the entire quantity of 38,500MTs, as imported by this respondent-importer, was finally allowed to becleared by the authorities concerned after the order of the Bombay HighCourt dated 15.10.2020 and hence, when the goods are not available forGconfiscation, no redemption fine could be imposed. A decision of BombayHigh Court in the case of Commissioner of Customs (Import), Mumbaiv. Finesse Creation Inc.:(2009) 248 ELT 122 has been referred andit has also been pointed out that an SLP against the said decision wasdismissed by this Court on 12.05.2010.

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46.4. With reference to the provisions of the FTDR Act and theCustoms Act as also the decisions of this Court in Hargovind Das K.Joshi and Atul Automations (supra) and that of Punjab and HaryanaHigh Court in Horizon Ferro Alloys Pvt. Ltd. and Ors. v. Union ofIndia and Ors.: (2016) 340 ELT 27, it has been argued that the subjectgoods are not falling under the category of absolutely prohibited goods,as they are not having tainted character such as fake currency,pornographic material etc.; and only the quantity restrictions having beenviolated, they were rightly taken by the Adjudicating Authority as acquiringthe 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. Itis submitted that even the order ultimately passed in the case of OmPrakash Bhatia (supra) rather operates against the stand of theappellants.

47. As noticed, two of the other importers have moved theapplications for intervention. These importers are said to be similarlyplaced as the private respondents of these appeals inasmuch as they toohave imported various quantities of peas/pulses pursuant to the interimorders in their respective writ petitions by the High Court of Rajasthanbut clearance of the goods remains stalled, particularly because of thepresent litigation. Having regard to the circumstances, we may also takenote of the submissions made on their behalf.

47.1. It has been submitted on behalf of the intervener NikhilPulses Pvt. Ltd. that it had similarly filed WP No. 12283 of 2019, whereinthe 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 yellowpeas at Adani SEZ, Mundra, Gujarat under fifty-nine bills of lading ofthe month of September 2019 and had filed bills of entry for homeconsumption but, such bills have remained unassessed.

47.1.1. Similar arguments have been advanced on behalf of thisimporter as regards difference between ‘restricted’ goods and ‘prohibited’goods and their treatment under the Customs Act, the FTDR Act andthe Trade Policy; and it is submitted that the goods in question are only‘restricted’ items and not ‘prohibited’. Again, with reference to thedecision of this Court in Atul Automations (supra), it has been submittedthat ‘restricted’ goods have the option of being redeemed on payment ofmarket value and do not deserve the treatment of ‘prohibited’ goodsunder Section 125 of the Customs Act. Countering the submissions of AB

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Athe ASG, it has been contended that the definition of restricted or prohibiteddoes not apply to a specific quantity but to a product and accordingly, theentire quantity should be treated as restricted and be released on paymentof fine and penalty.

47.1.2. It has further been submitted that even if the goods inBquestion are prohibited, the discretion could be exercised by theAdjudicating Authority under Section 125 of the Customs Act to allowredemption/release on fine. The decisions in Hargovind Das K. Joshiand Sant Raj (supra) have been referred. Further, it has been submittedwith reference to the decision in the case of U.P. State Road TransportCorporation and Anr. v. Mohd. Ismail and Ors.: (1991) 3 SCC 239Cthat the Court cannot direct the statutory authority to exercise thediscretion in a particular manner not expressly required by law; and withreference to the decision in Assistant Commissioner (CT) LTU,Kakinada and Ors. v. Glaxo Smith Kline Consumer Health CareLimited: 2020 SCC OnLine SC 440 that even under Article 142 ofDthe Constitution, the Court cannot render the statutory provision otiose.

47.1.3. While invoking equity, it has also been submitted that duringApril 2019 to November 2019, approximately 8.5 lakh MTs of similargoods were imported under the interim orders out of which about 6 lakhMTs were released by the customs; and even after the decision in AgricasE(supra), the customs has allowed release of about 50,000 MTs of peas/pulses during September-October 2020 and a balance quantity of about2 lakh MTs remains. It has been argued that demand and supply ofthese pulses is dynamic and not static in nature and what may have beenin abundance 18 months ago may not be so easily available now.According to the applicant, there is a short supply of pulses which isFevident from the fact that the Union of India has recently issued importlicences for a quantity of 9 Lakh MTs. The applicant would submit thatreleasing the confiscated goods will help in meeting the excess demandand the effect of releasing the goods will not be adverse.

47.1.4. The applicant would further submit that the goods areGperishable commodities and have been lying at the port for long andnow, their re-export is not feasible anymore for a variety of factors,including the present times of pandemic. It has, therefore, been prayedthat the cargo in question may be allowed to be released for the domesticmarket on payment of redemption fine and penalty.H

47.2. It has been submitted on behalf of the other intervenerAgricas LLP that it had earlier filed WP No. 9321 of 2019, wherein theHigh Court passed an interim order dated 24.05.2019 in its favour; andpursuant 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, thisimporter filed another writ petition bearing No. 13392 of 2019 wherein,the High Court passed interim order dated 14.08.2019 and thereafter, ithad imported a quantity of 27,775 MTs of black mapte that arrived inNovember 2019 from which, 14,366 MTs were released and cleared onpayment of requisite charges but the balance has not been released. It isstated by this importer that pursuant to the show cause notice dated05.10.2020, the Commissioner of Customs, Nhava Sheva found the goodsto be prohibited and liable to confiscation whereafter, it had filed WPNo. 525 of 2021 before the High Court of Judicature at Bombay againstnon-clearance of the goods but in the meantime, the main issue has beentaken up in these appeals.

47.2.1. Almost identical arguments have been raised on behalf ofthis importer that the goods in question are not prohibited and, in anycase, they could be released upon payment of redemption charges withreference to Section 11(9) of the FTDR Act and/or Section 125 of theCustoms Act. Similar grounds of equity have also been urged, as noticedin the case of the other applicant which need not be repeated.

48. Before proceeding further, we may usefully summarise theprincipal submissions of the parties.

48.1. To put it in a nutshell, the principal submissions on behalf ofthe appellants are: that the High Court has erred in entertaining the writpetitions and the directions by the High Court for release of goods werenot compatible with the purpose of adjudication by the Appellate Authority;that the subject goods, being covered by Section 3(2) of the FTDR Actand having been imported without licence as also in excess of the cap of1.5 lakh MTs, became prohibited goods under Section 11 of the CustomsAct 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 thisCourt in Agricas, such prohibited goods were liable to be confiscatedabsolutely 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 ofthe present case.

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A48.2. On the other hand, the principal submissions on behalf ofthe importers are: that the notifications in question placed quantitativerestrictions and there had not been any order or notification prohibitingthe subject goods and hence, they could not have been treated as absolutelyprohibited goods but were only restricted goods; that in Atul Automations,the goods imported without authorisation were held by this Court to beBrestricted goods and the same principle applies to the subject goods whenthey have been imported without import licence; that even if the subjectgoods are to be treated as prohibited, discretion was nevertheless availablewith the Adjudicating Authority to allow their redemption on payment offine and such discretion has rightly been exercised in the orders-in-original;Cthat the discretion cannot be ordered to be exercised in any particularmanner; that re-export of the subject goods is not a feasible option andthe 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; thatthe orders-in-appeal could be challenged in further statutory appeal.

D49. We have given anxious consideration to the rival submissionsand have perused the material placed on record with reference to thelaw applicable.

Points for determination

50. The narration and the recounts foregoing make it evident thatEthe root question in these matters is as to whether the goods in questionare liable to absolute confiscation or they could be released with paymentof fine in lieu of confiscation?

50.1. With intervention of the High Court of Judicature at Bombayin the writ jurisdiction and by way of the impugned orders dated 15.10.2020F(read with the modification order dated 09.12.2020) and 05.01.2021, theissues concerning legality and validity of the orders so passed by theHigh Court are, obviously, interlaced with the core issues, as regardstreatment of the goods in question. In the given circumstances, and lookingto the nature of orders involved in the matter, it would be appropriate toGexamine the validity of the orders so passed by the High Court beforedealing with other issues.

Legality and validity of the orders passed by the High Court

51. As noticed, the respondent-importers approached the HighCourt with the grievance that the goods were not being released despiteHthe orders-in-original dated 28.08.2020 having been passed in their favour; and they having made the payments (in whole in the case of M/s. HariharCollections and partially in the case of M/s. Raj Grow Impex) and havingobtained OOC. During the pendency of matters in the High Court, theCommissioner passed the orders dated 01.10.2020 in exercise of hispower under Section 129D(2) and then, it was suggested before theHigh Court on behalf of the Department that the writ petitions wererendered infructuous because of the said orders dated 01.10.2020.

