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Union Of India vs M/S Raj Grow Impex Llp on 17 June, 2021

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REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 2217-2218 of 2021
(Arising out of SLP(C) Nos. 14633-14634 of 2020)

UNION OF INDIA ORS. .….APPELLANT(S)

VERSUS

M/S. RAJ GROW IMPEX LLP ORS. ….RESPONDENT(S)

WITH

Civil Appeal No. 2219 of 2021 @ SLP(C) No. 1037 of 2021

JUDGMENT

Dinesh Maheshwari, J.

Contents

Preliminary 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
Orders-in-original dated 28.08.2020: The Adjudicating Authority allows
release of goods on payment of redemption fine………………………………….26
Immediate sequels to the orders-in-original…………………………………………31

1
The order dated 15.10.2020 and its modification dated 09.12.2020: The
High Court issues mandamus for release of goods………………………………39
Orders dated 24.12.2020 by the Appellate Authority: Orders-in-original set
aside with enhancement of penalty…………………………………………………….48
Another round in High Court: Challenge to the order-in-appeal dated
24.12.2020 and stay order by the High Court dated 05.01.2021…………….56
Rival submissions…………………………………………………………………………….59
Points for determination…………………………………………………………………….77
Legality and validity of the orders passed by the High Court………………….78
Whether the goods in question are of ‘prohibited goods’ category?………..90
Whether the goods in question are liable to absolute confiscation?………..99
Invocation of equity by the importers…………………………………………………115
Prayer for keeping issues open for statutory appeal……………………………116
Incidentally: principles relating to the grant or refusal of interim relief…….118
Summation……………………………………………………………………………………122
Conclusions and directions………………………………………………………………123

Preliminary and brief outline

Leave granted.

2. In this set of appeals, the Union of India and the authorities related

with customs have questioned the orders dated 15.10.2020 and

05.01.2021, passed by the High Court of Judicature at Bombay in Writ

Petition (L) Nos. 3502-3503 of 2020 and Writ Petition (ST) No. 24 of 2021

respectively1. The appellants are essentially aggrieved of the directions

issued by the High Court for compliance of the orders-in-original dated

28.08.2020 passed by the Additional Commissioner of Customs, Group-I,

Mumbai and consequently, for release of the goods imported by the

1 The order dated 15.10.2020 is to be read with the modification order dated 09.12.2020 in I.A.
(L) No. 5735 of 2020 in Writ Petition (L) No. 3502 of 2020.
2
private respondents though the goods in question are, according to the

appellants, liable to absolute confiscation.

2.1. Looking to the subject-matter of the present appeals involving a

multitude of issues and several of the background aspects, we may

profitably draw a brief outline and sketch of the matter at the outset.

3. The genesis of the present litigation lies in the notifications issued

by the Central Government under the Foreign Trade (Development and

Regulation) Act, 19922 as also the consequential trade notices issued by

the Directorate General of Foreign Trade3, making provisions for

restricting the import of certain beans, peas and pulses.

3.1. In the preceding years, such notifications and trade notices were

put to challenge in different High Courts by way of writ petitions wherein,

different interim orders were passed and the importers effected various

imports on the strength of such interim orders. However, the said writ

petitions were ultimately dismissed by the High Courts and one petition

seeking special leave to appeal was also dismissed by this Court. Similar

notifications and trade notice issued in the subsequent year, on restriction

of import of certain beans, peas and pulses, were again challenged in

different High Courts and, notwithstanding the rejection of a similar

challenge in the past by other High Courts, various interim orders were

again passed; and the importers again proceeded to effect various

imports under the cover of such interim orders.

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

3 Hereinafter also referred to as ‘the DGFT’ for short.
3
3.2. Faced with such challenges and interim orders in different High

Courts, the Union of India filed various transfer petitions, seeking transfer

of the cases relating to the same subject-matter to this Court. Having

regard to the nature of controversy and surrounding factors, this Court

heard the matters on merits so as to finally deal with the challenge to the

notifications and the trade notice in question. This led to the judgment

dated 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 notice

dated 16.04.2019, issued by the DGFT.

3.3. In the said judgment dated 26.08.2020, this Court, apart from

other findings, held that the importers cannot be said to be under any

bona fide belief in effecting the imports under the cover of interim orders;

and they would face the consequences in law. While dismissing the writ

petitions, this Court held that the imports made while relying on the

interim orders were contrary to the said notifications and trade notice

issued under the FTDR Act; and would be so dealt with under the

provisions of the Customs Act, 1962 5. However, this judgment has also

not given a quietus to the litigation and the events taking place after this

decision 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 LLP and M/s.

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’.

4

Harihar Collections, whose imported goods covered by the said

notifications had not been released, addressed respective

communications to the Additional Commissioner of Customs, Group-I,

Mumbai6, on the very day of judgment i.e., 26.08.2020, requesting for

waiver of show cause notices and for urgent personal hearing. The

Adjudicating Authority took up their cases in priority and, by his almost

identical orders-in-original dated 28.08.2020, while ordering confiscation,

gave an option to the importers to redeem the goods in question on

payment of fine in lieu of confiscation under Section 125(1) of the

Customs Act. While acting upon the orders so passed by the Adjudicating

Authority, the importers made certain payments towards customs duty,

redemption fine and penalty and obtained out of charge7; and some of the

consignments were released. However, the DGFT took exception against

release of the goods in question as the same were restricted items and

stated in its letter dated 01.09.2020 that such release would be contrary

to the import policy. Consequent to this and other communications, the

customs authorities requested Mumbai Port Trust not to issue delivery

order of the consignments in question and hence, the other consignments

were not released.

5. Feeling aggrieved by such communications and stoppage of

release of the goods in question, the importers (private respondents

herein) approached the High Court by way of separate writ petitions,

6 Hereinafter also referred to as the ‘Adjudicating Authority’.
7 ‘OOC’ for short.

5

essentially seeking mandamus for clearance of the goods in question.

While the said writ petitions were pending, the Commissioner of Customs

(Import-II) passed an order dated 01.10.2020 in exercise of his powers

under Section 129D(2) of the Customs Act, pointing out the alleged

deficiencies in the adjudication orders; and directed filing of appeals

before the Commissioner (Appeals)8. The appeals so filed were ultimately

allowed by the Appellate Authority on 24.12.2020. However, before such

decision in appeals, the High Court heard the said writ petitions of the

importers on 06.10.2020 and proceeded to decide the same by the

common order dated 15.10.2020.

5.1. In its order dated 15.10.2020, the High Court took the view that,

prima facie, the grounds stated in the order dated 01.10.2020 did not

make out any such case of illegality or impropriety as to call for exercise

of suo motu revisional powers by the Commissioner under Section

129D(2) of the Customs Act. Having said that, the High Court left the

matter to be decided by the Commissioner (Appeals). However,

thereafter, the High Court proceeded to examine the question as to the

justification or otherwise for not releasing the goods in question. In this

regard, the High Court was of the view that when the orders-in-original

were holding the field and the importers had complied with the terms and

conditions thereof; and where the importers were incurring expenditure

because of warehousing, any further withholding of the imported goods

was not justified. Thus, the High Court issued directions to the
8 Hereinafter also referred to as ‘the Appellate Authority’.
6
respondents to forthwith release the goods of the importers covered by

the bills of entry mentioned in paragraph 38 of the order.

6. Seeking to challenge the aforesaid order dated 15.10.2020, the

Union of India and its authorities related with customs approached this

Court on 26.11.2020 but, before their SLPs were taken up for

consideration, three major events took place in these matters. First such

event related to an application made by one of the importers M/s. Raj

Grow Impex to the High Court for modification of the order dated

15.10.2020 because some of its bills of entry had not been included

therein. The High Court accepted this application and issued modification

order dated 09.12.2020 accordingly. The second relevant event had been

that by the orders-in-appeal dated 24.12.2020, the Commissioner

(Appeals) proceeded to allow the appeals preferred by the Department

against the aforesaid orders-in-original dated 28.08.2020 and ordered

absolute confiscation of the goods in question while enhancing the

amount of penalty; of course, the Appellate Authority found that some of

the goods in question had since been released and treated that part of

the matter 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 by way

of another writ petition in the High Court. While considering this fresh writ

petition on 05.01.2021, the High Court took exception against the

observations made and directions issued by the Appellate Authority

which, according to the High Court, were running contrary to its decision

7
dated 15.10.2020. Accordingly, the High Court stayed the operation of the

order-in-appeal and directed the authorities concerned to comply with the

directions of the orders dated 15.10.2020 and 09.12.2020. An ancillary

part of the third event was that the said importer also moved a contempt

petition stating willful disobedience of the aforesaid order dated

09.12.2020 whereupon, by a separate order dated 05.01.2021, the High

Court issued show cause notice to the authorities concerned and directed

them to remain personally present in the Court on 21.01.2021. Again

aggrieved, the Union of India and its authorities concerned approached

this Court against these orders dated 05.01.2021, as passed by the High

Court, respectively in the fresh writ petition and in the contempt petition.

7. The aforementioned SLPs against the orders so passed by the

High Court were considered analogously on 20.01.2021 and, while

issuing notice, this Court stayed the operation of the order impugned.

Later on, these matters were taken up for hearing in priority looking to the

nature of controversy and the goods involved. During the course of

hearing, on 18.03.2021, this Court found no reason for continuation of

contempt proceedings in the High Court and closed the same. On

18.03.2021, yet another observation was made by this Court with

reference to the submission of learned ASG appearing for the appellants,

that it was open to the private respondents to opt for re-export of

perishable imported goods lying in the customs warehouse to outside

India.

8

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

notice, this Court did not accept that the imports in question, as made on

the basis or under the cover of the interim orders passed by the High

Courts, could be regarded as bona fide; but, in the given circumstances

and the issues raised, this Court left those goods to be dealt with under

the Customs Act. Now, dealing of the goods in question under the

Customs Act has given rise to this litigation. On one hand, the appellants

maintain that the subject goods are required to be confiscated absolutely

or else, the entire purpose of the said notifications and trade notice shall

be frustrated; and hence, they question the legality and validity of the

orders passed by the Adjudicating Authority and the High Court whereby

and whereunder, the goods in question are required to be released with

payment of fine in lieu of confiscation. On the other hand, the importers

maintain that the goods in question are not falling in the category of

banned or totally prohibited goods and hence, they have rightly been

ordered to be released with payment of fine in lieu of confiscation and

other charges. They, thus, support the impugned orders passed by the

Adjudicating Authority and the High Court.

8.1. Apart from the said two importers who had filed their respective

writ petitions in the High Court and who are directly related with the

orders in question before us, two more importers have moved

impleadment/intervention applications while asserting that they have also

9
imported under the cover of the interim orders of the High Court and their

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 for release and

are not liable to absolute confiscation.

The parties and their respective interests in the matter

9. Having drawn a brief sketch indicating the salient features of this

case and the issues involved, we may narrate, in brief, the relevant

particulars of the parties before us in these appeals9.

The appellants

10. The Union of India through the Secretary, Ministry of

Commerce and the Secretary, Department of Revenue, Ministry of

Finance is the appellant before us; and is joined by the Commissioner of

Customs (Import-I), Mumbai and other authorities related with customs.

The Commissioner of Customs (Appeal), Mumbai (Zone-I), who had

passed the order dated 24.12.2020 as Appellate Authority, has joined as a

party only in the appeal against the order dated 05.01.2021 10. These

appellants are aggrieved of the respective orders passed by the High

Court of Judicature at Bombay in the respective writ petitions; and

9 This introduction of persons/entities is to broadly co-relate the parties with the points to be
taken up for determination; and is not intended to be an exhaustive list of the parties involved.

10 The Director General of Foreign Trade, the Zonal Additional Director General of Foreign
Trade, and the Mumbai Port Trust are proforma respondents in the appeals against the common
order passed by the High Court on 15.10.2020.

10

maintain that the goods in question could not have been released and are

liable to absolute confiscation.

The contesting respondents

11. The two importers, in whose relation the impugned orders have

been passed by the authorities concerned and the High Court are the

contesting respondents of these appeals. Their relevant particulars are as

under:

11.1. M/s. Raj Grow Impex LLP
This importer is said to be a partnership firm having its registered

office at Jaipur in the State of Rajasthan. This firm had filed ten bills of

entry dated 01.11.2019 for clearance of 24,815 MTs of yellow peas, said

to 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 fine

led to the order-in-original dated 28.08.2020. This importer had obtained

OOC for three bills of entry and got released 7,500 MTs of the goods in

question but the remaining were not released. This importer had filed WP

(L) No. 3502 of 2020 before the High Court of Judicature at Bombay

seeking mandamus which was decided by the common order dated

15.10.2020. This importer has also filed WP (ST) No. 24 of 2021

questioning the order-in-appeal dated 24.12.2020 wherein, the High Court

of Judicature at Bombay passed the interim order dated 05.01.2021.

11.2. M/s. Harihar Collections
11
This importer is said to be a proprietorship concern having its

registered office at Jaipur in the State of Rajasthan. This importer had

filed eight bills of entry dated 18.11.2019 for clearance of 38,500 MTs of

yellow peas, said to have been imported under the cover of interim order

dated 10.07.2019, as passed by the Rajasthan High Court, Bench at

Jaipur in WP No. 11752 of 2019. Similar to the above, the efforts of this

importer to get the goods released with payment of fine in lieu of

confiscation led to another order-in-original dated 28.08.2020. This

importer had filed WP (L) No. 3503 of 2020 before the High Court of

Judicature at Bombay seeking mandamus which was decided by the

common order dated 15.10.2020. In relation to this importer, the Appellate

Authority passed another order-in-appeal dated 24.12.2020, which has

not been challenged but, the importer has stated its desire to do so in due

course.

The intervenors

12. Apart from the above, two other importers have filed impleadment

applications with the submissions that they have also imported a

substantial quantity of goods pursuant to the interim orders passed by the

Rajasthan High Court in their respective writ petitions; and that they have

substantial interest in the present proceedings because any final

judgment herein shall have impact on their interests. Their relevant

particulars are as under:-

Nikhil Pulses Pvt. Ltd.

12
12.1. This importer is said to be a private limited company having its

registered office at Jaipur in the State of Rajasthan. This company is said

to have imported 1,02,550 MTs of yellow peas under the cover of interim

order dated 02.08.2019, as passed by the Rajasthan High Court, Bench

at Jaipur in WP No. 12283 of 2019. This company had received a notice

dated 20.11.2020 from the Principal Commissioner of Customs, Mundra

requiring to show cause as to why the goods in question are not liable to

confiscation.

Agricas LLP
12.2. This importer is said to be a partnership firm having its registered

office at Jaipur in the State of Rajasthan. This firm is said to have

imported, inter alia, 27,775 MTs of black mapte under the cover of interim

order dated 14.08.2019, as passed by the Rajasthan High Court, Bench

at Jaipur in WP No. 13392 of 2019; and out of the quantity imported,

14,366 MTs of goods got released but not the remaining. It is stated by

this importer that pursuant to the show cause notice dated 05.10.2020,

the Commissioner of Customs, Nhava Sheva found the goods to be

prohibited and liable to confiscation whereafter it had filed a writ petition

bearing No. 525 of 2021 before the High Court of Judicature at Bombay

against the non-clearance of the goods but in the meantime, the main

issue has been taken up by this Court in these appeals.

Relevant factual aspects and background

13

13. Having taken note of the salient features of the case, the relevant

particulars of the parties before us with their respective interests, we may

now enter into the relevant factual aspects and background in necessary

details but while avoiding the facts which may not have bearing on

determination of the real issues involved.

14. The relevant background aspects of the matter are that the

Central Government had issued notifications dated 05.08.2017 and

21.08.2017, revising the policy for import of urad/moong and pigeon

peas/toor dal from “free” to “restricted” with a stipulation as to annual

quota and requirement of a prior licence from DGFT. Then, by the

notification dated 25.04.2018, import of the said beans/pulses was to

remain restricted requiring a prior licence and with a stipulation as to

annual quota for the fiscal year 2018-2019. One of the importers, M/s.

Hira Traders, preferred a writ petition before the Madras High Court,

challenging the notification dated 25.04.2018 and trade notices issued on

9th, 16th and 18th May, 2018 respectively. The said petitioner also prayed

for interim relief, of permission to import peas as per the contracts. By the

interim order dated 28.06.2018, the said High Court stayed the operation

of the notification dated 25.04.2018 and thereby, permitted imports

without the requisite licence. Several other writ petitions were filed before

different High Courts challenging the restrictions on import of these

beans/peas/pulses and various interim orders were passed, staying the

14
notifications; and leading to the effect of permitting imports without any

restrictions as to quota or licence.

14.1. The main plank of submissions in the said writ petitions was that

DGFT, the statutory authority under the FTDR Act, was not authorised to

issue an order amending the EXIM policy and such a power vested only

in the Central Government in terms of Section 3(2) read with Section 6(3)

of the FTDR Act.

14.2. The writ petitions so filed in challenge to the said and akin

notifications and trade notices were dismissed by different High Courts.

The writ petition by M/s. Hira Traders was dismissed by the Madras High

Court on 04.04.2019. The Bombay High Court had dismissed similar writ

petitions on 03.07.2018. Similarly, the Madhya Pradesh High Court had

dismissed such petitions on 25.10.2018; and the Gujarat High Court had

also dismissed similar writ petitions on 19.12.2018. The order passed by

the Gujarat High Court was sought to be challenged in this Court in

Special Leave Petition (C) No. 1922 of 2019 but, the same was also

dismissed by the order dated 28.01.2019.

14.3. Thus, to put in a nutshell, it is evident that even though the High

Courts initially took up the challenge to the said notifications and trade

notices and granted interim orders but, ultimately, the writ petitions were

dismissed. An attempt to challenge one of the decisions in this Court also

failed with dismissal of the special leave petition.

15

15. Thereafter, in the month of March, 2019, the Central Government,

in exercise of its power under Section 3 of the FTDR Act read with

paragraphs 1.02 and 2.01 of the Foreign Trade Policy 2015-2020,

amended the import policy conditions relating to various items of Chapter

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 dated

16.04.2019 by the DGFT. These notifications are at the core of

controversy involved in these matters and hence, it would be just and

appropriate to reproduce the same as under: –

“S.O. 1478(E).–In exercise of powers conferred by section 3 of the
Foreign Trade (Development and
Regulation) Act, 1992 (22 of
1992), read with paragraphs 1.02 and 2.01 of the Foreign Trade
Policy, 2015-2020, as amended from time to time, the Central
Government hereby notifies the Import Policy of items of Chapter
7 of the Indian Trade Classification (Harmonized System), 2017,
Schedule-1 (Import Policy), as under-

Exim Code Item Description Existing Policy Revised Policy
condition condition
0713 31 10 Beans of the Restricted. Import of Moong shall
SPP Vigna be subject an annual
Mungo (L.) (fiscal year) quota of 1.5
Hepper. lakh MT as per
0713 90 10 Split procedure 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 its
publication in the official Gazette.

xxx xxx xxx

16
S.O. 1479(E).–In exercise of powers conferred by
section 3 of the
Foreign Trade (Development and
Regulation) Act, 1992 (22 of
1992), read with paragraphs 1.02 and 2.01 of the Foreign Trade
Policy, 2015-2020, as amended from time to time, the Central
government hereby amends the Import Policy Conditions of items
of Chapter 7 of the Indian Trade Classification (Harmonized
System), 2017, Schedule-1 (Import Policy), as under –

Exim Code Item Existing Existing Revised Policy
Description Policy Policy condition
condition
0713 1000 Peans (Pisum Restricted Restricted for During the period
Sativum) the period from 1st April,
including from 1st 2019 to 31st
Yellow peas, January, March, 2020,
Green peas, 2019 to 31st total quantity of
Dun peas and March, 2019 1.5 Lakh MT of
Kaspa peas Peas shall be
0713 90 10 Split allowed against
0713 90 90 Other license as per the
procedure to be
notified by
Directorate
General of
Foreign Trade.

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

xxx xxx xxx

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

Exim Code Item Existing Policy Revised Policy
Description condition condition
0713 31 90 Beans of the Restricted. Import of Urad
SPP Vigna shall be subject
Radiata (L.) to an annual
Wilezek (fiscal year)
0713 90 10 Split quota of 1.5 lakh
0713 90 90 Other MT as per
procedure to be
notified by
Directorate
General of
Foreign Trade: –
Provided that this
restriction shall not
apply to

17
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 its
publication in the official Gazette.

xxx xxx xxx

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

        Exim Code      Item Description      Existing      Revised         Policy
Policy condition
condition
0713 60 00 Pigeon Peas Restricted. Import of Pigeon
(Cajanus Cajan)/ Peas (Cajanus
Toor Dal. Cajan)/Toor Dal shall
0713 90 10 Split be subject to an
0713 90 90 Other annual (fiscal year)
quota of 02 lakh MT
as per procedure to
be notified 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 1 st April, 2019.”

