2017 (2) TMI 932 - HC - Customs

Court sets aside Customs Act order, allows writ petition for provisional release of imported goods.

The Court allowed the writ petition, setting aside the impugned order under Section 110A of the Customs Act for the release of imported goods ... Provisional release under Section 110A of the Customs Act - mis-declaration and differential customs duty - self-assessment under Section 17 of the Customs Act - protection of revenue interest by security bond and bank guarantee - penalty regime under Section 114AA of the Customs ActProvisional release under Section 110A of the Customs Act - mis-declaration and differential customs duty - self-assessment under Section 17 of the Customs Act - Whether the petitioner was entitled to provisional release of seized imported goods under Section 110A after payment of the admitted and differential customs duty - HELD THAT: - The court found that the goods were not prohibited and that the respondents had agreed to consider provisional release under Section 110A. The petitioner had paid the admitted duty assessed under the self-assessment scheme and had also paid the differential duty calculated on alleged mis-declaration. The determinative question for adjudication remained whether mis-declaration occurred and what penalties would follow; those substantive determinations did not preclude provisional release once the revenue interest was suitably protected. Given that the petitioner had paid the full differential duty (in contrast to cases permitting provisional release on partial payment), the court held that the petitioner satisfied the primary revenue safeguard entitling it to provisional release subject to appropriate security conditions. [Paras 7]Petitioner entitled to provisional release under Section 110A after payment of admitted and differential duty, subject to furnishing appropriate security to protect revenue interest.Protection of revenue interest by security bond and bank guarantee - penalty regime under Section 114AA of the Customs Act - Whether the conditions imposed in the impugned order for provisional release were appropriate and what securities should be substituted to adequately protect the revenue - HELD THAT: - The respondents had sought a personal bond for the total value of cargo and a large bank guarantee. The court recognised the Department's concern about potential penalties under Section 114AA but observed that the petitioner had already discharged the differential duty. Balancing the revenue interest and the petitioner's position (full payment of differential duty and absence of prohibition on the goods), the court concluded that less onerous but adequate securities would protect the revenue. The court therefore exercised its supervisory jurisdiction to set aside the impugned conditions and prescribe substituted conditions (a personal bond and a renewable bank guarantee of reduced amounts) as a proportionate safeguard permitting provisional release pending adjudication on mis-declaration and penalty. [Paras 7, 9]Impugned security conditions set aside and substituted with specified bond and bank guarantee to protect revenue while allowing provisional release.Final Conclusion: Writ petition allowed. The impugned order is set aside; respondents directed to release the imported goods covered by bill of entry No.6739061 dated 16.09.2016 upon the petitioner furnishing the substituted personal bond and periodically renewable bank guarantee within seven days, after which the goods shall be released within two weeks. Issues:Challenge to order under Section 110A of the Customs Act for release of imported goods provisionally; Justification of conditions imposed for provisional release of goods; Interpretation of safeguarding revenue interest in provisional release of goods.Analysis:The petitioner, a partnership firm engaged in importing fabric items, filed a bill of entry for clearance of goods, which were seized under Section 110 of the Customs Act by the Directorate of Revenue Intelligence due to alleged mis-declaration. The petitioner sought provisional release of the goods under Section 110A by paying admitted customs duty and the full differential duty amount. The impugned order required the petitioner to execute a bond and furnish a bank guarantee for the total value of the imported cargo, leading to the challenge in this writ petition.The second respondent contended that the goods were seized due to mis-declaration, and the importer had paid the full differential duty amount. The Directorate of Revenue Intelligence recommended provisional release under Section 110A, resulting in the impugned order with specific conditions for release.The petitioner argued that having paid the entire differential duty amount, the imposition of further conditions for provisional release was unjustified. Citing a Division Bench decision, the petitioner proposed that provisional release could be granted even by paying 50% of the differential duty. The respondents, however, emphasized the need to safeguard revenue interest given the penalty provisions under the Customs Act.The Court considered whether the petitioner should comply with the conditions in the impugned order for provisional release. Acknowledging the petitioner's payment of both admitted and differential duties, the Court found that the interest of the revenue could be protected by altering the conditions. It directed the petitioner to furnish a bond and bank guarantee in specific amounts, different from those in the impugned order, within a specified timeline for the release of the goods.In conclusion, the writ petition was allowed, setting aside the impugned order and directing the respondents to release the goods upon the petitioner's compliance with the revised conditions. The Court's decision aimed to balance revenue protection while facilitating the provisional release of the imported goods, considering the petitioner's actions in paying the differential duty in full.