P&H HC Grants ₹50 Lakh Compensation Over Illegal Seizure Of Imported Kiwi Fruit By Customs, Says Policy Needed To Ensure Imported Goods Reach Public In Time

The Punjab and Haryana High Court slammed the Customs Department for wrongfully and illegally withholding a consignment of a large quantity of kiwi fruit being imported into India and granted compensation of Rs. 50 lakh.

The Court also suggested the concerned authorities to formulate a policy so that testing labs, shipping companies, and Customs Authorities "work in tandem and an atmosphere is created so that the imported goods reach the public as soon as possible."

A consignment of 89,420 kilograms of Kiwi was destroyed on account of delay in release and "lackadaisical approach" of Custom Department.

A bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth along with direction to refund the custom duty paid in..with 6% interest, the Court said, "we further direct that the petitioner/ importer would be entitled to compensation calculated conservatively of ` 50 lacs as the Kiwi worth weighing 89,420 kilograms were destroyed on account of delay in release by the respondents. We have granted the said amount as the Importer has already paid the same to the seller for the Kiwi and brought in India. Kiwi is a high valued fruit. The amount shall be recovered from erring officers as compensation to the Importer/ petitioner."

Speaking for the bench Justice Sanjeev Prakash Sharma highlighted that, "the present case is an example of red-tapism being followed by the government functionaries."

"The same needs to be creased out as it would result in discouraging the import of perishable goods. The Indian citizens also have a right to receive high- quality fruits which are available in different countries; however, if the approach, as adopted by the respondents, is allowed to continue, the importers would toe their line and release rotten fruits, vegetables, and perishable goods that have lost their freshness, and ultimately the public would be the main sufferer," the Court added.

In the present case, the Court found that the Customs Department had wrongfully and illegally withheld the perishable food item, i.e., kiwi, which has a limited shelf life. The delivery date of the goods was April 16, 2023, and they were restrained by the Customs Authorities for allegedly not having a Bill of Entry at the port. After the Court's intervention, the goods were finally released on August 1, 2023, by which time the entire consignment of the fruits had been destroyed. 

The Court observed that, "in import cases of perishable goods there is an inherent urgency which needs to be noticed and considered by the concerned stakeholders. In the facts of the present case, we find that there has been huge delay in compliance of the procedure."

While initially the respondents did not issue the necessary orders, it is only with the direction of this Court that the respondents permitted the amendment of Import General Manifest (IGM) from Mundra port to GRFL ICD, Sahnewal, Ludhiana

The Court found that, "in spite of the amendment of IGM, the goods were not actually released and were allowed to be shifted by the shipping company from Mundra Sea Port to Saurashtra Freight Private Limited."

While observing that goods were released only after the Court found that authorities committed contempt of Court it said, "The respondents did not release the goods even thereafter and again raised a doubt with regard to the place of origin of import of Kiwi fruit inspite of there being documents issued by the UAE Custom evidencing the origin of the goods as Chile."

The Court said that the goods were ultimately released on 01 August 2023 and the certificate which has been placed on record reflects that the entire goods weighing 89,420 Kgs were found completely damaged and were rendered being unfit for human consumption.

It was contrained to find that, "the lackadaisical approach adopted by the respondents, which has resulted in causing loss to the importer."

Custom Duty Can't Be Imposed On 100% Damaged Good Due To Non-Compliance Of Court's Order

 The Court opined that Section 26A will not be applicable in the facts of the present case where the goods perished on account of non-compliance of Court's order within time.

"It is a case where the respondents have themselves created hurdles in the release of the perishable goods. While 100% custom duty is imposed for import of perishable goods, if the goods itself are damaged and become completely un-useable for human consumption, in our opinion, the same deserves to be refunded. Import of Section 26A(3) of the Act cannot be understood to allow unjust enrichment from a justified, bonafide importer," the Court said.

It noted that 26A(3) of the Act, does not allow refund of duty in respect of perishable goods and the goods which have exceeded their shelf life or where the goods are found to have been damaged.

"However, at the same time it does not deal with the situations, as have arisen in the present case. Obviously, as noticed above, the department has issued several circulars from time to time sensitizing the need to deal with the import goods expeditiously, which are perishable in nature. But we find that even after intervention of this Court directing the respondents to take action expeditiously, the officers have put a lot of obstacles and hurdles in the release of perishable goods resulting the goods to be unuseable for human consumption," the Court said.

Justice Sharma pointed that, "the Importer/ petitioner has not only suffered on account of the adamant approach of the respondents but has also suffered huge loss. His reputation in the business market would have also suffered as he must not have been able to supply the goods to the people to whom he had promised."

In the light of the above, the plea seeking Mandamus for cancellation of Import General Manifest (IGM) iled at the port of Mundra, thereby restraining the movement of goods from Sea Port of Mundra to ICD Ludhiana, further directions were sought for permission for filling of Manual Bill of Entry, was allowed.

 Mr. Saurabh Kapoor, Advocate, for the petitioner.

Mr. Ajay Kalra, Senior Standing Counsel, for respondent Nos. 1 to 4.

Title: M/s Prenda Creations Private Limited Union of India and others v. Union of India and others

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