Kejriwal Enterprises v. Uoi& Ors

* IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P(C^ No. 7734/2009 Reservedon : 23*^^ September,2009 Pronouncedon: 25^*^ September,2009 KEJRIWAL ENTERPRISES & ORS ...Petitioners Through; Mr. JayantBhushan, Sr. Advocatewith Mr. Abhishek Saket, Advocate VERSUS UNION OF INDIA & ors. ....Respondents Through: Dr. Ashwani Bhardwaj, Advocate for respondents No. 1 to 3. CORAM: HON'l^^E MR. JUSTICE A. K. SIKRI HON'BLE MR. JUSTICE VALMIKI J.MEHTA

¶1Wlietherthe Reporters of local papers may be allowed to see the judgment?

¶2To be referred to the Reporter or not?

¶3Whether the judgment should be reported in the Digest? % VALMIKI J.MEHTA, J The presentwrit petitionhas been filed by the petitionerunder Article 226 of the Constitution of India seeking inter alia, the relief against the respontat No.2/Commissionerof Customs to release the goods in question, namely. Honey without any PFA.(Prevention of Food Aduheration) check and health check. Further relief is prayed for quashing of CSL Test conducted by W.P.CC)7734/2009 Page1 Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. the respondentNo.3/Directorof CentralFood Laboratoryand underwhich test the consignmentof Honey has been found to be adulterated/contaminatedwith an antibiotic, Chloramphenicol. The facts of the case are that the petitioner No.l is engaged in the businessof exportof Agri Food Commoditiesand the petitionerNo.2 is in the business of processing Honey and exporting the same out of India. The petitionersstatethat in the courseof its exportbusiness,the petitionerNo.l got an export order from a US Companynamely, LAMEX. The petitionerNo.l, through petitioner no.2 supplied Honey to the said US buyer. As per the contentions of the petitioner, after the shipment was sent, the buyer LAMEX retumecfapartofthe consignmenton the groundthatthe same was foundto be containingmoisture beyond their requirementand acceptable limit. On return of the said shipment, the customs official sent a sample of Honey to the respondentNo.3 and which sample when tested was found to be adulterated containingthe antibiotic Cliloramphenicol. The petitioners further contend that in terms of the Custom Circular No. 1/02 dated 8.1.2002, it has been clarified by the respondent No.l that the Prevention of Food Adulteration Act, 1954. (hereafterPFA Act) is not applicable for food items meant for export on re export. The petitioners further contend that since the Commissioner of Custorfc^espondent No.2 has identified the re-imported Honey as that, which was exportedi.e meant for export on re-export, the goods should be released as V W.P.CC)7734/2009 Page 2 A r it is recordedin the customs report that the foreign buyer had sent the goods back due to quality issue of moisture content.

¶3At this stage, it would be relevantto refer to the circularNo.1/02 dated

8.1.2002. "Circular No.l/2002-Cus. 8*'' January,2002. F.No.450/21/98-Cus. IV (Vol. II) Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs ^ Subject:ApplicationofPFAAct,1954for clearanceofconsignmentsof food articles-reg.- I am directed to refer to Board's Circular No.58/2001-Cus., dated 25.10.2001 on the above mentioned subject. In the said Circular, it hasbeenprovidedthat allthe consignmentsof importedfood itemsareto be referred to Port Health Officers for testing under the PFA Act, 1954. A reference has been received from the trade stating that the food items imported by EOUs for subsequent export after processing should be exemptedfrom the mandatorytestingunderthe said Act.

¶2The matter has been examined in consultation with the Ministry of Health & Family Welfare. It is observed that there is no provisionin the PFA Act to exemptfood itemsimportedbyEOUs or unitsin EPZ/SEZfrom testingunder the said Act It has, however, been clarified by theMinistryofHealth &Family Welfarethat the PFAAct is not applicable for food meantfor export. Therefore,in casethe Commissionerof Customs is satisfiedthat importedfood items, after their processingin EOUs or units in EPZ/SEZ. shall be exported and no part thereof shall be sold in India, he may allovy clearance of such food items without mandatorytesting under the said Act. The Commissioners may take an undertaking from the EOUs or units in EPZ/SEZ importingthe food itemsto the effect that the imported food item or any product manufacturedtherefromwould not be sold in the i TDomesticTariff Area under any circumstances. These instructions may be brought to the notice of all concerned for compliance.

¶4Difficulties, if any, faced in the implementation of above instructionsmay be brought to the notice of the Board. Kindly acknowledge receipt." W.P.(C)7734/2009 Page3 1-^

¶4The learned counsel for the petitionerhas laid stress on the italicised portion of the circularto contend that the said line in the circularis wholly independentofthe otherportionsofthe circularand thatthe circularis not to be interpretedso as to be applicableonly to imports by EOUs (Export Oriented Units)or unitsin EPZ/SEZ(ExportProcessingZone/SpecialEconomicZone). The counsel for the petitionerhas finally contendedthat since the writ petition is entitled to succeed, the respondent No.2 is liable to pay the demurragecharges incurredduring this periodwhen the Honey is lying at the iriJstanceof the respondent No.2.

