The Bombay High Court in the case Isha Exim carrying on business Versus Union of India observed and has quashed the customs deputy commissioner’s order which being contrary to the ruling passed by the Authority of Advance Ruling, AAR.
The bench comprising of Justice G.S. Kulkarni and Justice Jitendra Jain in the case observed and has stated that the ruling passed by the Authority of Advance Ruling, AAR in the petitioner’s own case which is binding as stated under Section 28 J (1) on the petitioner and the respondents or department as there being no change in law post-decision and the said decision has been accepted by the department in the absence of any further challenge before the higher forum.
In the present case, the petitioner or assessee being in the business of importing various edible products, including products of betel nuts (processed supari) and the petitioner has been importing various forms of supari, stated to be unflavored betel nuts (supari) and API betel nuts (supari). Thus, the petitioner is importing the goods from only two suppliers and the importers are received at Chennai and JNPT ports.
Therefore, the assessee seeks the advance ruling on the issue of classification under Customs Tariff Heading of the products of betel nuts.
It has been held by the AAR that the grounds sought to be imported, namely, ‘unflavoured supari’, ‘flavoured supari’, ‘API supari’, and ‘Chikni supari’, were being processed and the betelnut products that do not contain specified ingredients, namely lime, kath, and tobacco, but contain other flavouring materials or additives are classifiable under Customs Tariff Heading 2106 90 30.
Further, the portioner imported betel nuts from Indonesia at the Chennai port and classified them as ‘unflavored supari’ and the goods were assessed under Custom Tariff Heading (CTH) 21069030 as ‘unflavoured supari’.
However, it has been stated that the officer of DRI did not permit the cargo to be cleared on the ground that the petitioner had misclassified the goods.
The petitioner in the plea challenged the action by filing a writ petition before the Madras High Court wherein it is contended that the classification issue is resolved by the AAR, in which the AAR has given a ruling that ‘unflavoured supari’ is to be classified under CTH 21069030.
Therefore, the petitioner in the plea imported unflavoured supari from Myanmar by classifying it under CTH 21069030.
The department in the case passed an order wherein it rejecetd the classification of the goods imported under CTH 21069030 and ordered them to be classified under heading 0802.
The petitioner in the plea contended before the court that the classification issue in its own case has been decided by the AAR, which has attained finality since it was not challenged before the higher forum. The petitioner relied on Section 28J(1) of the Customs Act, this court would contend that the said ruling is binding on the respondents and a mere dismissal of the appeal filed by parties before the Supreme Court against the orders passed by the Chennai Bench of the Tribunal cannot be considered a change of law so as to contend that the advance ruling is not binding as stated under Section 28J (2).
On the other hand, it has been contended by the department that the O-I-O is an appealable order and, therefore, the petitioner should be relegated to an alternate remedy.
The petitioner also relied on various decisions for the proposition, refusing to entertain writ jurisdiction and the appeal against the order has been dismissed by the Supreme Court, and the ruling given by the AAR is not binding as per Section 28J(2) of the Customs Act.
Therefore, the respondents were justified in passing the order.
The court stated that it has also been provided under section 28J(1) provides that the advance ruling pronounced by the authority shall be binding not only on the applicant who had sought it but also on the Principal Commissioner of Customs or Commissioner of Customs and the customs authorities subordinate to him, in respect of the applicant. The Section 28J (2) provides that the advance ruling shall be binding unless there being a change of law or facts on the basis of which the advance ruling has been pronounced by the court in the matter.
The court in the case noted that the assessee can invoke writ jurisdiction under Article 226 of the Constitution of India, despite an alternate statutory remedy of an appeal inter alia, which being on the that there is a breach of fundamental rights, a breach of natural justice, an order passed without jurisdiction, or there is a challenge to the vires of the statute. Thus, the said court can exercise writ jurisdiction in spite of the appeal remedy being available to the petitioner.
The court while considering the facts and circumstances of the case stated that an assessee can invoke writ jurisdiction if the action is in excess of jurisdiction. The department passed the O-I-O which being contrary to the provisions of Section 28J and, thus, it is without jurisdiction. Thus, the order was passed without jurisdiction, and the writ petition is maintainable. Further, the court stated that the petitioner ought not to be relegated to taking recourse to an appellate remedy. The counsel, Advocate Prakash Shah appeared for the Petitioner.
The counsel, Advocate Jitendra B. Mishra represented the respondent.