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

- **Citation:** [2021] 12 S.C.R. 371
- **Court:** Supreme Court of India
- **Decided:** 2021-06-17
- **Case number:** Civil Appeal Nos. 221718 of 2021
- **Bench:** A. M. Khanwilkar, Dinesh Maheshwari, Krishna Murari
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-ors-v-m-s-raj-grow-impex-llp-ors-35167
- **Pages:** 104

## Headnote

Customs Act, 1962 - ss.2(33), 11(1) and 111(d) - Import -
'prohibited goods' - Appellants aggrieved of directions issued by
High Court in its writ jurisdiction for compliance of orders-inoriginal dated 28.08.2020 passed by the Additional Commissioner
of Customs and consequently, for release of goods imported by
private respondents though the goods in question, according to
appellants, were liable to absolute confiscation - Nature of the goods
in question - Held: On facts, import of the referred goods was
restricted to a particular quantity and could be made only against
a licence - The letter and spirit of the restriction was that, any
import beyond the specified quantity was clearly impermissible and
prohibited -The goods in question, having been imported in
contravention of the notifications dated 29.03.2019 issued by the
Central Government as also the trade notice dated 16.04.2019,
issued by the DGFT; and being of import beyond the permissible
quantity and without licence, were 'prohibited goods' for the purpose
of the Customs Act - Foreign Trade (Development and Regulation)
Act, 1992 - s.3.
Customs Act, 1962 - s.125 - Import - 'prohibited goods' and
'other goods' - Distinction between - Latter part of s.125 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 - If the
Adjudicating Authority does not choose to give such an option, the
result would be of absolute confiscation - Principles to be applied
for exercise of discretion so available in the first part of s.125(1) -
Held: Exercise of discretion is a critical and solemn exercise, to be
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undertaken rationally and cautiously and guided by law; according
to rules of reason and justice; and based on relevant considerations
- The purpose behind leaving such discretion with the Adjudicating
Authority in relation to prohibited goods is to ensure that all the
pros and cons shall be weighed before taking a final decision for
release or absolute confiscation of goods - On facts, orders-inoriginal dated 28.08.2020 of the Adjudicating Authority 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 s.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
and cautious adherence to the applicable principles - When personal
business interests of importers clash with public interest, the former
has to, obviously, give way to the latter - Further, if excessive
improperly imported goods are allowed to enter the country's market,
the entire purpose of the notifications would be defeated - Discretion
in 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 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 accordingly held
liable to absolute confiscation but with a relaxation of allowing reexport, on payment of necessary redemption fine and subject to the
importer discharging other statutory obligations - No leniency in
the name of equity can be claimed by the importers - Respondentimporters being responsible for improper imports as also for the
present litigation, apart from other consequences, also deserve to
be saddled with heavier costs - Respondent-importers to pay costs
of

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 [2021] 12 S.C.R. 371
371
UNION OF INDIA & ORS.
v.
M/S. RAJ GROW IMPEX LLP & ORS.
(Civil Appeal No(s). 2217-2218 of 2021)
JUNE 17, 2021
[A. M. KHANWILKAR, DINESH MAHESHWARI AND
KRISHNA MURARI, JJ.]
Customs Act, 1962 - ss.2(33), 11(1) and 111(d) - Import -
'prohibited goods' - Appellants aggrieved of directions issued by
High Court in its writ jurisdiction for compliance of orders-inoriginal dated 28.08.2020 passed by the Additional Commissioner
of Customs and consequently, for release of goods imported by
private respondents though the goods in question, according to
appellants, were liable to absolute confiscation - Nature of the goods
in question - Held: On facts, import of the referred goods was
restricted to a particular quantity and could be made only against
a licence - The letter and spirit of the restriction was that, any
import beyond the specified quantity was clearly impermissible and
prohibited -The goods in question, having been imported in
contravention of the notifications dated 29.03.2019 issued by the
Central Government as also the trade notice dated 16.04.2019,
issued by the DGFT; and being of import beyond the permissible
quantity and without licence, were 'prohibited goods' for the purpose
of the Customs Act - Foreign Trade (Development and Regulation)
Act, 1992 - s.3.
