M/S RAWDER PETROLEUM PVT LTD. THRU. DIRECTOR MR. SHIVENDU SHUKLA vs. UNION OF INDIA MINISTRY OF FINANCE THRU. DEPTT. OF REVENUE NORTH BLOCK NEW DELHI AND 2 OTHERS

WTAX/71/2025HC AllahabadUPHC02010572202530 May 2025Author: RAJAN ROY,OM PRAKASH SHUKLA43 pages
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What did the High Court hold?

The High Court allowed Writ Tax No. 71 of 2025 and dismissed the Customs Appeals. The Court found that the department's actions in drawing samples and sending them for testing were motivated and suspicious, lacking adherence to established guidelines and regulations. Specifically, the Court noted that the department sent a second sample for testing without an application from the importer, contrary to Regulation 9(9) and 9(10) of the Food Safety and Standards (Import) Regulations, 2017. The Court also observed that the time limits for analysis under the FSSAI Guidelines were flouted. The earliest report from M/s Fare Labs Pvt. Ltd., which indicated the commodity as 'roasted areca nuts' with 3.39% moisture content, was deemed the most authentic and reliable, meeting the guidelines of FSSA and the Customs Department. The Court found no plausible reasons for denying the benefit of this report to the importer. Consequently, the seizure memo dated 10.03.2025 was quashed, and the imported commodity was directed to be released on usual compliances, subject to the condition that the importer provides for treatment of the nuts by 'Gamma Irradiation process' as per BARC recommendations. The Court clarified that it only dealt with the classification issue and not other avenues of import or issues not raised.

What were the facts?

M/s Rawder Petroleum Pvt. Ltd. (the importer) sought an advance ruling on the classification of 'roasted areca nuts'. The Customs Authority for Advance Ruling (CAAR) ruled that 'roasted areca nuts' fall under Chapter 20 of the Customs Tariff Act, 1975. Following this, the importer placed an order for 'roasted areca nuts' from an Indonesian company. The goods arrived in India on November 6, 2024. The department appealed the CAAR's ruling, disputing the process of roasting and the classification. The department drew samples of the imported commodity, which were tested by two laboratories. M/s Fare Labs Pvt. Ltd. reported moisture content of 3.39% and found the commodity to be 'roasted areca nuts' fit for human consumption. However, the Central Revenue Control Laboratory (CRCL) reported moisture content of 7.09%, classifying the commodity as 'dried areca nuts' not fit for human consumption. The department, relying on the CRCL report, declared the goods as 'dried areca nuts' and proposed action for mis-declaration, prompting the importer to file a writ petition.

What were the issues?

1. Whether the impugned letter dated 27.12.2024, declaring the imported commodity as 'dried areca nuts' and proposing action for mis-declaration/misclassification, is sustainable in law? (Question of law and fact, concerning Section 144 of the Customs Act, 1962 and the Food Safety and Standards (Import) Regulations, 2017). Assessee's Arguments: The importer contended that the advance ruling by CAAR classified the goods as 'roasted areca nuts' under Chapter 20. They relied on the report from M/s Fare Labs Pvt. Ltd. which confirmed the goods as 'roasted areca nuts' fit for human consumption. They argued that the department's reliance on the CRCL report was flawed due to procedural irregularities in sample drawing and testing, and that the department failed to follow the Food Safety and Standards (Import) Regulations, 2017, and the FSSAI Guidelines. They sought quashing of the impugned letter and release of the goods. Revenue's Arguments: The department disputed the classification of the goods, arguing they were 'dried areca nuts' under Chapter 8, not 'roasted areca nuts' under Chapter 20. They relied on the CRCL report which found a higher moisture content, indicating the nuts were dried and not roasted, and not fit for human consumption. They also disputed the process of roasting and the very existence of 'roasted areca nuts' as a distinct category.

Which sections of the Income-tax Act were involved?

Section 28H,Section 28KA,Section 144

AI-generated summary — verify with the full judgment below

Page No. 1 of 43 Neutral Citation No. - 2025:AHC-LKO:33279-DB High Court of Judicature at Allahabad (Lucknow) **** Reserved on 15.05.2025 Delivered on 30.05.2025 Court No. - 2 Case :- WRIT TAX No. - 71 of 2025 Petitioner :- M/S Rawder Petroleum Pvt Ltd. Thru. Director Mr.

Shivendu Shukla Respondent :- Union Of India Ministry Of Finance Thru. Deptt. Of Revenue North Block New Delhi And 2 Others Counsel for Petitioner :- Ratnesh Chandra,Sankalp Mishra Counsel for Respondent :- A.S.G.I.,Anindya Shastri,Dipak Seth,Pawan Kumar Awasthi Connected with Case :- CUSTOM APPEAL No. - 3 of 2024 Appellant :- Commissioner Of Customs (Preventive ) U.P. Lko.

Respondent :- M/S Rawder Petroleum Pvt. Ltd.

Counsel for Appellant :- Dheeraj Srivastava Counsel for Respondent :- Ratnesh Chandra With Case :- CUSTOM APPEAL No. - 3 of 2025 Appellant :- Commissioner Of Customs (Preventive) U.P. And Uttarakhand, Lko.

Respondent :- M/S Auto Campus, Hyderabad, Telangana Counsel for Appellant :- Dheeraj Srivastava Hon'ble Rajan Roy,J.

Hon'ble Om Prakash Shukla,J. (Per Om Prakash Shukla, J.) (1)

Heard Sri Ratnesh Chandra assisted by Sri Sankalp Mishra, Sri Krantiveer Singh, learned counsel for the petitioner, S

The order continues below.

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