15.1. The trade notice dated 16.04.2019 issued by the DGFT laid down

the modalities for making the applications for import of the commodities in

question and carried the following amongst other stipulations: -

18

“a. Applications are invited online from the intending
millers/refiners (having own refining/processing capacity) of
pulses/peas for its import as per ANF-2M of FTP 2015-20 to
DGFT, at
[email protected] besides the concerned jurisdictional
Regional Authorities …..”

16. Seeking to challenge the said notifications dated 29.03.2019 and

the trade notice dated 16.04.2019, about 90 writ petitions were filed

before the Rajasthan High Court, Bench at Jaipur. Various akin writ

petitions 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 said

peas/pulses, notwithstanding the fact that they had not been issued the

import licences, as also the fact that the total imports with such interim

orders would exceed the maximum quantity fixed by way of the impugned

notifications.

17. In the given set of circumstances, Union of India approached this

Court with several transfer petitions. Having regard to the circumstances

and submissions sought to be made, such writ petitions concerning the

notifications in question were withdrawn to this Court and were ultimately

dismissed by the said judgment dated 26.08.2020, in the 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, essentially

relating to the validity of notifications and the corresponding trade notices

19
imposing restrictions on import of peas and pulses, were dealt with by this

Court on the anvil of the FTDR Act, particularly Sections 3 and 9A thereof.

We need not dilate on all the issues examined and dealt with by this

Court in Agricas but, a few salient features of the said decision need to

be accentuated, for the purpose of the issues involved in these appeals.

18.1. In Agricas (supra), this Court specifically took note of the stand of

the Union of India, as regards the purpose and purport of the notifications

in question, which could be usefully reproduced as under: -

“53. The Union of India, in their affidavit filed on 26th June
2020, have pleaded that they were required to strike a balance
between the farmers and the importers as largescale imports
would adversely impact the interests of the farmers due to fall
in prices in the local market. Reference was made to the
Minimum Support Price (MSP) for Moong, Urad and Toor dal and
Gram fixed on the recommendation of the Commission for
Agricultural Costs and Prices. Further, the Central Government
under the schemes being run had procured 85 lakh MT of
pulses directly from 53 lakh farmers by paying them MSP in
the last five years. There was also increase in production of
pulses from 25.42 Million MTs in 2017-18 to 26.66 Million MTs
in 2020-21. Imported Yellow Peas are the perfect substitute for
Gram in making of Besan which is primarily used in
preparation of Indian savouries. As the price of imported
Yellow Peas in India is cheaper than the domestic price of
Gram, a huge shift in industry usage from Gram to Yellow
Peas has taken place. In these circumstances that the
government has imposed restrictions from April, 2018
onwards with a small window of annual quota for permitted
imports. However, in view of the interim orders passed by the
various High Courts, the actual imports of peas were to the
tune of 8,51,408 MT and 6,52,607 MTs in 2018-2019 and 2019-
2020 respectively, though the annual quota for these two
years was 1/1.50 lakh MTs. The Government is presently holding
a buffer stock of 26.94 lakh MT of Gram, against the target
quantity of 3 lakh MTs. The Gram is being sold at Rs.4,000 - 4,200
per quintal, which is below the MSP of Rs.4,875/- per quintal.

Imported CIF value of Yellow Peas is Rs.2,028/- per quintal. Due
to the pandemic, the farmers could be compelled to make panic
disposal at much lower prices. In the further affidavit filed on 1 st
July 2020, the Union of India has stated that they had not
20
issued any quota for Peas, Yellow Peas etc. as inspite of
restricted quota of 1 lakh and 1.5 lakh MTs for Peas in the
Financial Years 2018-19 and 2019-20, due to interim orders
passed by the various High Courts, the actual import was 8.51
lakh MTs and 6.67 lakh MTs during the Financial Years 2018-
19 and 2019-20, respectively. Consequently, it has been decided
not to import Yellow Peas in the current Financial Year 2020-21. In
the affidavit filed on 6 th July 2020, with reference to Section 9A of
the FTDR Act, the Union of India has stated that the said section is
attracted only when the goods are imported into India in increased
quantity and under such conditions as to cause or threaten to
cause serious injury to domestic industry.
Section 9A is enacted as
a safeguard mechanism in terms of Article XIX of the GATT-1994
and Article II of the WTO Agreement on Safeguards vide the
Amendment Act, 2010. The notifications under challenge have
been issued within the express terms of Section 3 of the FTDR Act
which permits the Central Government to impose restrictions
without any qualification of the nature specified in
Section 9A.
Power of the Central Government to restrict imports to limited
quantities under
Section 3 and quantitative restrictions under
Section 9A of the FTDR Act are completely distinct and have no
connection or interplay. The power under Section 3(2) of the FTDR
Act is of a wide amplitude. Reference is also made to Rule 5(2) to
assert that there is necessity of evidence that the imports had
increased as a result of ‘unforeseen developments’ in addition to
the necessity for evidence disclosing serious injury or threat of
serious injury to domestic industry and a causal link between
imports and serious injury. The restrictions have been imposed
not due to increased quantities of imports but to prevent
panic disposal by farmers as the prices of Gram would come
down. It is submitted that special provisions like 9A of the FTDR
Act would be limited to areas within its scope leaving the general
provision free to operate in other areas.”
(emphasis in bold supplied)

18.2. Another line of over-ambitious but rather misconceived arguments

on the interpretation of the impugned notification was suggested on

behalf of the importers as if each licencee could import the quantity

mentioned in the notification. Such a baseless contention had, in fact,

been rejected at the outset by this Court. The relevant finding in that

regard may also be usefully noticed as follows:

21
“17. We would also without any hesitation reject the contention
raised by some of the importers that the impugned notification is
illegal because of vagueness or allows restricted quantity of 1/1.5
lakh MT of Peas (Pisum Sativum) including Yellow Peas, Green
Peas, Dun Peas and Kaspa Peas as against a licence, meaning
thereby each licensee is allowed to import the maximum quantity
specified in the notification. In other words, the total quantity
specified in the notification is per licensee and not for the total
imports of the commodity specified in the notification. The
submission has no merit as the notification expressly uses the
expression ‘total quantity’ of the commodity specified which could
be imported. There is no ambiguity or vagueness in the
notifications, relevant portions of which have been quoted above.
Even otherwise the expression ‘total quantity’ cannot be construed
as quantity per licence issued as the number of licences issued
concerning the subject goods could be numerable (as per the
Union of India 2248, 1016 and 2915 licences were issued in 2019-
20 for import of Tur, Moong and Urad dals against restricted quota
of 4, 1.5 and 4 lakh MT, respectively). If each licence holder is
allowed to import 1/1.5 lakh MT of Peas, the total import would
well exceed the total annual consumption after we account for the
production within India. In our opinion, the plea and interpretation
of the importers if accepted will not only be contrary to the express
language of the notification but would frustrate the intent and
object of restricting the imports of the stated goods by prescribing
a quota. We decline and would not accept this farfetched and
somewhat drivel interpretation of simple and straight forward
words.”

18.3. After dealing with the interpretation of Section 9A of the FTDR 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 in question to

be valid, for having been issued in accordance with the powers conferred

on the Central Government in terms of sub-section (2) of Section 3 of the

FTDR Act. This Court, inter alia, observed and held as under: -

“61. This being the position, Section 9A has to be interpreted as an
escape provision when the Central Government i.e. the Union of
India may escape the rigours of paragraph (1) of Article XIX of
GATT-1994.
Section 9A is not a provision which incorporates or
transposes paragraph (1) of Article XI into the domestic law either
expressly or by necessary implication. To hold to the contrary, we
would be holding that the Central Government has no right and

22
power to impose ‘quantitative restrictions’ except under Section 9A
of the FTDR Act. This would be contrary to the legislative
intent and objective. Section 9A of the FTDR Act does not
elide or negate the power of the Central Government to
impose restrictions on imports under sub-section (2) to
Section 3 of the FTDR Act.

62. In other words, the impugned notifications would be valid
as they have been issued in accordance with the power
conferred in the Central Government in terms of sub-section
(2) to Section 3 of the FTDR Act. The powers of the Central
Government by an order imposing restriction on imports under
sub-section (2) to
Section 3 is, therefore, not entirely curtailed by
Section 9A of the FTDR Act.”
(emphasis in bold supplied)

18.4. As noticed, before the said writ petitions were withdrawn to this

Court, various interim orders had been passed by the High Courts. It was

stated before this Court that, relying upon such interim orders, the

importers had imported various quantities of peas and pulses; and it was

contended on behalf of the importers that those had been bona fide

imports under the interim orders of the Courts. This Court specifically

rejected such contentions and held that despite the High Courts of

Madras, Bombay, Gujarat and Madhya Pradesh having dismissed the writ

petitions of similar nature while upholding the notifications and trade

notices, the importers took their chance, obviously for personal gains and

they would, accordingly, face the consequences in law. This Court, in no

uncertain terms, rejected the submissions that the importers had acted in

bona fide 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 under
interim orders and prayer for partial relief.

23

65. Learned counsel for some of the importers had placed reliance
on
Raj Prakash Chemical v. Union of India, which judgment, in
our opinion, has no application. In Raj Prakash Chemical (supra),
the petitioner had acted under a bona fide belief in view of
judgments and orders of High Courts and the interpretation placed
by the authorities. In this background, observations were made to
giving benefit to the importers, despite the contrary legal
interpretation. In the instant case, the importers rely upon the
interim orders passed by the High Court's whereas on the date
when they filed the Writ Petitions and had obtained interim orders,
the Madras High Court had dismissed the Writ Petition upholding
the notification. Similarly, the High Court of adjudicature at
Bombay, High Court of Gujarat and the High Court of Madhya
Pradesh had dismissed the Writ Petitions filed before them and
upheld the notifications and the trade notices. Notwithstanding the
dismissals, the importers took their chance, obviously for personal
gains and profits. They would accordingly face the consequences
in law. In these circumstances, the importers it cannot be said had
bona fide belief in the right pleaded.”

18.5. Only one aspect of the matter was not decided by this Court and

that related to the pending appeals against the orders suspending or

terminating the import-export code11 of some of the parties. This Court left

the statutory appeals in that regard to be decided in accordance with law.

19. Having upheld the validity of the notifications and trade notice and

also having held that the importers, while effecting the imports by relying

upon the interim orders, cannot be said to have acted bona fide, this

Court concluded on the writ petitions with the observations and directions

that the imports in question would be held to be contrary to the

notifications and trade notices issued under the FTDR Act; and would be

so dealt with under the provisions of the Customs Act. This Court

dismissed all the writ petitions which were subject of the transfer petitions

11 ‘IEC’ for short.

24

as also the writ petitions filed by the intervenors. The concluding part of

the decision of this Court in Agricas (supra) reads as under: -

“F. Conclusion

67. Accordingly, we uphold the impugned notifications and the
trade notices and reject the challenge made by the importers. The
imports, if any, made relying on interim order(s) would be held to
be contrary to the notifications and the trades notices issued under
the FTDR Act and would be so dealt with under the provisions of
the
Customs Act 1962. The Writ Petitions subject matter of the
Transfer Petitions, subject to E above (What is not decided) are
dismissed. Writ Petitions filed by the intervenors before the
respective High Courts shall stand dismissed in terms of this
decision. Pending application(s), if any, also stand disposed of in
the 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 notifications were

fundamentally intended to protect the domestic agriculture market and

also pronounced on the true meaning and import of these notifications;

and while rejecting the far-stretched interpretation suggested on behalf of

the importers that each licencee was entitled to import the quantity

mentioned in the notifications, this Court not only upheld the notifications

and the trade notice in question but also held that any import made under

the 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 this Court dated 26.08.2020 in

Agricas has given rise to the present round of litigation.

Orders-in-original dated 28.08.2020: The Adjudicating Authority
allows release of goods on payment of redemption fine
25

21. As noticed, within no time after the decision of this Court dated

26.08.2020 in Agricas (supra), the private respondents of these appeals,

M/s. Raj Grow Impex LLP and M/s. Harihar Collections, who had made

certain imports of the goods covered by the said notifications but their

imported goods had not been released, took up the proceedings in the

manner that the eventuality of absolute confiscation could be obviated

and they could get the goods released by payment of fine. In this regard,

they addressed respective communications on 26.08.2020, requesting for

waiver of show cause notices under Section 124 of the Customs Act and

for urgent personal hearing. The Adjudicating Authority took up their

cases in priority and, by his almost identical orders-in-original dated

28.08.2020, while ordering confiscation under Section 111(d) of the

Customs Act, gave an option to the importers to redeem the goods in

question on payment of fine in lieu of confiscation under Section 125(1)

thereof. Having regard to the questions involved, the relevant features of

the said orders-in-original dated 28.08.2020, in relation to the individual

importer may be taken note of.

M/s. Raj Grow Impex LLP

22. On 01.11.2019, the importer M/s Raj Grow Impex LLP filed ten

bills of entry bearing numbers 5520536, 5520537, 5520538, 5520539,

5520540, 5520541, 5520732, 5520871, 5520872 and 5521191, for
26
clearance of 24,815 MTs of yellow peas, said to have been imported

under the cover of interim order passed by the Rajasthan High Court on

20.07.2019 in WP No. 11974 of 2019. However, the goods were not

released, particularly for the objections against their release by the

officers of DGFT. The goods were stored in a warehouse under Section

49 of the Customs Act.

22.1. On the very day of the decision of this Court in the case of

Agricas (supra) on 26.08.2020, this importer sent a letter to the

Adjudicating Authority with the request that show cause notice under

Section 124 of the Customs Act be waived and personal hearing may be

provided expeditiously. Accepting this request, the Adjudicating Authority

granted expedited hearing because of perishable nature of the goods;

and proceeded to pass the order-in-original on 28.08.2020 (which was

issued on 03.09.2020).

22.2. The Adjudicating Authority observed in its order-in-original dated

28.08.2020 that the goods were imported by the importer in the month of

November 2019 under the protection of the interim order granted by the

Rajasthan High Court but, when held to have been imported in

contravention of the applicable notifications, they became prohibited

goods under Section 11 of the Customs Act read with Section 3 of the

FTDR Act; and hence, the goods were liable to confiscation under Section

111(d) of the Customs Act. Further, the importer was also held liable for

27
penalty under
Section 112(a)(i) of the Customs Act. The relevant findings

of the Adjudicating Authority could be usefully extracted as under: -

“9. The impugned goods were imported in contravention of the
DGFT notifications No. S.O. 1478(E), 1479(E), 1480(E) and
1481(E) dated 29.03.2019 and subsequent trade notice No.
06/2019-2020 Dated 16.04.2019. Thereby, the impugned goods
became prohibited under
section 11 of the Customs Act, 1962
read with
section 3 of the FOREIGN TRADE (DEVELOPMENT
AND REGULATION) ACT, 1992. Hence, I hold that the goods are
liable for confiscation u/s. 111(d) for the
Customs Act, 1962.

10. For the above acts of omission and commission which render
the 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 to

confiscation and the importer was liable for penalty, the Adjudicating

Authority proceeded to determine the quantum of redemption fine and

penalty to be levied on the importer. In this regard, the Adjudicating

Authority took into account the alleged margin of profit of the importer,

market price of the goods, and the expenditure incurred on storage and

transportation etc. The Adjudicating Authority also took into account

various other factors for which the quality of goods, being perishable in

nature, had deteriorated, like poor condition of warehouses, excessive

rainfall, humidity, exposure and pest attacks. It was, however, observed

by the Adjudicating Authority that the goods in question, though having

lost much of their market value, were still fit for human consumption, as

per the certificate from the accredited laboratory. On these

considerations, the Adjudicating Authority considered it appropriate to

28
impose fine and penalty while calculating the margin of profit @ Re. 1 per

Kg; and concluded on the matter with the following order: -

“12. In view of the above discussion and findings, I pass the
following order:-

Order
i. I confiscate the impugned goods u/s. 111(d) of the
Customs act, 1962. Whereas I give an option to the
importer to redeem the impugned goods on payment of the
redemption fine of Rs. 1.0 crores (Rupees One Crores only)
in lieu of confiscation u/s 125(1) of the
Customs Act, 1962.
ii. I, also impose a penalty of Rs. 1.485 crores (Rupees
One Crore Forty Eight Lakhs Fifty Thousand only) on M/s.
Raj Grow Impex LLP, Jaipur u/s. 112(a)(i) of the
Customs
Act, 1962.

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

M/s. Harihar Collections

23. The case of the other importer M/s. Harihar Collections is not

materially different except for a few individual facts. This importer had, on

18.11.2019, filed eight bills of entry on 18.11.2019 bearing numbers

5720040, 5720192, 5720693, 5722458, 5722730, 5719772, 5722243 and

5722456 for clearance of 38,500 MTs of yellow peas, said to have been

imported under the cover of interim order passed by the Rajasthan High

Court on 10.07.2019 in WP No. 11752 of 2019. In this case too, the

goods were not released in view of objections and were stored in a

warehouse.

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 communication on

29
the same day to the Adjudicating Authority, seeking waiver of show cause

notice under Section 124 of the Customs Act and for expeditious personal

hearing. This case was also considered expeditiously and another order-

in-original of similar nature was passed by the Adjudicating Authority on

28.08.2020 (issued on 03.09.2020).

23.2. Almost on the similar considerations as noticed above in the case

of M/s. Raj Grow Impex, the Adjudicating Authority held that the goods in

question became prohibited goods under Section 11 of the Customs Act

read with Section 3 of the FTDR Act; and hence, were liable to

confiscation under Section 111(d) of the Customs Act; and the importer

was also liable for penalty under Section 112(a)(i) of the Customs Act.

Again, on similar lines, the Adjudicating Authority proceeded to determine

the quantum of redemption fine and penalty to be levied on the importer;

and, on similar considerations as above, proceeded to impose fine and

penalty while calculating the margin of profit @ Re. 1 per Kg and

concluded on the matter with the following order: -

“13. In view of the above discussions and findings, I pass the
following order: -

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

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

30

14. This order is passed without prejudice to any other action that
may be contemplated against the importer or any other person in
terms of any provision of the
Customs Act, 1962 and/ 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 led to

several actions and reactions. Acting swiftly on the orders-in-original, the

respondent-importers took immediate steps for payment of redemption

fine and penalty. On 29.08.2020, the respondent M/s. Raj Grow Impex

made such payment in relation to three bills of entry bearing Nos.

5520732, 5520871 5520536 and obtained OOC. On the other hand, the

respondent M/s. Harihar Collections made payment of redemption fine

and penalty in respect of all its eight bills of entry on 29.08.2020 and

obtained OOC. When the respondent M/s. Raj Grow Impex was in the

process of making payment for the remaining seven bills of entry and

when the goods for which OOC had been issued were in the process of

unloading and release, the DGFT addressed its letter dated 01.09.2020 to

the Chairman, Central Board of Indirect Taxes and Customs, referring to

the import policy and restrictions over import of peas as also to the

judgment of this Court in Agricas (supra). The DGFT stated that any

release of imported peas would be contrary to the import policy; that they

were in the process of obtaining legal opinion from the ASG; and till then,

the field formations under the Customs may be directed not to release the

consignments of peas and, if any such consignments had been released,

31
the details may be provided. It appears that acting on this communication

from DGFT, the Zonal Additional Director General of Foreign 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 Trust authorities to

stop the release of the goods in question. This led to the stoppage of

unloading and release of the goods whereupon, the respondent-importers

made a request to the Commissioner of Customs (Import-I), Mumbai on

03.09.2020 to release the cargo when the requisite fine and penalty had

already been paid. However, the respondent-importers received the

communication from Mumbai Port Trust authorities that the cargo stored

in the port trust premises will not be released on account of the directions

received from the customs authorities. Thereafter, they received one

more letter from the Mumbai Port Trust on 11.09.2020 stating that the

goods could be cleared subject to fulfilment of the Customs and Port

Trust formalities. However, despite all their efforts, the importers could not

secure the desired release of goods.

