2016 (11) TMI 1081 - HC - Customs

Clarification on Imported Goods Classification, Relief Options for Bank Guarantee Release

Itspossible Marketing Ltd. (Through the Director, Ashish Khetarpal) Versus Union of India, Commissioner of Customs, Additional Department of Revenue Intelligence, Oriental Bank of Commerce

The court addressed issues regarding the classification of imported goods, compliance with court orders, relief sought for the release of a Bank ... Release of bank guarantee - Held that: - the Bank Guarantee has worked itself out and after 16.1.2015, the Bank Guarantee has not been renewed as it has expired and it is a lapsed document. Nevertheless, unless and until the second respondent, issues necessary communication to the fourth respondent, the Bank Guarantee will not be released. In other words, the petitioner would not be in a position to deal with the Securities, which he has placed at the disposal of the fourth respondent Bank to enable the petitioner to furnish a Bank Guarantee for ₹ 85 lakhs. Whether the petitioner would be entitled to a direction for provisional release of the subsequent cargo? - Held that: - the goods were imported and Bill of Entry was filed in 2011. Though the High Court of Delhi issued directions to consider the petitioner s application for provisional release within a period of four weeks from 13.12.2012, the order was not complied with by the Department. The adjudication of the show cause notice has taken almost three years and the order-in-original was passed on 16.12.2015. Thus, the petitioner s case is that the goods cannot be marketed and have to be destroyed and in fact their latest representation to the second respondent on 25.1.2016, was for destruction of goods lying in the Godown - considering the peculiar facts and circumstances of the case and taking note of the fact that already the adjudication proceedings has been completed and Order-in-original has been passed, the question of directing the second respondent to grant provisional release of the goods, is not maintainable. Therefore, only option available for the petitioner is to move the CESTAT for appropriate interim relief. Liberty is granted to the petitioner to file an Interim Application before the CESTAT in the pending Appeal for appropriate interim relief for release of goods. Considering the hard facts and the time taken for the Department to adjudicate the matter, this court is of the view that the CESTAT may consider the petitioner s application for interim relief as expeditiously as possible, preferably, within a period of six weeks - petition disposed off. Issues involved:1. Classification of imported goods under Customs Tariff Heading.2. Compliance with court orders regarding provisional release of goods.3. Relief sought for release of Bank Guarantee and compensation.4. Entitlement to provisional release of subsequent cargo.Issue 1: Classification of imported goods under Customs Tariff Heading:The petitioner, a company engaged in timeshare vacation business, imported products from a company named MRI. The dispute arose when the Directorate of Revenue Intelligence alleged that the petitioner imported dietary supplements but cleared them as medicaments under the wrong Customs Tariff Heading. Despite no prior dispute on classification, a show cause notice was issued, leading to legal proceedings.Issue 2: Compliance with court orders regarding provisional release of goods:The petitioner filed a Writ Petition in the High Court of Delhi seeking provisional release of goods. The court directed the Customs authorities to consider the matter and pass an appropriate order within a specified time frame. However, the authorities did not comply with the court order, leading to further legal actions and an Order-in-Original being passed.Issue 3: Relief sought for release of Bank Guarantee and compensation:The petitioner sought three reliefs, including the release of a Bank Guarantee, provisional release of goods, and compensation for losses. The court noted that the Bank Guarantee had expired, and the petitioner needed the second respondent to communicate for its release. The court directed the petitioner to approach the second respondent for necessary actions regarding the Bank Guarantee.Issue 4: Entitlement to provisional release of subsequent cargo:The court deliberated on whether the petitioner could be entitled to a direction for provisional release of subsequent cargo. It was highlighted that, due to the Order-in-Original being already passed, the Customs authorities could not grant provisional release under section 110A of the Act. The court advised the petitioner to seek interim relief from CESTAT, emphasizing the appellate body's power to pass necessary interim orders for justice.In conclusion, the judgment addressed various legal issues concerning the classification of imported goods, compliance with court orders, relief sought for release of Bank Guarantee, and entitlement to provisional release of subsequent cargo. The court directed the petitioner to seek interim relief from CESTAT for the release of goods, considering the delays in adjudication and the completion of Order-in-Original. The judgment provided a detailed analysis of each issue and clarified the legal options available to the petitioner for seeking appropriate remedies.