Re-Export Cannot be Denied When Importer Never Intended Domestic Clearance: Allahabad HC Dismisses Revenue Appeal
The Bench observed that compelling the importer to obtain provisional release prior to re-export would serve no purpose when the consignment was never meant for domestic use and when the importer voluntarily initiated corrective steps.
The Allahabad High Court has upheld the order of the Customs, Excise and ServiceTax Appellate Tribunal ( CESTAT ), observing that re-export of imported goods cannot be denied when the importer had no intention to clear or distribute the goods in the domestic market.
The department filed an appeal under Section 130 of the Customs Act, 1962. The Division Bench of Justice Dayal Singh and Indrajeet Shukla held that once the Tribunal recorded a clear factual finding that the importer sought re-export even before detention or seizure, the Revenue could not insist on provisional release or adjudication as a precondition for re-export.
The issue is that M/s Best Crop Science Pvt. Ltd. imported a chemical declared as ‘3-Chloro-4-(1,1,2-Trifluoro-2-Trifluoromethoxy) Ethoxy Benzenamine’ against a Bill of Entry dated 12 August 2024.
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At the time of receipt, the consignment was found to contain an entirely different substance ‘Novaluron’, a restricted item requiring authorisation. The importer promptly contacted the overseas supplier and sought immediate return of the consignment, well before the Customs authorities initiated seizure proceedings. The importer subsequently filed a formal request for re-export.
However, Customs authorities seized the goods and contested the re-export request, arguing that the Tribunal erred in directing unconditional re-export without insisting on provisional release under Section 110A or awaiting issuance of a show-cause notice under Section 124.
The Revenue argued that goods under seizure could not be allowed to be re-exported until statutory timelines were exhausted.
The High Court held that the Revenue had not disputed the Tribunal’s core factual finding that the importer never intended to import the goods into India and had sought re-export before any enforcement action commenced.
Once this factual finding remained unchallenged, the Court ruled, the grounds raised by the Revenue were merely technical and lacked real substance.
The Bench observed that compelling the importer to obtain provisional release prior to re-export would serve no purpose when the consignment was never meant for domestic use and when the importer voluntarily initiated corrective steps.
Accordingly, the Court confirmed the Tribunal’s direction permitting unconditional re-export and held that, in such circumstances, neither duty, penalty nor redemption fine was payable.
“In face of the unassailed finding of fact recorded by the Tribunal, the provisions of Section 110A of the Act may only offer a technical ground to the revenue but not a real or substantial ground in the facts recorded by the Tribunal. It would be futile to enforce on the respondent the requirement to first obtain provisional release and then re- export the goods” said the bench, Accordingly, the appeal of the Principal Commissioner of Customs, Noida, was dismissed.
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