25. Being aggrieved by the said communications and denial of release

of the goods, the respondent-importers approached the High Court of

Judicature at Bombay on 15.09.2020, seeking mandamus for clearance

of the goods imported by them while also questioning the

communications denying them the release of the goods in question. The

writ petitions so filed by the importers, being Writ Petition (L) No. 3502 of

32
2020 (
M/s. Raj Grow Impex LLP v. Union of India and Ors.) and Writ

Petition (L) No. 3503 of 2020 (M/s. Harihar Collections v. Union of India

and Ors.), were decided by the impugned common order dated

15.10.2020. We shall be dilating on the relevant features of the order

dated 15.10.2020 a little later but, at this juncture, we may take note of

the 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:

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

(b) This Hon’ble Court be pleased to issue a writ of mandamus or
a writ in the nature of mandamus or any other appropriate writor
order or direction under
Article 226 of the Constitution of India
ordering and directing the Respondents and in particular the
Respondent No.7and Respondent No. 4 itself, its officers,
subordinates, servants and agents to clear the goods imported by
the Petitioner vide Bills of Entry Nos. 5520732, 5520871 and
5520536 all dated 01.11.2019;

(c) this Hon’ble Court be pleased to issue a writ of mandamus or
a writ in the nature of mandamus or any other appropriate writor
order 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 imported
vide 7 Bills of Entry bearing Nos. 5520537, 5520538, 5520539,
5520540, 5520541, 5520872 and 5521191 on payment of
Redemption Fine and Penalty;

(d) that pending the hearing and final disposal of this Petition, that
this 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
action to stop the clearance of the goods imported by the
Petitioner vide Bills of Entry Nos. 5520732, 5520871 and
5520536 all dated 01.11.2019;

33

ii. direct the Respondent No.4 ,itself, its officers, subordinates,
servants and agents to clear the goods imported by the
Petitioner vide Bills of Entry Nos. 5520732, 5520871 and
5520536 all dated 01.11.2019;

iii. direct the Respondent No.7 and Respondent No. 4 itself, its
officers, subordinates, servants and agents to release the
goods imported vide 7 Bills of Entry bearing Nos. 5520537,
5520538, 5520539, 5520540,5520541, 5520872 and 5521191
on payment of 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 may deem 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 or a
writ in the nature of certiorari or any other appropriate writ, order or
direction for calling for the records of the present case and after
going through the legality and validity thereof be pleased to quash
and set aside the Directions / Letter issued by Respondent No.5
and 6 on 02.09.2020 (“Exhibit K L”);

(b) This Hon’ble Court be pleased to issue a writ of mandamus or
a writ in the nature of mandamus or any other appropriate writor
order or direction under
Article 226 of the Constitution of India
ordering and directing the Respondents and in particular
Respondent No. 7 and Respondent No.4 itself, its officers,
subordinates, servants and agents to clear the goods imported by
the Petitioner vide Bills of Entry bearing Nos. 5720040, 5720192,
572069, 5722458, 5722730, 5719772, 5722243 and 5722456, all
dated 18.11.2019;

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

i. restrain the Respondent No.3 itself, its officers,
subordinates, servants and agents from taking any further
action to stop the clearance of the goods imported by the
Petitioner vide Bills of Entry bearing Nos. 5720040, 5720192,
572069, 5722458, 5722730, 5719772, 5722243 and 5722456,
all dated 18.11.2019;

ii. direct the Respondent No.4,itself, its officers,
subordinates, servants and agents to clear the goods imported
by the Petitioner vide Bills of Entry bearing Nos. 5720040,

34
5720192, 572069, 5722458, 5722730, 5719772, 5722243 and
5722456, all dated 18.11.2019;

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

(e) for costs of this Petition and the Orders made thereon, and

(f) for such further and other reliefs as this Hon’ble Court may
deem fit in the facts and circumstances of the case.”

25.1. In the writ petitions so filed by the importers, the High Court issued

notice and directed the respondents to file an affidavit within 10 days

while fixing the matter for consideration on 06.10.2020.

26. While the aforesaid writ petitions remained pending with the High

Court, the Commissioner of Customs (Import-II), Mumbai, in exercise of

his powers under Section 129D(2) of the Customs Act, proceeded to

issue separate orders dated 01.10.202012, stating various grounds on

which the said orders-in-original were questionable on legality and

propriety; and directed the authority concerned to apply to the

Commissioner (Appeals) for setting aside the said orders and for passing

a suitable order as deemed fit. The grounds stated in the aforesaid orders

dated 01.10.2020 carry their own relevance for the issues arising in these

appeals and the same may also be noticed in the requisite details.

26.1 In the case of M/s. Raj Grow Impex, the Commissioner found the

following shortcomings: -

a. Non-issuance of show cause notice

12 Being Review Order No. 1/2020-21 in the case of M/s. Raj Grow Impex and Review Order
No. 2/2020-21 in the case of M/s. Harihar Collections.
35
With reference to
Section 124 of the Customs Act, the Commissioner

opined that the order-in-original suffered from a legal infirmity for want of

serving a detailed show cause notice incorporating all the relevant

grounds of confiscation. The Commissioner observed as follows: -

“In the present case, the oral submissions as recorded in the
subject OIO do not have any mention of grounds of confiscation
being communicated to the importer and their submissions
regarding the same, The recordings of personal hearing are
largely with respect to importers contention that as per the Hon’ble
Supreme Court order Customs Authorities to deal with the goods
imported under provisions of
Customs Act, and with regards to
deterioration in the quality of goods. No detailed Show cause was
issued incorporating all relevant ground of prohibitions in the
matter viz suspension of IEC etc. Therefore, the subject order of
ADC suffers from 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 fact that

there was a question-mark about the very existence of the firm in

question; and also referred to the statutory appeals concerning

suspension or 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 of complaints by Jt.
DGFT doubting financial status of the importer that it could be a
shell firm and the same had to be verified at Customs Level.
In this regard, it has been mentioned in the brief facts that the
bank statement of 3 accounts of importer M/s Raj Grow Impex was
scrutinized and financial credentials were forwarded to the Jt.
DGFT, Jaipur vide letter dated 22.11.2019. That despite advisor
from Jt. DGFT that the facts can be verified and put before Hon’ble
court, ADC adjudicated the matter.

There is no discussion regarding cancellation of IEC or
otherwise by DGFT in respect of the said importer. The order is
therefore not a speaking order and in terms of Hon’ble Supreme
Court order, the issue of suspension of IEC has to be examined in
this case. Therefore, in order to follow due process of law, the
order merits review.”

c. The order having been passed on the assumption that the goods
were to be released against redemption fine
36
The Commissioner further observed that the order in question was

passed on the assumption that the goods were required to be released

against redemption fine though various issues including those of

quantitative restrictions were to be taken into consideration. In this regard,

the Commissioner referred, inter alia, to Section 2(33) of the Customs Act

defining prohibited goods as also Sections 111 and 113 thereof. The

Commissioner further reproduced the findings of this Court in the case of

Agricas (supra) on the implication and meaning of the quantitative

restrictions in the subject notifications and observed as under: -

“The adjudicating authority failed to consider the same in this
order. The adjudication authority while addressing the question of
allowing redemption of impugned goods on payment of fine, did
not apply his mind on the legislative intent for imposing restrictions
on the import of Green peas. Redemption has been allowed
mechanically without going into the merits or demerits of
allowing such an option, thus circumventing the legislative
intent behind the restrictions.”
(emphasis in bold supplied)

d. No reasons were given as to why absolute confiscation or re-

export was not taken into consideration

The Commissioner further referred to the fact that the goods

became prohibited under Section 11 of the Customs Act read with Section

3 of the FTDR Act and found omission on the part of the Adjudicating

Authority to take into account the relevant considerations while observing

as under: -

“19. The goods became prohibited under section 11 of the
Customs Act, 1962 read with
section 3 of Foreign Trade
(Development and
Regulation) Act, 1992. Thus, the option of re-
export of the said goods to the original supplier should also have
been taken into consideration. It is now settled law that power of
discretion by the authority is to be exercised based on well-

founded principles and should not be done in a mechanical way. It
is the Adjudicating authority’s bounden duty to give cogent
37
reasons while exercising discretion as to why goods are being
released on redemption fine which he grossly failed to do. He had
an obligation to Revenue and the State, as much as he did
towards the appellant while considering the question of
redemption. The adjudicating authority did not give reasons as
to why absolution confiscation or re-export is not taken into
consideration in view of the facts of the case as listed above.”
(emphasis in bold supplied)

e. Apart from the above, the Commissioner also found the

shortcomings that the Adjudicating Authority, (i) chose to rely on the

accredited laboratory certificate rather than referring the matter to the

designated government agency; (ii) did not conduct an inquiry for

ascertaining market price and margin of profit; and (iii) did not assess the

duty payable on the consignment.

26.2. As regards the matter of M/s. Harihar Collections, the

Commissioner passed an almost identical order on 01.10.2020 with one

basic difference concerning the issue of IEC. Not much of the

observations were made on this issue as were made in the other case of

M/s. Raj Grow Impex but, it was observed that the licence of this importer

was shown as cancelled and this fact was not taken into consideration by

the Adjudicating Authority. Besides this, the order-in-original concerning

this importer was also found suffering from the same shortcomings as

noticed hereinabove.

27. The aforesaid orders dated 01.10.2020 led the Additional

Commissioner of Customs, Group-I, Mumbai to apply to the

Commissioner (Appeals) and on that basis, the matters were examined in

appeal; and came to be decided by the Appellate Authority in its orders-in-

38
appeal dated 24.12.2020. However, before such decision by the

Appellate Authority, the aforementioned writ petitions filed by the

importers were taken up for consideration by the High Court and were

decided by the common order dated 15.10.2020. This common order has

been challenged in the appeal arising out of SLP(C) Nos. 14633-34 of

2020. Therefore, before dilating on the orders-in-appeal dated

24.12.2020, it is necessary to examine the impugned order dated

15.10.2020 in requisite details with the relevant particulars.

The order dated 15.10.2020 and its modification dated 09.12.2020:
The High Court issues mandamus for release of goods.

28. As noticed, the respondent-importers, before passing of the said

order dated 01.10.2020, had already approached the High Court on

15.09.2020 seeking mandamus for clearance of the goods imported by

them while also questioning the communications denying them the

release of the goods in question. In these writ petitions, the High Court

had issued notice and directed the respondents to file an affidavit within

10 days while fixing the matter for consideration on 06.10.2020 but, in the

interregnum, the Commissioner of Customs (Import-I), Mumbai passed

the aforesaid orders dated 01.10.2020 under Section 129D(2) of the

Customs Act.

29. When the writ petitions were heard on 06.10.2020, a submission

was made on behalf of the respondents that after passing of the said

order dated 01.10.2020 by the Commissioner, the writ petitions were

rendered infructuous and were also liable to be dismissed for the writ
39
petitioners 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) against the orders-in-original. Per contra, it was

submitted on behalf of the writ petitioners that the stand so taken was not

only unfair but was untenable too. It was submitted that the respondents

of the writ petitions had attempted to materially alter the subject matter of

the petitions without taking leave of the Court. This apart, it was also

contended that the grounds stated by the Commissioner while directing

the Additional Commissioner to apply for appeal were totally frivolous;

and all the grounds given in the order dated 01.10.2020 were also

countered. It was also submitted that the orders-in-original dated

28.08.2020, issued on 03.09.2020, were holding the field and had neither

been set aside nor stayed by any appellate authority or higher authority;

that the writ petitioners had complied with all the conditions of the orders

and had made the payments; that there was no justifiable reason not to

release the goods in question; and that because of storage of goods in

the customs warehouse, the writ petitioners were suffering huge

expenditure.

30. In its impugned common order dated 15.10.2020, the High Court

took up the petition of M/s. Harihar Collections as the lead case and after

taking note of all the background aspects, first of all took up the issues

related with propriety in passing the order dated 01.10.2020 by the

40
Commissioner when the writ petitions were pending in the High Court. In

this regard, a serious exception was taken that the Commissioner at all

chose to pass the order when the High Court was in seisin of the matter.

The High Court also observed that the suggestion for dismissing the writ

petitions because of the subsequent development or relegating the writ

petitioners to appellate forum amounted to interference with the

administration of justice. The High Court strongly expressed its views in

the following terms: -

“26. When this Court had taken cognizance of the grievance made
by the petitioner and was in seisin of the matter fixing 06.10.2020
for consideration, it was highly improper on the part of
Commissioner of Customs (Import-II) to have passed the order
dated 01.10.2020 without any intimation to or taking leave of the
Court. It needs no reiteration that when the court, that too the High
Court, is in seisin of a matter, an administrative or executive
authority cannot start a parallel proceeding on the very same
subject matter at its own ipse dixit and record a finding. It would
amount to interfering with the dispensation of justice by the courts.
In the instant case, when the Court was set to examine the
grievance of the petitioner regarding non-release of the goods
despite the order-in-original, what was sought to be done was to
present the Court with an order passed in the midst of such
examination keeping the Court totally in the dark saying that the
order-in-original suffers from illegality or impropriety directing the
subordinate authority to apply to the Commissioner (Appeals) to
set aside the order-in-original and then contending that the writ
petition should be dismissed because of the subsequent
development or that the petitioner should be relegated to the
appellate forum to contest the subsequent order. As pointed out
above, this amounts to interfering with the administration of justice
and is thus not at all acceptable. A view may be taken that such an
order should be ignored as it is contumacious.”

31. Having said that, the High Court proceeded to examine the scope

and purport of the powers under Section 129D(2) of the Customs Act and

held that those powers were in the very narrow compass, being

41
essentially of revision and not of review. The High Court also observed

that the Commissioner had three months’ time to pass the said order

which was further extendable by thirty days; and yet, ‘he chose to pass

the order most hastily in the midst of the court proceeding keeping the

court completely in the dark’. Proceeding further, the High Court

summarised the reasons given by the Commissioner of Customs for

taking the view against the orders-in-original in the following terms: -

“29…….. After narrating the facts of the case and the order-in-
original passed by the adjudicating authority, Commissioner of
Customs took the view that the said order is not legal and proper
for the following reasons (mentioned as grounds):-

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

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

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

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

5. adjudicating authority did not discuss as to why he relied
upon the certificate of accredited laboratory rather than referring
the matter to the designated government agency;

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

32. Thereafter, the High Court dealt with the aforesaid grounds of the

order dated 01.10.2020.

32.1. The High Court observed, as regards the first ground relating to

non-issuance of show cause notice, as follows: -

“32.2. In the instant case, petitioner made a request not to issue
show cause notice but to give him personal hearing. This was
42
accepted by the adjudicating authority which power admittedly he
has under the first proviso to
section 124 and he has given
reasons for the same i.e., long pendency and perishable nature of
the consignments.”

32.2. As regards the second ground of non-addressal of the issue of

suspension of import export code of the importer, the High Court referred

to the observations of this Court in Agricas (supra) that such issue was

left open to be decided in the pending statutory appeal; and even

otherwise, the order of suspension dated 06.12.2019 had barred the

importer prospectively and such suspension in no way impacted the

imports in question. The High Court said: -

“33.2. In view of what the Supreme Court had observed the
adjudicating authority could not have taken up and examined such
order of suspension. Besides, from a perusal of the order of
suspension dated 16.12.2019 it is evident that the said order has
barred the petitioner from conducting any further import and export
meaning thereby that it is prospective and in no way impacted the
import made prior to that date which was the subject matter of
adjudication in the order-in-original.”

32.3. The third, fourth and sixth grounds aforesaid were examined

together and the High Court took the view that taking exception to the

order-in-original on the basis of these grounds appeared to be

questionable. The High Court, inter alia, observed as under: -

“34.3. The power under sub-section (1) of section 125 regarding
giving option to the owner or person concerned to pay fine in lieu
of confiscation is discretionary in respect of goods the importation
or exportation whereof is prohibited but in respect of other goods it
is mandatory. Therefore, such a power is available to the
adjudicating authority and he has exercised that power. That apart,
when fine is imposed in lieu of confiscation, sub-section (2) makes
it abundantly clear that the owner or the person concerned would
have to pay in addition to the fine, the customs duty and other
charges. Non-mentioning of the duty payable in the order-in-

43

original is therefore immaterial, as payment of the same is
statutorily mandated under sub-section (2) of
section 125.

xxx xxx xxx

“34.6. In such circumstances, taking exception to the order-in-

original on the above grounds appears to be questionable. As
already discussed, adjudicating authority had the power to give
option to the owner or person concerned to pay fine in lieu of
confiscation which power he exercised and the quantum of fine
was determined after considering various aspects including the
margin of profit suggested by the assessing officer.”

32.4. As regards the fifth ground, the High Court observed that the

laboratory in question was accredited to the customs department and no

fault could be found in the Adjudicating Authority placing reliance on its

report.

33. For what has been noticed in the preceding paragraphs, it would

appear that the High Court not only questioned the propriety in passing of

the order dated 01.10.2020 by the Commissioner of Customs but also

examined the grounds stated therein, for directions to challenge the

orders passed by the Adjudicating Authority; and expressed its views

against tenability of the grounds so suggested by the Commissioner.

However, even after such detailed discussions and observations, the High

Court consciously stopped short of pronouncing finally on the said

grounds because the matter had already been taken in appeal pursuant

to the said order dated 01.10.2020. The High Court, however, observed

that the manner of passing of the said order dated 01.10.2020 was

definitely questionable and further observed that the contents of the said

order and the grounds given, as examined prima facie, did not make out
44
that the order passed by the Adjudicating Authority was suffering from any

such illegality and impropriety that suo motu revisional powers under

Section 129D(2) should have been exercised. The High Court iterated

that on prima facie examination of the stated grounds, the orders-in-

original could not be said to be unlawful or inappropriate or unjust or

beyond the bounds of the Adjudicating Authority. However, it was

reiterated that since application had been filed which would be decided as

an appeal, the High Court was limiting its examination to the justification

or otherwise of not releasing the goods on the strength of the order dated

01.10.2020. These observations of the High Court, occurring in paragraph

36 of the impugned order read as under: -

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

45

34. Thereafter, the High Court recounted the factors that the order-in-

original was already holding the field; the respondents admitted that

redemption fine and personal fine were levied proportionately to the

quantity declared; the petitioner had complied with the terms and

conditions of the order-in-original and had made the necessary payments;

out of charge had been issued; and the petitioner was incurring

substantial expenditure because of warehousing of the goods. Taking

note of these factors, the High Court expressed its views that withholding

of imported goods of the petitioner would not be just and proper; and their

release could not be denied on the basis of the order dated 01.10.2020.

Having said that, the High Court concluded on the writ petitions with the

findings and conclusions occurring in paragraph 37 to 39 of the impugned

order, which read as under: -

“37. We have already discussed and noted that the order-in-
original is holding the field. The same has neither been set aside
nor stayed. Interestingly, respondent Nos.4 to 6 in para 16 of their
affidavit have themselves admitted that the redemption fine and
personal fine were levied proportionately to the quantity declared
in the bills of entry. Petitioner has complied with the terms and
conditions of the order-in-original and made the necessary
payments. Out of charge has been issued. Because of
warehousing of the goods under
section 49 of the Customs Act,
petitioner is required to pay a substantial amount to the customs
authority. In the above context and after thorough consideration of
all aspects of the matter, we are of the view that non-release or
withholding of the imported goods of the petitioner any further
would not be just and proper. At least the grounds given in the
order dated 01.10.2020, which order itself was passed in a highly
improper manner, do not justify that the goods should be withheld
or denied release notwithstanding the order-in-original and
compliance thereto.

Conclusion

38. Consequently, we direct the respondents more particularly
46
respondent Nos.4 to 7 to forthwith release the goods of the
petitioner covered by bills of entry bearing Nos.5720040, 5720192,
572069, 5722458, 5722730, 5719772, 5722243 and 5722456, all
dated 18.11.2019. Similar direction also follows in Writ Petition
No.3502 of 2020 in respect of bills of entry bearing Nos.5520732,
5520871 and 5520536, all dated 01.11.2019.

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

35. As noticed, the appellants had approached this Court against the

aforesaid order dated 15.10.2020 on 26.11.2020 by way of SLP(C) Nos.

14633-34 of 2020 but the SLPs did not come up for consideration and, in

the meantime, the importer M/s. Raj Grow Impex moved an application

before the High Court for modification of the order dated 15.10.2020 and

for incorporating the left-over bills of entry, which did not occur in

paragraph 38 of the original order dated 15.10.2020. Though it was

pointed out before the High Court that SLPs had already been filed in this

Court against the order dated 15.10.2020 but it was also an admitted

position that until then, no stay had been granted by this Court. Having

noticed the submissions, the High Court deemed it just and proper to

issue the modification order on 09.12.2020 in the following terms: -

“10. Having heard learned Counsel for the parties and on due
consideration, we modify our judgment and order dated 15th
October, 2020 by insertion/addition of the following sentence in
paragraph 4.1 as well as in paragraph 38 thereof. The last line in
paragraph 38 would thus read as under:-

“In addition, respondent Nos.4 to 7 are also directed to
forthwith release the goods of the petitioner covered by
seven Bills of Entry bearing Nos. 5520537, 5520538,
5520539, 5520540, 5520541, 5520872 and 5521191 on
payment of redemption fine, penalty, customs duty and
any other dues that may be payable as per law.”
47

36. As noticed, the High Court, even while making several

observations and comments that the Commissioner had acted wholly

improper in issuing the order dated 01.10.2020; and even while indicating

its views that the grounds stated by the Commissioner may not be

tenable, did not return final findings on such grounds and made this

aspect repeatedly clear in paragraph 36 of the order dated 15.10.2020

that the matter (on merits) would be examined in appeal by the

Commissioner (Appeals).