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

53. Much has been said in these matters regarding the exerciseof power by the Commissioner under Section 129D(2) of the CustomsAct. The High Court proceeded to observe in the impugned order dated15.10.2020 that the Commissioner’s orders dated 01.10.2020 were termedas review orders but the jurisdiction conferred by Section 129D(2) wasthat of suo motu revision and not that of review; and in that regard, theHigh Court particularly referred to the expressions “legality or propriety”occurring in the provision.

53.1. Section 129D of the Customs Act reads as under: - “129D. Power of Committee of Principal ChiefCommissioners of Customs or Chief Commissioners ofCustoms or Principal Commissioner of Customs orCommissioner of Customs to pass certain orders.—(1) TheCommittee of Principal Chief Commissioners of Customs or ChiefCommissioners of Customs may, of its own motion, call for andexamine the record of any proceeding in which a PrincipalCommissioner of Customs or Commissioner of Customs as anadjudicating authority has passed any decision or order under thisAct for the purpose of satisfying itself as to the legality or proprietyof any such decision or order and may, by order, direct suchCommissioner or any other Commissioner to apply to the AppellateTribunal for the determination of such points arising out of thedecision or order as may be specified by the Committee ofPrincipal Chief Commissioners of Customs or ChiefCommissioners of Customs in its order:

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AProvided that where the Committee of Principal ChiefCommissioners of Customs or Chief Commissioners of Customsdiffers in its opinion as to the legality or propriety of the decisionor order of the Principal Commissioner of Customs orCommissioner of Customs, it shall state the point or points onwhich it differs and make a reference to the Board which, afterBconsidering the facts of the decision or order passed by the PrincipalCommissioner of Customs or Commissioner of Customs, if is ofthe opinion that the decision or order passed by the PrincipalCommissioner of Customs or Commissioner of Customs is notlegal or proper, may, by order, direct such Commissioner or anyCother Commissioner to apply to the Appellate Tribunal for thedetermination of such points arising out of the decision or order,as may be specified in its order.

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(2) The Principal Commissioner of Customs or Commissioner ofCustoms may, of his own motion, call for and examine the recordof any proceeding in which an adjudicating authority subordinate D

to him has passed any decision or order under this Act for thepurpose of satisfying himself as to the legality or propriety of anysuch decision or order and may, by order, directsuch authority orany officer of customs subordinate to him to apply totheCommissioner (Appeals) for the determination of such points E

arising out of thedecision or order as may be specified by thePrincipal Commissioner of Customs or Commissioner of Customsin his order.

(3) Every order under sub-section (1) or sub-section (2), as thecase may be, shall be made within a period of three months fromthe date of communication of the decision or order of theadjudicating authority:

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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-Gsection (2), the adjudicating authority or any officer of customsauthorised in this behalf by the Principal Commissioner of Customsor Commissioner of Customs makes an application to the AppellateTribunal or the Commissioner (Appeals) within a period of onemonth from the date of communication of the order under sub-Hsection (1) or sub-section (2) to the adjudicating authority, such application shall be heard by the Appellate Tribunal or theCommissioner (Appeals) as the case may be, as if such applicationswere an appeal made against the decision or order of theadjudicating authority and the provisions of this Act regardingappeals, including the provisions of sub-section (4) of section 129Ashall, so far as may be, apply to such application.”

53.2. For clarification, we deem it appropriate to observe thatsuch enactments dealing with several areas of commerce and fiscalimplications, like the Customs Act, 1962 and the Central Excise Act,1944[17], do carry akin provisions reserving a residual power in the highestcontrolling authority of the Department, apart from the appellate powersof the departmental Appellate Authority or the Appellate Tribunal andapart from the powers of revision of the Central Government. Suchresidual power, as conferred by Section 129D of the Customs Act orSection 35E of Central Excise Act, is essentially to serve the purposethat the highest controlling authority of the Department (or a Committeeof such highest authorities) satisfies itself as to the legality and proprietyof any decision taken by the subordinate authority and, in case it findsany points arising from the decision in question, to direct the authoritypassing such order or any other subordinate authority to apply to theappellate forum for determination of such points/questions. In the schemeof the Customs Act, the power of revision is reserved for the CentralGovernment, as per Section 129DD thereof. Similar power of revisionin the Central Government could be seen in Section 35EE of the CentralExcise 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 betaken up before the appellate forum, is that of revision stricto sensu.However, it does not appear necessary to delve further on this aspect inthis judgement because, as noticed, it is not in dispute that theCommissioner could have exercised such power under Section 129D ofthe Customs Act. In fact, we are unable to comprehend as to whatprecisely was the outcome of the detailed discussion by the High Courtconcerning the nature of power under Section 129D(2) because it hadnot been the finding that the orders dated 01.10.2020 were sufferingfrom any want of jurisdiction or if the Commissioner, while passing thesaid orders, transgressed the bounds of his authority.

54. The other aspect commented upon by the High Court hadbeen about the manner and time of passing of the said order when thematter was sub judice in the High Court.

17 Hereinafter also referred to as ‘the Central Excise Act’.

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A54.1. Coming to the question of propriety in passing of the ordersdated 01.10.2020 by the said Commissioner despite being aware of thependency of the writ petitions in the High Court, in our view, the commentsof the High Court, even when not incorrect in general application, do notappear apt and apposite to the facts and in the circumstances of thepresent case. In other words, though we are at one with the High CourtBthat, ordinarily, when the matter is sub judice in the higher forum andthat too before the Constitutional Court, the executive authorities shouldnot attempt to bring about a new state of affairs without taking permissionfrom the Court and/or bringing the relevant facts to the notice of theCourt. However, even in this regard, before pronouncing on the improprietyCon the part of an executive authority who had done anything withoutprior information to the Court or without taking Court’s permission, allthe relevant surroundings factors are also required to be examined so asto find as to whether such an action was calculated at interference withthe administration of justice or was a bona fide exercise of power in thegiven circumstances.D

54.2. In the present case, though the High Court had issued noticein the writ petitions on 25.09.2020 and placed the petitions on 06.10.2020but, it was clear on the face of record that the DGFT was taking seriousexception to the orders-in-original dated 28.08.2020 and it was beingasserted that the said orders were in the teeth of the pronouncement of Ethis Court in the case of Agricas (supra). Indisputably, the Commissionerhad available with him three months’ time to pass the order under Section129D(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 importerspreferred the writ petitions questioning the communication of DGFT

Fand the denial of release of goods; and sought mandamus for such release.Such a prayer for mandamus was effectively a prayer for execution ofthe orders-in-original dated 28.08.2020. The High Court found it unjustifiedon the part of the Department to suggest that the writ petitions wererendered infructuous because of the orders dated 01.10.2020; and to this extent, we are again at one with the High Court because, on theGstrength of any order passed by the Commissioner during the pendencyof the writ petitions, it could not have been claimed that the Department,by its own actions, made the writ petitions meaningless. However, sucha submission on the part of the respondents of the writ petition, even ifunwarranted, could not have taken the worth and value out of ordersH

dated 01.10.2020; and, at the same time, the High Court could not haveignored the other material circumstances.

54.3. One of the fundamental and material circumstance, whichthe High Court totally omitted to consider, was that the writ petitionswere filed as if seeking execution of the orders-in-original and that if thewrit, 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 AppellateAuthority; and if, for any reason, the orders-in-original were to beinterfered with at a later stage in the appellate forum, irreparable damagewould have been done because the goods would have been released forthe domestic market. (As noticed, it has indeed happened to a largeextent in present cases, with release of a substantial quantity of goods ofthe respondent-importers).

54.4. The purpose of our comments foregoing is that even whilethe High Court was right in questioning the fact that the Commissionerchose to pass the order when the matter was sub judice, the HighCourt missed out the relevant feature that the importers had preferredthe writ petitions essentially to pre-empt any further proceedings by thestatutory authority concerned under the Customs Act. In other words,the invocation of writ jurisdiction by the importers was itself questionable.

55. Noticeable it is that the High Court, even after making somescathing comments on the question of propriety against the Commissioner,took up the points stated in the orders dated 01.10.2020 one by one andindicated its views that the points so raised were baseless and/or untenable.However, the High Court was also conscious of the fact that the saidorders dated 01.10.2020 were not in challenge before it and the appealspreferred pursuant to those orders shall have to be examined by theAppellate Authority. Thus, the High Court qualified all its findings inparagraph 36 of the impugned order as being of its prima facie impressionand specifically left the matter open for examination by the AppellateAuthority.

