Legal principle

An Advance Ruling validly obtained under the Customs Act, 1962 binds the Department, which must follow the classification it directs as per Section 28J, and goods detained contrary to such a ruling must be released with waiver of demurrage and container detention charges under Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009.

Court decision

The Division Bench allowed the Importer's writ appeals and dismissed the Department's nine writ appeals, upholding the findings of the Advance Ruling Authority in its Ruling dated 31.03.2017 and rejecting the Department's claim in light of Section 28J of the Customs Act, 1962. The Court directed the Department to release the goods forthwith, within one week of receipt of the judgment, and held the Importer eligible for a Detention Certificate waiving demurrage and container detention charges under Regulation 6(1)(l), which the Department must ensure the respective CFS/Liners honor, failing which the Department would be liable.

Facts

M/s Isha Exim, a proprietary firm importing betel nuts/'Supari', held Advance Ruling No.AAR/44/Cus/02/2017 dated 31.03.2017 classifying the goods under CTH 21069030 (Chapter 21). The Department's attempt to challenge the ruling before the AAR was rejected as not maintainable (31.03.2022) and its request for re-examination under Section 28K was declined. On bills of entry declaring 'Unflavoured Supari', Shed Officers found the goods to be dried arecanuts in small cut pieces, drew samples, and the Department issued SCN No.17/2022 dated 30.09.2022 under Section 124 proposing re-classification under CTH 08028020 (Chapter 8) and confiscation; Order-in-Original No.15/2023 dated 06.02.2023 re-classified the goods under Chapter 8, imposed penalties and allowed redemption only for re-export. The Single Judge, by common order dated 22.12.2023, directed provisional release on payment of duty on the tariff value notified under Section 14 (Notification 68/2022-Cus.(NT) dated 12.08.2022) and quashed the OIO and the rejection of provisional release, leading to cross writ appeals by both sides.

Key provisions

• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 28J, Customs Act, 1962 — Applicability of Advance Ruling
• Section 11, Customs Act, 1962 — Power to prohibit importation or exportation of goods
• Section 3(3), Customs Act, 1962 — Classes of officers of customs
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Regulation 6(1)(1), Handling of Cargo in Customs Areas Regulations, 2009 — Responsibilities of Customs Cargo Service provider
• Section 14, Customs Act, 1962 — Valuation of goods
• Section 110A, Customs Act, 1962 — Provisional release of goods, documents and things seized