37. The Appellate Authority i.e., the Commissioner of

Customs (Appeals), dealt with the matter in separate appeals registered

in the individual cases of the private respondents and decided the same

by way of separate orders-in-appeal dated 24.12.2020. Having regard to

the questions involved, it would also be appropriate to take note of the

salient features of the orders so passed by the Appellate Authority on

24.12.2020.

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

38. In the order-in-appeal dated 24.12.2020 in relation to the case of

M/s. Raj Grow Impex, the Appellate Authority thoroughly examined the

contents of the order-in-original dated 28.08.2020 and the grounds of

appeal as also the submissions and counter submissions of the parties;

and thereafter, formulated the issues requiring determination as follows: -

“52.2. From the plain reading of the submissions dated
16.12.2020 made by the Respondents, I have observed that there
has been some technical/peripheral issues raised by them, which
48
includes maintainability of the present appeal on the grounds like
Additional Commissioner being equivalent to the Commissioner of
Customs and hence, the appeal, if any, will not lie with
Commissioner(Appeals) and the issue of Review Vs Revision as
dealt by Hon’ble High Court in its order. Further, from the grounds
of appeal, the major issues which needs to be decided are (i)
whether Additional Commissioner of Customs was correct in going
ahead with the adjudication despite non issue of show cause
notice, cancellation of IEC, etc. (ii) whether the impugned goods is
liable for absolute confiscation or redemption under Section 125(1)
of the Act should have been considered or should have been
redeemed for the purpose of re-export to the original supplier and

(iii) whether Redemption Fine and Penalty imposed is adequate
looking into the gravity of the offense. In my discussions below, I
will deal with these issues.”

38.1. After rejecting the peripheral/technical issues raised by the

importer, as regards maintainability of the appeal and his jurisdiction to

deal with the same, the Appellate Authority entered into the determination

of major issues involved in the matter. It would be relevant to notice that

one of the arguments urged before the Appellate Authority in opposition to

the appeal was that all the grounds of appeal had been examined by the

High Court in its order dated 15.10.2020 and, therefore, the appeal

merited rejection. This contention was countered on behalf of the

appellant with the submission that only the implementation of the order

dated 28.08.2020 was the issue for consideration before the High Court;

and any prima facie observation by the High Court on the grounds stated

in the order dated 01.10.2020 cannot be treated as final views of the High

Court, particularly when the entire matter was left open for adjudication by

the Appellate Authority. The Commissioner (Appeals) rejected this

objection of the importer while observing as under: -

49
“52.7. I agree with the above submissions of the Appellant and
it has forcefully rebutted the contentions of the Respondent that
since the Hon’ble High Court has already examined all the
grounds of appeal, the same may not be open for examination
again. What basically is pleaded by the respondent is that the
order dated 15.10.2020 of Hon’ble Bombay High Court has shut
down appellate mechanism and consequently, would bar Revenue
from pursuing the present appeal before Commissioner (Appeals).
This plea is both incorrect, misdirected and misconceived for the
following reasons:

a) What is before the present Appellate Authority is the review of
the Adjudication order dated 28.08.2020, purely on merits.
Whereas what was decided by the order dated 15.10.2020 of
Hon’ble High Court of Bombay is one relating to the release of the
goods and not the merits of the adjudication order, which was not
even assailed before Hon’ble Court.

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

c) Hon’ble High Court of Bombay having allowed this Appellate
Authority to decide the appeal, this authority had provided
adequate opportunities of hearing, exchange of written submission
and receiving the rejoinder submissions and therefore now can
proceed to pass final orders and once final order gets passed, the
Order of Adjudication would merge into the same. The said
process has not been barred by the Hon’ble High Court.
Considering the above facts, I have decided to exercise my
appellate jurisdiction in this matter and therefore, the contentions
of the Respondent in this regard is not acceptable.”

38.2. After taking note of the findings of this Court in Agricas (supra),

the Appellate Authority proceeded to deal with the grounds of appeal in

the following manner: -

a. As regards non-issuance of show cause notice, the Appellate

Authority observed that the respondent-importer had expressly waived

the right to show cause notice and though the Adjudicating Authority was

entitled to proceed with adjudication, the order passed by him ought to be
50
in sync with the law in terms of
Sections 111 and 125 of the Customs Act

read with the ratio in Agricas (supra).

b. As regards non-addressal of the issue of suspension of IEC, the

Appellate Authority observed that by an order dated 05/06.12.2019, the

IEC of the said importer was suspended and the ASG, Rajasthan by his

letter dated 06.12.2019, had informed the appellant that the firm was non-

existent and some other firm dealing with the aviation business was

running its office as tenant for last 10 years. The Appellate Authority

observed that as per the directions of this Court in Agricas (supra), the

statutory appeal, if any, preferred against suspension or termination of

IEC, was to be decided in accordance with law. The Appellate Authority

took note of the fact that proceedings having been taken up rather at a

brisk pace after the decision of this Court in Agricas (supra) and the

material aspects having been omitted from consideration but, left this

aspect of the matter at that, while observing as under: -

54.2. Non-addressal of the issue of suspension of IEC of
the importer
………….In this regard, I observe that there has been a tearing
hurry to adjudicate the matter as the time lines of the case
suggests. Though what the Respondent says has merits at the
same time the reasons of cancellation of IEC by the order of
DGFT as contended vide Para 6 of their order should have raised
concerns in the minds of the adjudicating authority. If there has
been a mis-declaration whereby the bonafide of the importer has
been in question, the same should have been considered in the
right earnest and to say the least, the OIO should not have been
passed in a tearing hurry. So on one side there has been waiver of
show cause notice and on the other side, there has been a hurry
to adjudicate the matter despite the fact that there has been mis-

declaration on the part of the importer as brought out in the order
of DGFT. If a full-fledged investigation by the Customs authorities
would have been launched it may have brought out the facts like
51
mis-declaration, etc., but since it is not a subject matter of this
appeal, hence refrain to discuss about it any further.”

c. After the aforesaid, the Appellate Authority dealt with the core

questions, as regards operation of Section 125 of the Customs Act and

exercise of discretion by the Adjudicating Authority in this case. The

Appellate Authority took note of the ratio in the decisions of this Court in

the cases of Garg Woollen Mills (P) Ltd. v. Addl. Collector of

Customs, New Delhi: (1999) 9 SCC 175, Sant Raj and Anr. v. O.P.

Singla and Anr.: (1985) 2 SCC 349 and Reliance Airport Developers

(P) Ltd. v. Airports Authority of India and Ors.: (2006) 10 SCC 1 as

also the relevant provisions of the Customs Act and the FTDR Act and

stated its findings against the proposition of the release of goods and in

favour of their absolute confiscation, inter alia, in the following words: -

“54.3. Non-consideration of various issues in allowing
redemption of goods
xxx xxx xxx
e. The Revenue seems to have made a strong case of absolute
confiscation which is in sync with the decision of the Hon’ble
Supreme Court dated 26.08.2020 on the grounds that on one
hand the Hon’ble Supreme Court upholds the vires of the Notfn.

imposing a restriction on import quantities while on the other hand
the adjudicating authority defeats the objective of constitutionally
valid Notifications by allowing the goods to mingle in the Indian
markets on payment of a Redemption Fine and Penalty. In the
above submissions of the Appellant, they have countered the
submissions of the Respondent in detail and on the basis of Case
Laws.
Section 125 of the Act makes clear distinction between
prohibited goods and other goods and obligates release of other
goods on payment of Redemption Fine…………

f) Hence the law is settled that restricted goods under the Act are
deemed to be prohibited goods if the conditions subject to these
goods have not been complied with. The Hon’ble Supreme Court
in the case of M/s Agrica’s LLP others has already held that the
52
steps can be initiated as per the
Customs Act 1962 and the
subject goods should be dealt with under the provision of FT (DR
) Act, 1992. Since the DGFT notification dated 29.02.2019 has
been issued under section 3(2) of FT(DR ) Act, 1992, has
imposed restriction upon the import of the goods, the subject
goods under section 3(3) of FT(DR) Act,1992 goods deemed to
be prohibited under
section 11 of the Customs Act, 1962. Although
under
Section 125 of the Customs Act, 1962 in the case goods
imported a discretion is conferred on the Customs authorities
to release the goods which are even prohibited on payment
on fine in lieu of confiscation the same provision mandates
reasonable exercise thereof and requires taking into
consideration circumstances relevant of such exercises of
discretion. Therefore, in these cases the adjudicating
authority needs to exercise his discretion diligently and free
from arbitrariness and unfairness…….

g) Further, the Hon’ble Supreme Court in its judgment dated
26.08.2020, in Para 34 has given quantitative details that
“However, in view of the interim orders by various High Courts
where the actual imports were to the tune of 8.51 Lakh MT and
6.52 Lakh MT in 2018-19 and 2019-20, though the annual quota
for these two years was 1/1.5MT only. Gram is being sold at Rs.
4000-4200 per quintal which is below the MSP which is Rs. 4875
per quintal, whereas the imported CIF value of yellow peas is
2028 per quintal”. Further in Para 48 the Hon’ble Supreme Court
has held that imports, if any made, relying on interim orders would
be contrary to the notifications and the trade notices issued under
the FTDR Act, 1992. And in Para 46 the Hon’ble Court held that
the importers cannot be said to have had bonafide belief and took
their chance for personal gains and profits importing under interim
orders and accordingly have to face the consequences in law. So
the Hon’ble Supreme Court has noted that quantities much
more than annual quota have already been imported by the
importers on the strength of interim orders and I agree with
the contention of the Appellant that under these
circumstances allowing any import inside the country, even if
against fine and penalty, is patently perverse. Further, as
detailed earlier, the domestic production of pulses and therefore,
the Govt. has imposed restrictions giving only a small window of
annual import under defined quota prices. The Govt. has also
procured peas and pulses under various schemes at Minimum
Support Price. Consequently, the buffer stock with the Govt. is
very high. Therefore, any additional supply of peas and
pulses would be against the interest of the farmers and it
would have an adverse impact on the economy and would
defeat the very purposes of import restrictions. Based on
these findings I observe that the impugned goods merited absolute
confiscation.”
(emphasis in bold supplied)
53
d. The Appellate Authority also found the assessment of margin of

profit and quantum of penalty in the order-in-original wanting in the

requisite analysis and assessment; and observed as under: -

“h. Further, the Revenue has raised objection in the manner of
calculating the quantum of margin of profit and the way the same
has been divided between fine and penalty and has contended
that the order stands on flimsy grounds and beyond the accepted
principles of law. The Revenue explained that how the
Redemption Fine and Penalty serves the mutually exclusive
purposes i.e. while the Redemption Fine nullifies the margin of
profit, the penalty acts as a deterrent. But the manner in which the
adjudicating authority has conveniently divided the margin of profit
between Redemption Fine and Penalty is questionable and is bad
in law. Further, Revenue has also objected on quantum of
Redemption Fine and Penalty and pleads that the same is
abysmally low. On a plain reading of Para 12 of the order of the
adjudicating authority, any person of average intelligence can
notice that how perfunctorily the margin of profit has been decided
in this case. The adjudicating authority places complete reliance
on the submissions made by the importer and takes them as
gospel truth forgetting the fact that he is also obligated to look into
the interests of revenue. The adjudicating authority should have
been much more diligent, cautious, vigilant, meticulous and should
have been more circumspect in his approach in understanding the
letter and spirit of the judgment of the Hon’ble Supreme Court.

Looking into the gravity of the offence, I observe that the quantum
of penalty imposed in the OIO under
Section 112(a)(i) of the
Customs Act, 1962, is on a much lower side and it is needed to be
enhanced substantially.”

38.3. In view of the above, the Appellate Authority allowed the appeal,

ordered absolute confiscation of the goods covered by seven bills of entry

that had not been released while observing that the goods covered by

other three bills of entry (which had already been released) were not

available for absolute confiscation and accepted that as fait accompli

while directing appropriation of the redemption fine paid in this regard.

The Appellate Authority also enhanced the penalty from Rs. 1.485 crores

54
to a sum of Rs. 5 crores under
Section 112(a)(i) of the Customs Act and

passed the final order in the following terms: -

“57. Accordingly, I pass the following order :

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

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

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

39. From the submissions made and the material placed on record, it

is noticed that a similar order-in-appeal in relation to the other importer

M/s. Harihar Collections was also passed by the Appellate Authority on

24.12.202013. On the facts of that case, the Appellate Authority found that

the goods covered by the said eight bills of entry had already been

cleared and were not available for absolute confiscation. This was also

accepted by the Appellate Authority as fait accompli while directing

appropriation of the redemption fine paid in this regard but the penalty of

Rs. 2.35 crores in that case, as imposed by the Adjudicating Authority,
13 Placed on record as Annexure R-1 (p. 255) in the counter affidavit on behalf of this importer.
55
was enhanced to a sum of Rs. 10 crores under
Section 112(a)(i) of the

Customs Act. The operative portion of the order-in-appeal concerning the

importer M/s. Harihar Collections reads as under: -

“ORDER
i. I order absolute confiscation of the goods covered under Bills of
Entry Nos. 5720040, 5720192, 5720693, 5722458, 5722730,
5719772, 5722243 and 5722456 all dated 18.11.2019 under
Section 111(d) of the Customs Act, 1962 read with Section 3(3) of
Foreign Trade (Development
Regulation) Act, 1992. But, since
the goods covered under these 08 Bills of Entry have already been
cleared and not available for absolute confiscation, I am
constrained to accept it as fait accompli and Redemption Fine
already paid, if any, in this regard, is ordered to be appropriated.
ii. I set aside the Penalty of Rs.2.35 Crores imposed by the lower
authority and impose a Penalty of Rs.10,00,00,000/- ( Rupees Ten
Crores only ) on M/s Harihar Collections, 47, Hathi Babu Ka Baug,
Bani Park, Jaipur, Rajasthan – 302016, under
Section 112(a)(i) of
Customs Act 1962, and any Penalty paid, if any, against the
impugned Order-in-Original is ordered to be appropriated towards
this new enhanced Penalty.

iii. The order of the lower authority dated 28.08.2020 is modified to
the above extent and the Appeal filed by the Revenue stands
disposed off accordingly.”

Another round in High Court: Challenge to the order-in-appeal dated
24.12.2020 and stay order by the High Court dated 05.01.2021

40. Though the person aggrieved by the said orders-in-appeal could

have preferred statutory appeal under Section 129A of the Customs Act

before the Customs, Excise and Service Tax Appellate Tribunal14 but, the

respondent-importer M/s. Raj Grow Impex approached the High Court

against the order-in-appeal by way of Writ Petition (ST) No. 24 of 2021

and also filed a contempt petition stating willful disobedience of the High

Court’s (modification) order dated 09.12.2020 because the goods covered

by the said order had not been released.

14 ‘CESTAT’ for short.

56

41. Taking up the writ petition so filed by the importer, the High Court

referred to its previous orders dated 15.10.2020 and 09.12.2020 and took

exception against the impugned order-in-appeal dated 24.12.2020 while

observing that the observations made and the directions issued by the

Appellate Authority were not correct and were running contrary to its

directions. The High Court stayed the operation of the order-in-appeal

dated 24.12.2020 and also directed the authorities concerned to comply

with the directions contained in the orders dated 15.10.2020 and

09.12.2020; and while placing the matter on 27.01.2021, the High Court

required the counsel for the Department to state compliance. The relevant

part of the order dated 05.01.2021 in the fresh writ petition so filed by the

importer M/s. Raj Grow Impex reads as under: -

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

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

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

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

41.1. This order dated 05.01.2021 is challenged by the appellants in the

appeal arising out of SLP(C) No. 1037 of 2021.

57

42. The High Court also entertained the contempt petition, being

Contempt Petition (L) No. 9351 of 2020 by a separate order dated

05.01.2021 and while issuing notice therein, directed the authorities

concerned to remain personally present in the Court on 21.01.2021. The

order so passed by the High Court in contempt petition was challenged in

separate appeal by the appellants; and, as noticed, on 18.03.2021, this

Court found no reason for continuation of contempt proceedings in the

High Court and closed the same while allowing the appeal so filed by the

appellants15.

43. After the narration of all the material factual and background

aspects as also the orders passed at different stages by different

authorities and Courts, we may now refer to the rival submissions to

specify the stand of the respective parties in these appeals.

Rival submissions

44. The learned ASG appearing for the appellants has forcefully

argued against the orders so passed by the High Court while asserting

that the goods in question are liable to absolute confiscation.

44.1. Assailing the orders passed by the High Court, the learned ASG

would submit that the High Court has erred in entertaining the writ

petitions and in passing the order dated 15.10.2020 for implementing the

orders-in-original dated 28.08.2020 and thereby, for release of the subject

goods though the orders so passed by the Adjudicating Authority were not
15 Being C.A. No. 985 of 2021 arising out of SLP(C) No. 1097 of 2021.
58
final and were subject to appeal; and, in fact, the appeals had indeed

been filed pursuant to the review orders dated 01.10.2020. With reference

to the observations and directions of the High Court in the order dated

15.10.2020, the learned ASG has pointed out that on one hand, the High

Court permitted the Commissioner (Appeals) to proceed with the appeals

filed by the Department but, at the same time, also directed that the

goods be released. According to the learned ASG, the directions for

release of the goods rather defeated the purpose of adjudication before

the Commissioner (Appeals) on the question as to whether or not the

goods were liable to be confiscated absolutely. On the same lines, it has

also been contended that when the Appellate Authority passed the

orders-in-appeal on 24.12.2020 and one of the importers preferred

another writ petition, the High Court entertained the same and granted

stay but, omitted to consider that the order-in-appeal could have been

challenged in regular statutory appeal before CESTAT under Section

129A of the Customs Act.

44.1.1. As regards the power under Section 129D of the Customs Act, the

learned ASG has submitted that thereunder, the higher authority only

performs the function of reviewing on grounds relating to legality or

propriety and directs the lower authority to file an application for appeal;

and exactly that was done in the orders dated 01.10.2020.

44.2. As regards the question as to whether the subject goods are to be

treated as ‘restricted’ or ‘prohibited’, the learned ASG has referred to sub-

59
sections (2) and (3) of Section 3 of the FTDR Act and
Sections 2(33) and

11 of the Customs Act and has submitted that the notifications in

question, placing a quantitative restriction on the import of certain pulses,

which were upheld by this Court by the judgment dated 26.08.2020 in

Agricas (supra), had been issued under sub-section (2) of Section 3 of

the FTDR Act; and since the goods imported by the respondent are

covered by the said notification, they are deemed to be ‘prohibited’ goods

under Section 11 of the Customs Act, by virtue of sub-section (3) of

Section 3 of the FTDR Act. While emphasizing on Section 2(33) of the

Customs Act, the learned ASG has also submitted that through the

notifications in question, an upper limit of 1.5 lakh MTs of import quantity

was placed and, therefore, any import within the cap of 1.5 lakh MTs will

be the import of restricted goods but, in excess of the cap of 1.5 lakh MTs,

the goods would lose the character as restricted goods and would

become prohibited goods. The learned ASG has particularly relied upon

the enunciation on the amplitude of the words ‘any prohibition’ in Section

111(d) of the Customs Act in the case of Sheikh Mohd. Omer v.

Collector of Customs, Calcutta and Ors: (1970) 2 SCC 728 holding,

inter alia, that the wide words ‘any prohibition’ mean ‘every prohibition’;

and restriction is also a type of prohibition. The learned ASG has further

referred to the decision in the case Commissioner of Customs, New

Delhi v. Brooks International Ors: (2007) 10 SCC 396 to submit that

if the conditions for import and export of goods are not complied with, it

60
would be considered to be the case of prohibited goods. Another decision

of this Court in Om Prakash Bhatia v. Commissioner of Customs,

Delhi: (2003) 6 SCC 161 has also been referred.

44.3. The learned ASG has also addressed the issue pertaining to the

mode of monitoring the limit specified in the notifications and has

submitted that every importer has to apply and obtain a licence for

importing restricted goods; and the goods could be cleared from the port

only upon obtaining such a licence. Every importer is allotted a quota to

be imported; the approving authority has to apply his mind and approve

the licence; and only upon such satisfaction of the approving authority

and issuance of licence that an importer gets a right to import and else,

right to import is not a vested right, as held in P.T.R. Exports (Madras)

Pvt. Ltd. and Ors. v. Union of India and Ors.: (1996) 5 SCC 268. It has

been argued that obtaining the licence being a condition precedent for

importing restricted goods, any violation of this condition would render the

goods as prohibited goods. On the importance of obtaining a valid licence

wherever required in the context of import/export related transactions, the

learned ASG has referred to the decision in S.B. International Ltd. and

Ors. v. Asstt. Director General of Foreign Trade and Ors.: (1996) 2

SCC 439.