55.1. However, when the Appellate Authority ultimately passedthe 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 timethe High Court, in its impugned interim order dated 05.01.2021, madethe observations that the decision by the Appellate Authority was at AB

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Aloggerheads with its earlier findings and directions. The High Court evenobserved that its findings in the order dated 15.10.2020 could not havebeen regarded as prima facie finding only; and when the goods weredirected to be released forthwith, it was beyond comprehension as tohow a lower Appellate Authority could have nullified such directions byordering absolute confiscation.B

56. We find it very difficult to reconcile the observations of theHigh Court in these matters. Paragraph 36 of the order dated 15.10.2020left nothing for a doubt with anyone that whatever the High Court hadobserved in that order as regards the orders dated 01.10.2020 was notof final determination; and the matter was left open, to be decided by theCCommissioner (Appeals). Significantly, if the purport of the order dated15.10.2020 had been that even if Commissioner (Appeals) would bedeciding the matter in appeal, he could not order absolute confiscation ofthe goods because the High Court had ordered their release, it wouldimmediately lead to the position that the order dated 15.10.2020 of theDHigh Court carried inherent contradictions. In other words, if release ofgoods was the only option available with the authorities, the materialpart of consideration of the Appellate Authority had already been renderedredundant.

57. For what has been discussed hereinabove, it is at onceclearEthat when the matter was left for decision by the Commissioner (Appeals),there was neither any occasion nor any justification for the High Courtto pass the order for release of the goods for the simple reason that anyorder for release of goods was to render the material part of the mattera fait accompli. This, simply, could not have been done. Putting itdifferently, a little pause after paragraph 36 of the impugned orderF15.10.2020 and before the directions in the next paragraph would makeit clear that for what had been observed in the said paragraph 36 of theimpugned order (as regards leaving of the matter for decision by theAppellate Authority), any direction for release of goods pursuant to theorder-in-original could not have been issued. To put it in yet other words,Gdespite making several observations so as to indicate that the revieworders dated 01.10.2020 were unjustified and the points stated thereinwere baseless or untenable, the High Court stopped short of settingaside the orders dated 01.10.2020 and also did not pronounce finally onthe validity of the orders-in-original dated 28.08.2020 because the saidorders-in-original were the subject matter of appeal. Having rightly leftH

the matter for decision in appeal, the High Court committed a seriouserror in yet issuing such a writ as if the orders-in-original dated 28.08.2020had become rule of the Court and as if the Court was ensuring its dueexecution. It gets, perforce, reiterated that if the orders-in-original dated28.08.2020 were to be executed under the mandate of the High Court,the appeals were going to be practically redundant after release of thegoods and nothing material was to remain for decision by the AppellateAuthority on the main subject matter of the appeal.

58. What has been indicated from different angles hereinaboveleads only to one conclusion that the order dated 15.10.2020 passed bythe High Court suffers from inherent contradictions and inconsistencies;and cannot be approved.

59. Apart from the fundamental flaws of contradictions, the orderpassed by the High Court on 15.10.2020 further suffers from theshortcomings that while issuing mandamus for release of goods, the HighCourt omitted to take into account the relevant facts as also the materialfactors concerning the imports in question, including the reasons forissuance of the notifications in question that the same were to safeguardthe agriculture market economy of India; and the observations and findingsof this Court in the case of Agricas (supra). An examination of theimpugned order dated 15.10.2020 in its entirety makes it clear that thereasons for directing release of goods in favour of the importers are tobe found only in paragraph 37 thereof. Therein, the High Court hastaken into account a few factors standing in favour of the importers likethe orders-in-original holding the field; the importers having made thenecessary payments; and the importers incurring expenditure becauseof warehousing. An additional factor had been the High Court’sdissatisfaction that the orders dated 01.10.2020 were passed in animproper manner and grounds given therein were not justifying thewithholding of the goods. While proceeding on these reasons andconsiderations, it appears that the other overriding factors like the interestof domestic agriculture market economy as also the findings andobservations of this Court in Agricas (supra) totally escaped the attentionof the High Court. Thus, the impugned order dated 15.10.2020, havingbeen passed while ignoring the relevant considerations, cannot beapproved.

60. For what has been observed hereinabove, the other orderdated 05.01.2021 passed by the High Court in the second writ petition A

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Afiled by the importer M/s. Raj Grow Impex also deserves to bedisapproved.

60.1. As noticed, in the said order dated 05.01.2021, the HighCourt even observed that the Appellate Authority wrongly construedthat its earlier decision for release of goods has been prima facie; andfurther questioned as to how a lower Appellate Authority could haveBnullified its directions for release of goods by ordering confiscation. Theconstruction of its own order dated 15.10.2020, as put by the High Courtin its later order dated 05.01.2021, only fortifies the inconsistencies wehave indicated hereinabove. This apart, the expression ‘prima facie’ inregard to the order of the High Court dated 15.10.2020 had not been aCcreation of the Appellate Authority but had been stated in unequivocalterms, twice over, in paragraph 36 of the order dated 15.10.2020, wherethe High Court also made it clear that final views were not being expressedbecause the matter was to be examined in appeal.

60.2. Apart from the above, while entertaining the said secondwrit petition, the High Court seems to have also omitted to consider thatDthe said writ petition was filed against the order-in-appeal passed by theAppellate Authority and the alternative remedy of regular statutory appealto CESTAT was available to the importer. In our view, on considerationof the relevant facts and circumstances in their correct perspective, theHigh Court would not have entertained the writ petitions so filed in theseEmatters.61. We are, therefore, clearly of the view that the impugned ordersdated 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.

62. However, merely setting aside the orders passed by the HighCourt does not bring finality to these appeals because, as noticed, theFcore issues still remain as to whether the goods in question are or wereliable to absolute confiscation or could be or could have been releasedby recovery of fine in lieu of confiscation?

62.1. For dealing with the core issues, we need to examine in thefirst place as to whether the goods in question fall in the category ofGprohibited goods, as argued on behalf of the appellants or in the categoryof restricted goods, as argued on behalf of the importers.

Whether the goods in question are of ‘prohibited goods’category?

63. For dealing with the questions relating to the treatment of theHgoods in question, it shall be apposite to recapitulate that in the case of Agricas (supra), this Court, after dealing with a variety of issues relatingto the validity of the notifications dated 29.03.2019 and the correspondingtrade notice dated 16.04.2019, specifically referred to the purpose behindand the purport of the notifications; and it was noticed that the notificationswere aimed at striking a balance between the farmers of the country onone hand and the importers on the other, particularly when large-scaleimports were adversely impacting the interests of the farmers due to fallin prices in the local market. The repercussions of excessive importsunder the cover of the interim orders in the past were taken note of andit was also noticed that the restrictions were imposed to prevent panicdisposal in the local markets. As the notifications provided for quantitativerestriction on import of various peas and pulses in the range of 1.5-2lakh MTs against licence, a rather preposterous line of arguments wasadopted by the importers before this Court that the total quantitiesspecified in each of the notifications was ‘per licence’ and not for the‘total imports’. Such contentions were rejected by this Court after findingno ambiguity in the notifications and holding clearly that the expression‘total quantity’ did not refer to the ‘quantity per licence’. This Courtfurther held in no uncertain terms that the impugned notifications werevalid for having been issued in accordance with the power conferred inthe Central Government in terms of sub-section (2) of Section 3 of theFTDR Act. Yet further, this Court rejected the submissions that theimporters had acted bona fide in importing the goods in question; andthe imports, made under the cover of interim orders, were held to becontrary to the notifications and the trade notice issued under the FTDRAct but, were left to be dealt with under the provisions of the CustomsAct.

64. In view of the findings and requirements aforesaid and inview of the contentions of the respective parties relating to the treatmentof goods imported under the cover of interim orders, it is necessary totake note of the relevant statutory provisions, particularly those containedin Section 3 of the FTDR Act and Sections 2(33), 11(1) and 111(d) ofthe Customs Act. These relevant provisions read as under: - Section 3 of the Foreign Trade (Development andRegulation) Act, 1992

“3. Powers to make provisions relating to imports andexports.- (1) The Central Government may, by Order publishedin the Official Gazette, make provision for the development and A

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Aregulation of foreign trade by facilitating imports and increasingexports.

(2) The Central Government may also, by Order published in theOfficial Gazette, make provision for prohibiting, restricting orotherwise regulating, in all cases or in specified classes of casesBand subject to such exceptions, if any, as may be made by orunder the Order, the import or export of goods or services ortechnology:

Provided that the provisions of this sub-section shall be applicable,in case of import or export of services or technology, only whenCthe service or technology provider is availing benefits under theforeign trade policy or is dealing with specified services or specifiedtechnologies.

(3) All goods to which any Order under sub-section (2) appliesshall be deemed to be goods the import or export of which hasDbeen prohibited under section 11 of the Customs Act, 1962 (52 of1962) 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 benecessary for import or export of any goods, nor any goods shallEbe prohibited for import or export except, as may be requiredunder 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 ofwhich is subject to any prohibition under this Act or any other lawFfor the time being in force but does not include any such goods inrespect of which the conditions subject to which the goods arepermitted 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 todo for any of the purposes specified in sub-section (2), it may, bynotification in the Official Gazette, prohibit either absolutely orsubject to such conditions (to be fulfilled before or after clearance)as may be specified in the notification, the import or export ofHgoods of any specified description.

