2019 (9) TMI 1169 - HC - Customs

Court Upholds Export Goods Release Conditions with Bank Guarantee, Emphasizes CBEC Compliance

M/s. SA Trading Company Versus The Assistant Commissioner of Customs (ACIU), The Assistant/Deputy Commissioner of Customs (Exports)

M/s. SA Trading Company Versus The Assistant Commissioner of Customs (ACIU), The Assistant/Deputy Commissioner of Customs (Exports) - 2019 (368) E.L.T. ... Issues Involved:1. Provisional release of goods for export.2. Conditions imposed for provisional release, specifically the execution of a bank guarantee.3. Allegations of misclassification and overvaluation of goods.4. Claim for higher rate of IGST refund.5. Compliance with CBEC Circulars regarding provisional release of goods.Issue-wise Detailed Analysis:1. Provisional Release of Goods for Export:The petitioner, engaged in import and export business, filed two shipping bills for exporting goods declared as Multipurpose Split Pin Top Quality. The Air Cargo Intelligence Unit intercepted the consignment based on intelligence and detained it for further investigation. The petitioner sought provisional release of the goods, which was granted by the first respondent subject to certain conditions, including the execution of a bank guarantee.2. Conditions Imposed for Provisional Release, Specifically the Execution of a Bank Guarantee:The petitioner challenged the condition to furnish a bank guarantee of Rs. 25,00,000, arguing it was onerous. The petitioner had no issue with executing a provisional duty bond for Rs. 92,23,500. The court examined whether the conditions imposed were justifiable or onerous. It was noted that the conditions were based on allegations of misclassification, overvaluation, and intended higher IGST refund claims. The court found the conditions reasonable and justified, emphasizing the need to safeguard the interest of the Revenue.3. Allegations of Misclassification and Overvaluation of Goods:The respondents claimed that the export consignment was overvalued and misclassified. The goods were declared under HSN Code 87089900, but the respondents argued they should be classified under CTH 7318 (73182400). This misclassification allegedly aimed to claim a higher IGST refund rate. The court did not express any view on the merits of these contentions as the adjudication process was still pending.4. Claim for Higher Rate of IGST Refund:The respondents alleged that the exporter intended to claim a higher IGST refund by misclassifying the goods. Under CTH 7318, the IGST refundable is 18%, whereas, under CTH 8708, it is 28%. The court noted that the adjudication process was yet to take place and focused on whether the conditions for provisional release were justifiable.5. Compliance with CBEC Circulars Regarding Provisional Release of Goods:The court referred to CBEC Circular No. 01/2011-Customs and Circular No. 30/2013, which outline the requirements for provisional release of export goods detained for investigation. These circulars mandate the execution of a bond equivalent to the value of the goods and furnishing appropriate security to cover redemption fine and penalty. The court found that the conditions imposed by the customs were in line with these circulars and were not arbitrary or unreasonable.Conclusion:The court concluded that the conditions for provisional release, including the bank guarantee, were justified and necessary to safeguard the interest of the Revenue. The writ petition was disposed of with the observation that if the petitioner found it difficult to furnish the bank guarantee, they could alternatively provide immovable property security to the satisfaction of the first respondent. The court emphasized balancing the interests of the exporter and the Revenue, ensuring compliance with relevant circulars and legal provisions.