44.4. On the question regarding treatment of the subject goods, the

learned ASG has made elaborate submissions on the scope of Section

125 of the Customs Act and has contended that thereunder, a clear

61
distinction is made between ‘prohibited goods’ and ‘other goods’

inasmuch as in the case of ‘other goods’, Section 125 obligates release of

the same against redemption fine, whereas there is no such compulsion

when it comes to the ‘prohibited goods’. The Adjudicating Authority under

the Customs Act can absolutely confiscate the prohibited goods using its

judicial discretion. The learned ASG would argue that both, in terms of

provisions of the Customs Act and the decisions rendered, restricted

goods under the Customs Act are deemed to be prohibited goods, if the

conditions attached to restricted goods are breached, as in the present

case. The learned ASG has strongly relied upon the decision of this Court

in the case of Garg Woollen Mills (supra) and has contended that while

deciding a similar customs matter with presence of the elements of

breach of law, trade violations and lack of bona fide, this Court approved

the directions for absolute confiscation. The learned ASG has also

submitted that the orders passed by the Adjudicating Authority, as

directed to be implemented by the High Court, in fact, defeat the purpose

of the notifications in question as also the findings and effort of this Court

in rendering the judgment dated 26.08.2020 in the case of Agricas

(supra).

44.5. While dealing with the question of exercise of judicial discretion,

the learned ASG has referred to the decisions in Sant Raj and Reliance

Airport Developers Pvt. Ltd. (supra) to submit that the imports in

question, being patently illegal and against the object of the

62
constitutionally valid notifications, cannot be allowed to be cleared in any

manner into India for further sale in the Indian market even after the

imposition of duty and redemption fine. While maintaining that the goods

in question deserve to be confiscated absolutely, the learned ASG has

submitted that the notifications have put an embargo on the quantity of

pulses that can be imported into the country and allowing any import over

and above the restriction would be against the very purpose of the

restriction. The learned ASG has referred to the observations made by

this Court in Agricas (supra), as regards the excessive quantity having

been imported under the cover of the interim orders in the past, much

beyond the annual quota fixed as also the observations that the present

importers had worked only for personal gains and had not acted bona

fide. Thus, the exercise of discretion by the Adjudicating Authority being

not in accord with law, cannot be approved.

44.6. As regards the decision in the case of Commissioner of

Customs v. Atul Automations Private Limited: (2019) 3 SCC 539,

strongly relied upon by the importers, the learned ASG has argued that

therein, this Court upheld the decision for release of the goods for the

same being not prohibited goods and for the reasons, inter alia, that: (i)

the goods in question were MFDs (Multi-Function Devices, Photocopiers

and Printers) and they had a utility/shelf life for 5-7 years; and (ii) the

Central Government permitted the import of used MFD’s that had utility

for 5 years because MFDs were not manufactured locally in India. It has

63
been argued that in contrast to the fact situation in the case of Atul

Automations (supra), in the present case, this Court had held that

excess imports will not be in the interest of the farmers, and the excess

imports made in contravention of the notifications but under the cover of

the interim orders were not bona fide; and further that such imports were

made with the motive to earn profits and gains and therefore, the

importers should suffer the consequences. Thus, according to the learned

ASG, the judgment in Atul Automations (supra), proceeding on its own

facts, will not have a bearing on the facts and circumstances of the

present case.

44.7. The learned ASG has also referred to a decision of the Kerala

High Court in the case of Shri Amman Dhall Mill v. Commissioner of

Customs: (2021) SCC OnLine Ker 362 to submit that the said High

Court, as regards similar imports, has upheld the orders for absolute

confiscation; and the goods imported by the respondent deserve the

same treatment.

44.8. The learned ASG would, therefore, submit that the fine and

penalty imposed by the Commissioner (Appeals) may be upheld; the

importers may be allowed to re-export the goods out of India on payment

of redemption fine of 5%; and the appellants may be permitted to

absolutely confiscate the goods, of such of the importers who do not opt

for re-export within the time stipulated by this Court.

64

45. Per contra, the learned senior counsel appearing for the

respondent-importer M/s. Raj Grow Impex has strenuously argued in

support of the orders-in-original and the orders passed by the High Court

while asserting that release of goods with payment of redemption fine is

in accord with law.

45.1. The learned senior counsel has referred to the material

background aspects as noticed hereinbefore and has pointed out that

ultimately, after the order dated 15.10.2020 of the High Court of

Judicature at Bombay, the appellants permitted the release of goods

covered by three bills of entry for which, redemption fine and penalty had

been paid and OOC had been issued but, the goods covered by other

seven bills of entry, for which payment of duty, fine and penalty was made

later, were not released. The learned counsel has also referred to the

proceedings relating to appeal before the Commissioner (Appeals) and

the objections taken by the respondent against jurisdiction of the said

Appellate Authority but, according to the learned counsel, the Appellate

Authority, within three days of hearing, hurriedly proceeded to pass the

order-in-appeal dated 24.12.2020, setting aside the order-in-original

dated 28.08.2020 and ordering absolute confiscation of the goods while

enhancing the penalty.

45.2. While supporting the order-in-original dated 28.08.2020 as also

the orders passed by the High Court on 15.10.2020, 09.12.2020 and

05.01.2021, the learned senior counsel would argue that in true operation

65
of the provisions of the
Customs Act and the FTDR Act read with the

pronouncement of this Court in Agricas (supra), the goods in question

were not liable to be confiscated absolutely and had rightly been ordered

to be released on payment of redemption fine.

45.3. With reference to the decision of this Court in Agricas (supra), the

learned counsel has strenuously argued that once this Court has held, in

unequivocal terms, that the notifications in question were issued imposing

restrictions, may be not under Section 9A of the FTDR Act but under

Section 3(3) thereof, the question does not arise to interpret the same as

prohibition on import of the subject goods.

45.4. Again, with reference to the notifications in question, the learned

counsel would argue that the contentions of the appellants are very much

against the spirit of the said notifications dated 29.03.2019 and the trade

notice inasmuch as under the said notifications, the policy conditions qua

the goods in question were not revised and they were not placed in the

‘prohibited’ category. The DGFT’s interpretation on its own website has

also been referred where, in answer to a query as to ‘what is a restricted

item’, the DGFT stated that all goods, import of which is permitted only

with an Authorisation/ Permission/ License or in accordance with the

procedure prescribed in a notification/ public notice are ‘Restricted’

goods. It has, thus, been contended that whenever a licence is required

for import of certain goods, the same is a ‘restricted’ item and not a

66
‘prohibited’ one; and that the appellants are not right in their contentions

that the peas were a ‘prohibited’ item.

45.5. The learned senior counsel has elaborated on his submissions

with reference to the connotation of the terms ‘prohibited’ and ‘restricted’,

particularly with reference to Section 2(33) of the Customs Act and

Clause 9.47 of the Trade Policy as also Schedule I thereof. Further, while

placing strong reliance on the decision of this Court in Atul Automations

(supra), the learned counsel has submitted that this Court has clearly

underscored the difference between what is ‘prohibited’ and what is

‘restricted’. It is submitted that in Atul Automations, the goods imported

without authorisation were found to be restricted goods; and redemption

of the consignment on payment of the re-assessed market price with fine

was upheld. The learned counsel would submit that the restricted goods

have the option of being redeemed and do not deserve the treatment of

absolute confiscation, which could be applied only to absolutely prohibited

goods.

45.6. In the alternative line of submissions, it has been contended that

even if the goods in question are treated to be ‘prohibited’, the discretion

to allow their redemption/release on fine had been with the Adjudicating

Authority and such a discretion, as exercised in the present case, calls for

no interference. The contentions have been elaborated with reference to

the use of the expression ‘may’ in regard to the prohibited goods in

Section 125 of the Customs Act; and it has been argued that it is not the

67
expression that the Adjudication Authority ‘shall not’ give an option to pay

fine in lieu of confiscation. It is submitted that Adjudicating Authority is to

exercise the discretion provided to him under Section 125 of the Customs

Act objectively and this discretion cannot be taken away through a judicial

proceeding. In regard to this line of argument, strong reliance has been

placed on the decision of this Court in the case of Hargovind Das K.

Joshi and Ors. v. Collector of Customs and Ors.: (1987) 2 SCC 230.

Further, with reference to the decision of this Court in the case of Sant

Raj (supra), it has been argued that whenever something has to be done

within the discretion of the authority then, that thing has to be done

according to the rules of reasons and justice and not according to private

opinion. In other words, discretion means sound discretion guided by law.

45.7. It has also been contended that only 17,000 MTs of yellow peas

imported by this respondent are to be released out of the total imported

quantity of 24,815 MTs. This respondent is ready and willing to pay duty

and redemption fine as deemed fit and proper by this Court but the option

of re-export may not be a feasible option at this stage for, it is a time-

consuming process with logistical and transportation issues and more

particularly, in the present pandemic situation; and the respondent has

already suffered huge losses by way of detention, demurrage, rent,

interest, insurance and other related costs. With these submissions, the

fervent plea on behalf of this respondent-importer has been to allow the

redemption of remaining goods.

68

46. The learned counsel appearing for the other respondent-importer

M/s. Harihar Collections, while arguing in tandem with the aforesaid

contentions of the senior counsel, has made yet further submissions

against the proposition of absolute confiscation16.

46.1. With reference to sub-sections (2) and (3) of Section 3 of the

FTDR Act and Section 11 of the Customs Act, it is submitted that all

goods to which an order under sub-section (2) of Section 3 applies shall

be deemed to be the goods of which import has been ‘prohibited’ under

Section 11 of the Customs Act but in the present case, no such order

under sub-section (2) prohibiting the subject goods having been issued,

sub-section (3) of Section 3, creating the deeming fiction is not attracted

in the present case. It has been contended that although there is specific

power to prohibit specified classes of goods by an order to be published

in the official gazette but no such gazette has been placed by the

appellants before this Court. Equally, no such notification under Section

11 of the Customs Act prohibiting the subject goods, either absolutely or

subject to any condition, has been placed on record; and no notification in

terms of Sections 11A and 11B of the Customs Act, notifying the subject

goods, has been shown. Further, with reference to the decision of this

16 During the course of submissions, a line of argument was sought to be adopted with
reference to sub-section (3) of
Section 11 of the Customs Act that any prohibition or restriction
or obligation relating to import of goods provided in any other law for the time being in force
shall be executed only if such prohibition or restriction or obligation is notified under the
provisions of this Act and no such notification having been made, the contentions of the
appellants were required to be rejected. However, the learned ASG pointed out that the said
sub-section (3) of
Section 11 of the Customs Act, as proposed to be inserted by the Finance
Act, 2018, was to come into force from a date to be notified but the same has not been notified
as yet. Accepting this position, the said argument has been withdrawn on behalf of the
respondent with apology. Having regard to the circumstances, we would leave this aspect of the
matter at that only.

69

Court in Agricas (supra), it has been submitted that by the notifications in

question, the import of peas was revised from ‘free’ to ‘restricted’

category; and the goods were clearly mentioned as ‘restricted’. Yet

further, it has been pointed out that such restriction was not applicable to

the Government of India’s import commitments under any treaty,

agreement or MoU. With reference to these factors, the contention has

been that the goods in question, meant for human consumption, were not

absolutely prohibited for import, unlike specifically notified prohibited

goods. Simply put, according to the learned counsel, goods in question

were not of ‘absolutely prohibited’ category from any point of view.

46.2. It has further been submitted that since the imports in question

were not covered by the import licence, the goods in question were to be

dealt with under Section 125 of the Customs Act; and had rightly been so

dealt with by the Adjudicating Authority, who held them liable to

confiscation and to be redeemed on payment of redemption fine and duty,

which the Adjudicating Authority indeed levied apart from personal

penalty. It has been pointed out that pursuant to the payment of the entire

duty, fine and penalty, aggregating to a sum of about Rs. 44.21 crores,

OOC was given and the goods were allowed clearance after the authority

was satisfied that they were fit for human consumption. The order-in-

appeal dated 24.12.2020 in relation to this importer has also been

referred with the submissions that therein, the Commissioner of Customs

(Appeals) has enhanced the penalty to Rs. 10 crores from Rs. 2.35 crores

70
and the importer is desirous of availing statutory remedy of challenging

this enhancement of penalty before the CESTAT; and it is prayed that the

opportunity to avail the appropriate remedy may not be curtailed for this

importer. In this regard, it has also been submitted that the High Court, in

its order dated 15.10.2020, never injuncted the Department from

proceeding with their statutory appeal and, following the same thread, the

respondent-importer may also be allowed to exercise its right of appeal

before the CESTAT; and, for that matter, any observation made in the

present matter may not prejudice such right of appeal.

46.3. It has further been argued that the entire quantity of 38,500 MTs,

as imported by this respondent-importer, was finally allowed to be cleared

by the authorities concerned after the order of the Bombay High Court

dated 15.10.2020 and hence, when the goods are not available for

confiscation, no redemption fine could be imposed. A decision of Bombay

High Court in the case of Commissioner of Customs (Import), Mumbai

v. Finesse Creation Inc.: (2009) 248 ELT 122 has been referred and it

has also been pointed out that an SLP against the said decision was

dismissed by this Court on 12.05.2010.

46.4. With reference to the provisions of the FTDR Act and the Customs

Act as also the decisions of this Court in Hargovind Das K. Joshi and

Atul Automations (supra) and that of Punjab and Haryana High Court in

Horizon Ferro Alloys Pvt. Ltd. and Ors. v. Union of India and Ors.:

(2016) 340 ELT 27, it has been argued that the subject goods are not

71
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 been violated, they were

rightly taken by the Adjudicating Authority as acquiring the tag of being

deemed to be prohibited; and hence, the discretion of ‘may’ as given in

Section 125 of the Customs Act was rightly applied. It is submitted that

even the order ultimately passed in the case of Om Prakash Bhatia

(supra) rather operates against the stand of the appellants.

47. As noticed, two of the other importers have moved the

applications for intervention. These importers are said to be similarly

placed as the private respondents of these appeals inasmuch as they too

have imported various quantities of peas/pulses pursuant to the interim

orders in their respective writ petitions by the High Court of Rajasthan but

clearance of the goods remains stalled, particularly because of the

present litigation. Having regard to the circumstances, we may also take

note of the submissions made on their behalf.

47.1. It has been submitted on behalf of the intervener Nikhil Pulses

Pvt. Ltd. that it had similarly filed WP No. 12283 of 2019, wherein the

High Court passed an interim order dated 02.08.2019 in its favour; and

pursuant to the interim order, it had imported 1,02,550 MTs of yellow peas

at Adani SEZ, Mundra, Gujarat under fifty-nine bills of lading of the month

of September 2019 and had filed bills of entry for home consumption but,

such bills have remained unassessed.

72
47.1.1. Similar arguments have been advanced on behalf of this importer

as regards difference between ‘restricted’ goods and ‘prohibited’ goods

and their treatment under the Customs Act, the FTDR Act and the Trade

Policy; and it is submitted that the goods in question are only ‘restricted’

items and not ‘prohibited’. Again, with reference to the decision of this

Court in Atul Automations (supra), it has been submitted that ‘restricted’

goods have the option of being redeemed on payment of market value

and do not deserve the treatment of ‘prohibited’ goods under Section 125

of the Customs Act. Countering the submissions of the ASG, it has been

contended that the definition of restricted or prohibited does not apply to a

specific quantity but to a product and accordingly, the entire quantity

should be treated as restricted and be released on payment of fine and

penalty.

47.1.2. It has further been submitted that even if the goods in question

are prohibited, the discretion could be exercised by the Adjudicating

Authority under Section 125 of the Customs Act to allow

redemption/release on fine. The decisions in Hargovind Das K. Joshi

and Sant Raj (supra) have been referred. Further, it has been submitted

with reference to the decision in the case of U.P. State Road Transport

Corporation and Anr. v. Mohd. Ismail and Ors.: (1991) 3 SCC 239 that

the Court cannot direct the statutory authority to exercise the discretion in

a particular manner not expressly required by law; and with reference to

the decision in Assistant Commissioner (CT) LTU, Kakinada and Ors.

73
v. Glaxo Smith Kline Consumer Health Care Limited: 2020 SCC

OnLine SC 440 that even under Article 142 of the Constitution, the Court

cannot render the statutory provision otiose.

47.1.3. While invoking equity, it has also been submitted that during April

2019 to November 2019, approximately 8.5 lakh MTs of similar goods

were imported under the interim orders out of which about 6 lakh MTs

were released by the customs; and even after the decision in Agricas

(supra), the customs has allowed release of about 50,000 MTs of

peas/pulses during September-October 2020 and a balance quantity of

about 2 lakh MTs remains. It has been argued that demand and supply of

these pulses is dynamic and not static in nature and what may have been

in abundance 18 months ago may not be so easily available now.

According to the applicant, there is a short supply of pulses which is

evident from the fact that the Union of India has recently issued import

licences for a quantity of 9 Lakh MTs. The applicant would submit that

releasing the confiscated goods will help in meeting the excess demand

and the effect of releasing the goods will not be adverse.

47.1.4. The applicant would further submit that the goods are perishable

commodities and have been lying at the port for long and now, their re-

export is not feasible anymore for a variety of factors, including the

present times of pandemic. It has, therefore, been prayed that the cargo

in question may be allowed to be released for the domestic market on

payment of redemption fine and penalty.

74
47.2. It has been submitted on behalf of the other intervener Agricas

LLP that it had earlier filed WP No. 9321 of 2019, wherein the High Court

passed an interim order dated 24.05.2019 in its favour; and pursuant to

the interim order it had imported 480.54 MTs of black mapte/urad in July

2019 that were released on execution of bond. Further, this importer filed

another writ petition bearing No. 13392 of 2019 wherein, the High Court

passed interim order dated 14.08.2019 and thereafter, it had imported a

quantity of 27,775 MTs of black mapte that arrived in November 2019

from which, 14,366 MTs were released and cleared on payment of

requisite charges but the balance has not been released. It is stated by

this importer that pursuant to the show cause notice dated 05.10.2020,

the Commissioner of Customs, Nhava Sheva found the goods to be

prohibited and liable to confiscation whereafter, it had filed WP No. 525 of

2021 before the High Court of Judicature at Bombay against non-

clearance of the goods but in the meantime, the main issue has been

taken up in these appeals.

47.2.1. Almost identical arguments have been raised on behalf of this

importer that the goods in question are not prohibited and, in any case,

they could be released upon payment of redemption charges with

reference to Section 11(9) of the FTDR Act and/or Section 125 of the

Customs Act. Similar grounds of equity have also been urged, as noticed

in the case of the other applicant which need not be repeated.

75

48. Before proceeding further, we may usefully summarise the

principal submissions of the parties.

48.1. To put it in a nutshell, the principal submissions on behalf of the

appellants are: that the High Court has erred in entertaining the writ

petitions and the directions by the High Court for release of goods were

not compatible with the purpose of adjudication by the Appellate Authority;

that the subject goods, being covered by Section 3(2) of the FTDR Act

and having been imported without licence as also in excess of the cap of

1.5 lakh MTs, became prohibited goods under Section 11 of the Customs

Act by virtue of the deeming fiction in Section 3(3) of the FTDR Act; that in

view of the purpose of notifications and the observations of this Court in

Agricas, such prohibited goods were liable to be confiscated absolutely

and could not have been released to mingle in the Indian market; and that

the case of Atul Automations has no application to the facts of the

present case.

48.2. On the other hand, the principal submissions on behalf of the

importers are: that the notifications in question placed quantitative

restrictions and there had not been any order or notification prohibiting

the subject goods and hence, they could not have been treated as

absolutely prohibited goods but were only restricted goods; that in Atul

Automations, the goods imported without authorisation were held by this

Court to be restricted goods and the same principle applies to the subject

goods when they have been imported without import licence; that even if

76
the subject goods are to be treated as prohibited, discretion was

nevertheless available with the Adjudicating Authority to allow their

redemption on payment of fine and such discretion has rightly been

exercised in the orders-in-original; that the discretion cannot be ordered

to be exercised in any particular manner; that re-export of the subject

goods is not a feasible option and the demand and supply of the pulses in

question being dynamic in nature, the release of the subject goods will

not be adverse to the economy; that the orders-in-appeal could be

challenged in further statutory appeal.

49. We have given anxious consideration to the rival submissions and

have perused the material placed on record with reference to the law

applicable.

Points for determination

50. The narration and the recounts foregoing make it evident that the

root question in these matters is as to whether the goods in question are

liable to absolute confiscation or they could be released with payment of

fine in lieu of confiscation?