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Section 111(d) of the Customs Act, 1962

“111. Confiscation of improperly imported goods, etc.—Thefollowing goods brought from a place outside India shall be liableto confiscation:- xxx xxxxxx (d) any goods which are imported or attempted to be imported orare brought within the Indian customs waters for the purpose ofbeing imported, contrary to any prohibition imposed by or underthis Act or any other law for the time being in force; xxx xxx xxx”

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

66. 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 quantitativerestrictions and there had not been any other order or notificationprohibiting the import of these goods. The contentions remain baselessand are required to be rejected.

66.1. A bare look at the notifications in question and the findingsof this Court in Agricas (supra) make it clear that only the particularrestricted quantity of the commodities covered by the said notificationscould have been imported, like those upto 1.5 lakh MTs; and that too,under a licence. The learned ASG has rightly pointed out with referenceto the decision in PTR Exports (supra) that an applicant has no vestedright to have export or import licence; and granting of licence depends A

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Aupon the policy prevalent on the date. The learned ASG has furtherrightly submitted, with reference to the decision in S.B. International(supra), that granting a licence to import is not a matter of formality; andthe authorities have to satisfy themselves that the application satisfies allthe 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 mechanicalexercise nor a formality. On receipt of the application, theauthorities have to satisfy themselves about the correctness ofthe contents of the application. They also have to satisfythemselves that the application satisfies all the requirements ofCthe scheme and the other applicable provisions of law, if any….”

66.2. As noticed, only the particular restricted quantity of thecommodities covered by the said notifications could have been importedand that too, under a licence. Therefore, any import within the cap (likethat of 1.5 lakh MTs) under a licence is the import of restricted goodsDbut, every import of goods in excess of the cap so provided by thenotifications, is not that of restricted goods but is clearly an import ofprohibited goods.

67. The applicable principles of law relating to the categorisationof goods as ‘prohibited’ or ‘other than prohibited’ have been clearlyEenunciated by this Court in the decisions referred by the learned ASG.

67.1. In the case of Sheikh Mohd. Omer (supra), a particularmare was found to be not a ‘pet animal’and, therefore, its import wasfound to be violative of the Imports Control Order. It was, however, anadmitted position that the import of horses or mares was not prohibitedFas such. The question was as to whether by making such import, theappellant contravened Section 111(d) read with Section 125 of theCustoms Act. While answering the question, this Court held that anyrestriction on import or export is to an extent a prohibition; and theexpression “any prohibition” in Section 111(d) of the Customs Act includesGrestrictions. This Court further underscored that “any prohibition” meansevery prohibition; and restriction is also a type of prohibition. This Court,inter alia, said, - “11…. While elaborating his argument the learned counsel invitedour attention to the fact that while Section 111(d) of the Act usesthe word “prohibition”. Section 3 of the Imports and Exports H

(Control) Act, 1947, takes in not merely prohibition of imports andexports, it also includes “restrictions or otherwise controlling” allimports and exports. According to him restrictions cannot beconsidered as prohibition more particularly under the Imports andExports (Control) Act, 1947, as that statute deals with “restrictionsor otherwise controlling” separately from prohibitions. We arenot impressed with this argument. What clause (d) of Section 111says is that any goods which are imported or attempted to beimported contrary to “any prohibition imposed by any law for thetime being in force in this country” is liable to be confiscated.“Any prohibition” referred to in that section applies toevery type of “prohibition”. That prohibition may becomplete or partial. Any restriction on import or export isto an extent a prohibition. The expression “anyprohibition” in Section 111(d) of the Customs Act, 1962includes restrictions. Merely because Section 3 of the Importsand Exports (Control) Act, 1947 uses three different expressions“prohibiting”, “restricting” or “otherwise controlling”, we cannotcut down the amplitude of the word “any prohibition” in Section111(d) of the Act. “Any prohibition” means every prohibition.In other words all types of prohibitions. Restriction is onetype of prohibition…..”

67.2. In the case of Om Prakash Bhatia (supra), over-invoicingand fraudulent claim of drawback by the exporter was held to be that ofexporting prohibited goods with reference to the requirements of ForeignExchange Regulation Act, 1973, while rejecting the contention of theexporter that Section 113(d) of the Customs Act was not applicable asthe goods were not prohibited as such. A line of argument has beensuggested on behalf of one of the respondents that the order ultimatelypassed in the case of Om Prakash Bhatia operates against the standof the appellants. It is true that in that case, redemption fine and penaltywas imposed but, the exercise of discretion in a particular manner relatedto the facts of that case. These aspects relating to the exercise ofdiscretion shall be considered a little later, while dealing with the questionas to whether the goods in question are liable to absolute confiscation orcould be released on redemption fine. Suffice it to notice for the presentpurpose that the export attempted in violation of the conditions was heldto be taking the goods in the category of ‘prohibited’ goods.

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A67.3. In the case of Brooks International (supra), the marketvalue of goods under export was found to be less than the amount ofdrawback claimed. The question was whether such goods could beconfiscated for violation of the provisions of the Customs Act? Whileconsidering the import of the definition of “prohibited goods” in Section2(33) and of Section 11 of the Customs Act, this Court referred to theBfollowing exposition in the case of Om Prakash Bhatia (supra): -

“10. From the aforesaid definition, it can be stated that: (a) ifthere is any prohibition of import or export of goods under the Actor any other law for the time being in force, it would be consideredto be prohibited goods; and (b) this would not include any suchCgoods in respect of which the conditions, subject to which thegoods are imported or exported, have been complied with. Thiswould mean that if the conditions prescribed for import or exportof goods are not complied with, it would be considered to beprohibited goods. This would also be clear from Section 11 whichDempowers the Central Government to prohibit either ‘absolutely’or ‘subject to such conditions’ to be fulfilled before or afterclearance, as may be specified in the notification, the import orexport of the goods of any specified description. The notificationcan be issued for the purposes specified in sub-section (2). Hence,prohibition of importation or exportation could be subjectEto certain prescribed conditions to be fulfilled before orafter clearance of goods. If conditions are not fulfilled, itmay amount to prohibited goods….”

F67.4. Learned counsel for the importers have strongly relied upona 3-Judge Bench decision of this Court in Atul Automations (supra) tosubmit that therein, the goods imported without authorisation were heldto be ‘restricted’ goods; and the same principle applies to the subjectgoods when they have been imported without import licence and hence,they cannot be taken as prohibited goods. The submissions have beenGcountered by the ASG that the said decision related to the matter underthe FTDR Act and different facts and different regulations concerningthe goods were involved therein.

67.4.1. In the case of Atul Automations (supra), the goodsimported without authorisation were found to be not ‘prohibited’ butH

‘restricted’ items for import and the orders for their release with paymentof fine in lieu of confiscation were approved. However, a close look atthe factual aspects puts it beyond the pale of doubt that therein, thisCourt has neither laid down the law that in every case of import withoutauthorisation, the goods are to be treated as restricted and not prohibitednor that the goods so imported without authorisation are always to bereleased on payment of redemption fine.

67.4.2. The factual aspect of Atul Automations (supra) makes itclear that the imported Multi-Function Devices, Photocopiers and Printers(MFDs) involved in that case were restricted items, importable againstauthorisation under Clause 2.31 of the Foreign Trade Policy. Thus, theMFDs were found to be restricted items for import and not prohibiteditems. That had not been the case where import was restricted in termsof quantity in the manner that the goods were importable only up to aparticular extent of quantity and that too against a licence. It was alsofound therein that the Central Government had permitted the import ofused MFDs having utility for at least five years, keeping in mind thatthey were not being manufactured in the country.

67.4.3. The present case is of an entirely different restrictionwhere import of the referred peas/pulses has been restricted to a particularquantity and could be made only against a licence. The letter and spiritof this restriction, as expounded by this Court earlier, is that, any importbeyond the specified quantity is clearly impermissible and is prohibited.This Court has highlighted the adverse impact of excessive quantity ofimports of these commodities on the agricultural market economy in thecase of Agricas (supra) whereas, it had not been the case in AtulAutomations (supra) that the import was otherwise likely to affect thedomestic market economy. In contrast to the case of Atul Automations,where the goods were permitted to be imported (albeit with authorisation)for the reason that they were not manufactured in the country, in thepresent case, the underlying feature for restricting the imports by quantumhas been the availability of excessive stocks and adverse impact on theprice obtainable by the farmers of the country. The decision in AtulAutomations (supra), by no stretch of imagination, could be consideredhaving any application to the present case.

68. Thus, we have no hesitation in holding that the goods inquestion, having been imported in contravention of the notifications dated29.03.2019 and trade notice dated 16.04.2019; and being of import beyond AB

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68.1. The unnecessary and baseless arguments raised on behalfof the importers that the goods in question are of ‘restricted’ category,with reference to the expression ‘restricted’ having been used for theBpurpose of the notifications in question or with reference to the generalanswers given by DGFT or other provisions of FTDR Act are, therefore,rejected. The goods in question fall in the category of ‘prohibited goods’.