Customs Act, 1962 - s.125 - Import - 'prohibited goods' and
'other goods' - Distinction between - Latter part of s.125 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 - If the
Adjudicating Authority does not choose to give such an option, the
result would be of absolute confiscation - Principles to be applied
for exercise of discretion so available in the first part of s.125(1) -
Held: Exercise of discretion is a critical and solemn exercise, to be
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undertaken rationally and cautiously and guided by law; according
to rules of reason and justice; and based on relevant considerations
- The purpose behind leaving such discretion with the Adjudicating
Authority in relation to prohibited goods is to ensure that all the
pros and cons shall be weighed before taking a final decision for
release or absolute confiscation of goods - On facts, orders-inoriginal dated 28.08.2020 of the Adjudicating Authority 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 s.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
and cautious adherence to the applicable principles - When personal
business interests of importers clash with public interest, the former
has to, obviously, give way to the latter - Further, if excessive
improperly imported goods are allowed to enter the country's market,
the entire purpose of the notifications would be defeated - Discretion
in 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 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 accordingly held
liable to absolute confiscation but with a relaxation of allowing reexport, on payment of necessary redemption fine and subject to the
importer discharging other statutory obligations - No leniency in
the name of equity can be claimed by the importers - Respondentimporters being responsible for improper imports as also for the
present litigation, apart from other consequences, also deserve to
be saddled with heavier costs - Respondent-importers to pay costs
of litigation to appellants, quantified at Rs. 2,00,000/- each.
Import-Export - Adjudicating Authority, while ordering
confiscation, gave option to the importers to redeem the goods in
question on payment of fine in lieu of confiscation u/s.125(1) of the
Customs Act - However, the DGFT took exception against release
of the goods stating that the same were restricted items - Importers
(private respondents) approached the High Court by way of
separate writ petitions, seeking mandamus for clearance of the goods
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in question - While the writ petitions were pending, the Commissioner
of Customs passed order dated 01.10.2020 in exercise of his powers
u/s.129D(2) of the Customs Act, pointing out the alleged deficiencies
in the adjudication orders; and directed filing of appeals before
the Commissioner (Appeals) - Meanwhile, the High Court by order
dated 15.10.2020 held 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 s.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
issued directions to the respondents to forthwith release the goods
of the importers - Legality and validity of the orders passed by the
High Court - Held: Order dated 15.10.2020 passed by High Court
suffers from inherent contradictions and inconsistencies; and cannot
be approved - Significantly, if the purport of the order dated
15.10.2020 of the High Court 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 - If release of goods was the only option available
with the authorities, the material part of consideration of the
Appellate Authority had already been rendered redundant - 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
-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 -
Impugned order dated 15.10.2020, having been passed while
ignoring the relevant considerations, cannot be approved.
Equity - Claim of - Held: Once the 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
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ORS.
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action - Absence of bona fide in a claimant and his claim of equity
remain incompatible and cannot stand together.
Interim relief - Grant of - Matter of discretion -
Considerations - Held: In matters of grant of interim relief,
satisfaction of the Court only about existence of prima facie case
in favour of the suitor is not enough - The other elements i.e.,
balance of convenience and likelihood of irreparable injury, 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.
Allowing the appeals, the Court
HELD:
Whether the goods in question are of 'prohibited goods'
category?
1. The categorical findings in the case of Agricas 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 under the Foreign Trade
(Development and Regulation) Act, 1992 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. [Para 65][451-C-E]
2.1. The contention on the part of the importers, that the
subject goods fall in 'restricted' category and not 'prohibited'
category, is baseless and required to be rejected. [Para 66]
[451-E]
2.2. In the present case 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, is
that, any import beyond the specified quantity is clearly
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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. 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 obtainable by the farmers
of the country. [Para 67.4.3][455-E-G]
2.3. 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 Act. 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.
[Para 68][455-H; 456-A]
2.4. 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'. [Para 68.1]
[456-B]
Whether the goods in question are liable to absolute
confiscation?
3. 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. [Para 69][456-C-D]
4. A bare reading of Section 125(1) of the Customs Act
makes it evident that a clear distinction is made between
'prohibited goods' and 'other goods'. 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
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS.
