2022 (9) TMI 1404 - HC - Customs

Court modifies release order, requires 50% duty payment & Bank Guarantee, deems demand unjustified. Petition granted for prompt car release.

The court modified the impugned condition in the provisional release order, directing the petitioner to pay 50% of the duty amount and provide a Bank ... Provisional release under Section 110A of the Customs Act - Bank guarantee as condition for provisional release - Security limited to quantified duty liability - Modification of provisional release conditions by writ jurisdiction - Alternative remedy by appeal under Section 128 of the Customs Act and maintainabilityBank guarantee as condition for provisional release - Security limited to quantified duty liability - Provisional release under Section 110A of the Customs Act - Modification of provisional release conditions by writ jurisdiction - Validity of condition No.2 in the provisional release order directing the petitioner to furnish a Bank Guarantee of Rs.5,68,16,000/- - HELD THAT: - The Court examined the Show Cause Notice dated 10.08.2022, wherein the 1st respondent quantified the petitioner's liability at Rs.2,28,15,790/- (with interest and penalty). In the absence of any material or reasoned justification for demanding a Bank Guarantee of Rs.5,68,16,000/-, the impugned condition was held to be without basis, arbitrary and beyond the authority of the 4th respondent. The Court noted the co-ordinate Bench decision in Shri Suriya where, under similar circumstances, provisional release conditions were moderated by directing part payment and bank guarantee for the balance; the principle of limiting security to a reasonable proportion of the quantified duty payable was applied. Having regard to those conclusions, the Court found it just and necessary to quash and modify the excessive Bank Guarantee condition and to prescribe a proportionate regime of payment and security, leaving other merits of adjudication to the adjudicatory process. [Paras 3, 5, 6, 8]Condition No.2 directing a Bank Guarantee of Rs.5,68,16,000/- is quashed and modified: petitioner to pay 50% of Rs.2,28,15,790/- within six weeks and furnish a Bank Guarantee for the remaining 50%, kept renewed until final adjudication; subject car to be released on compliance.Final Conclusion: Writ petition allowed limitedly; the excessive Bank Guarantee condition in the provisional release order is set aside and substituted with a requirement of payment of 50% of the quantified liability and a Bank Guarantee for the remaining 50%, with release of the vehicle on compliance; other contentions left open for adjudication. Issues:1. Quashing of Seizure Memo dated 13.08.20212. Challenge to Provisional Release Order dated 25.07.20223. Jurisdiction of the 4th Respondent in directing Bank Guarantee4. Comparison of applicable duty and Bank Guarantee amount5. Legal basis for Bank Guarantee requirement6. Maintainability of petition despite alternative remedy available7. Validity of impugned condition No.2 in the provisional release orderAnalysis:1. The petitioner sought to quash the Seizure Memo dated 13.08.2021, arguing it was not issued by the proper Officer under the Act and lacked jurisdiction. The Court examined the contentions and material on record. The petitioner challenged the Provisional Release Order dated 25.07.2022 issued by the 4th Respondent, claiming it was arbitrary and bad in law. The Court considered the arguments presented by both parties.2. The petitioner's counsel highlighted that the 4th Respondent lacked jurisdiction or authority in demanding a Bank Guarantee of Rs.5,68,16,000, which was deemed illegal, arbitrary, and without basis. Reference was made to a Show Cause Notice to support the argument that the duty payable by the petitioner was significantly lower than the demanded Bank Guarantee amount. The petitioner's counsel relied on a previous court decision to strengthen the argument for quashing the impugned condition.3. In response, the respondents' counsel defended the 4th Respondent's decision, stating it was justified to impose the Bank Guarantee condition. The Court noted discrepancies between the duty amount and the Bank Guarantee sum, emphasizing the lack of quantification for demanding the Bank Guarantee. The Court referenced a previous case where a similar issue was addressed, leading to a modified order for payment and Bank Guarantee.4. The Court emphasized the disparity between the duty payable and the Bank Guarantee amount, concluding that the 4th Respondent's demand lacked justification. The Court modified the impugned condition, ordering the petitioner to pay 50% of the duty amount and furnish a Bank Guarantee for the remaining 50%, subject to renewal until final adjudication. Upon compliance, the 4th Respondent was directed to release the subject car promptly.5. Regarding the maintainability of the petition despite an alternative appeal remedy, the Court held that the availability of an alternative remedy did not render the petition non-maintainable. The Court's decision was limited to the validity of the impugned condition related to the Bank Guarantee, without delving into other contentions at that stage. Ultimately, the Court allowed the petition, modifying the Bank Guarantee requirement and directing the release of the subject car upon compliance.