Calcutta HC Slams Customs Authorities for Judicial Overreach, Relief to Importer in 27-Year-Old ‘Prawn Feed’ Classification Dispute [Read Order]
The HC Directed the Department to Accept the Classification of Artemia Cysts as Prawn Feed, and issued a Stern Warning for Delay and Defiance of Earlier Court Orders
Relief to Importer in 27-Year-Old ‘Prawn Feed’
Relief to Importer in 27-Year-Old ‘Prawn Feed’
The Calcutta High Court has allowed the appeal filed by the petitioner, setting aside both the 2017 de novo adjudication order and a subsequent Customs Appellate Tribunal ruling dated June 26, 2024. The court heavily criticised the customs authorities for judicial indiscipline, exceeding jurisdiction, and delaying adjudication by over a decade, all while disregarding earlier binding decisions of the High Court.
The case revolved around the import of Artemia Cysts, commonly known as Brine Shrimp Eggs, by the petitioners, Atherton Engineering Co. Pvt. Ltd., from October 1998 to February 2001. The importer had classified the goods as "prawn feed" under Customs Tariff Heading 2309.90, which attracted significantly lower duty. The Directorate of Revenue Intelligence (DRI) contested this classification, arguing that the goods were actually "animal products" falling under Chapter Heading 0511.99, attracting a much higher rate of customs duty.
The matter reached the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in 2006, where it was decided against the importer by a 2:1 majority. Atherton Engineering then approached the High Court through a writ petition, which was allowed in 2010. The court ruled that a factual inquiry must determine whether the imported Artemia cysts contained embryos, a key determinant for classification as prawn feed.
Despite the clarity of the 2010 High Court order, the customs department took seven years to begin the directed de novo adjudication. This was only initiated after Atherton Engineering filed another writ petition. The final order issued in 2017 once again went against the importer, resulting in a fresh appeal to the Tribunal, which dismissed it in 2024.
The bench, consisting of Chief Justice T.S. Sivagnanam and Justice Chaitali Chatterjee (Das), observed that the adjudicating authority exceeded its jurisdiction by reopening a settled issue and virtually sat in judgment over the earlier High Court order.
The court pointed out that the customs authorities not only ignored the clear boundaries of the remand order from 2010 but also committed several procedural and legal blunders, such as re-imposing confiscation and redemption fines despite the goods being released in 2002, imposing a penalty on a deceased director, relying on a previously quashed tribunal order, and failing to complete proceedings within the court-mandated 12-week period.
The court held that this was a classic violation of the principles laid down by the Supreme Court in Union of India vs. Kamlakshi Finance Corporation Ltd. regarding the duty of subordinate authorities to follow binding precedent without question or delay.
With samples now scientifically unusable due to the passage of 27 years, the High Court held that the factual inquiry ordered in 2010 was no longer feasible. As a result, it issued a decisive directive that the Department shall accept the classification of Artemia Cysts under Heading 2309.90 as claimed by the appellant and extend the benefit of relevant duty exemption notifications. The court gave the department three weeks to comply and warned that failure to do so would invite personal accountability of the concerned officer.
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