Court clarifies Department's non-binding offer in assessment, stresses adherence to legal procedures

The Court clarified that the Department's offer for provisional assessment was not legally binding as it did not meet the statutory requirements. The Court emphasized the need for proper assessment procedures, directing the Department to follow the law in determining duty and releasing goods. The writ petition was disposed of without prejudice, highlighting the importance of adherence to legal provisions in provisional assessment and goods release.

---

---

Issues:
1. Retention of goods after paying admitted duty due to undervaluation.
2. Anomaly in provisions regarding provisional duty and final duty.
3. Interpretation of provisions regarding provisional assessment and release of goods.
4. Validity of the conditions set by the Department for release of goods.
5. Whether an offer made by the Department for provisional assessment is legally binding.

Issue 1: Retention of goods after paying admitted duty due to undervaluation
The petitioner was aggrieved by the retention of goods despite paying the admitted duty, which were imported and detained for undervaluation. The Customs Act, 1962, allows for provisional assessment of duty by the Proper Officer pending further inquiry. The Customs (Provisional Duty Assessment) Regulation 2011 outlines the procedure for provisional assessment and the security required for releasing goods.

Issue 2: Anomaly in provisions regarding provisional duty and final duty
A Division Bench of the Court clarified that provisional assessment is done to determine the final duty on a provisional basis for releasing goods. The Department is not limited to imposing duty based only on the provisional assessment value. The Department must assess the provisional value of goods, calculate the difference between the provisional and admitted duty, demand 20% of the difference, and collect security for the remaining balance.

Issue 3: Interpretation of provisions regarding provisional assessment and release of goods
The Court directed consideration of the petitioner's representation seeking release on provisional assessment. The Department issued conditions for release, including payment of duty, bank guarantee, and executing a bond. The Court emphasized that the decision for provisional assessment rests with the Proper Officer, and an offer like Ext.P4 does not constitute a provisional assessment order as required by law.

Issue 4: Validity of the conditions set by the Department for release of goods
The Department's offer in Ext.P4, although a practice over the years, lacks legal sanction as it does not align with the Act or Rules requiring a provisional assessment order. The Department should have passed a final or provisional order as directed by the Court, considering the binding Division Bench decision.

Issue 5: Whether an offer made by the Department for provisional assessment is legally binding
The Court noted the Department's offer in Ext.P4 indicated the need for an enquiry, but it did not fulfill the legal requirements for a provisional assessment order. Considering the hardship faced by the petitioner due to demurrage and the revenue concerns of the Department, the Court determined the provisional assessable value and outlined the payment and security requirements for releasing the goods.

In conclusion, the writ petition was disposed of without prejudice to the parties' contentions regarding the actual duty leviable, emphasizing the importance of following legal procedures for provisional assessment and release of goods.

---