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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. [Paras 69 and 69.1][456-G; 457-A-B]
5.1. 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
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. [Para 79][465-F-H]
5.2. It is but evident that the orders-in-original dated
28.08.2020 passed by the Additional Commissioner of Customs
(the Adjudicating Authority) 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. The reasons assigned
by the Appellate Authority, in the order-in-appeal dated
24.12.2020 are fully in accord with the principles of exercise of
discretion. [Para 80][466-A-D]
5.3. 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 was
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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. This Court also held that the
imports were not bona fide and were made by the importers only
for their personal gains. [Para 81][466-D-F]
6. 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, 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 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. [Para 82][466-F-H; 467-A-B]
7. On the facts and in the circumstances of the present case,
the discretion could only be for absolute confiscation with levy 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. The orders-inoriginal dated 28.08.2020 cannot be approved. As a necessary
corollary, the orders-in-appeal dated 24.12.2020 deserve to be
approved. [Paras 84 and 85][467-G-H; 468-A-B]
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Invocation of equity by the importers
8. Various submissions invoking equity were 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. However, 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.
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. [Para 86, 86.1][468-B-E]
Prayer for keeping issues open for statutory appeal
9. A prayer was made for keeping the opportunity of further
statutory appeal to CESTAT open for the importers. Though in
ordinary circumstances, such a prayer might have been of no
difficulty but, having regard to the background and the relevant
circumstances, any liberty for further rounds of litigation, at least
in relation to the respondents, is not called for; and the matters
ought to be given a finality. There is no reason to allow any prayer
for filing appeal against the orders-in-appeal dated 24.12.2020.
[Paras 87, 90][468-H; 469-A; 470-A-B]
Incidentally: principles relating to the grant or refusal of
interim relief
10.1. 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. 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, and
further for what has been held in this judgment, the goods in
question were not to mingle in the Indian market. Such mingling,
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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. Even though
granting of an interim relief is a matter of discretion, such a
discretion needs to be exercised judiciously and with due regard
to the relevant factors. [Paras 91, 91.1][470-B-F]
10.2. 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.
[Para 92][470-G-H; 471-A]
10.3. 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 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
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allowed to be flooded with excessive quantity of the said imported
peas/pulses. [Para 93][472-E-G]
10.4. In fact, the repercussion of the stay orders passed in
the earlier years were duly noticed by this Court in Agricas; 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 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. This Court had, in
unequivocal terms, declared in Agricas, 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 all this
was avoidable if the implications were taken into account before
granting any interim relief in these matters. [Para 94][472-H;
473-A-B]
Summation
11. The goods in question are 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 respondentimporters being responsible for the improper imports as also for
the present litigation, apart from other consequences, also
deserve to be saddled with heavier costs. The respondentimporters shall pay costs of this litigation to the appellants,
quantified at Rs. 2,00,000/- (Rupees two lakhs) each. [Paras 96,
99][473-D-E; 474-D]
Commissioner of Customs v. Atul Automations Private
Limited, (2019) 3 SCC 539 - held inapplicable.
Hargovind Das K. Joshi and Ors. v. Collector of
Customs and Ors., (1987) 2 SCC 230 - explained.
Commissioner of Customs (Import), Mumbai v. Finesse
Creation Inc., (2009) 248 ELT 122 - distinguished.
Union of India and Ors. v. Agricas LLP and Ors., 2020
SCC OnLine SC 675 - relied on.
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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 : [ 1985]
3 SCR 623; Reliance Airport Developers (P) Ltd. v.
Airports Authority of India and Ors. (2006) 10 SCC 1
: [2006] 8 Suppl. SCR 39; Sheikh Mohd. Omer v.
Collector of Customs, Calcutta and Ors: (1970) 2 SCC
728 : [ 1971] 2 SCR 35; Commissioner of Customs, New
Delhi v. Brooks International & Ors: (2007) 10 SCC
396 : [2007] 7 SCR 791; Om Prakash Bhatia v.
Commissioner of Customs, Delhi: (2003) 6 SCC 161 :
[2003] 1 Suppl. SCR 412; P.T.R. Exports (Madras) Pvt.
