Madras High Court Directs Customs Dept. To Release Fresh Apples Imported From New Zealand On Furnishing Of Bank Guarantee Towards Differential Duty

The Madras High Court has directed the customs department to release fresh apples imported from New Zealand on the furnishing of bank guarantees towards differential duty. The Madras High Court has directed the customs department to release fresh apples imported from New Zealand on the furnishing of bank guarantees towards differential duty.

The bench of Justice R. Mahadevan and Justice Mohammed Shaffiq has observed that the nature of the subject goods, viz., fresh apples, which are perishable in nature and are meant for human consumption, made the court find it appropriate to order the release of the goods, however, subject to the condition that the assessee or respondent shall furnish a bank guarantee to the value of differential duty to be determined by the authority in order to safeguard the interests of the department.

According to the appellant or department, the apples imported could be broadly classified into two categories: cost insurance freight (CIF) prices above Rs. 50 per kg and CIF prices below Rs. 50 per kg.

As per DGFT Notification No. 5 of 2023, dated May 8, 2023, when the CIF value is below Rs. 50 per kg, the import of “fresh apples” shall be treated as "prohibited”.

Based on the DGFT Notification, the authority passed the order confiscating the goods, viz., fresh apples whose value was below Rs. 50/- per kg, and assessing the same at Rs. 18,61,610.02 under Section 111(d) of the Customs Act, 1962.

The respondent sought the direction to release the imported goods and to issue detention certificates for waiver of demurrage and container detention charges in terms of Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009.

In view of the stay order against notification no. 5/2023 dated May 8, 2023, passed by the Kerala High Court as well as the Madras High Court, the judge has granted an order of interim direction to the appellant to assess and release the goods.

The appellant contended that by notification no. 5/2023 dated May 8, 2023, the fresh apples, whose CIF value is below Rs. 50 per kg, were prohibited from import. Knowing fully well about the same, the respondent had imported the subject goods in violation of the notification. As of the date of the Bill of Entry, the notification has been in force, and the same was stayed by the Kerala High Court only on July 11, 2023.

The assessee contended that the notification prohibiting the import of fresh apples, on the ground that the CIF value is less than Rs. 50 per kg, is stayed by two High Courts, and it is trite law that when the notification is stayed by one High Court, the operation of the stay order is not confined to the territorial limit of that High Court alone but has pan-India effect.

The court directed the appellant to release the subject goods on the furnishing of a bank guarantee to the tune of Rs. 2,25,000 towards differential duty by the respondent. It is made clear that this interim arrangement would be made only to safeguard the interests of both parties, and the bank guarantee to be furnished by the respondent is kept alive till the decision is arrived at with regard to the validity of notification no. 5/2023 dated May 8, 2023.

Counsel For Appellant: K.Umesh Rao

Counsel For Respondent: Sathish Sundar

Case Title: The Additional Commissioner of Customs Versus M/s.N.C.Alexander

Citation: 2023 LiveLaw (Mad) 334

Case No.: W.A.No.2626 of 2023 and C.M.P.No.22137 of 2023

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