2017 (3) TMI 1398 - HC - Customs

Petitioner must provide PD Bond & bank guarantee for 10% disputed amount. Respondents to release goods promptly.

The court modified the order, requiring the petitioner to provide a PD Bond and a bank guarantee for 10% of the disputed amount without prejudice, keeping ... Provisional release of seized goods - requirement to specify amount of duty in show cause notice under Section 28(1)(a) of the Customs Act, 1962 - bank guarantee as condition for provisional release - PD Bond for full value of goods as condition for provisional release - confiscation and penalty proceedings under the Customs ActRequirement to specify amount of duty in show cause notice under Section 28(1)(a) of the Customs Act, 1962 - provisional release of seized goods - bank guarantee as condition for provisional release - PD Bond for full value of goods as condition for provisional release - Validity of the condition in the provisional-release order demanding a specific bank guarantee amount when the show cause notice did not state the duty amount. - HELD THAT: - The Court held that Section 28(1)(a) requires the proper officer to indicate in the show cause notice the amount which the noticee is called upon to pay. Failure to mention the duty amount in the show cause notice constitutes a material defect which affects the conditions that can be legitimately imposed for provisional release of goods. While the ultimate question of liability for duty and penalties remains for final adjudication on merits, the absence of a quantified duty in the notice renders the second condition (demanding the specific bank guarantee amount set out in the impugned order) unsustainable. Orders and notices of statutory authorities must stand on their own and cannot be cured by averments in counter-affidavits. The first condition-execution of a PD Bond equivalent to 100% of the value of the goods-was not challenged and is sustainable. In the exercise of equitable modification of the provisional-release order, the Court substituted the impugned bank-guarantee requirement with a bank guarantee of 10% of the referenced figure, to be kept alive until adjudication, together with the PD Bond for 100% of the goods' value, and directed release on compliance within two days. [Paras 12, 13, 14, 15]The second condition in the provisional-release order demanding the specified bank guarantee amount is set aside; the order is modified to require a PD Bond for 100% of the value of goods and a bank guarantee equivalent to 10% of the referenced figure, to be maintained until adjudication, after which the goods shall be released on compliance.Final Conclusion: The writ petition is allowed in part: the impugned provisional-release order is modified by deleting the challenged bank-guarantee condition and substituting a bank guarantee of 10% (to be kept alive until adjudication) together with the already stipulated PD Bond for 100% of the goods' value; the detained goods are to be released on compliance, without prejudice to final adjudication of the show cause notice. Issues:Challenge to order directing provisional release of goods with conditions.Analysis:The petitioner, engaged in import and distribution of newsprint, stored goods in customs bonded warehouse as per Exim Policy. Directorate of Revenue Intelligence (DRI) detained newsprint reels based on intelligence. Show cause notice under Customs Act, 1962 issued to petitioner for confiscation and penalty. Notice lacked duty amount, leading to writ petition for provisional release of goods. Petitioner argued against onerous condition of Bank Guarantee in impugned order.The court noted Section 28(1)(a) of the Act requires duty amount in show cause notice. Absence of duty amount weakens notice, impacting provisional release conditions. Court found second condition for release unsustainable due to lack of duty amount in notice. First condition of PD Bond for 100% value of goods deemed valid. Petitioner agreed to furnish bank guarantee for 10% of disputed amount without prejudice.Modified order required PD Bond and bank guarantee as specified, keeping bank guarantee active until adjudication. Respondents directed to release goods within two days of compliance. Court clarified observations wouldn't affect final adjudication of show cause notice. Writ petition disposed off without costs.