50.1. With intervention of the High Court of Judicature at Bombay in the

writ jurisdiction and by way of the impugned orders dated 15.10.2020

(read with the modification order dated 09.12.2020) and 05.01.2021, the

issues concerning legality and validity of the orders so passed by the

High Court are, obviously, interlaced with the core issues, as regards

treatment of the goods in question. In the given circumstances, and

77
looking to the nature of orders involved in the matter, it would be

appropriate to examine the validity of the orders so passed by the High

Court before dealing with other issues.

Legality and validity of the orders passed by the High Court

51. As noticed, the respondent-importers approached the High Court

with the grievance that the goods were not being released despite the

orders-in-original dated 28.08.2020 having been passed in their favour;

and they having made the payments (in whole in the case of M/s. Harihar

Collections and partially in the case of M/s. Raj Grow Impex) and having

obtained OOC. During the pendency of matters in the High Court, the

Commissioner passed the orders dated 01.10.2020 in exercise of his

power under Section 129D(2) and then, it was suggested before the High

Court on behalf of the Department that the writ petitions were rendered

infructuous because of the said orders dated 01.10.2020.

52. A close look at the impugned order dated 15.10.2020 makes it

clear that the High Court dealt with the issues before it in three major

segments: (i) as regards the nature of jurisdiction under Section 129D(2)

of the Customs Act; (ii) as regards the propriety in passing of the orders

dated 01.10.2020 by the Commissioner and tenability of the grounds

stated therein; and (iii) as regards the prayer for release of the goods.

53. Much has been said in these matters regarding the exercise of

power by the Commissioner under Section 129D(2) of the Customs Act.

The High Court proceeded to observe in the impugned order dated
78
15.10.2020 that the Commissioner’s orders dated 01.10.2020 were

termed as review orders but the jurisdiction conferred by Section 129D(2)

was that of suo motu revision and not that of review; and in that regard,

the High Court particularly referred to the expressions “legality or

propriety” occurring in the provision.

53.1. Section 129D of the Customs Act reads as under: -

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

Provided that where the Committee of Principal Chief
Commissioners of Customs or Chief Commissioners of Customs
differs in its opinion as to the legality or propriety of the decision or
order of the Principal Commissioner of Customs or Commissioner
of Customs, it shall state the point or points on which it differs and
make a reference to the Board which, after considering the facts of
the decision or order passed by the Principal Commissioner of
Customs or Commissioner of Customs, if is of the opinion that the
decision or order passed by the Principal Commissioner of
Customs or Commissioner of Customs is not legal or proper, may,
by order, direct such Commissioner or any other Commissioner to
apply to the Appellate Tribunal for the determination of such points
arising out of the decision or order, as may be specified in its
order.

(2) The Principal Commissioner of Customs or Commissioner of
Customs may, of his own motion, call for and examine the record
of any proceeding in which an adjudicating authority subordinate
to him has passed any decision or order under this Act for the
purpose of satisfying himself as to the legality or propriety of any
such decision or order and may, by order, direct such authority or
79
any officer of customs subordinate to him to apply to the
Commissioner (Appeals) for the determination of such points
arising out of the decision or order as may be specified by the
Principal Commissioner of Customs or Commissioner of Customs
in his order.

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

Provided that the Board may, on sufficient cause being shown,
extend the said period by another thirty days.

(4) Where in pursuance of an order under sub-section (1) or sub-
section (2), the adjudicating authority or any officer of customs
authorised in this behalf by the Principal Commissioner of
Customs or Commissioner of Customs makes an application to
the Appellate Tribunal or the Commissioner (Appeals) within a
period of one month from the date of communication of the order
under sub-section (1) or sub-section (2) to the adjudicating
authority, such application shall be heard by the Appellate Tribunal
or the Commissioner (Appeals) as the case may be, as if such
applications were an appeal made against the decision or order of
the adjudicating authority and the provisions of this Act regarding
appeals, including the provisions of sub-section (4) of
section
129A shall, so far as may be, apply to such application.”

53.2. For clarification, we deem it appropriate to observe that such

enactments dealing with several areas of commerce and fiscal

implications, like the Customs Act, 1962 and the Central Excise Act,

194417, do carry akin provisions reserving a residual power in the highest

controlling authority of the Department, apart from the appellate powers of

the departmental Appellate Authority or the Appellate Tribunal and apart

from the powers of revision of the Central Government. Such residual

power, as conferred by Section 129D of the Customs Act or Section 35E

of Central Excise Act, is essentially to serve the purpose that the highest

controlling authority of the Department (or a Committee of such highest

authorities) satisfies itself as to the legality and propriety of any decision

17 Hereinafter also referred to as ‘the Central Excise Act’.
80
taken by the subordinate authority and, in case it finds any points arising

from the decision in question, to direct the authority passing such order or

any other subordinate authority to apply to the appellate forum for

determination of such points/questions. In the scheme of the Customs

Act, the power of revision is reserved for the Central Government, as per

Section 129DD thereof. Similar power of revision in the Central

Government could be seen in Section 35EE of the Central Excise Act.

Thus, in the scheme and on the purpose of these enactments, it cannot

be said that such residual power, of requiring the matter to be taken up

before the appellate forum, is that of revision stricto sensu. However, it

does not appear necessary to delve further on this aspect in this

judgement because, as noticed, it is not in dispute that the Commissioner

could have exercised such power under Section 129D of the Customs

Act. In fact, we are unable to comprehend as to what precisely was the

outcome of the detailed discussion by the High Court concerning the

nature of power under Section 129D(2) because it had not been the

finding that the orders dated 01.10.2020 were suffering from any want of

jurisdiction or if the Commissioner, while passing the said orders,

transgressed the bounds of his authority.

54. The other aspect commented upon by the High Court had been

about the manner and time of passing of the said order when the matter

was sub judice in the High Court.

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54.1. Coming to the question of propriety in passing of the orders dated

01.10.2020 by the said Commissioner despite being aware of the

pendency of the writ petitions in the High Court, in our view, the

comments of the High Court, even when not incorrect in general

application, do not appear apt and apposite to the facts and in the

circumstances of the present case. In other words, though we are at one

with the High Court that, ordinarily, when the matter is sub judice in the

higher forum and that too before the Constitutional Court, the executive

authorities should not attempt to bring about a new state of affairs without

taking permission from the Court and/or bringing the relevant facts to the

notice of the Court. However, even in this regard, before pronouncing on

the impropriety on the part of an executive authority who had done

anything without prior information to the Court or without taking Court’s

permission, all the relevant surroundings factors are also required to be

examined so as to find as to whether such an action was calculated at

interference with the administration of justice or was a bona fide exercise

of power in the given circumstances.

54.2. In the present case, though the High Court had issued notice in

the writ petitions on 25.09.2020 and placed the petitions on 06.10.2020

but, it was clear on the face of record that the DGFT was taking serious

exception to the orders-in-original dated 28.08.2020 and it was being

asserted that the said orders were in the teeth of the pronouncement of

this Court in the case of Agricas (supra). Indisputably, the Commissioner

82
had available with him three months’ time to pass the order under
Section

129D(2) and thereby to ensure taking up of the matter against the orders-

in-original dated 28.08.2020 by the Appellate Authority but, the importers

preferred the writ petitions questioning the communication of DGFT and

the denial of release of goods; and sought mandamus for such release.

Such a prayer for mandamus was effectively a prayer for execution of the

orders-in-original dated 28.08.2020. The High Court found it unjustified on

the part of the Department to suggest that the writ petitions were

rendered infructuous because of the orders dated 01.10.2020; and to this

extent, we are again at one with the High Court because, on the strength

of any order passed by the Commissioner during the pendency of the writ

petitions, it could not have been claimed that the Department, by its own

actions, made the writ petitions meaningless. However, such a

submission on the part of the respondents of the writ petition, even if

unwarranted, could not have taken the worth and value out of orders

dated 01.10.2020; and, at the same time, the High Court could not have

ignored the other material circumstances.

54.3. One of the fundamental and material circumstance, which the

High Court totally omitted to consider, was that the writ petitions were filed

as if seeking execution of the orders-in-original and that if the writ, as

prayed for, was to be issued and the goods were to be released, nothing

much on merits was to be left for examination by the Appellate Authority;

and if, for any reason, the orders-in-original were to be interfered with at a

83
later stage in the appellate forum, irreparable damage would have been

done because the goods would have been released for the domestic

market. (As noticed, it has indeed happened to a large extent in present

cases, with release of a substantial quantity of goods of the respondent-

importers).

54.4. The purpose of our comments foregoing is that even while the

High Court was right in questioning the fact that the Commissioner chose

to pass the order when the matter was sub judice, the High Court missed

out the relevant feature that the importers had preferred the writ petitions

essentially to pre-empt any further proceedings by the statutory authority

concerned under the Customs Act. In other words, the invocation of writ

jurisdiction by the importers was itself questionable.

55. Noticeable it is that the High Court, even after making some

scathing comments on the question of propriety against the

Commissioner, took up the points stated in the orders dated 01.10.2020

one by one and indicated its views that the points so raised were

baseless and/or untenable. However, the High Court was also conscious

of the fact that the said orders dated 01.10.2020 were not in challenge

before it and the appeals preferred pursuant to those orders shall have to

be examined by the Appellate Authority. Thus, the High Court qualified all

its findings in paragraph 36 of the impugned order as being of its prima

facie impression and specifically left the matter open for examination by

the Appellate Authority.

84
55.1. However, when the Appellate Authority ultimately passed the

orders in setting aside the orders-in-original, one of the importers, despite

being aware of the remedy of further appeal being available, chose to

invoke, again, the writ jurisdiction of the High Court. This time the High

Court, in its impugned interim order dated 05.01.2021, made the

observations that the decision by the Appellate Authority was at

loggerheads with its earlier findings and directions. The High Court even

observed that its findings in the order dated 15.10.2020 could not have

been regarded as prima facie finding only; and when the goods were

directed to be released forthwith, it was beyond comprehension as to how

a lower Appellate Authority could have nullified such directions by

ordering absolute confiscation.

56. We find it very difficult to reconcile the observations of the High

Court in these matters. Paragraph 36 of the order dated 15.10.2020 left

nothing for a doubt with anyone that whatever the High Court had

observed in that order as regards the orders dated 01.10.2020 was not of

final determination; and the matter was left open, to be decided by the

Commissioner (Appeals). Significantly, if the purport of the order dated

15.10.2020 had been that even if Commissioner (Appeals) would be

deciding the matter in appeal, he could not order absolute confiscation of

the goods because the High Court had ordered their release, it would

immediately lead to the position that the order dated 15.10.2020 of the

High Court carried inherent contradictions. In other words, if release of

85
goods was the only option available with the authorities, the material part

of consideration of the Appellate Authority had already been rendered

redundant.

57. For what has been discussed hereinabove, it is at once clear that

when the matter was left for decision by the Commissioner (Appeals),

there was neither any occasion nor any justification for the High Court to

pass the order for release of the goods for the simple reason that any

order for release of goods was to render the material part of the matter a

fait accompli. This, simply, could not have been done. Putting it differently,

a little pause after paragraph 36 of the impugned order 15.10.2020 and

before the directions in the next paragraph would make it clear that for

what had been observed in the said paragraph 36 of the impugned order

(as regards leaving of the matter for decision by the Appellate Authority),

any direction for release of goods pursuant to the order-in-original could

not have been issued. To put it in yet other words, despite making several

observations so as to indicate that the review orders dated 01.10.2020

were unjustified and the points stated therein were baseless or untenable,

the High Court stopped short of setting aside the orders dated 01.10.2020

and also did not pronounce finally on the validity of the orders-in-original

dated 28.08.2020 because the said orders-in-original were the subject

matter of appeal. Having rightly left the matter for decision in appeal, the

High Court committed a serious error in yet issuing such a writ as if the

orders-in-original dated 28.08.2020 had become rule of the Court and as

86
if the Court was ensuring its due execution. It gets, perforce, reiterated

that if the orders-in-original dated 28.08.2020 were to be executed under

the mandate of the High Court, the appeals were going to be practically

redundant after release of the goods and nothing material was to remain

for decision by the Appellate Authority on the main subject matter of the

appeal.

58. What has been indicated from different angles hereinabove leads

only to one conclusion that the order dated 15.10.2020 passed by the

High Court suffers from inherent contradictions and inconsistencies; and

cannot be approved.

59. Apart from the fundamental flaws of contradictions, the order

passed by the High Court on 15.10.2020 further suffers from the

shortcomings that while issuing mandamus for release of goods, the High

Court omitted to take into account the relevant facts as also the material

factors concerning the imports in question, including the reasons for

issuance of the notifications in question that the same were to safeguard

the agriculture market economy of India; and the observations and

findings of this Court in the case of Agricas (supra). An examination of

the impugned order dated 15.10.2020 in its entirety makes it clear that the

reasons for directing release of goods in favour of the importers are to be

found only in paragraph 37 thereof. Therein, the High Court has taken

into account a few factors standing in favour of the importers like the

orders-in-original holding the field; the importers having made the

87
necessary payments; and the importers incurring expenditure because of

warehousing. An additional factor had been the High Court’s

dissatisfaction that the orders dated 01.10.2020 were passed in an

improper manner and grounds given therein were not justifying the

withholding of the goods. While proceeding on these reasons and

considerations, it appears that the other overriding factors like the interest

of domestic agriculture market economy as also the findings and

observations of this Court in Agricas (supra) totally escaped the attention

of the High Court. Thus, the impugned order dated 15.10.2020, having

been passed while ignoring the relevant considerations, cannot be

approved.

60. For what has been observed hereinabove, the other order dated

05.01.2021 passed by the High Court in the second writ petition filed by

the importer M/s. Raj Grow Impex also deserves to be disapproved.

60.1. As noticed, in the said order dated 05.01.2021, the High Court

even observed that the Appellate Authority wrongly construed that its

earlier decision for release of goods has been prima facie; and further

questioned as to how a lower Appellate Authority could have nullified its

directions for release of goods by ordering confiscation. The construction

of its own order dated 15.10.2020, as put by the High Court in its later

order dated 05.01.2021, only fortifies the inconsistencies we have

indicated hereinabove. This apart, the expression ‘prima facie’ in regard

to the order of the High Court dated 15.10.2020 had not been a creation

88
of the Appellate Authority but had been stated in unequivocal terms, twice

over, in paragraph 36 of the order dated 15.10.2020, where the High

Court also made it clear that final views were not being expressed

because the matter was to be examined in appeal.

60.2. Apart from the above, while entertaining the said second writ

petition, the High Court seems to have also omitted to consider that the

said writ petition was filed against the order-in-appeal passed by the

Appellate Authority and the alternative remedy of regular statutory appeal

to CESTAT was available to the importer. In our view, on consideration of

the relevant facts and circumstances in their correct perspective, the High

Court would not have entertained the writ petitions so filed in these

matters.

61. We are, therefore, clearly of the view that the impugned orders

dated 15.10.2020 (read with the modification order dated 09.12.2020) and

05.01.2021 remain unsustainable and are required to be set aside.

62. However, merely setting aside the orders passed by the High

Court does not bring finality to these appeals because, as noticed, the

core issues still remain as to whether the goods in question are or were

liable to absolute confiscation or could be or could have been released by

recovery of fine in lieu of confiscation?

62.1. For dealing with the core issues, we need to examine in the first

place as to whether the goods in question fall in the category of prohibited

89
goods, as argued on behalf of the appellants or in the category of

restricted goods, as argued on behalf of the importers.

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

63. For dealing with the questions relating to the treatment of the

goods in question, it shall be apposite to recapitulate that in the case of

Agricas (supra), this Court, after dealing with a variety of issues relating

to the validity of the notifications dated 29.03.2019 and the corresponding

trade notice dated 16.04.2019, specifically referred to the purpose behind

and the purport of the notifications; and it was noticed that the

notifications were aimed at striking a balance between the farmers of the

country on one hand and the importers on the other, particularly when

large-scale imports were adversely impacting the interests of the farmers

due to fall in prices in the local market. The repercussions of excessive

imports under the cover of the interim orders in the past were taken note

of and it was also noticed that the restrictions were imposed to prevent

panic disposal in the local markets. As the notifications provided for

quantitative restriction on import of various peas and pulses in the range

of 1.5-2 lakh MTs against licence, a rather preposterous line of arguments

was adopted by the importers before this Court that the total quantities

specified in each of the notifications was ‘per licence’ and not for the ‘total

imports’. Such contentions were rejected by this Court after finding no

ambiguity in the notifications and holding clearly that the expression ‘total

90
quantity’ did not refer to the ‘quantity per licence’. This Court further held

in no uncertain terms that the impugned notifications were valid for having

been issued in accordance with the power conferred in the Central

Government in terms of sub-section (2) of Section 3 of the FTDR Act. Yet

further, this Court rejected the submissions that the importers had acted

bona fide in importing the goods in question; and the imports, made under

the cover of interim orders, were held to be contrary to the notifications

and the trade notice issued under the FTDR Act but, were left to be dealt

with under the provisions of the Customs Act.

64. In view of the findings and requirements aforesaid and in view of

the contentions of the respective parties relating to the treatment of goods

imported under the cover of interim orders, it is necessary to take note of

the relevant statutory provisions, particularly those contained in Section 3

of the FTDR Act and Sections 2(33), 11(1) and 111(d) of the Customs

Act. These relevant provisions read as under: -

Section 3 of the Foreign Trade (Development and Regulation)
Act, 1992
“3. Powers to make provisions relating to imports and
exports.- (1) The Central Government may, by Order published in
the Official Gazette, make provision for the development and
regulation of foreign trade by facilitating imports and increasing
exports.

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

Provided that the provisions of this sub-section shall be applicable,
in case of import or export of services or technology, only when
the service or technology provider is availing benefits under the

91
foreign trade policy or is dealing with specified services or
specified technologies.

(3) All goods to which any Order under sub-section (2) applies
shall be deemed to be goods the import or export of which has
been prohibited under
section 11 of the Customs Act, 1962 (52 of
1962) and all the provisions of that Act shall have effect
accordingly.

(4) without prejudice to anything contained in any other law, rule,
regulation, notification or order, no permit or licence shall be
necessary for import or export of any goods, nor any goods shall
be prohibited for import or export except, as may be required
under this Act, or rules or orders made thereunder.”

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

“(33) “prohibited goods” means any goods the import or export of
which is subject to any prohibition under this Act or any other law
for the time being in force but does not include any such goods in
respect of which the conditions subject to which the goods are
permitted to be imported or exported, have been complied with;”

Section 11(1) of the Customs Act, 1962:

“11. Power to prohibit importation or exportation of goods.–
(1) If the Central Government is satisfied that it is necessary so to
do for any of the purposes specified in sub-section (2), it may, by
notification in the Official Gazette, prohibit either absolutely or
subject to such conditions (to be fulfilled before or after clearance)
as may be specified in the notification, the import or export of
goods of any specified description.

xxx xxx xxx”

Section 111(d) of the Customs Act, 1962
“111. Confiscation of improperly imported goods, etc.—The
following goods brought from a place outside India shall be liable
to confiscation:-

xxx xxx xxx

(d) any goods which are imported or attempted to be imported or
are brought within the Indian customs waters for the purpose of
being imported, contrary to any prohibition imposed by or under
this Act or any other law for the time being in force;

xxx xxx xxx”

65. The categorical findings in the case of Agricas (supra) by this

Court, read with the provisions above-quoted, hardly leave anything to

doubt that sub-section (3) of Section 3 of the FTDR Act applies to the

goods in question and, for having been imported under the cover of the

interim orders but, contrary to the notifications and the trade notice issued
92
under the FTDR Act and without the requisite licence, these goods shall

be deemed to be prohibited goods under Section 11 of the Customs Act;

and all the provisions of the Customs Act shall have effect over these

goods and their import accordingly. However, a long deal of arguments

has been advanced before us as regards the category in which these

goods are to be placed, i.e., whether they are of ‘restricted’ category or

‘prohibited’ category.

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 quantitative restrictions and

there had not been any other order or notification prohibiting the import of

these goods. The contentions remain baseless and are required to be

rejected.

66.1. A bare look at the notifications in question and the findings of this

Court in Agricas (supra) make it clear that only the particular restricted

quantity of the commodities covered by the said notifications could have

been imported, like those upto 1.5 lakh MTs; and that too, under a

licence. The learned ASG has rightly pointed out with reference to the

decision in PTR Exports (supra) that an applicant has no vested right to

have export or import licence; and granting of licence depends upon the

policy prevalent on the date. The learned ASG has further rightly

submitted, with reference to the decision in S.B. International (supra),

that granting a licence to import is not a matter of formality; and the

93
authorities have to satisfy themselves that the application satisfies all the

requirements of the scheme and the applicable laws. In S.B.