Whether the goods in question are liable to absoluteconfiscation?

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69. Once it is clear that the goods in question are improperlyimported and fall in the category of ‘prohibited goods’, the provisionscontained in Chapter XIV of the Customs Act, 1962 come into operationand the subject goods are liable to confiscation apart from otherconsequences. Having regard to the contentions urged and theDbackground features of these appeals, the root question is as to how thegoods in question are to be dealt with under Section 125 of the CustomsAct? The relevant part of Section 125 of the Customs Act reads asunder: - Section 125(1) of the Customs Act, 1962

E“125. Option to pay fine in lieu of confiscation.—(1)Whenever confiscation of any goods is authorised by this Act, theofficer adjudging it may, in the case of any goods, the importationor exportation whereof is prohibited under this Act or under anyother law for the time being in force, and shall, in the case of anyFother goods, give to the owner of the goods or, where such owneris not known, the person from whose possession or custody suchgoods have been seized, an option to pay in lieu of confiscationsuch fine as the said officer thinks fit:

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G69.1. A bare reading of the provision aforesaid makes it evidentthat a clear distinction is made between ‘prohibited goods’ and ‘othergoods’. As has rightly been pointed out, the latter part of Section 125

18 In the passing, we may observe that even in the orders-in-original dated 28.08.2020by the Adjudicating Authority, it was clearly held that the goods in question wereHprohibited goods (vide the findings reproduced hereinbefore in paragraph 22.2).

obligates the release of confiscated goods (i.e., other than prohibitedgoods) against redemption fine but, the earlier part of this provision makesno such compulsion as regards the prohibited goods; and it is left to thediscretion of the Adjudicating Authority that it may give an option forpayment of fine in lieu of confiscation. It is innate in this provision that ifthe Adjudicating Authority does not choose to give such an option, theresult would be of absolute confiscation. The Adjudicating Authority inthe present matters had given such an option of payment of fine in lieuof confiscation with imposition of penalty whereas the Appellate Authorityhas found faults in such exercise of discretion and has ordered absoluteconfiscation with enhancement of the amount of penalty. This takes usto the principles to be applied for exercise of the discretion so availablein the first part of Section 125(1) of the Customs Act.

70. The principles relating to the exercise of discretion by anauthority are expounded in various decisions cited by the parties. Wemay take note of the relevant expositions as follows:

70.1. In the case of Sant Raj (supra), referred to and relied uponby both the sides, this Court dealt with the matter as regards the discretionof Labour Court to award compensation in lieu of reinstatement andobserved as under: - “4…..Whenever, it is said that something has to be donewithin the discretion of the authority then that somethinghas to be done according to the rules of reason and justiceand not according to private opinion, according to law andnot humor. It is to be not arbitrary, vague and fanciful but legaland regular and it must be exercised within the limit to which anhonest man to the discharge of his office ought to find himself…..Discretion means sound discretion guided by law. It must begoverned by rule, not by humor, it must not be arbitrary, vagueand fanciful…..”

70.2. In the case of Reliance Airport Developers (supra), thisCourt, with reference to various pronouncements pertaining to the legalconnotations of ‘discretion’ and governing principles for exercise ofdiscretion observed, inter alia, as under: - “30. Discretion, in general, is the discernment of what is right andproper. It denotes knowledge and prudence, that discernment A

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Awhich enables a person to judge critically of what is correct andproper united with caution; nice discernment, and judgment directedby circumspection: deliberate judgment; soundness of judgment;a science or understanding to discern between falsity and truth,between wrong and right, between shadow and substance,between equity and colourable glosses and pretences, and not toBdo according to the will and private affections of persons.”

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70.3. In the case of U.P. State Road Transport Corporation(supra), while dealing with the case of non-exercise of discretion by theauthority, this Court expounded on the contours of discretion as also onlimitations on the powers of the Courts when the matter is of the discretionCof the competent authority, in the following terms: -

“12. The High Court was equally in error in directing the Corporationto offer alternative job to drivers who are found to be medicallyunfit before dispensing with their services. The court cannotdictate the decision of the statutory authority that ought toDbe made in the exercise of discretion in a given case. Thecourt cannot direct the statutory authority to exercise thediscretion in a particular manner not expressly required bylaw.The court could only command the statutory authority by awrit of mandamus to perform its duty by exercising the discretionEaccording to law. Whether alternative job is to be offered or not isa matter left to the discretion of the competent authority of theCorporation and the Corporation has to exercise the discretion inindividual cases. The court cannot command the Corporation toexercise discretion in a particular manner and in favour of aparticular person. That would be beyond the jurisdiction of theFcourt.

13. In the instant case, the Corporation has denied itself thediscretion to offer an alternative job which the regulation requiresit to exercise in individual cases of retrenchment. ……It may bestated that the statutory discretion cannot be fettered by self-Gcreated rules or policy. Although it is open to an authority to whichdiscretion has been entrusted to lay down the norms or rules toregulate exercise of discretion it cannot, however, deny itself thediscretion which the statute requires it to exercise in individualcases. ……

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“15.……Every discretion conferred by statute on a holderof public office must be exercised in furtherance ofaccomplishment of purpose of the power. The purpose ofdiscretionary decision making under Regulation 17(3) was intendedto rehabilitate the disabled drivers to the extent possible and withinthe abovesaid constraints. The Corporation therefore, cannot actmechanically. The discretion should not be exercisedaccording to whim, caprice or ritual. The discretion should beexercised reasonably and rationally. It should be exercised faithfullyand impartially. There should be proper value judgment withfairness and equity…..”

70.4. In the case of Glaxo Smith Kline (supra), this Courtexpounded on the principles that the Constitutional Courts, even inexercise of their wide jurisdictions, cannot disregard the substantiveprovisions of statute while observing, inter alia, as under: - “12. Indubitably, the powers of the High Court under Article 226of the Constitution are wide, but certainly not wider than the plenarypowers bestowed on this Court under Article 142 of theConstitution. Article 142 is a conglomeration and repository of theentire judicial powers under the Constitution, to do complete justiceto the parties.

Even while exercising that power, this Court is required to bear inmind the legislative intent and not to render the statutory provisionotiose.”

71. Thus, when it comes to discretion, the exercise thereof has tobe guided by law; has to be according to the rules of reason and justice;and has to be based on the relevant considerations. The exercise ofdiscretion is essentially the discernment of what is right and proper; andsuch discernment is the critical and cautious judgment of what is correctand proper by differentiating between shadow and substance as alsobetween equity and pretence. A holder of public office, when exercisingdiscretion conferred by the statute, has to ensure that such exercise is infurtherance of accomplishment of the purpose underlying confermentof such power. The requirements of reasonableness, rationality,impartiality, fairness and equity are inherent in any exercise of discretion;such an exercise can never be according to the private opinion.

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A71.1. It is hardly of any debate that discretion has to be exercisedjudiciously and, for that matter, all the facts and all the relevant surroundingfactors as also the implication of exercise of discretion either way haveto be properly weighed and a balanced decision is required to be taken.

72. It is true that the statutory authority cannot be directed toBexercise its discretion in a particular manner but, as noticed in the presentcase, the exercise of discretion by the Adjudicating Authority has beenquestioned on various grounds and the Appellate Authority has, in fact,set aside the orders-in-original whereby the Adjudicating Authority hadexercised the discretion to release the goods with redemption fine andpenalty. Having found that the goods in question fall in the category ofC‘prohibited goods’ coupled with the relevant background aspects, includingthe reasons behind issuance of the notifications in question and the findingsof this Court in Agricas (supra), the question is as to whether the exerciseof discretion by the Adjudicating Authority in these matters, giving optionof payment of fine in lieu of confiscation, could be approved?D

73. As regards the question at hand, we may usefully take note ofthe relevant decisions cited by learned counsel for the parties. However,it may be observed that the decision of the Punjab and Haryana HighCourt in Horizon Ferro Alloys (supra), dealing with a particular classof goods that were ‘restricted’ and not ‘prohibited’, needs no elaboration.E

74. On behalf of the appellants, the learned ASG has relied uponthe decision in the case of Garg Woollen Mills to support the contentionthat the subject goods deserve to be confiscated absolutely. In that case,the Additional Collector of Customs had directed confiscation of goodswhen it was found that there had been an attempt of fraudulentlyFimporting huge quantity of raw material in the name of non-existentunits; and serviceable garments were concealed against mutilatedgarments. That being a case where fraud was involved, the order ofabsolute confiscation was not interfered with. This Court, inter alia,observed and held as under: - G“5. Another contention that was urged by Shri Mahabir Singhwas that the Additional Collector, as also the Tribunal, have failedto take into consideration the provisions contained in Section 125of the Act which prescribes that whenever confiscation of anygoods is authorised by the Act, the officer adjudging it may, in thecase of any goods, the importation or exportation whereof isHprohibited under the Act or under any other law for the time being

in force, and shall, in the case of any other goods, give to theowner of the goods or, where such owner is not known, the personfrom whose possession or custody such goods have been seized,an option to pay in lieu of confiscation such fine as the said officerthinks fit. We do not find any merit in this contention of Mr MahabirSingh. Under Section 125 a discretion has been conferred on theofficer to give the option to pay fine in lieu of confiscation incases of goods, the importation or exportation whereof is prohibitedunder the Act or under any other law for the time being in forcebut in respect of other goods the officer is obliged to give such anoption. In the present case, having regard to the facts andcircumstances in which the goods were said to be imported andthe patent fraud committed in importing the goods, the AdditionalCollector has found that the goods had been imported in violationof the provisions of the Import (Control) Order, 1955 read withSection 3(1) of the Import and Export (Control) Act, 1947. In thecircumstances he considered it appropriate to direct absoluteconfiscation of the goods which indicates that he did not considerit a fit case for exercise of his discretion to give an option to paythe redemption fine under Section 125 of the Act. The Tribunalalso felt that since this was a case in which fraud wasinvolved, the order of the Additional Collector directingabsolute confiscation of the goods did not call for anyinterference. We do not find any reason to take a differentview.”

