2018 (10) TMI 573 - HC - Customs

High Court directs CESTAT to review case on Circular No.35/2017-CUS, stresses extenuating circumstances

The High Court directed the Customs Excise and Service Tax Appellate Tribunal (CESTAT) to reconsider a case involving the interpretation of Circular ... Interpretation of Statute - Circular No.35/2017–CUS. dated 16.08.2017 - provisional release of goods - CESTAT has relegated the matter entirely to the Commissioner, with a direction that the application should be decided in accordance with Circular No.35/2017–CUS. dated 16.08.2017 - Held that:- The circular expressly states in para 4.1 that the observations of this court and of the Madras High Court are to be taken into account - This obviously meant that the conditions in paras 2.1 and 2.2 are merely guidance and cannot be treated as mandatory, in all circumstances. The CESTAT is directed to consider the matter afresh and pass an appropriate order having regard to the circumstances of the case - appeal allowed in part. Issues:1. Interpretation of Circular No.35/2017-CUS by Customs Excise and Service Tax Appellate Tribunal (CESTAT).2. Applicability of extenuating circumstances in provisional release of seized goods.3. Discretionary power under Section 110A of the Act.4. Consideration of judicial observations from Delhi High Court and Madras High Court in similar cases.Interpretation of Circular No.35/2017-CUS:The High Court addressed the issue of the CESTAT's interpretation of Circular No.35/2017-CUS, emphasizing that the Tribunal had not considered all extenuating circumstances outlined in the circular before directing the Commissioner to follow specific paras. The court highlighted that the circular's provisions in paras 2.1 and 2.2 should not be applied as mandatory in all situations, as other factors mentioned in para 4, including judicial observations, must also be taken into account. The court directed the CESTAT to reconsider the matter, ensuring a comprehensive assessment of all circumstances.Applicability of Extenuating Circumstances:The judgment underscored the importance of considering extenuating circumstances in cases of provisional release of seized goods. It referenced judicial observations from the Delhi High Court and the Madras High Court, emphasizing that each case should be evaluated based on its unique facts. The court highlighted that a blanket rule for depositing duty in cases of misdeclaration may not always be appropriate, and the discretion under Section 110A of the Act should be exercised judiciously, considering the legal limits and potential miscarriage of justice.Discretionary Power under Section 110A of the Act:The court reiterated the discretionary power vested in customs authorities under Section 110A of the Act, emphasizing the need for a balanced exercise of this discretion. It noted that treating all wrongful imports equally could lead to unjust outcomes and that customs officials have some margin for discretion within legal boundaries. The judgment highlighted the importance of judicial review to ensure the proper exercise of discretion in cases of provisional release.Consideration of Judicial Observations:The judgment extensively referenced judicial observations from previous cases, particularly those from the Delhi High Court and the Madras High Court, to guide the approach towards provisional release of goods. It emphasized the need to consider the nuances of each case, such as misdeclaration, diversion of goods, and non-compliance with import conditions, rather than applying a uniform approach. The court directed customs authorities to keep these judicial observations in mind while deciding on provisional release, indicating that a holistic evaluation of circumstances is essential for a fair and just outcome.