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“Can DRI hold an Out of Charge (OOC) Shipment- Our Views under the Customs Act, 1962 in a Live matter
One of our clients is a small trading firm, and they import goods for various customers as per their customer’s requirements, based on meager margins.
The facts are that, after repeated requests made to DRI by our client, The Importer, and later on by us, the NOC cum Release Order and the Detention certificate u/s 45(2)(b) has not been issued till date so that the subject goods can been released and handed over to The Importer. This is important to mention here that all of our previous request sent through email has not been replied or responded by DRI so far.
It was clearly evident from the BoE copy, the OOC Gate Pass that the subject Imported goods were given out of charge (OOC) and even after that the goods are still lying at the CFS for further release orders. The goods, once cleared for Home Consumption and given OOC order with a Gate Pass are no longer imported goods and does not fall under the purview of the Customs Act, 1962.
To support our above submission, we made the submission related to M/s Holy Land Marketing Private Limited Vs. Commissioner of Customs, New Delhi vide Customs Appeal No. 51055 of 2020 at Principal Bench of CESTAT New Delhi, where the bench had made its clear observation which is reproduced below, and the order copy is also attached in this email for your handy reference.
“14. In this case, the Deputy Commissioner has clearly erred in issuing an assessment order under Section 17(5) after the goods were already cleared for home consumption. He had no authority to issue such an order because he could assess a bill of entry only if the goods are still ―imported goods and are ―dutiable goods”.
A clear inference can be drawn from the above cited CESTAT order that if a goods cleared for home consumption cannot attract the assessment order u/s 17(5) then the shipment under bill of entry no 9999999 dtd 99.99.9999 was inappropriately stopped by DRI unit u/s 106 read with Notification No. 26/2022-Customs (N.T) dtd 31.03.2022.
We requested the DRI team to issue the much-requested NOC cum Release Order and the “Detention certificate” u/s 45(2)(b).
It is extremely important to mention here that the Notification No. 26/2022-Customs (N.T) dtd 31.03.2022 clarifies the various powers and jurisdictions granted to DRI officials vis a vis different sections of the Customs Act, 1962. Nowhere in the cited Notification DRI was vested with powers to take Undertakings and records statements in accordance with the customs law.
The two main aspects in law (Powers and Jurisdiction) related to the handling of the BoE no 9999999 dtd 99.99.9999 by DRI units as stated below-
- Powers vested with DRI-
(i) DRI, in this particular case, had absolutely no powers under the Customs Act, 1962 to hold the shipment once it was out of charge and cleared for home consumption as was evident from the OOC BoE and the gate pass itself.
(ii) DRI team had physically examined the goods sometime in MONTH-YEAR itself and had found nothing in violation of the declared and submitted shipping documents. It also has made its examination report which was signed by the Customs Broker. DRI had the power to search the shipment before the shipment was cleared for home consumption & not after that.
(iii) DRI units, in this particular case, had not exercised its powers, in accordance with law, and had erred by violating the provisions u/s 108 of the Customs Act, 1962 read with Notification No. 26/2022-Customs (N.T) dtd 31.03.2022, by recording statements and taking written undertakings and documents from the Authorised representative of The Importer on multiple occasions, which was evident from their email itself.
Powers are also vested with limitations in law. A series of Notifications and circulars were issued by the CBIC Board to ensure compliance with the order of the Apex court in the matter of Civil Appeal No. 1827 of 2018 in the case of M/s Canon India Private Limited vs. Commissioner of Customs. Based on this cited case the CBIC board issued Notification No. 26/2022-Customs (N.T) dtd 31.03.2022, which was violated multiple times & right from the time when the shipment was detained by DRI in MONTH-YEAR.
It is an adopted Legal principle that fits perfectly in this context “Subla Fundamento Cadit Opus” meaning a foundation being removed the superstructure falls. In this particular case when the goods were already cleared for home consumption then the applicability of Section 2(25) is necessitated in this scenario, which makes all subsequent actions taken by DRI as null & void ab initio.
It is important to consider another legal principle “Cessante ratione legis, cessat ipsa lex” meaning The cessation of the reason for the law, ceases the law itself, in this case. This in turn invokes another legal principle “A verbis legis non recedendum est.” meaning A provision of the law shall not depart; or From the words of the law, there must be no departure.
- Jurisdiction vested with DRI-
(i) DRI has been instrumental in resolving revenue pilferage, and smuggling issues across the country since its inception.
(ii) However, in this particular case, this matter is not related to revenue pilferage or smuggling etc. Moreover, when the BoE no 9999999 dtd 99.99.9999 was given OOC on 99.99.9999 for home consumption then the provisions of Customs Act, 1962 ceased to apply on the subject consignment.
(iii) DRI units had no jurisdiction at the first place, in this particular matter, to even stop the shipment under the provisions of customs law.
(iv) DRI unit had physically examined the goods in MONTH-YEAR itself and had found nothing in violation of the declared and submitted shipping documents. It also has made its examination report on which the Customs Broker was asked to sign. DRI had the powers to search the shipment before the shipment was cleared for home consumption & not after that. Even if we ignore the power to search here, then please enlighten us whether the copy of the examination order was shared with the Appraising Group-3, the original jurisdictional officers of Customs in this case, in accordance with the provisions of Circular No. 7/2022-Customs dtd 31.03.2022 vis a vis the insertion of section-110AA, through amendment.
Series of Notification & Circular was issued by the empowered CBIC Board based on Instruction No.04/2021-Customs dtd 17.03.2021.
(v) Recording the statements of the authorized representative of The Importer at DRI on multiple occasions, as evident from their emails, they had grossly violated their jurisdictions as granted to DRI under the customs law.
It is very humbly prayed to your good office to-
- kindly assist on priority basis by issuing the NOC cum Release Order
- To issue the “Detention certificate” u/s 45(2)(b) in order to avail the 100% waiver of the detention/demurrage charges incurred so far by The Importer as per Rule 6(1) of Customs Area Handling Regulations, 2009
- To kindly stop posing any irrelevant points which is not related to the shipment in question here
- To adhere to the communication protocol as requested by the Importer and also by us, by not isolating other email IDs as mentioned in the mail cc channel
- We also urge your good self to kindly consider doing the needful in a time bound manner, preferably within this week itself or by early next week at the max. We are there to assist your good self on this particular BoE should you require our further assistance.”
Source reference Order used above: CESTAT, New Delhi
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@ Team S.J. EXIM SERVICES, New Delhi
CP: Mr. Ravi Jha/+91-9999005379 I +91-11-4999 2707
“Indirect Tax & Litigations Advisory”
NOTE: All Inquiries are solicited via email only.
The views expressed in the update are strictly personal, based on our understanding of the underlying law. We are not responsible for any injury, loss or cost arising to any person who refers to this update and acts or refrains from any act accordingly. We would suggest that detailed legal advice must be sought before relying on this update.