75. The learned ASG has also referred to the decision in the caseof Shri Amman Dhall Mills (supra) where the Kerala High Court hasdealt with the imports made in violation of the subsequent notificationsconcerning the same commodities as are involved in the present case.Therein, on 22.04.2020, the importer applied for issuance of license forimport of 200 MTs of green peas but, before actual grant of license toimport, filed a bill of entry dated 23.06.2020 for clearance of goodsdeclared as Canadian Green Peas. As per declaration in the bill of entry,the quantity declared was 210 MTs with declared assessable value ofRs. 79,28,444/-. The Commissioner of Customs, Kochi, by his orderdated 16.10.2020, made on the request of the importer for release ofgoods, noted that DGFT notification dated 18.12.2019 had revised the AB

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Apolicy for import of peas; further policy conditions as regards minimumimport price and annual fiscal quota of Rs. 1.5 lakh MTs wereincorporated and the imports were permitted through Calcutta seaport.The importer, who had imported the subject goods after the issue ofnotifications dated 18.12.2019 and 28.03.2020, filed a writ petition in theHigh Court seeking provisional release of the subject goods but this prayerBfor provisional release was declined. The importer filed an intra-courtappeal that was also dismissed. However, the High Court desired thatthe customs authorities proceed with the adjudication proceedingsexpeditiously. The Commissioner of Customs, in his order dated16.10.2020, while considering the request of importer for provisionalCrelease, referred to three conditions in the notification dated 18.12.2019as modified in the notification dated 28.03.2020; and ordered absoluteconfiscation of the goods for contravention of the provisions of Section111(d) of the Customs Act read with Section 3(3) of the FTDR Act; andimposed a penalty of Rs. 4 lakhs. The importer challenged the order ofCommissioner before the Appellate Tribunal. The Appellate TribunalDobserved that the subject goods, having been imported in violation of theconditions of EXIM Policy, acquired the nature of prohibited goods interms of Section 2(33) of the Customs Act and were liable to confiscationin terms of Section 111(d). Thereafter, the Tribunal formulated thequestion as to whether the Adjudicating Authority had an option to allowEsuch goods to be redeemed on payment of fine in lieu of confiscation.After referring to the judgment of this Court in the case of AtulAutomations (supra) and the order passed by the Bombay High Courtin the case of M/s. Harihar Collections (impugned herein), the Tribunaldirected redemption of impugned goods on payment of Rs. 12 lakhs asfine and confirmed the penalty of Rs. 4 lakhs imposed by theFCommissioner.

75.1. In cross-appeals by the importer and by the revenue, theKerala High Court consciously took note of the decision of this Court inAgricas (supra) and also the fact that the order so passed by the BombayHigh Court in the case of M/s. Harihar Collections had been stayed byGthis Court in the present appeals. Thereafter, the High Court proceededto disapprove the order passed by the Appellate Tribunal for release ofgoods, with the following amongst other findings and observations: - “25. We hasten to add, that if in every case goods arereleased on payment of redemption fine, by the primary orH

appellate Tribunal, then such decisions are unsustainablein law and judicial review. In our considered view, exerciseof power and discretion under Section 125 of Customs Act1962, are specific and generally governed by the applicablepolicy, notification etc. Notification dated 18.4.2019 stipulatesrestriction on import of a quantity of 1.5 lakh MT only; stipulatesminimum import price of Rs. 200/- and above CIF per kg and theimport is allowed through Calcutta Sea Port only. These are theconditions which the licensee for import of the goods is expectedto conform. The primary authority has noted that by keeping inview the stand taken by the Union of India before the SupremeCourt in Agricas LLPcase; the available stock position of greenpeas is treated as surplus, and declined release and orderedconfiscation. The further import according to CustomsCommissioner is not needed or alternatively detrimental to theinterest of farmers. He has further noted that in his order dated16.10.2020 that the importer does not conform to any of theconditions applicable for import of green peas. In our consideredview the exercise of above discretion by Customs Commissioneris the question for consideration before the Appellate Tribunal.The Appellate Tribunal on the contrary, as already noted,considered matters not completely germane for appreciating themode and manner of exercise of authority by the Commissionerof customs, but, however, recorded that the subject goods can betreated as restricted goods and can be released on payment ofredemption fine. …. The Tribunal fell in clear error of law. Byholding that release of goods is the only option to CustomsCommissioner in the case on hand the language of Section 125 ofCustoms Act is fully liberalised. The reasoning of Tribunal isadopted both by other primary authority/Appellate Tribunal, thenExim policy, notifications are defeated and opens floodgates ofthe import Green Peas, and such contingencies are commentedby Supreme Court in Agricas Case. We are of the view that theconsideration of Appellate Tribunal in the case on hand is illegal,ignored relevant notifications, the mandate of FTDR Act andCustoms Act 1962.”

76. On the other hand, the importers have placed heavy relianceupon the decision in the case of Hargovind Das K. Joshi (supra).

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ATherein, a consignment of zip fasteners imported by the appellants wasordered for absolute confiscation by the Additional Collector of Customsand a penalty was also imposed. The order was confirmed by theAppellate Tribunal. In appeal to this Court, three questions were raisedby the appellants, namely, on validity of the order confiscating the goods;on validity of the orders imposing penalty; and failure on the part of theBcustoms authority to give an option to them for redeeming the goods onpayment of fine in lieu of confiscation. This Court rejected the first twocontentions after finding that the order directing confiscation wasunassailable in facts or in law and that the order levying penalty wasalso justified. However, this Court found substance in the third part ofCthe submissions because the Collector of Customs had passed the orderfor absolute confiscation without giving the appellants an option to redeemthe goods on payment of fine. This Court observed that the saidAdjudicating Authority, undoubtedly, had the discretion to give an optionof payment of fine in lieu of confiscation but omitted to consider such adiscretion available with him. In the given circumstances, this CourtDremitted the matter to the Adjudicating Authority to the limited extent asto whether or not to give an option to the importers to redeem theconfiscated goods on payment of fine. In that regard, this Court left itopen for the officer concerned to take a decision one way or the other inaccordance with law, while observing in the last that the officer concernedEwill take into consideration all the relevant circumstances including thesubmission on behalf of the importers that the free import of the goods inquestion had also been allowed, of whatever worth that was.

76.1. From the decision in Hargovind Das K. Joshi (supra), it isnot borne out as to what was the reason for which the goods (zip fasteners)Fbecame subject to confiscation and it appears that at a later point oftime, free import of the item had also been allowed. Be that as it may,what this Court found therein was that the Adjudicating Authority omittedto take into consideration one part of the discretion available for him i.e.,of giving an option for redemption with payment of fine in lieu of confiscation and for that reason alone, the matter was remitted. TheGsaid decision cannot be read as an authority for the proposition that inevery case of confiscation, invariably, the discretion has to be exercisedby the Adjudicating Authority to give an option for redemption by paymentof fine. In our view, the said decision does not make out any case infavour of the importers.H

76.2. In fact, the observations made in Hargovind Das K. Joshi(supra) rather operate against the orders-in-original in the present appealsbecause therein, the Adjudicating Authority, after finding the goods liableto confiscation, straightaway proceeded as if the option for payment offine in lieu of confiscation has to be given and did not consider the otherpart of discretion available with him that the goods could also beconfiscated absolutely.

77. Thus, for what has been noticed above, the Kerala High Courthas approved absolute confiscation of similar goods while following thedecision of this Court in Agricas (supra) and after finding unsustainablethe order of Tribunal for release of goods. In the case of Garg WoollenMills (supra), this Court approved absolute confiscation when fraud wasinvolved. In Hargovind Das K. Joshi (supra), when one part of discretionof Section 125(1) of the Customs Act was not taken into account, thisCourt remitted the matter for proper exercise of discretion.