¶6The counselfor the respondentson the other hand has strenuouslyurged that the circular dated 8.1.2002, is an exception to the general circular dated

25.10.2001which specificallyprovidesthat "it has been providedthat no food item would be allowed clearance unless it is tested under the Prevention of Food Aduheration Aot, 1954 and other allied laws". This circular is of the Central Board of Excise and Customs and the relevant portion of this Circular reads as undcr:- "Customs Circular No.58-2001 Circular NO.58/2001-CUS .3 ^ 25"'October,2001 F.NO.450/21/98-CUS.1V Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs W.P.[C)7734/2009 Page4 Subject:Applicationof PFAAct, 1954 and otherActs forthe clearance of consignmentsof food articles-instructions-regarding-I am directed to refer to the Board's Circular No.36/2001-CUS., dated 15*^ June, 2001 on above-mentionedsubject. The said Circularprovides detailed guidelines for examinationand testing of good items prior to Customs clearance. It has been provided that no food item would be allowed clearance unless it is tested under the Prevention of Food Adulteration Act. 1954 and other allied laws. In this connection, a number of representationshas been received from the hotel industry stating that they are facing difficultiesin clearance of perishablefood items due to mandatory testing of all consignments. The Federation of Hotel and Restaurant Association Of India has requested for restoration of the exemption granted earlier to hotels from 100% testing under Circular No.l03/2000-Cus.,dated 15^' December,2000 (whichwas supersededby Circular No.36/2001-Cus., dated 15/6/2001)."

¶7The counsel for the respondents has, therefore, contended that the -dxceptiorj provided by means of the circular dated 8.1.2002, is therefore confinedonly to import by EOUs or Units in EPZ/SEZ. The learned counsel has flirther contended that it is clearly shown by the report of the Central Food Laboratory that the sample of Honey was adulterated because it contained the antibiotic Chloramphenicol. The counsel has placed their reliance upon the circular dated 16.10.2003 issued by the Director General of Health Services which showed that Chinese Honey containing the Antibiotic Chloramphenicol - which causes cancer or anaemia is being dumped into India as the said goods are being stopped from being imported in U.K, Canada and Germany. This circular is relevant and the same is reproduced herein. V "No. P-15011/3/2002-PH(F) DTE. GENERAL OF HEALTH SERVICES Nirman Bhavan, New Delhi Dated the 16.10.2003 To W.P.(C)7734/2009 Page5

¶1All ports/AirportsHealth Officers.

¶2All Customs Collectors. Subject:-Import of ChineseHoney. Madam/Sir, It has been broughtto the noticeof this Dte. By M/o Agriculture that Export Inspection Council of India informed them that U.K. Food standards Agency, the Canadian Food inspection Agency and the German Agriculture& ConsumerprotectionMinistryhave througha series of sample tests found that Chinese Honev had contained traces of an antibiotic, chloramphenicol,which can cause cancer or a plastic anaemia if consumed over a long period. The U.K. Canada and Germany have stoppedimportsof Chinese honey due to the reason of contamination. The Export Inspection Council of India further informed that Chinese honey, which is being rejected in Europe and North Americancountries,is being dumped into India through both legal and illegal channel. . The import of Chinese honey jumped to 1,381.03tons (worthRs.583.14lakhs) in the first nine months of 2002/03 as compared to only O.io tons (at Rs.0.09 lakhsO during 2001-02. It is also gjiegedthat Nepaleseexportersarere-exportingChineseHonev. You are therefore,requestedto keep a strictvigil on the qualityof such consignments of honey before the same is released for human consumption. Yours faithfully, Sd/= (Dr. S.K. Gupta) ASSTT. DIRECTION GENERAL (PFAO Copy forwarded for information and necessaryaction to:-

¶1All Directors of C.F. Labs.

¶2Public Analysts of States/U.T.s, who are authorised for analysis of samples of imported food.

¶3The Director Customs, Central Board of Excise & Customs, Deptt. Of Revenue, M/O. Finance, North Block, New Delhi. Sd/=(Dr. S.RGupta) Assistant Director General (PFA) 8, Tfe counsel for the respondents has further contended that a reading of the relevant requirement of the PFA Rules pertaining to the food item Honey shows that it should be free from foreign matter and any other extraneous matter W.P-CC)7734/2009 Page6 a whichsurelywouldincludeany form ofharmfulsubstancesuchas an antibiotic Cliloramphenicol.

