Delivery Challans Essential for Establishing Smooth Flow from Exporter-Importer- Recipient: Madras HC directs to Reconsider Goods Release based on Delivery Challans [Read Order]

The court directed the department to consider the request on release of goods however based on the delivery challans
Delivery Challans - Establishing Smooth Flow - Exporter - Importer - Recipient - Madras HC - Goods Release - Delivery Challans - taxscan

In a recent ruling, the Madras High Court set aside the detention order of the intercepted ‘Oleoresin Paprika Crude’ Goods intercepted. The court directed the department to reconsider the release of the goods based on Delivery challans submitted acknowledging the submissions of the department.

A writ petition was filed by the Petitioner, Mane Kancor Ingredients Pvt.Ltd challenging the detention and penalty imposed on goods imported by a company specializing in natural food ingredients solutions has resulted in a significant judicial directive.

The petitioner, a recognized ‘4 Star Export House’ and holder of an ‘Authorized Economic Operator Certificate,’ contested an order dated May 27, 2024, which detained their shipment of 16 metric tonnes of ‘Oleoresin Paprika Crude’ imported from M/s. Lead Healthy ( Hongkong ) Trading Company Limited.

During proceedings, the petitioner’s counsel argued that the transportation was supported by an Advance Authorisation Certificate, GST Registration Certificate listing the Karnataka Unit, Bill of Entry, and an E-way Bill specifying the intended recipient and shipping address in Karnataka. Referring to a circular from the Central Board of Indirect Taxes and Customs ( CBIC ), the counsel contended that the requirement for a delivery challan did not apply in this scenario.

The respondent’s counsel argued that the petitioner, being a registered entity in Kerala under GST law, operates as separate units, necessitating proper documentation to establish the complete chain from the exporter through the importer to the recipient. In the absence of a delivery challan, he contended that this chain remains incomplete, justifying the interception and detention of the goods by the respondents.

The court noted that the petitioner has provided substantial evidence, including the Advance Authorisation Certificate specifying the Karnataka Unit’s details where the goods were delivered, and the GST Registration Certificate listing additional places of business, which also includes the Karnataka Unit.

Additionally, both the Bill of Entry and the E-way Bill are available, with the latter indicating details such as the exporter’s name, importer’s name, and the shipping address in Karnataka.

Furthermore, the petitioner has cited a clarification from the CBIC suggesting that delivery challans may not be mandatory in cases where goods are directly sent to the job worker by the principal.

Considering these facts collectively, the bench of Justice Senthilkumar Ramamoorthy deemed it appropriate to direct the first respondent to promptly consider the petitioner’s plea for the release of the goods, contingent upon the submission of relevant delivery challans.

The High Court concluded that “For reasons set out above, the writ petition is disposed of by setting aside the order dated 27.05.2024 and directing the 1st respondent to reconsider the petitioner’s request for release of goods. Such request shall be considered subject to production of relevant delivery challans and disposed of on or before 20.06.2024.”

The court’s ruling struck a balanced approach. It set aside the detention order, thereby protecting the petitioner’s interests. Simultaneously, it directed a reconsideration of the goods’ release, taking into account the delivery challan. This decision acknowledged and addressed the concerns raised by the revenue, ensuring a fair consideration of both parties’ arguments.

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