78. It is true that, ordinarily, when a statutory authority is investedwith discretion, the same deserves to be left for exercise by that authoritybut the significant factors in the present case are that the AdjudicatingAuthority had exercised the discretion in a particular manner withoutregard to the other alternative available; and the Appellate Authority hasfound such exercise of discretion by the Adjudicating Authority whollyunjustified. In the given circumstances, even the course adopted in thecase of Hargovind Das K. Joshi (of remitting the matter forconsideration of omitted part of discretion) cannot be adopted in thepresent appeals; and it becomes inevitable that a final decision is takenherein as to how the subject goods are to be dealt with under Section125 of the Customs Act.

79. As noticed, the exercise of discretion is a critical and solemnexercise, to be undertaken rationally and cautiously and has to be guidedby law; has to be according to the rules of reason and justice; and has tobe based on relevant considerations. The quest has to be to find what isproper. Moreover, an authority acting under the Customs Act, whenexercising discretion conferred by Section 125 thereof, has to ensurethat such exercise is in furtherance of accomplishment of the purposeunderlying conferment of such power. The purpose behind leaving suchdiscretion with the Adjudicating Authority in relation to prohibited goodsis, obviously, to ensure that all the pros and cons shall be weighed beforetaking a final decision for release or absolute confiscation of goods.

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A80. For what has been observed hereinabove, it is but evident thatthe orders-in-original dated 28.08.2020 cannot be said to have beenpassed in a proper exercise of discretion. The Adjudicating Authority didnot even pause to consider if the other alternative of absolute confiscationwas available to it in its discretion as per the first part of Section 125(1)of the Customs Act and proceeded as if it has to give the option ofBpayment of fine in lieu of confiscation. Such exercise of discretion bythe Adjudicating Authority was more of assumptive and ritualistic naturerather than of a conscious as also cautious adherence to the applicableprinciples. The Appellate Authority, on the other hand, has stated variousreasons as to why the option of absolute confiscation was the only properCexercise of discretion in the present matter. We find the reasons assignedby the Appellate Authority, particularly in paragraph 54.3 of the order-in-appeal dated 24.12.2020 (reproduced in point ‘c’ of paragraph 38.2hereinabove) to be fully in accord with the principles of exercise ofdiscretion, as indicated hereinabove and in view of the facts and peculiarcircumstances of this case.D

81. It needs hardly any elaboration to find that the prohibitioninvolved in the present matters, of not allowing the imports of thecommodities in question beyond a particular quantity, was not a prohibitionsimpliciter. It was provided with reference to the requirements ofbalancing the interests of the farmers on the one hand and the importersEon the other. Any inflow of these prohibited goods in the domestic marketis going to have a serious impact on the market economy of the country.The cascading effect of such improper imports in the previous yearunder the cover of interim orders was amply noticed by this Court inAgricas (supra). This Court also held that the imports were not bonaFfide and were made by the importers only for their personal gains.

82. The sum and substance of the matter is that as regards theimports in question, the personal interests of the importers who madeimproper imports are pitted against the interests of national economyand more particularly, the interests of farmers. This factor alone isGsufficient to find the direction in which discretion ought to be exercisedin these matters. When personal business interests of importers clashwith public interest, the former has to, obviously, give way to the latter.Further, not a lengthy discussion is required to say that, if excessiveimproperly imported peas/pulses are allowed to enter the country’smarket, the entire purpose of the notifications would be defeated. TheH

discretion in the cases of present nature, involving far-reaching impacton national economy, cannot be exercised only with reference to thehardship suggested by the importers, who had made such improper importsonly for personal gains. The imports in question suffer from the vices ofbreach of law as also lack of bona fide and the only proper exercise ofdiscretion would be of absolute confiscation and ensuring that thesetainted goods do not enter Indian markets. Imposition of penalty on suchimporters; and rather heavier penalty on those who have been able toget some part of goods released is, obviously, warranted.

83. Before closing on this part of discussion, we may also refer toa decision of Bombay High Court in the case of Finesse Creation Inc.(supra), cited on behalf of one of the importers. In that case, the declaredvalue of goods imported by the assessee in respect of 13 consignmentsover a period of about three years was rejected and the Commissionerordered re-assessment of the value of goods; and after re-determination,differential duty was confirmed under Section 28(2) of the Customs Actwith recovery of interest under Section 28AB thereof. Moreover, theimported goods were confiscated and redemption fine under Section125 of the Customs Act was also imposed in lieu of confiscation. Whileconfirming the differential duty and consequent penalty and interest,CESTAT quashed the imposition of redemption fine because the goodswere not available for confiscation. In that context, the High Court saidthat the concept of redemption fine would arise in the event the goodswere available and were to be redeemed; and if the goods were notavailable, there was no question of redemption of goods. The said decisioncannot be pressed into service in the present case merely because thesaid importer M/s. Harihar Collections has been able to obtain releaseof all the goods after passing of the order-in-original of the AdjudicatingAuthority dated 28.08.2020 when the same was under challenge. Thepresent one is not a case where the subject goods were not available onthe day of passing of the order by the Adjudicating Authority.

84. Hence, on the facts and in the circumstances of the presentcase as noticed and dilated hereinabove, the discretion could only be forabsolute confiscation with levy of penalty. At the most, an option for re-export could be given to the importers and that too, on payment ofredemption fine and upon discharging other statutory obligations. Thisoption we had already left open in the order dated 18.03.2021, passedduring the hearing of these matters.

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A85. For what we have observed hereinabove, the orders-in-originaldated 28.08.2020 cannot be approved. As a necessary corollary, theorders-in-appeal dated 24.12.2020 deserve to be approved. However,before final conclusion in that regard, a few more aspects need to bedealt with.BInvocation of equity by the importers A

86. Various submissions invoking equity have been made on behalfof the importers while submitting that they have already suffered hugelosses and that even re-export of subject goods is not a feasible option.

86.1. In regard to the submissions invoking equity, noticeable it isCthat various such features of equity were taken into consideration by theAdjudicating Authority, in the orders-in-original dated 28.08.2020 and bythe High Court, in the impugned order dated 15.10.2020 while directingrelease of goods. We have already disapproved the orders so passed bythe Adjudicating Authority and the High Court. Therefore, no leniency inDthe name of equity can be claimed by these importers. In fact, anyinvocation of equity in these matters is even otherwise ruled out in viewof specific rejection of the claim of bona fide imports by this Court inAgricas (supra). Once this Court has reached to the conclusion that aparticular action is wanting in bona fide, the perpetrator cannot claimany relief in equity in relation to the same action. Absence of bona fideEin a claimant and his claim of equity remain incompatible and cannotstand together.

86.2. The overt suggestions on behalf of the interveners thatdemand and supply of pulses is dynamic and not static in nature haveonly been noted to be rejected. In our view, meeting with the requirementsFof demand and supply is essentially a matter for policy decision of theGovernment. No equity could be claimed with such submissions by theimporters. Similarly, if, for whatever reason, any consignment of thesubject goods has been released, such release had not been in accordwith law and no equity could be claimed on that basis.G86.3. Therefore, all the submissions seeking relief in equity arerequired to be, and are, rejected.

Prayer for keeping issues open for statutory appeal

87. We have also pondered over the prayer for keeping theopportunity of further statutory appeal to CESTAT open for the importers.H

Though in ordinary circumstances, such a prayer might have been of nodifficulty but, we are of the view that having regard to the backgroundand the relevant circumstances, any liberty for further rounds of litigation,at least in relation to the respondents before us, is not called for; and thematters ought to be given a finality.

88. As regards the importer M/s. Raj Grow Impex, as noticed, theorder-in-appeal was consciously challenged by it by way of a fresh writpetition in the High Court despite being aware of the availability ofstatutory remedy of appeal before CESTAT. No cogent and plausiblereason is forthcoming as to why it had chosen to avoid the regular remedyof appeal except that it had the keen desire to get the remaining goods(under seven bills of entry) released after it had obtained release ofgoods under three bills of entry; and in that attempt, filed a fresh writpetition challenging the order-in-appeal and also filed a contempt petitionin the High Court.

88.1. So far as the question of release of goods is concerned, thematter stands concluded once we have found that the goods covered bythe notifications in question and by the judgment of this Court in Agricas(supra) are liable to absolute confiscation. Therefore, any prayer forrelease of any of such goods becomes redundant and cannot be grantedby any authority or Court. Of course, it is true that the Appellate Authorityhas enhanced penalty from Rs. 1.485 crores to Rs. 5 crores but, the factthat this importer had taken release of the goods covered by three billsof entry and that aspect of the matter was required to taken as faitaccompli by the Appellate Authority, in our view, effectively operatesagainst any claim for reduction of the amount of penalty. Putting itdifferently, once we have approved the order-in-appeal, any attempt forfurther appeal by this importer shall remain an exercise in futility.

