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Orders, Tribunal’s Decision and Adjudication Proceedings Set Aside; Labels Action as Jurisdictional Overreach and Delay as Unjustified
In a scathing judgment, the Calcutta High Court has set aside the Customs Tribunal’s dismissal of an appeal by Atherton Engineering Co. Pvt. Ltd., ruling that both the Tribunal and the Customs Department violated binding judicial directions and exceeded their jurisdiction in a long-standing import classification dispute.
The case concerned the classification of Artemia Cysts (Brine Shrimp Eggs) imported by the petitioner between 1998 and 2001. The importer had declared the goods as “prawn feed” to claim concessional customs duty, but the Department contended the classification was incorrect and alleged misdeclaration.
Background: Judicial Direction Ignored
In a 2010 decision, the High Court had already held that if the shrimp eggs contained embryos, they should be classified as “prawn feed” under Customs Heading 2309.90. The Court also quashed the earlier Tribunal and departmental decisions, and directed a limited remand solely for factual inquiry into whether the imported goods contained embryos.
However, the Customs Department failed to initiate the de novo adjudication within the 12-week timeframe set by the Court, only acting after the petitioner filed a second writ petition in 2017. Shockingly, when the adjudication finally happened in 2017—seven years later—the department reopened the entire classification dispute, imposed confiscation orders, and even penalized a deceased director of the company.
Why the Petitioner Approached the High Court?
- Violation of Judicial Discipline:
- The Customs Tribunal, in the de novo proceedings, relied on its earlier decision (which had been explicitly quashed by the Calcutta High Court in 2010 and had attained finality).
- The Tribunal effectively reinstated a quashed order, which the petitioner claimed was without jurisdiction.
- Scope of Remand Ignored:
- In 2010, the High Court remanded the case with a limited scope—only to verify whether the imported shrimp eggs contained embryos (which would qualify them as “prawn feed”).
- The petitioner argued that the Customs authority exceeded this limited scope by re-opening the entire classification issue, already settled in their favour.
- Delay in Adjudication:
- Despite a court-mandated 12-week timeframe for re-adjudication (ordered in 2010), the department delayed re-initiation for over 7 years, only acting after a second writ petition in 2017.
- This inordinate delay, per the petitioner, violated natural justice and caused serious prejudice.
- Unlawful Confiscation and Penalties:
- The de novo adjudicating authority ordered confiscation and imposed a redemption fine, even though the goods had already been released and confiscation was ruled out in the original adjudication.
- It also imposed penalty on a deceased director, which the petitioner highlighted as a grave factual and legal error.
Tribunal’s Perversity and Selective Compliance
The High Court observed that the Customs Tribunal, instead of confining itself to the factual inquiry as directed, relied on its earlier decision which had already been quashed and declared void in the 2010 judgment. This, the Court said, amounted to judicial indiscipline and “sitting in judgment over binding High Court directions.”
The Tribunal also failed to account for the inordinate delay and the fact that the de novo adjudicating authority had exceeded its mandate by introducing new penalties and confiscatory orders not present in the original adjudication.
Court’s Ruling
Calling the entire process “perverse and without jurisdiction,” Chief Justice T.S. Sivagnanam and Justice Chaitali Chatterjee (Das) ruled:
- The classification issue had already attained finality, and should not have been reopened.
- The Department’s action of confiscating goods already released and imposing redemption fines was illegal.
- Imposing penalty on a deceased person was a serious factual error.
- The seven-year delay was unjustified and violated principles of natural justice.
Directions Issued
Given the efflux of time and the inability to now test the original samples, the Court concluded that the earlier factual inquiry was no longer feasible. It therefore directed the Department to:
- Accept the appellant’s classification of the goods as “prawn feed”.
- Extend duty benefits as per applicable notifications.
- Comply within three weeks, failing which personal liability would attach to the responsible officer.
To Know The Details of the Judgement Click Here.
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