The Madras High Court while directing Customs Department to check applicability of Advance Authorisation Scheme (AA Scheme) said that Permission to re-export of Goods stands secured in the customs frontier.
The petitioner, Czarnikow Group Limited is a company incorporated in England primarily engaged in trading in sugar. It had entered into a contract dated 20.10.2016 with Ambika Sugars Limited for the supply of 29,830.50 Metric Tonnes (MT) of standard VHP cane raw sugar. A Collateral Management Agreement (CMA) had also been entered into providing for the simultaneous opening of a Letter of Credit for payment and supply, insofar as the sugar was to be released in instalments.
The sugar has been imported in anticipation of the sale to R5 and upon import, sugar has been retained in a bonded warehouse in the customs frontier and according to the petitioner, has not entered into the territory of India. The bonded warehouse is under lock and key, both at the instance of R5 as well as the petitioner, the latter having placed its lock above the lock placed by the petitioner. The petitioner’s agent under the CMA, Mr.Amin (agent) is said to be supervising the safety of the asset.
According to both the petitioner applied for and obtained an approval under the Advance Authorisation Scheme (AA Scheme) issued by Additional Director General of Foreign Trade (ADGFT) and implemented Commissioner of Customs, Tiruchirappalli or Commissioner of Customs, Chennai II thus entitling the import of the sugar without the payment of customs duty.
The single bench of Justice Anita Sumanth held that the contract at clause 20 thereof, confirms the position that title to the goods would not pass until the buyer has made payment for the entirety of the goods. In my considered view, the petitioner thus assumes the status of an unpaid seller who continues to hold title/ownership to the asset imported.
“The petitioner would bring to my notice a representation filed before the Customs Authorities as well as DRI seeking permission to re-export on the ground that the asset stands secured in the customs frontier and has not yet entered the domestic market. Let this aspect be verified by the customs as also the question of whether such goods are entitled to the benefit of the AA Scheme,” the court said.
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