¶9We feel that the contentions of the counsel for the respondent are well founded and the writ petition is liable to be dismissed. The circular dated

8.1.2002,when read in its entiretymakes it clearthat the same only appliesto importsbyEOUs orunitsinEPZ/SEZ. Thisbecomesclearfrom the underlined portionof the circular reproduced above.

¶10This issue also becomes clear from para 1 of the circular which specifies that tlie same is with respect to reference received from trade with respect to V" / food items importedby EOUs for subsequentexport after processing. Even on generalprinciplesone fails to understandas to how it can be contendedby the petitionersthat without any testing of the goods, the same can be broughtinto the country. For example, the food item may contain ingredients of contagious disease or many other harmfril and dangerous diseases and which goods if allowedto be importedin the country,may cause grave harm to the denizensof ^the country. Surely, the customs officials are entitled to ensure that harmfril goods do not cross the customs barriers of the country so as to come within the domestic tariff area. If this power is not given,to the customs authorities, grave harm, prejudice and havoc can be caused. The goods with respect to which no testing is claimed as a matter of right can in many circumstances find their way illegally into the domestic market and cause untold harm and misery. We, therefore, even on first principles cannot agree with the contentions of the W.P.CC)7734/2009 Page7 f petitionersthat simply because the goods would be re-exported,there is no requirementat all of goods to be inspected by any authority includingthe authorities under the PFA Act.

¶11At this stage, it is also relevantto mentionthat in the writ petition,the petitionersadmit that they themselvesdo not manufacturehoney in their own farms but they source the same from outside bee-hive keepers, and thus the chance of adulterated honey coming into their possession cannot be ruled out. P Also , in para 6 of the counter-affidavitfiled by the respondentsNo.l and 2, it has bee|^ clearly stated that the petitionerhad filed a bill of entry of home consumptionand whichis not disputedby the petitionersin the rejoinderfiled. Merelybecause on a first checkby the customsauthorities,the oral statementof the petitioner was accepted that the goods had been sent back due to moisture content cannot be conclusive of the matter. We may note that in fact it has not even been argued and canvassed during the course of hearing that the antibiotic Chloramphenicolhas not been found in the consignment of Honey in question. ' VVliat is only sought to be urged is that in the relevant rule with respect to the Jood item Honey, there is no standardprescribedwith respectto non-existence of the antibiotic Chloramphenicol. This argument is clearly mis-conceived on i - tlie face of it because the said relevant article in the PFA Rules not only prescribes certain standards with respect to moisture Sucrose etc but on reading the same, it clearly states as under:- W.P.CC)7734/2009 Page8 "[A.07.03-"HONEY"means the natural sweet substanceproduced by honey bees from the nectar of blossoms or from secretionsof plants which honey bees collect,transform store in honey combs for ripening. When visuallyinspected,the honey shall befree from any foreignmattersuch as mould dirt, scum, piecesof beeswax,the fragmentsof bees and other insects and from any other extraneous matter"

¶12We also feel thatthe explanationofthe petitionerthatthe consignmentin question was sent back by the US buyer merely because there was excess moisture content does not seem to be too believable not only no report of US aiMhoritiesis filed to this effect and also because in the letter dated 6.11.2008 whichis filedby thepetitioneritself,thereis no mentionof rejectionbecauseof >' anymoisture content. This letter simplyreads as under: "November 06, 2008 Kejriwal Enterprises W-42 Greater Kailash-2 New Delhi-110048 India Dear Kejriwal Enterprises, The product in this container OOLU 1505972 is being returned since it did not meetthe specificationsof the intendedbuyer. This product was originallyshipped in FCLFCIU 3261311. Best Regards, Sd/- Gregory Olsen LAMEX Foods, Inc."

¶13No doubt, subsequently an additional affidavit was filed by the r petitioner, along with the letter dated 19.3.2008 of LAMEX, which appears to be on the letter head of the LAMEX, but the same is an unsigned letter. This letter appears as annexure 4 to the additional affidavit dated 4/8/April/2009. We would hasten to add that our final conclusions are not based upon this W.P.(C)7734/2009 Page9 Ir aspectbutwe foundthis issueabit perplexingand thereforehavereferredto the same.

¶14In view of the above, sincewe are dismissingthe writ petitionitself,there arises no questionof claim of demurrageto be paid by the respondentNo.2as has beenprayedinthe writpetition. In the peculiarfacts ofthis case, whenthe honey in question has been found to be contaminated with a dangerous substance which can cause cancer and anaemia and only for which the circular dated 16.10.2003was issued by the Director General of Health Services and as reproducedabove in the body of the order, and the petitioner has filed this misconceived petition claiming its release on grounds which are wholly unacceptablewe dismissthe writpetitionwith costsquantifiedat Rs.25,000/-. VALMIKI J.MEHTA, J A.K. SIKRI, J ^ September25, 2009 W.P.(C)7734/2009 Page10 /I,