International, this Court observed, inter alia, as under: -

“9. It should be noticed that grant of licence is neither a
mechanical exercise nor a formality. On receipt of the application,
the authorities have to satisfy themselves about the correctness of
the contents of the application. They also have to satisfy
themselves that the application satisfies all the requirements of the
scheme and the other applicable provisions of law, if any….”
66.2. As noticed, only the particular restricted quantity of the

commodities covered by the said notifications could have been imported

and that too, under a licence. Therefore, any import within the cap (like

that of 1.5 lakh MTs) under a licence is the import of restricted goods but,

every import of goods in excess of the cap so provided by the

notifications, is not that of restricted goods but is clearly an import of

prohibited goods.

67. The applicable principles of law relating to the categorisation of

goods as ‘prohibited’ or ‘other than prohibited’ have been clearly

enunciated by this Court in the decisions referred by the learned ASG.

67.1. In the case of Sheikh Mohd. Omer (supra), a particular mare was

found to be not a ‘pet animal’ and, therefore, its import was found to be

violative of the Imports Control Order. It was, however, an admitted

position that the import of horses or mares was not prohibited as such.

The question was as to whether by making such import, the appellant

contravened Section 111(d) read with Section 125 of the Customs Act.

While answering the question, this Court held that any restriction on
94
import or export is to an extent a prohibition; and the expression “any

prohibition” in Section 111(d) of the Customs Act includes restrictions.

This Court further underscored that “any prohibition” means every

prohibition; and restriction is also a type of prohibition. This Court, inter

alia, said, -

“11…. While elaborating his argument the learned counsel invited
our attention to the fact that while
Section 111(d) of the Act uses
the word “prohibition”. Section 3 of the Imports and Exports
(Control) Act, 1947, takes in not merely prohibition of imports and
exports, it also includes “restrictions or otherwise controlling” all
imports and exports. According to him restrictions cannot be
considered as prohibition more particularly under the Imports and
Exports (Control) Act, 1947, as that statute deals with “restrictions
or otherwise controlling” separately from prohibitions. We are not
impressed with this argument. What clause (d) of
Section 111
says is that any goods which are imported or attempted to be
imported contrary to "any prohibition imposed by any law for the
time being in force in this country" is liable to be confiscated. “Any
prohibition” referred to in that section applies to every type of
"prohibition". That prohibition may be complete or partial.

Any restriction on import or export is to an extent a
prohibition. The expression “any prohibition” in
Section
111(d) of the Customs Act, 1962 includes restrictions. Merely
because Section 3 of the Imports and Exports (Control) Act, 1947
uses three different expressions “prohibiting”, “restricting” or
"otherwise controlling", we cannot cut down the amplitude of the
word "any prohibition" in
Section 111(d) of the Act. "Any
prohibition" means every prohibition. In other words all types
of prohibitions. Restriction is one type of prohibition…..”
(emphasis in bold supplied)

67.2. In the case of Om Prakash Bhatia (supra), over-invoicing and

fraudulent claim of drawback by the exporter was held to be that of

exporting prohibited goods with reference to the requirements of Foreign

Exchange Regulation Act, 1973, while rejecting the contention of the

exporter that Section 113(d) of the Customs Act was not applicable as the

goods were not prohibited as such. A line of argument has been

95
suggested on behalf of one of the respondents that the order ultimately

passed in the case of Om Prakash Bhatia operates against the stand of

the appellants. It is true that in that case, redemption fine and penalty was

imposed but, the exercise of discretion in a particular manner related to

the facts of that case. These aspects relating to the exercise of discretion

shall be considered a little later, while dealing with the question as to

whether the goods in question are liable to absolute confiscation or could

be released on redemption fine. Suffice it to notice for the present

purpose that the export attempted in violation of the conditions was held

to be taking the goods in the category of ‘prohibited’ goods.

67.3. In the case of Brooks International (supra), the market value of

goods under export was found to be less than the amount of drawback

claimed. The question was whether such goods could be confiscated for

violation of the provisions of the Customs Act? While considering the

import of the definition of “prohibited goods” in Section 2(33) and of

Section 11 of the Customs Act, this Court referred to the following

exposition in the case of Om Prakash Bhatia (supra): -

“10. From the aforesaid definition, it can be stated that: (a) if there
is any prohibition of import or export of goods under the Act or any
other law for the time being in force, it would be considered to be
prohibited goods; and (b) this would not include any such goods in
respect of which the conditions, subject to which the goods are
imported or exported, have been complied with. This would mean
that if the conditions prescribed for import or export of goods are
not complied with, it would be considered to be prohibited goods.

This would also be clear from Section 11 which empowers the
Central Government to prohibit either ‘absolutely’ or ‘subject to
such conditions’ to be fulfilled before or after clearance, as may be
specified in the notification, the import or export of the goods of

96
any specified description. The notification can be issued for the
purposes specified in sub-section (2). Hence, prohibition of
importation or exportation could be subject to certain
prescribed conditions to be fulfilled before or after clearance
of goods. If conditions are not fulfilled, it may amount to
prohibited goods….”
(emphasis in bold supplied)

67.4. Learned counsel for the importers have strongly relied upon a 3-

Judge Bench decision of this Court in Atul Automations (supra) to

submit that therein, the goods imported without authorisation were held to

be ‘restricted’ goods; and the same principle applies to the subject goods

when they have been imported without import licence and hence, they

cannot be taken as prohibited goods. The submissions have been

countered by the ASG that the said decision related to the matter under

the FTDR Act and different facts and different regulations concerning the

goods were involved therein.

67.4.1. In the case of Atul Automations (supra), the goods imported

without authorisation were found to be not ‘prohibited’ but ‘restricted’

items for import and the orders for their release with payment of fine in

lieu of confiscation were approved. However, a close look at the factual

aspects puts it beyond the pale of doubt that therein, this Court has

neither laid down the law that in every case of import without

authorisation, the goods are to be treated as restricted and not prohibited

nor that the goods so imported without authorisation are always to be

released on payment of redemption fine.

67.4.2. The factual aspect of Atul Automations (supra) makes it clear

that the imported Multi-Function Devices, Photocopiers and Printers
97
(MFDs) involved in that case were restricted items, importable against

authorisation under Clause 2.31 of the Foreign Trade Policy. Thus, the

MFDs were found to be restricted items for import and not prohibited

items. That had not been the case where import was restricted in terms of

quantity in the manner that the goods were importable only up to a

particular extent of quantity and that too against a licence. It was also

found therein that the Central Government had permitted the import of

used MFDs having utility for at least five years, keeping in mind that they

were not being manufactured in the country.

67.4.3. The present case is of an entirely different restriction where import

of the referred peas/pulses has been restricted to a particular quantity

and could be made only against a licence. The letter and spirit of this

restriction, as expounded by this Court earlier, is that, any import beyond

the specified quantity is clearly impermissible and is prohibited. This

Court has highlighted the adverse impact of excessive quantity of imports

of these commodities on the agricultural market economy in the case of

Agricas (supra) whereas, it had not been the case in Atul Automations

(supra) that the import was otherwise likely to affect the domestic 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 the present case, the

underlying feature for restricting the imports by quantum has been the

availability of excessive stocks and adverse impact on the price

98
obtainable by the farmers of the country. The decision in Atul

Automations (supra), by no stretch of imagination, could be considered

having any application to the present case.

68. Thus, we have no hesitation in holding that the goods in question,

having been imported in contravention of the notifications dated

29.03.2019 and trade notice dated 16.04.2019; and being of import

beyond the permissible quantity and without licence, are ‘prohibited

goods’ for the purpose of the Customs Act18.

68.1. The unnecessary and baseless arguments raised on behalf of the

importers that the goods in question are of ‘restricted’ category, with

reference to the expression ‘restricted’ having been used for the purpose

of the notifications in question or with reference to the general answers

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 absolute confiscation?

69. Once it is clear that the goods in question are improperly imported

and fall in the category of ‘prohibited goods’, the provisions contained in

Chapter XIV of the Customs Act, 1962 come into operation and the

subject goods are liable to confiscation apart from other consequences.

Having regard to the contentions urged and the background features of

these appeals, the root question is as to how the goods in question are to

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

99
be dealt with under
Section 125 of the Customs Act? The relevant part of

Section 125 of the Customs Act reads as under: -

Section 125(1) of the Customs Act, 1962
“125. Option to pay fine in lieu of confiscation.—(1) Whenever
confiscation of any goods is authorised by this Act, the officer
adjudging it may, in the case of any goods, the importation or
exportation whereof is prohibited under this Act or under any other
law for the time being in force, and shall, in the case of any other
goods, give to the owner of the goods or, where such owner is not
known, the person from whose possession or custody such goods
have been seized, an option to pay in lieu of confiscation such fine
as the said officer thinks fit:

xxx xxx xxx”

69.1. A bare reading of the provision aforesaid makes it evident that a

clear distinction is made between ‘prohibited goods’ and ‘other goods’. As

has rightly been pointed out, the latter part of Section 125 obligates the

release of confiscated goods (i.e., other than prohibited goods) against

redemption fine but, the earlier part of this provision makes no such

compulsion as regards the prohibited goods; and it is left to the discretion

of the Adjudicating Authority that it may give an option for payment of fine

in lieu of confiscation. It is innate in this provision that if the Adjudicating

Authority does not choose to give such an option, the result would be of

absolute confiscation. The Adjudicating Authority in the present matters

had given such an option of payment of fine in lieu of confiscation with

imposition of penalty whereas the Appellate Authority has found faults in

such exercise of discretion and has ordered absolute confiscation with

enhancement of the amount of penalty. This takes us to the principles to

be applied for exercise of the discretion so available in the first part of

Section 125(1) of the Customs Act.

100

70. The principles relating to the exercise of discretion by an authority

are expounded in various decisions cited by the parties. We may take

note of the relevant expositions as follows:

70.1. In the case of Sant Raj (supra), referred to and relied upon by

both the sides, this Court dealt with the matter as regards the discretion of

Labour Court to award compensation in lieu of reinstatement and

observed as under: -

“4…..Whenever, it is said that something has to be done
within the discretion of the authority then that something has
to be done according to the rules of reason and justice and
not according to private opinion, according to law and not
humor. It is to be not arbitrary, vague and fanciful but legal and
regular and it must be exercised within the limit to which an honest
man to the discharge of his office ought to find himself…..

Discretion means sound discretion guided by law. It must be
governed by rule, not by humor, it must not be arbitrary, vague and
fanciful…..”
(emphasis in bold supplied)

70.2. In the case of Reliance Airport Developers (supra), this Court,

with reference to various pronouncements pertaining to the legal

connotations of ‘discretion’ and governing principles for exercise of

discretion observed, inter alia, as under: -

“30. Discretion, in general, is the discernment of what is right and
proper. It denotes knowledge and prudence, that discernment
which enables a person to judge critically of what is correct and
proper united with caution; nice discernment, and judgment
directed by 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 to do according to the will and private affections of
persons.”

70.3. In the case of U.P. State Road Transport Corporation (supra),

while dealing with the case of non-exercise of discretion by the authority,
101
this Court expounded on the contours of discretion as also on limitations

on the powers of the Courts when the matter is of the discretion of the

competent authority, in the following terms: -

“12. The High Court was equally in error in directing the
Corporation to offer alternative job to drivers who are found to be
medically unfit before dispensing with their services. The court
cannot dictate the decision of the statutory authority that
ought to be made in the exercise of discretion in a given case.
The court cannot direct the statutory authority to exercise the
discretion in a particular manner not expressly required by
law. The court could only command the statutory authority by a
writ of mandamus to perform its duty by exercising the discretion
according to law. Whether alternative job is to be offered or not is
a matter left to the discretion of the competent authority of the
Corporation and the Corporation has to exercise the discretion in
individual cases. The court cannot command the Corporation to
exercise discretion in a particular manner and in favour of a
particular person. That would be beyond the jurisdiction of the
court.

13. In the instant case, the Corporation has denied itself the
discretion to offer an alternative job which the regulation requires it
to exercise in individual cases of retrenchment. ……It may be
stated that the statutory discretion cannot be fettered by self-

created rules or policy. Although it is open to an authority to which
discretion has been entrusted to lay down the norms or rules to
regulate exercise of discretion it cannot, however, deny itself the
discretion which the statute requires it to exercise in individual
cases. ……
xxx xxx xxx
“15.……Every discretion conferred by statute on a holder of
public office must be exercised in furtherance of
accomplishment of purpose of the power. The purpose of
discretionary decision making under Regulation 17(3) was
intended to rehabilitate the disabled drivers to the extent possible
and within the abovesaid constraints. The Corporation therefore,
cannot act mechanically. The discretion should not be
exercised according to whim, caprice or ritual. The discretion
should be exercised reasonably and rationally. It should be
exercised faithfully and impartially. There should be proper value
judgment with fairness and equity…..”
(emphasis in bold supplied)

70.4. In the case of Glaxo Smith Kline (supra), this Court expounded

on the principles that the Constitutional Courts, even in exercise of their
102
wide jurisdictions, cannot disregard the substantive provisions of statute

while observing, inter alia, as under: -

“12. Indubitably, the powers of the High Court under Article 226 of
the Constitution are wide, but certainly not wider than the plenary
powers bestowed on this Court under
Article 142 of the
Constitution.
Article 142 is a conglomeration and repository of the
entire judicial powers under the Constitution, to do complete
justice to the parties.

Even while exercising that power, this Court is required to bear in
mind the legislative intent and not to render the statutory provision
otiose.”

71. Thus, when it comes to discretion, the exercise thereof has to be

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 of discretion

is essentially the discernment of what is right and proper; and such

discernment is the critical and cautious judgment of what is correct and

proper by differentiating between shadow and substance as also between

equity and pretence. A holder of public office, when exercising discretion

conferred by the statute, has to ensure that such exercise is in

furtherance of accomplishment of the purpose underlying conferment of

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.

71.1. It is hardly of any debate that discretion has to be exercised

judiciously and, for that matter, all the facts and all the relevant

surrounding factors as also the implication of exercise of discretion either

way have to be properly weighed and a balanced decision is required to

be taken.

103

72. It is true that the statutory authority cannot be directed to exercise

its discretion in a particular manner but, as noticed in the present case,

the exercise of discretion by the Adjudicating Authority has been

questioned on various grounds and the Appellate Authority has, in fact,

set aside the orders-in-original whereby the Adjudicating Authority had

exercised the discretion to release the goods with redemption fine and

penalty. Having found that the goods in question fall in the category of

‘prohibited goods’ coupled with the relevant background aspects,

including the reasons behind issuance of the notifications in question and

the findings of this Court in Agricas (supra), the question is as to whether

the exercise of discretion by the Adjudicating Authority in these matters,

giving option of payment of fine in lieu of confiscation, could be

approved?

73. As regards the question at hand, we may usefully take note of the

relevant decisions cited by learned counsel for the parties. However, it

may be observed that the decision of the Punjab and Haryana High Court

in Horizon Ferro Alloys (supra), dealing with a particular class of goods

that were ‘restricted’ and not ‘prohibited’, needs no elaboration.

74. On behalf of the appellants, the learned ASG has relied upon the

decision in the case of Garg Woollen Mills to support the contention that

the subject goods deserve to be confiscated absolutely. In that case, the

Additional Collector of Customs had directed confiscation of goods when

it was found that there had been an attempt of fraudulently importing

104
huge quantity of raw material in the name of non-existent units; and

serviceable garments were concealed against mutilated garments. That

being a case where fraud was involved, the order of absolute confiscation

was not interfered with. This Court, inter alia, observed and held as

under: -

“5. Another contention that was urged by Shri Mahabir Singh was
that the Additional Collector, as also the Tribunal, have failed to
take into consideration the provisions contained in
Section 125 of
the Act which prescribes that whenever confiscation of any goods
is authorised by the Act, the officer adjudging it may, in the case of
any goods, the importation or exportation whereof is prohibited
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 the owner of the
goods or, where such owner is not known, the person from whose
possession or custody such goods have been seized, an option to
pay in lieu of confiscation such fine as the said officer thinks fit.
We do not find any merit in this contention of Mr Mahabir Singh.
Under
Section 125 a discretion has been conferred on the officer
to give the option to pay fine in lieu of confiscation in cases of
goods, the importation or exportation whereof is prohibited under
the Act or under any other law for the time being in force but in
respect of other goods the officer is obliged to give such an option.
In the present case, having regard to the facts and circumstances
in which the goods were said to be imported and the patent fraud
committed in importing the goods, the Additional Collector has
found that the goods had been imported in violation of the
provisions of the Import (Control) Order, 1955 read with
Section
3(1) of the Import and Export (Control) Act, 1947. In the
circumstances he considered it appropriate to direct absolute
confiscation of the goods which indicates that he did not consider
it a fit case for exercise of his discretion to give an option to pay
the redemption fine under
Section 125 of the Act. The Tribunal
also felt that since this was a case in which fraud was
involved, the order of the Additional Collector directing
absolute confiscation of the goods did not call for any
interference. We do not find any reason to take a different
view.”
(emphasis in bold supplied)

75. The learned ASG has also referred to the decision in the case of

Shri Amman Dhall Mills (supra) where the Kerala High Court has dealt

with the imports made in violation of the subsequent notifications
105
concerning the same commodities as are involved in the present case.

Therein, on 22.04.2020, the importer applied for issuance of license for

import of 200 MTs of green peas but, before actual grant of license to

import, filed a bill of entry dated 23.06.2020 for clearance of goods

declared as Canadian Green Peas. As per declaration in the bill of entry,

the quantity declared was 210 MTs with declared assessable value of Rs.

79,28,444/-. The Commissioner of Customs, Kochi, by his order dated

16.10.2020, made on the request of the importer for release of goods,

noted that DGFT notification dated 18.12.2019 had revised the policy for

import of peas; further policy conditions as regards minimum import price

and annual fiscal quota of Rs. 1.5 lakh MTs were incorporated and the

imports were permitted through Calcutta seaport. The importer, who had

imported the subject goods after the issue of notifications dated

18.12.2019 and 28.03.2020, filed a writ petition in the High Court seeking

provisional release of the subject goods but this prayer for provisional

release was declined. The importer filed an intra-court appeal that was

also dismissed. However, the High Court desired that the customs

authorities proceed with the adjudication proceedings expeditiously. The

Commissioner of Customs, in his order dated 16.10.2020, while

considering the request of importer for provisional release, referred to

three conditions in the notification dated 18.12.2019 as modified in the

notification dated 28.03.2020; and ordered absolute confiscation of the

goods for contravention of the provisions of Section 111(d) of the

106
Customs Act read with Section 3(3) of the FTDR Act; and imposed a

penalty of Rs. 4 lakhs. The importer challenged the order of

Commissioner before the Appellate Tribunal. The Appellate Tribunal

observed that the subject goods, having been imported in violation of the

conditions of EXIM Policy, acquired the nature of prohibited goods in

terms of Section 2(33) of the Customs Act and were liable to confiscation

in terms of Section 111(d). Thereafter, the Tribunal formulated the

question as to whether the Adjudicating Authority had an option to allow

such goods to be redeemed on payment of fine in lieu of confiscation.

After referring to the judgment of this Court in the case of Atul

Automations (supra) and the order passed by the Bombay High Court in

the case of M/s. Harihar Collections (impugned herein), the Tribunal

directed redemption of impugned goods on payment of Rs. 12 lakhs as

fine and confirmed the penalty of Rs. 4 lakhs imposed by the

Commissioner.

