The Punjab and Haryana High Court on Friday ordered the customs authorities to pay ₹50 lakhs to an importer who had to destroy kiwi fruit weighing 89,420 kilograms due to the hurdles caused in releasing the imported fruit in 2023 [M/s Prenda Creations Private Limited v Union of India and Others].

The Bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisht also ordered the authorities to release the amount paid by the importer, Prenda Creations Private Limited, as custom duty, along with 6 per cent interest per annum.

“We further direct that the petitioner/ importer would be entitled to compensation calculated conservatively of ₹50 lacs as the Kiwi worth weighing 89,420 kilograms were destroyed on account of delay in release by the respondents. We have granted the said amount as the Importer has already paid the same to the seller for the Kiwi and brought in India. Kiwi is a high valued fruit. The amount shall be recovered from erring officers as compensation to the Importer/ petitioner,” the Court ordered. 

The Court added that this case reflected an example of redtapism being followed by the government functionaries.

The same needs to be creased out as it would result in discouraging the import of perishable goods, it said.

“The Indian citizens also have a right to receive high quality fruits which are available in different countries; however, if the approach, as adopted by the respondents, is allowed to continue, the importers would toe their line and release rotten fruits, vegetables, and perishable goods that have lost their freshness, and ultimately the public would be the main sufferer. A policy needs to be formulated by the concerned authorities so that testing labs, shipping companies, and Customs Authorities work in tandem and an atmosphere is created so that the imported goods reach the public as soon as possible,” the Court emphasized.

In April 2023, Prenda Creations imported Kiwis through a Gujarat-based shipping company in four containers from a supplier in Dubai. Under Section 46 of the Customs Act, the importer of any goods is required to present a bill of entry for the goods imported.

Due to certain contradictions related to the final place of delivery in the documentation by the shipping company, the movement of goods from sea port of Mundra to Ludhiana was restrained by the customs authorities.

As per the petitioner, they were not allowed to amend the Import General Manifest filed by the shipping company despite the law allowing the same.

Since the items were perishable in nature, Prenda Creations moved the High Court, which in May 2023 directed the authorities to let the goods be transferred from Mundra to Ludhiana. However, this time, the shipping company's decision to shift the goods to a freight station (Saurashtra Freight Private Limited) interfered with the execution of the Court's order. Consequently, the Court again had to pass an order for release of the goods.

Subsequently, the authorities expressed an apprehension that the kiwi fruit had originated in Iran and that a fake certificate had been presented to show that they had come from Chile.

The goods were then detained by the customs authority in Ludhiana. The Court later took on record a certificate issued by Dubai Customs Authority declaring that the kiwi fruits were imported from Chile.

In July 2023, the Court passed another order directing authorities to release the consignment and conduct an enquiry with respect to the certificate issued by Dubai Customs. These goods were eventually released only on August 1, 2023, rendering them unfit for consumption.

In a judgment passed on April 4, the Court ruled that the Customs Department had wrongfully and illegally withheld the perishable good item – kiwi – which has a limited shelf life.

“We noticed that in import cases of perishable goods there is an inherent urgency which needs to be noticed and considered by the concerned stakeholders. In the facts of the present case, we find that there has been huge delay in compliance of the procedure. While initially the respondents did not issue the necessary orders, it is only with the direction of this Court that the respondents permitted the amendment of Import General Manifest (IGM) from Mundra port to GRFL ICD, Sahnewal, Ludhiana,” it said.

The Court further recorded that it had to intervene again and again to ensure that the products reached Ludhiana.

Even then, the authorities did not release the goods as they raised doubts with regard to the place of origin of fruits, the Court noted, adding that when fruits were ultimately released, they were completely damaged.

“We are, therefore, constrained to find the lackadaisical approach adopted by the respondents, which has resulted in causing loss to the importer,” the Court remarked.

On the argument that an importer under Section 26A(3) of the Customs Act, is not allowed a refund in respect of perishable goods and goods which have exceeded their shelf life, the Court said the provision would not be applicable in the case as the goods got damaged on account of non-compliance of its orders.

“It is a case where the respondents have themselves created hurdles in the release of the perishable goods. While 100% custom duty is imposed for import of perishable goods, if the goods itself are damaged and become completely un-useable for human consumption, in our opinion, the same deserves to be refunded. Import of Section 26A(3) of the Act cannot be understood to allow unjust enrichment from a justified, bonafide importer.”

The Court noted that the customs department has issued several circulars from time to time sensitizing the need to expeditiously deal with the imported goods that are perishable in nature. The Court proceeded to point out,

“Even after intervention of this Court directing the respondents to take action expeditiously, the officers have put a lot of obstacles and hurdles in the release of perishable goods resulting the goods to be unuseable for human consumption.”

The petition was thus allowed with an order for compensation and the refund of customs duty.

Advocate Saurabh Kapoor represented Prenda Creations Private Limited. Senior Standing Counsel Ajay Kalra represented the Union of India, including the Customs Department.

[Read Judgment]