Analysis. Illegal pulses import may be penalised five times their value

Consignments of pulses which were ruled by the Supreme Court to have been imported illegally in contravention of the Customs Act, 1962, and the Foreign Trade (Development and Regulation) (FTDR) Act, 1992, could attract penalties that could be five times of their total value.

Last week, the Supreme Court upheld an appeal by the Centre against a Bombay High Court judgement that ordered the release of consignments of yellow peas by a few traders after payment of the penalty for the goods confiscated under the FTDR Act.

These firms had imported yellow peas because the Centre’s restrictions on imports of urad (black matpe), moong (green gram), tur (pigeon pea) and yellow peas besides beans had been stayed by the Rajasthan High Court.

Besides these importers, there are other importers too who had imported yellow peas and other pulses illegally.

Minister of State of Commerce and Industry Hardeep Singh Puri told the Lok Sabha in February this year that Customs authorities had confiscated a total of 2.66 lakh tonnes of pulses, mainly peas. These consignments are in the custody of the authorities across eight ports in the country.

The apex court’s ruling last week will apply to these confiscated consignments too.

Penalty

While quashing the Bombay High Court judgement, a Supreme Court bench comprising Justices Dinesh Maheswari and AM Khanwilkar ruled that goods imported violate the Centre’s notifications and orders can be confiscated under Section 125 of the Customs Act.

The judges, however, allowed the confiscated consignments to be re-exported subject to the conditions that the importers pay the penalty for confiscation besides discharging other statutory obligations that include penalty payment.

Justices Maheswari and Khanwilkar came down heavily on the importers noting: “The personal interests of the importers who made improper imports are pitted against the interests of the national economy and more particularly, the interests of farmers.”

In particular, the judges said that the importers whose confiscated goods had taken their chance for personal gains and would have to face the consequences. They also advocated stiff penalties against the defaulters.

Analysts view

Trade analysts point out that this would encourage authorities to take action under sub-section (d) of Section 111, and sub-section (d) of Section 113. These provisions state that any goods imported or attempted to be imported and exported or attempted to be exported contrary to any prohibition imposed by the Customs Act would attract a penalty for the illegal acts.

These provisions, especially, say: “In respect of prohibited goods, the adjudication officer may impose penalty up to five times the value of goods.”

The objective behind such a huge penalty is to discourage such shipments and ensure that traders pay heavily for such “misadventures”, analysts say.

Some importers could even turn bankrupt, but it would not be the outlook of the Centre since it has curbed the imports to ensure the welfare of the farmers.

The defaulting importers could be hauled up and penalised on two grounds. One, for violating the Customs Act and two, for contravening the FTDR Act.

It remains to be seen how the adjudicating authority acts in this case since the apex court has left it to the authority to decide on the penalty and other obligations the importers have to meet.

Also, a question has now cropped up on how the confiscated goods can be re-exported. This is because these consignments will not have an identification under the Importer Exporter Code and thus could prove to be a problem for Customs to clear for re-exports.

The importers have time until next week to decide what they want to do on these consignments detained for nearly two years now. But they have been left with a tough choice and an uphill task.

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