75.1. In cross-appeals by the importer and by the revenue, the Kerala

High Court consciously took note of the decision of this Court in Agricas

(supra) and also the fact that the order so passed by the Bombay High

Court in the case of M/s. Harihar Collections had been stayed by this

Court in the present appeals. Thereafter, the High Court proceeded to

disapprove the order passed by the Appellate Tribunal for release of

goods, with the following amongst other findings and observations: -

“25. We hasten to add, that if in every case goods are released
on payment of redemption fine, by the primary or appellate
107
Tribunal, then such decisions are unsustainable in law and
judicial review. In our considered view, exercise of power and
discretion under
Section 125 of Customs Act 1962, are
specific and generally governed by the applicable policy,
notification etc. Notification dated 18.4.2019 stipulates restriction
on import of a quantity of 1.5 lakh MT only; stipulates minimum
import price of Rs. 200/- and above CIF per kg and the import is
allowed through Calcutta Sea Port only. These are the conditions
which the licensee for import of the goods is expected to conform.
The primary authority has noted that by keeping in view the stand
taken by the Union of India before the Supreme Court in Agricas
LLP case; the available stock position of green peas is treated as
surplus, and declined release and ordered confiscation. The
further import according to Customs Commissioner is not needed
or alternatively detrimental to the interest of farmers. He has
further noted that in his order dated 16.10.2020 that the importer
does not conform to any of the conditions applicable for import of
green peas. In our considered view the exercise of above
discretion by Customs Commissioner is the question for
consideration before the Appellate Tribunal. The Appellate Tribunal
on the contrary, as already noted, considered matters not
completely germane for appreciating the mode and manner of
exercise of authority by the Commissioner of customs, but,
however, recorded that the subject goods can be treated as
restricted goods and can be released on payment of redemption
fine. …. The Tribunal fell in clear error of law. By holding that
release of goods is the only option to Customs Commissioner in
the case on hand the language of
Section 125 of Customs Act is
fully liberalised. The reasoning of Tribunal is adopted both by other
primary authority/Appellate Tribunal, then Exim policy, notifications
are defeated and opens floodgates of the import Green Peas, and
such contingencies are commented by Supreme Court in Agricas
Case. We are of the view that the consideration of Appellate
Tribunal in the case on hand is illegal, ignored relevant
notifications, the mandate of FTDR Act and
Customs Act 1962.”
(emphasis in bold supplied)

76. On the other hand, the importers have placed heavy reliance upon

the decision in the case of Hargovind Das K. Joshi (supra). Therein, a

consignment of zip fasteners imported by the appellants was ordered for

absolute confiscation by the Additional Collector of Customs and a

penalty was also imposed. The order was confirmed by the Appellate

Tribunal. In appeal to this Court, three questions were raised by the

108
appellants, namely, on validity of the order confiscating the goods; on

validity of the orders imposing penalty; and failure on the part of the

customs authority to give an option to them for redeeming the goods on

payment of fine in lieu of confiscation. This Court rejected the first two

contentions after finding that the order directing confiscation was

unassailable in facts or in law and that the order levying penalty was also

justified. However, this Court found substance in the third part of the

submissions because the Collector of Customs had passed the order for

absolute confiscation without giving the appellants an option to redeem

the goods on payment of fine. This Court observed that the said

Adjudicating Authority, undoubtedly, had the discretion to give an option of

payment of fine in lieu of confiscation but omitted to consider such a

discretion available with him. In the given circumstances, this Court

remitted the matter to the Adjudicating Authority to the limited extent as to

whether or not to give an option to the importers to redeem the

confiscated goods on payment of fine. In that regard, this Court left it

open for the officer concerned to take a decision one way or the other in

accordance with law, while observing in the last that the officer concerned

will take into consideration all the relevant circumstances including the

submission on behalf of the importers that the free import of the goods in

question had also been allowed, of whatever worth that was.

76.1. From the decision in Hargovind Das K. Joshi (supra), it is not

borne out as to what was the reason for which the goods (zip fasteners)

109
became subject to confiscation and it appears that at a later point of time,

free import of the item had also been allowed. Be that as it may, what this

Court found therein was that the Adjudicating Authority omitted to 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. The said decision cannot

be read as an authority for the proposition that in every case of

confiscation, invariably, the discretion has to be exercised by the

Adjudicating Authority to give an option for redemption by payment of fine.

In our view, the said decision does not make out any case in favour of the

importers.

76.2. In fact, the observations made in Hargovind Das K. Joshi (supra)

rather operate against the orders-in-original in the present appeals

because therein, the Adjudicating Authority, after finding the goods liable

to confiscation, straightaway proceeded as if the option for payment of

fine in lieu of confiscation has to be given and did not consider the other

part of discretion available with him that the goods could also be

confiscated absolutely.

77. Thus, for what has been noticed above, the Kerala High Court has

approved absolute confiscation of similar goods while following the

decision of this Court in Agricas (supra) and after finding unsustainable

the order of Tribunal for release of goods. In the case of Garg Woollen

Mills (supra), this Court approved absolute confiscation when fraud was

110
involved. In Hargovind Das K. Joshi (supra), when one part of discretion

of Section 125(1) of the Customs Act was not taken into account, this

Court remitted the matter for proper exercise of discretion.

78. It is true that, ordinarily, when a statutory authority is invested with

discretion, the same deserves to be left for exercise by that authority but

the significant factors in the present case are that the Adjudicating

Authority had exercised the discretion in a particular manner without

regard to the other alternative available; and the Appellate Authority has

found such exercise of discretion by the Adjudicating Authority wholly

unjustified. In the given circumstances, even the course adopted in the

case of Hargovind Das K. Joshi (of remitting the matter for

consideration of omitted part of discretion) cannot be adopted in the

present appeals; and it becomes inevitable that a final decision is taken

herein as to how the subject goods are to be dealt with under Section 125

of the Customs Act.

79. As noticed, the exercise of discretion is a critical and solemn

exercise, to be undertaken rationally and cautiously and has to be guided

by law; has to be according to the rules of reason and justice; and has to

be based on relevant considerations. The quest has to be to find what is

proper. Moreover, an authority acting under the Customs Act, when

exercising discretion conferred by Section 125 thereof, has to ensure that

such exercise is in furtherance of accomplishment of the purpose

underlying conferment of such power. The purpose behind leaving such

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discretion with the Adjudicating Authority in relation to prohibited goods is,

obviously, to ensure that all the pros and cons shall be weighed before

taking a final decision for release or absolute confiscation of goods.

80. For what has been observed hereinabove, it is but evident that the

orders-in-original dated 28.08.2020 cannot be said to have been passed

in a proper exercise of discretion. The Adjudicating Authority did not even

pause to consider if the other alternative of absolute confiscation was

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 of payment of

fine in lieu of confiscation. Such exercise of discretion by the Adjudicating

Authority was more of assumptive and ritualistic nature rather than of a

conscious as also cautious adherence to the applicable principles. The

Appellate Authority, on the other hand, has stated various reasons as to

why the option of absolute confiscation was the only proper exercise of

discretion in the present matter. We find the reasons assigned by the

Appellate Authority, particularly in paragraph 54.3 of the order-in-appeal

dated 24.12.2020 (reproduced in point ‘c’ of paragraph 38.2 hereinabove)

to be fully in accord with the principles of exercise of discretion, as

indicated hereinabove and in view of the facts and peculiar circumstances

of this case.

81. It needs hardly any elaboration to find that the prohibition involved

in the present matters, of not allowing the imports of the commodities in

question beyond a particular quantity, was not a prohibition simpliciter. It

112
was provided with reference to the requirements of balancing the

interests of the farmers on the one hand and the importers on the other.

Any inflow of these prohibited goods in the domestic market is going to

have a serious impact on the market economy of the country. The

cascading effect of such improper imports in the previous year under the

cover of interim orders was amply noticed by this Court in Agricas

(supra). This Court also held that the imports were not bona fide and were

made by the importers only for their personal gains.

82. The sum and substance of the matter is that as regards the

imports in question, the personal interests of the importers who made

improper imports are pitted against the interests of national economy and

more particularly, the interests of farmers. This factor alone is sufficient to

find the direction in which discretion ought to be exercised in these

matters. When personal business interests of importers clash with public

interest, the former has to, obviously, give way to the latter. Further, not a

lengthy discussion is required to say that, if excessive improperly

imported peas/pulses are allowed to enter the country’s market, the entire

purpose of the notifications would be defeated. The discretion in the

cases of present nature, involving far-reaching impact on national

economy, cannot be exercised only with reference to the hardship

suggested by the importers, who had made such improper imports only

for personal gains. The imports in question suffer from the vices of breach

of law as also lack of bona fide and the only proper exercise of discretion

113
would be of absolute confiscation and ensuring that these tainted goods

do not enter Indian markets. Imposition of penalty on such importers; and

rather heavier penalty on those who have been able to get some part of

goods released is, obviously, warranted.

83. Before closing on this part of discussion, we may also refer to a

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 declared

value of goods imported by the assessee in respect of 13 consignments

over a period of about three years was rejected and the Commissioner

ordered re-assessment of the value of goods; and after re-determination,

differential duty was confirmed under Section 28(2) of the Customs Act

with recovery of interest under Section 28AB thereof. Moreover, the

imported goods were confiscated and redemption fine under Section 125

of the Customs Act was also imposed in lieu of confiscation. While

confirming the differential duty and consequent penalty and interest,

CESTAT quashed the imposition of redemption fine because the goods

were not available for confiscation. In that context, the High Court said

that the concept of redemption fine would arise in the event the goods

were available and were to be redeemed; and if the goods were not

available, there was no question of redemption of goods. The said

decision cannot be pressed into service in the present case merely

because the said importer M/s. Harihar Collections has been able to

obtain release of all the goods after passing of the order-in-original of the

114
Adjudicating Authority dated 28.08.2020 when the same was under

challenge. The present one is not a case where the subject goods were

not available on the day of passing of the order by the Adjudicating

Authority.

84. Hence, on the facts and in the circumstances of the present case

as noticed and dilated hereinabove, the discretion could only be for

absolute confiscation with levy of penalty. At the most, an option for re-

export could be given to the importers and that too, on payment of

redemption fine and upon discharging other statutory obligations. This

option we had already left open in the order dated 18.03.2021, passed

during the hearing of these matters.

85. For what we have observed hereinabove, the orders-in-original

dated 28.08.2020 cannot be approved. As a necessary corollary, the

orders-in-appeal dated 24.12.2020 deserve to be approved. However,

before final conclusion in that regard, a few more aspects need to be

dealt with.

Invocation of equity by the importers

86. Various submissions invoking equity have been made on behalf of

the importers while submitting that they have already suffered huge

losses and that even re-export of subject goods is not a feasible option.

86.1. In regard to the submissions invoking equity, noticeable it is that

various such features of equity were taken into consideration by the

Adjudicating Authority, in the orders-in-original dated 28.08.2020 and by

115
the High Court, in the impugned order dated 15.10.2020 while directing

release of goods. We have already disapproved the orders so passed by

the Adjudicating Authority and the High Court. Therefore, no leniency in

the name of equity can be claimed by these importers. In fact, any

invocation of equity in these matters is even otherwise ruled out in view of

specific rejection of the claim of bona fide imports by this Court in

Agricas (supra). Once this Court has reached to the conclusion that a

particular action is wanting in bona fide, the perpetrator cannot claim any

relief in equity in relation to the same action. Absence of bona fide in a

claimant and his claim of equity remain incompatible and cannot stand

together.

86.2. The overt suggestions on behalf of the interveners that demand

and supply of pulses is dynamic and not static in nature have only been

noted to be rejected. In our view, meeting with the requirements of

demand and supply is essentially a matter for policy decision of the

Government. No equity could be claimed with such submissions by the

importers. Similarly, if, for whatever reason, any consignment of the

subject goods has been released, such release had not been in accord

with law and no equity could be claimed on that basis.

86.3. Therefore, all the submissions seeking relief in equity are required

to be, and are, rejected.

Prayer for keeping issues open for statutory appeal

116

87. We have also pondered over the prayer for keeping the

opportunity of further statutory appeal to CESTAT open for the importers.

Though in ordinary circumstances, such a prayer might have been of no

difficulty but, we are of the view that having regard to the background and

the relevant circumstances, any liberty for further rounds of litigation, at

least in relation to the respondents before us, is not called for; and the

matters ought to be given a finality.

88. As regards the importer M/s. Raj Grow Impex, as noticed, the

order-in-appeal was consciously challenged by it by way of a fresh writ

petition in the High Court despite being aware of the availability of

statutory remedy of appeal before CESTAT. No cogent and plausible

reason is forthcoming as to why it had chosen to avoid the regular

remedy of appeal except that it had the keen desire to get the remaining

goods (under seven bills of entry) released after it had obtained release of

goods under three bills of entry; and in that attempt, filed a fresh writ

petition challenging the order-in-appeal and also filed a contempt petition

in the High Court.

88.1. So far as the question of release of goods is concerned, the

matter stands concluded once we have found that the goods covered by

the notifications in question and by the judgment of this Court in Agricas

(supra) are liable to absolute confiscation. Therefore, any prayer for

release of any of such goods becomes redundant and cannot be granted

by any authority or Court. Of course, it is true that the Appellate Authority

117
has enhanced penalty from Rs. 1.485 crores to Rs. 5 crores but, the fact

that this importer had taken release of the goods covered by three bills of

entry and that aspect of the matter was required to taken as fait accompli

by the Appellate Authority, in our view, effectively operates against any

claim for reduction of the amount of penalty. Putting it differently, once we

have approved the order-in-appeal, any attempt for further appeal by this

importer shall remain an exercise in futility.

89. So far as the other importer M/s. Harihar Collections is concerned,

it had obtained release of goods covered by all its eight bills of entry and,

therefore, the matter was taken as fait accompli by the Appellate Authority

with appropriation of redemption fine and enhancement of penalty. As

noticed, this importer has even attempted to argue before us against

redemption fine with the submissions that the goods were not available

for confiscation. Neither the redemption fine nor even the enhancement of

penalty from Rs. 2.34 crores to Rs. 10 crores could fully set off the

damage caused by the actions of this importer. Needless to repeat that

with our approval of the order-in-appeal, any attempt for further appeal by

this importer shall also remain an exercise in futility.

90. In view of above, we find no reason to allow any prayer for filing

appeal against the orders-in-appeal dated 24.12.2020.

Incidentally: principles relating to the grant or refusal of interim
relief

118

91. While closing on these matters, we are constrained to observe

that the root cause of the present controversy had not been that much in

the notifications in question as it had been in the interim orders passed by

the High Court of Rajasthan, Bench at Jaipur. It needs hardly any

elaboration that only under the cover of such interim orders that the

importers ventured into the import transactions which resulted in

excessive quantities of peas/pulses than those permitted by the

notifications reaching the Indian ports. As has been noticed in the present

cases, some of the goods so imported got released and the

Commissioner (Appeals) had to take that aspect as fait accompli. For

what has been held by this Court in Agricas (supra), and further for what

has been held in this judgment, the goods in question were not to mingle

in the Indian market. Such mingling, obviously, has an adverse impact on

the agricultural market economy and defeats the policy of the

Government of India. This state of affairs was an avoidable one; and

would have been avoided if, before passing interim orders, the respective

Courts would have paused to consider 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 the Indian ports, even if the notifications were

prohibiting any such import.

91.1. Having regard to the scenario that has unfolded in the present

cases, we are impelled to re-state that even though granting of an interim

119
relief is a matter of discretion, such a discretion needs to be exercised

judiciously and with due regard to the relevant factors.

92. In addition to the general principles for exercise of discretion, as

discussed hereinbefore, a few features specific to the matters of interim

relief need special mention. It is rather elementary that in the matters of

grant of interim relief, satisfaction of the Court only about existence of

prima facie case in favour of the suitor is not enough. The other elements

i.e., balance of convenience and likelihood of irreparable injury, are not of

empty formality and carry their own relevance; and while exercising its

discretion in the matter of interim relief and adopting a particular course,

the Court needs to weigh the risk of injustice, if ultimately the decision of

main matter runs counter to the course being adopted at the time of

granting or refusing the interim relief. We may usefully refer to the

relevant principle stated in the decision of Chancery Division in Films

Rover International Ltd. and Ors. v. Cannon Film Sales Ltd.: [1986] 3

All ER 772 as under: -

“….The principal dilemma about the grant of interlocutory
injunctions, whether prohibitory or mandatory, is that there is by
definition a risk that the court may make the “wrong” decision, in
the sense of granting an injunction to a party who fails to establish
his right at the trial (or would fail if there was a trial) or
alternatively, in failing to grant an injunction to a party who
succeeds (or would succeed) at trial. A fundamental principle is
therefore that the court should take whichever course
appears to carry the lower risk of injustice if it should turn out
to have been “wrong” in the sense I have described. The
guidelines for the grant of both kinds of interlocutory injunctions
are derived from this principle.”
(emphasis in bold supplied)

120
92.1. While referring to various expositions in the said decision, this

Court, in the case of Dorab Cawasji Warden v. Coomi Sorab Warden

and Ors.: (1990) 2 SCC 117 observed as under: -

“16. The relief of interlocutory mandatory injunctions are thus
granted generally to preserve or restore the status quo of the last
non-contested status which preceded the pending controversy
until the final hearing when full relief may be granted or to compel
the undoing of those acts that have been illegally done or the
restoration of that which was wrongfully taken from the party
complaining. But since the granting of such an injunction to a
party who fails or would fail to establish his right at the trial
may cause great injustice or irreparable harm to the party
against whom it was granted or alternatively not granting of it
to a party who succeeds or would succeed may equally cause
great injustice or irreparable harm, courts have evolved
certain guidelines. Generally stated these guidelines are:
(1) The plaintiff has a strong case for trial. That is, it shall be of a
higher standard than a prima facie case that is normally required
for a prohibitory injunction.

(2) It is necessary to prevent irreparable or serious injury which
normally cannot be compensated in terms of money.
(3) The balance of convenience is in favour of the one seeking
such relief.

17. Being essentially an equitable relief the grant or refusal of an
interlocutory mandatory injunction shall ultimately rest in the sound
judicial discretion of the court to be exercised in the light of the
facts and circumstances in each case. Though the above
guidelines are neither exhaustive nor complete or absolute rules,
and there may be exceptional circumstances needing action,
applying them as prerequisite for the grant or refusal of such
injunctions would be a sound exercise of a judicial discretion.”
(emphasis in bold supplied)

93. In keeping with the principles aforesaid, one of the simple

questions to be adverted to at the threshold stage in the present cases

was, as to whether the importers (writ petitioners) were likely to suffer

irreparable injury in case the interim relief was denied and they were to

ultimately succeed in the writ petitions. A direct answer to this question

would have made it clear that their injury, if at all, would have been of

121
some amount of loss of profit, which could always be measured in

monetary terms and, usually, cannot be regarded as an irreparable one.

Another simple but pertinent question would have been concerning the

element of balance of convenience; and a simple answer to the same

would have further shown that the inconvenience which the importers

were going to suffer because of the notifications in question was far

lesser than the inconvenience which the appellants were going to suffer

(with ultimate impact on national interest) in case operation of the

notifications was stayed and thereby, the markets of India were allowed to

be flooded with excessive quantity of the said imported peas/pulses.

94. In fact, the repercussion of the stay orders passed in the earlier

years were duly noticed by this Court in Agricas (supra); and

unfortunately, more or less same adverse consequences had been

hovering over the markets because of the imports made under the cover

of the interim orders passed in relation to the notifications dated

29.03.2019. This, in our view, was not likely to happen if the material

factors relating to balance of convenience and irreparable injury were

taken into account while dealing with the prayers for interim relief in the

writ petitions. As noticed, this Court had, in unequivocal terms, declared in

Agricas (supra), that the importers cannot be said to be under any bona

fide belief in effecting the imports under the cover of interim orders; and

they would face the consequences in law. It gets, perforce, reiterated that

122
all this was avoidable if the implications were taken into account before

granting any interim relief in these matters.

95. We need not expand the comments in regard to the matters

relating to the grant or refusal of interim relief and would close this

discussion while reiterating the principles noticed above.

Summation

96. For what has been discussed hereinabove, these appeals deserve

to be allowed and, while setting aside the orders passed by the High

Court and approving the orders-in-appeal, the goods in question are to be

held liable to absolute confiscation but with a relaxation of allowing re-

export, on payment of the necessary redemption fine and subject to the

importer discharging other statutory obligations. The respondent-

importers being responsible for the improper imports as also for the

present litigation, apart from other consequences, also deserve to be

saddled with heavier costs.

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 modification

order dated 09.12.2020), as passed by the High Court in Writ

123
Petition (L) Nos. 3502-3503 of 2020, is set aside and the writ

petitions so filed by the respondent-importers are dismissed;

(c) the impugned interim order dated 05.01.2021, as passed by

the High Court in Writ Petition (ST) No. 24 of 2021 is also set

aside and the said writ petition shall be governed by this

judgment;

(d) the orders-in-appeal dated 24.12.2020, as passed by the

Appellate Authority in the respective appeals, are approved and

consequently, the orders-in-original dated 28.08.2020 in the

respective cases of the respondent-importers stand quashed;

(e) the orders-in-appeal having been approved by this Court, the

questions of release of goods as also the quantum of penalty

stand concluded with this judgment and hence, the prayer for

keeping open the option of further statutory appeal stands

rejected; and

(f) the subject goods are held liable to absolute confiscation but, in

continuity with the order dated 18.03.2021 in these appeals, it is

provided that if the importer concerned opts for re-export, within

another period of two weeks from today, such a prayer for re-

export may be granted by the authorities after recovery of the

necessary redemption fine and subject to the importer discharging

other statutory obligations. If no such option is exercised within

124
two weeks from today, the goods shall stand confiscated

absolutely.

98. The matters relating to the interveners shall also be governed by

the findings of this judgment and appropriate orders in their regard shall

be passed by the authorities/Courts, wherever their matters relating to the

subject goods are pending but, their options of further appeal, only in

relation to the quantum of amount payable, including that of penalty, is left

open.

99. The respondent-importers shall pay costs of this litigation to the

appellants, quantified at Rs. 2,00,000/- (Rupees two lakhs) each.

100. All pending applications stand disposed of.

..………………………….J.

(A.M. KHANWILKAR) 1

……..…………………….J.

(DINESH MAHESHWARI)

……..…………………….J.

(KRISHNA MURARI) 1

New Delhi
June 17, 2021

125

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