30 Sep 2023 1:00 PM GMT
The Allahabad High Court recently held that Court is not an expert body to decide whether Ethephon (an insecticide) falls within the exemption claimed by the petitioner under Section 38(1)(b) of the Insecticide Act, 1968. Though the Court noted that petitioner had failed to discharge its burden to prove that exemption was rightly claimed, it directed the petitioner to appear before the...
The Allahabad High Court recently held that Court is not an expert body to decide whether Ethephon (an insecticide) falls within the exemption claimed by the petitioner under Section 38(1)(b) of the Insecticide Act, 1968.
Though the Court noted that petitioner had failed to discharge its burden to prove that exemption was rightly claimed, it directed the petitioner to appear before the statutory authority as it is a fact-finding body who is empowered to decide the issue of exemption claimed being right or wrong.
A bench comprising of Justices Saumitra Dayal Singh and Rajendra Kumar-IV held,
“A fact enquiry would be required to be conducted before the contention being canvassed by the learned counsel for the petitioner may be accepted. That consideration has become necessary in the face of the claim of exemption set up by the petitioner. That claim must arise and be tested before the fact-finding authority i.e., the statutory authorities.”
Petitioner is engaged in the business of import, manufacture, and trading in Ethylene Ripener/Ethephon. Petitioner imports bulk quantities of that Ethylene Ripener/Ethephon from China and repacks the same in smaller packings. Certain quantities of the said goods were imported, and custom duty was paid. Meanwhile, a search operation was conducted at the premises of the petitioner. Ethylene Ripener/Ethephon, Ethylene Ripener (Mango), and Ethylene Ripener (Banana) present on the premises was detained under Section 110 of Customs Act, 1969.
Though petitioner filed reply to the detention memo, it assailed the detention memo and the search and seizure proceedings. During the pendency of writ petition, seizure order was passed which was challenged by way of an amendment application. The Court noted that at this stage, a show cause notice under Section 124 (Issue of show cause notice before confiscation of goods, etc.) of the Act has been issued to the petitioner and confiscation proceedings are pending.
Counsel for the Petitioner contended that under Section 110 (Seizure of goods, documents, and things) read with Section 111(d) (Confiscation of improperly imported goods) of the Act only goods on which prohibition has been imposed under the Act or by any other law in force, may be seized/confiscated as they may have been imported contrary to any prohibition. The petitioner’s goods were not prohibited goods, it was argued. Further, placing reliance on Section 38(1)(b) of Insecticide Act, it was argued that though Ethephon may be an insecticide, it falls under the exempted category as it is a ripening agent not used to prevent/mitigate/repel/destroy any plant/animal life, and is not regulated by the provisions of Insecticide Act, 1968.
It was also submitted that Section 11(3) of the Act provides that any prohibition under any other law can be executed under the Customs Act only if a notification to that effect has been issued under the Customs Act. Counsel for petitioner submitted that no such notification was issued in the present case, thus, the entire proceedings by Department were without jurisdiction.
Counsel for revenue/ department defended the proceedings by relying on Section 17 (Prohibition of import and manufacture of certain insecticides) of the Insecticide Act to state that since the petitioner had not obtained registration under the Insecticide Act to import Ethephon, it was prohibited to import or manufacture it under the Insecticide Act.
Reliance was placed on Section 2(33) of the Customs Act to bring Ethephon within the definition of prohibited goods. It was submitted that since it is a prohibited good under the Customs Act, no notification is necessary.
High Court Verdict
The Court held that Ethephon is a scheduled commodity under the Insecticide Act and registration under the Act was mandatory for importing it. Perusing Section 38(1)(b) of the Insecticide Act, the Court observed that the legislative intent was specific to allow exemptions to insecticides used in household, kitchen garden and agriculture, and to those which do not cause the aforesaid harm to any life forms which may not be perceived useful to human beings.
However, in conclusion to the argument, the Court held that it is not “an expert in the science of chemistry or environment, nor it has any expert jurisprudential material available to it as may safely lead it to the conclusion that import and/or manufacture of Ethephon may not cause the effect of preventing or destroying or repelling or mitigating any insect or rodent or fungi or weed or any other form of plant or animal life.” Accordingly, the Court held that the claim must be tested before a fact-finding authority.
Relying on the decision of the Supreme Court in Commissioner of Income Tax, Madras vs. R. Venkataswamy Naidu, the Court observed that even in tax law “the burden to establish an exemption rests on the person who claims its existence.” Thus, exemption cannot be claimed for Ethephon in absence of any proof that it is exempted under the Act. However, the Court left the issue to be adjudicated by the authorities as it was do be decided by a fact-finding authority.
The Court held that Section 11(3) though inserted, has not been enforced by way of a notification. Thus, it will not be applicable. However, Section 110 read with Section 111(d) and 2(33) of the Customs Act and Section 9 and 17 of the Insecticide Act empower the authorities to seize Ethephon for lack of registration certificate under the Insecticide Act.
Accordingly, the writ petition was disposed of with a direction to the petitioner to file its reply to the show cause notice.
Case Title: M/S Gold Ripe International Private Limited vs. Directorate Of Revenue Intelligence And 4 Others 2023 LiveLaw (AB) 355
Citaiton: 2023 LiveLaw (AB) 355
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