Ltd. and Ors. v. Union of India and Ors., (1996) 5 SCC
268 : [1996] 2 Suppl. SCR 662; S.B. International Ltd.
and Ors. v. Asstt. Director General of Foreign Trade
and Ors., (1996) 2 SCC 439 : [1996] 1 SCR 910; Shri
Amman Dhall Mill v. Commissioner of Customs, (2021)
SCC OnLine Ker 362; U.P. State Road Transport
Corporation and Anr. v. Mohd. Ismail and Ors., (1991)
3 SCC 239 : [1991] 2 SCR 274; Assistant Commissioner
(CT) LTU, Kakinada and Ors. v. Glaxo Smith Kline
Consumer Health Care Limited, 2020 SCC OnLine SC
440 and Dorab Cawasji Warden v. Coomi Sorab Warden
and Ors., (1990) 2 SCC 117 : [1990] 1 SCR 332 -
referred to.
Horizon Ferro Alloys Pvt. Ltd. and Ors. v. Union of
India and Ors., (2016) 340 ELT 27 - referred to.
Rover International Ltd. and Ors. v. Cannon Film Sales
Ltd., [1986] 3 All ER 772 - referred to.
Case Law Reference
(1999) 9 SCC 175
referred to
Para 38.2
[1985] 3 SCR 623
referred to
Para 38.2
[2006] 8 Suppl. SCR 39
referred to
Para 38.2
[1971] 2 SCR 35
referred to
Para 44.2
[2007] 7 SCR 791
referred to
Para 44.2
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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[2003] 1 Suppl. SCR 412
referred to
Para 44.2
[1996] 2 Suppl. SCR 662
referred to
Para 44.3
[1996] 1 SCR 910
referred to
Para 44.3
(2019) 3 SCC 539
held inapplicable
Para 44.6
(1987) 2 SCC 230
explained
Para 45.6
[1991] 2 SCR 274
referred to
Para 47.1.2
[1990] 1 SCR 332
referred to
Para 92.1
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 221718 of 2021.
From the Judgment and Order dated 15.10.2020 of the High Court
of Judicature at Bombay in Writ Petition 3502-3503 of 2020.
With
Civil Appeal No. 2219 of 2021.
N. Venkataraman, ASG., Ms. B. Sunita Rao, V. Chandra Shekara
Bharathi, Liz Mathew, Mukesh Kumar Maroria, B. Krishna Prasad, B.
V. Balaram Das, Advs. for the Appellants.
Ranjit Kumar, Neeraj Kishan Kaul, Sr. Advs., Sanjay Bansal, Ms.
Swati Bansal, Ms. Vaishali Gupta, G. K. Bansal, Sujay Kantawalla,
Samsher Garud, Sandeep Sudhakar Deshmukh, Ms. Juhi Valia, Buddy
A Ranganadhan, A. V. Rangam, Animesh Kumar, Anantha Narayana
M. G., V. C. Shukla, Ambuj Dixit, Rishabh Prasad, Sujit Ghosh, Nishant
Kumar, Ms. Utkarsha Sharma, Neeraj Shekhar, Advs. for the
Respondents.
The Judgment of the Court was delivered by
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
*The Contents is as per the Original Judgment.
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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
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: Ordersin-original set aside with enhancement of penalty.................48
Another round in High Court: Challenge to the order-inappeal 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
1.Leave granted.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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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-inoriginal dated 28.08.2020 passed by the Additional Commissioner of
Customs, Group-I, Mumbai and consequently, for release of the goods
imported by the 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.
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
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 Hereinafter also referred to as 'the FTDR Act'.
3 Hereinafter also referred to as 'the DGFT' for short.
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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, 19625. 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. 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
4 Since reported as 2020 SCC OnLine SC 675; hereinafter also referred to as the case of
'Agricas'.
5 Hereinafter also referred to as 'the Customs Act'.
6 Hereinafter also referred to as the 'Adjudicating Authority'.
7 'OOC' for short.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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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, essentially
seeking mandamus for clearance of the goods in question. While the
said writ petitions were pending, the Commissioner of Customs (ImportII) 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 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
8 Hereinafter also referred to as 'the Appellate Authority'.
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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
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. The outline foregoing makes it clear that in the case of Agricas
(supra), while deciding on the validity of the notifications and the trade
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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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.