Classification Of Goods Is Factual Issue, Not For Writ Court To Decide: Kerala High Court Upholds Seizure & Provisional Release Conditions

The Kerala High Court has held that the classification of 'Nata de Coco' is a factual matter that must be decided by the adjudicating authority through statutory proceedings and not by the writ court. Justice Ziyad Rahman A.A. stated that since it is a statutory proceeding contemplated under Section 124 of the Act, which should be followed from the proceedings under Section 110 of the Act, the question as to be sustainability of the classification cannot be considered by this Court in writ jurisdiction. This is because the adjudication of the dispute involved, being a factual aspect, it has to be examined by the competent authorities, and this Court cannot conduct a parallel enquiry in connection with the same. In this case, the petitioner is an importer and trader of the product by the name “Nata de Coco”, which is an edible product obtained by cooking and fermentation of coconut water and coconut milk. The import was made from Vietnam, and as per the invoices and the bill of entries, the classification of the goods was made under the Customs Tariff Act (CTH) 2007 9990. The importer/petitioner argued that, as far as the classification made by the importer is concerned, it is in tune with the classification made by the exporting country, which is clearly mentioned in the invoices and the bills of entry. According to him, the said classification is supported by an official journal published by the Ministry of Agriculture. Thus, according to the importer, he had correctly classified the goods and furnished the documents and declarations in this regard. However, the officer attached to the Assistant/Deputy Commissioner of Customs detained the goods and issued a seizure memorandum stating that he had reason to believe the goods were misdeclared. On making a request for provisional release of the goods, the Assistant/Deputy Commissioner of Customs issued a provisional release order requiring the importer to execute a bond for Rs.5,50,768/-, being the value of the seized goods and also to furnish a bank guarantee or cash deposit in favour of the Commissioner of Customs for an amount of Rs. 2,50,000/-. As against the provisional release order, the importer submitted a request to modify the provisional release order, but the same was rejected. The department argued that it is a clear case that falls under 111(m) & (o) of the Customs Act. It was also pointed out that, by declaring the classification 2007 9990, the importer availed an exemption from payment of duty, whereas, in the investigation, it was found that the said goods would fall under the classification 2008 9999. The bench agreed with the department that this Court cannot sit in appeal over the “reasonable belief” expressed by the officer concerned by invoking the powers under Article 226. The bench further opined that even though the correct classification according to the department was not specifically mentioned in seizure memorandum, it is a fact that, after conducting an investigation, a show cause notice under section 124 of the Act is seen issued, mainly pointing out that, the goods of the importer would fall under CTH2008, which deals with fruits, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included. It was stated that the said goods are under the specific entry of 2008 9999. Thus, the reasonable belief expressed by the officer concerned, while issuing a seizure memorandum, is fortified by the findings in the show cause notice, and the proceedings based on the same are now in progress, added the bench. Regarding the reasonableness of the condition imposed in the provisional release order, the bench noted that the importer/petitioner himself sought the release of the article against a suitable bank guarantee as per the provisions of the Customs Act. Therefore, the importer/petitioner cannot now turn around and contend that he cannot be imposed with a condition of furnishing a bank guarantee. In view of the above, the bench dismissed the petition. Case Title: Sri. Shimwas Hussain v. The Addl./Joint Commissioner of Customs Case Number: WP(C) NO. 33519 OF 2025 Counsel for Petitioner/Assessee: M. Balagopal Counsel for Respondent/Department: Suvin R. Menon Click Here To Read/Download Order

Classification Of Goods Is Factual Issue, Not For Writ Court To Decide: Kerala High Court Upholds Seizure & Provisional Release Conditions

Mehak Dhiman

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