Non-Speaking Order Ignoring Advance Authorisation Claim Cannot Stand: Madras HC Sets Aside Customs Confiscation [Read Order]

In a recent ruling, the Madras High Court held that a customs order confiscating goods and imposing a penalty cannot be sustained if it fails to consider the importer’s claim that the goods were imported under a valid Special Advance Authorisation and that such an order violates principles of natural justice.

Arasu Texports, the petitioner, challenged order passed by Additional Commissioner of Customs which stated that the goods imported by the petitioner were confiscated and a penalty of Rs.50,000 was imposed under the Customs Act.

The petitioner imported the goods under a Special Advance Authorisation issued by the Assistant DGFT, Coimbatore. The customs authorities relied on DGFT Notification No.77/2023 dated 16 March 2024 relating to Minimum Import Price and demanded differential customs duty, leading to confiscation of the goods.

The petitioner’s counsel argued that imports made under a Special Advance Authorisation are exempt from customs duty and that the concept of Minimum Import Price did not apply. They further argued that the Bills of Entry were filed on 23 September 2024 and the notification relied upon by the respondents had no applicability to the petitioner’s case.

The petitioner also explained that a detailed representation was submitted before the authority but the same was not considered while passing the impugned order. They also pointed out that due to the impugned order, the petitioner was unable to secure release of the goods, carry out necessary improvements and return them to the wholesale buyer in the USA within the prescribed 18-month period under the Advance Authorisation scheme.

The customs department, in its counter affidavit, argued that the petitioner was liable to pay differential customs duty based on the Minimum Import Price notification. The respondents also argued that the writ petition was not maintainable as the petitioner had an alternative statutory remedy by way of appeal.

Justice Abdul Quddhose bserved that the main contention of the petitioner, that no customs duty was payable due to the Special Advance Authorisation, was not considered at all in the impugned order. The Court observed that the detailed explanation submitted by the petitioner was ignored and the order passed was a non-speaking order.

The court explained that if the petitioner’s claim was correct, failure to examine it would cause serious hardship and irreparable loss. The court pointeded out that the customs authorities were required to consider the relevant notifications, the Foreign Trade Policy, and the Special Advance Authorisation before passing an adverse order. The court quashed the impugned order.