89. So far as the other importer M/s. Harihar Collections isconcerned, it had obtained release of goods covered by all its eight billsof entry and, therefore, the matter was taken as fait accompli by theAppellate Authority with appropriation of redemption fine andenhancement of penalty. As noticed, this importer has even attempted toargue before us against redemption fine with the submissions that thegoods were not available for confiscation. Neither the redemption finenor even the enhancement of penalty from Rs. 2.34 crores to Rs. 10crores could fully set off the damage caused by the actions of thisimporter. Needless to repeat that with our approval of the order-in-appeal, A

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90. In view of above, we find no reason to allow any prayer forfiling appeal against the orders-in-appeal dated 24.12.2020.

Incidentally: principles relating to the grant or refusal ofBinterim relief

91. While closing on these matters, we are constrained to observethat the root cause of the present controversy had not been that much inthe notifications in question as it had been in the interim orders passedby the High Court of Rajasthan, Bench at Jaipur. It needs hardly anyCelaboration that only under the cover of such interim orders that theimporters ventured into the import transactions which resulted in excessivequantities of peas/pulses than those permitted by the notifications reachingthe Indian ports. As has been noticed in the present cases, some of thegoods so imported got released and the Commissioner (Appeals) had toDtake that aspect as fait accompli. For what has been held by this Courtin Agricas (supra), and further for what has been held in this judgment,the goods in question were not to mingle in the Indian market. Suchmingling, obviously, has an adverse impact on the agricultural marketeconomy and defeats the policy of the Government of India. This stateof affairs was an avoidable one; and would have been avoided if, beforeEpassing interim orders, the respective Courts would have paused toconsider the implications and impact of such interim orders, which were,for all practical purposes, going to operate as mandatory injunction,whereby the appellants were bound to allow the goods to reach theIndian ports, even if the notifications were prohibiting any such import.F91.1. Having regard to the scenario that has unfolded in the presentcases, we are impelled to re-state that even though granting of an interimrelief is a matter of discretion, such a discretion needs to be exercisedjudiciously and with due regard to the relevant factors.

92. In addition to the general principles for exercise of discretion,Gas discussed hereinbefore, a few features specific to the matters ofinterim relief need special mention. It is rather elementary that in thematters of grant of interim relief, satisfaction of the Court only aboutexistence of prima facie case in favour of the suitor is not enough. Theother elements i.e., balance of convenience and likelihood of irreparableinjury, are not of empty formality and carry their own relevance; andH

while exercising its discretion in the matter of interim relief and adoptinga particular course, the Court needs to weigh the risk of injustice, ifultimately the decision of main matter runs counter to the course beingadopted at the time of granting or refusing the interim relief. We mayusefully refer to the relevant principle stated in the decision of ChanceryDivision in Films Rover International Ltd. and Ors. v. Cannon FilmSales Ltd.:[1986] 3 All ER 772 as under: -

“….The principal dilemma about the grant of interlocutoryinjunctions, whether prohibitory or mandatory, is that there is bydefinition a risk that the court may make the “wrong” decision, inthe sense of granting an injunction to a party who fails to establishhis right at the trial (or would fail if there was a trial) oralternatively, in failing to grant an injunction to a party who succeeds(or would succeed) at trial. A fundamental principle is thereforethat the court should take whichever course appears to carrythe lower risk of injustice if it should turn out to have been“wrong” in the sense I have described. The guidelines for thegrant of both kinds of interlocutory injunctions are derived fromthis principle.”

92.1. While referring to various expositions in the said decision,this Court, in the case of Dorab Cawasji Warden v. Coomi SorabWarden and Ors.: (1990) 2 SCC 117 observed as under: - “16. The relief of interlocutory mandatory injunctions are thusgranted generally to preserve or restore the status quo of the lastnon-contested status which preceded the pending controversy untilthe final hearing when full relief may be granted or to compel theundoing of those acts that have been illegally done or the restorationof that which was wrongfully taken from the party complaining.But since the granting of such an injunction to a party whofails or would fail to establish his right at the trial may causegreat injustice or irreparable harm to the party against whomit was granted or alternatively not granting of it to a partywho succeeds or would succeed may equally cause greatinjustice or irreparable harm, courts have evolved certainguidelines. Generally stated these guidelines are:

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(1) The plaintiff has a strong case for trial. That is, it shall be of ahigher standard than a prima facie case that is normally requiredfor a prohibitory injunction.

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17. Being essentially an equitable relief the grant or refusal of aninterlocutory mandatory injunction shall ultimately rest in the soundjudicial discretion of the court to be exercised in the light of theCfacts and circumstances in each case. Though the above guidelinesare neither exhaustive nor complete or absolute rules, and theremay be exceptional circumstances needing action, applying themas prerequisite for the grant or refusal of such injunctions wouldbe a sound exercise of a judicial discretion.”

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93. In keeping with the principles aforesaid, one of the simplequestions to be adverted to at the threshold stage in the present caseswas, as to whether the importers (writ petitioners) were likely to sufferirreparable injury in case the interim relief was denied and they were toEultimately succeed in the writ petitions. A direct answer to this questionwould have made it clear that their injury, if at all, would have been ofsome amount of loss of profit, which could always be measured inmonetary terms and, usually, cannot be regarded as an irreparable one.Another simple but pertinent question would have been concerning theFelement of balance of convenience; and a simple answer to the samewould have further shown that the inconvenience which the importerswere going to suffer because of the notifications in question was farlesser than the inconvenience which the appellants were going to suffer(with ultimate impact on national interest) in case operation of thenotifications was stayed and thereby, the markets of India were allowedGto be flooded with excessive quantity of the said imported peas/pulses.

94. In fact, the repercussion of the stay orders passed in the earlieryears were duly noticed by this Court in Agricas (supra); andunfortunately, more or less same adverse consequences had beenhovering over the markets because of the imports made under the coverHof the interim orders passed in relation to the notifications dated 29.03.2019. This, in our view, was not likely to happen if the materialfactors relating to balance of convenience and irreparable injury weretaken into account while dealing with the prayers for interim relief in thewrit petitions. As noticed, this Court had, in unequivocal terms, declaredin Agricas (supra), that the importers cannot be said to be under anybona fide belief in effecting the imports under the cover of interimorders; and they would face the consequences in law. It gets, perforce,reiterated that all this was avoidable if the implications were taken intoaccount before granting any interim relief in these matters.

95. We need not expand the comments in regard to the mattersrelating to the grant or refusal of interim relief and would close thisdiscussion while reiterating the principles noticed above.

Summation

96. For what has been discussed hereinabove, these appealsdeserve to be allowed and, while setting aside the orders passed by theHigh Court and approving the orders-in-appeal, the goods in questionare to be held liable to absolute confiscation but with a relaxation ofallowing re-export, on payment of the necessary redemption fine andsubject to the importer discharging other statutory obligations. Therespondent-importers being responsible for the improper imports as alsofor the present litigation, apart from other consequences, also deserve tobe saddled with heavier costs.

Conclusions and directions

97. Accordingly, and in view of the above:

(a) these appeals are allowed;

(b) the impugned order dated 15.10.2020 (read with modificationorder dated 09.12.2020), as passed by the High Court in WritPetition (L) Nos. 3502-3503 of 2020, is set aside and the writpetitions so filed by the respondent-importers are dismissed;

(c) the impugned interim order dated 05.01.2021, as passed bythe High Court in Writ Petition (ST) No. 24 of 2021 is also setaside and the said writ petition shall be governed by this judgment; (d) the orders-in-appeal dated 24.12.2020, as passed by theAppellate Authority in the respective appeals, are approved andconsequently, the orders-in-original dated 28.08.2020 in therespective cases of the respondent-importers stand quashed; A

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A(e) the orders-in-appeal having been approved by this Court, thequestions of release of goods as also the quantum of penalty standconcluded with this judgment and hence, the prayer for keepingopen the option of further statutory appeal stands rejected; and

(f) the subject goods are held liable to absolute confiscation but, inBcontinuity with the order dated 18.03.2021 in these appeals, it isprovided that if the importer concerned opts for re-export, withinanother period of two weeks from today, such a prayer for re-export may be granted by the authorities after recovery of thenecessary redemption fine and subject to the importer dischargingother statutory obligations. If no such option is exercised withinCtwo weeks from today, the goods shall stand confiscated absolutely.

98. The matters relating to the interveners shall also be governedby the findings of this judgment and appropriate orders in their regardshall be passed by the authorities/Courts, wherever their matters relatingto the subject goods are pending but, their options of further appeal, onlyDin relation to the quantum of amount payable, including that of penalty, isleft open.

99. The respondent-importers shall pay costs of this litigation tothe appellants, quantified at Rs. 2,00,000/- (Rupees two lakhs) each.

100. All pending applications stand disposed of.

E

Bibhuti Bhushan Bose

Appeals allowed.

F

G

H