2020 (6) TMI 72 - HC - Customs

CESTAT's Power to Direct Provisional Release & Fix Terms Upheld

Additional Director General (Adjudication) Versus M/s. Its My Name Pvt. Ltd.

Additional Director General (Adjudication) Versus M/s. Its My Name Pvt. Ltd. - 2021 (375) E.L.T. 545 (Del.) Issues Involved:1. Whether the CESTAT can substitute its view for the discretion of the Adjudicating Authority under Section 110A of the Customs Act.2. Whether the appellate jurisdiction of the CESTAT against an order passed under Section 110A is restricted to examining whether such an order has been passed after duly considering the law in respect of provisional release and not passed arbitrarily.3. Whether the appellant is entitled to provisional release of the seized gold in question in view of the facts and circumstances of this case.Detailed Analysis:Issue 1: Substitution of CESTAT's View for the Adjudicating Authority's DiscretionThe court held that the power and jurisdiction of the CESTAT, hearing an appeal against an order of provisional release, is coequal with the power exercised by the adjudicating authority. The CESTAT, therefore, has the power to direct provisional release and to fix the terms thereof. The court noted that the adjudicating authority, in this case, did not fix any terms for provisional release but held that it would be premature to arrive at any conclusion about provisional release before completion of adjudication proceedings. The court found this view untenable and agreed with the CESTAT's decision to quash the order of the ADG, DRI.Issue 2: Appellate Jurisdiction of CESTATThe court clarified that the CESTAT's jurisdiction is not limited to merely examining the legality of the adjudicating authority's order but extends to passing orders for provisional release if the adjudicating authority's decision is found to be unsustainable. The court held that the CESTAT's power to confirm, modify, or annul the order of the adjudicating authority includes the authority to fix terms for provisional release.Issue 3: Entitlement to Provisional Release of Seized GoldThe court upheld the CESTAT's decision to allow provisional release of the gold, gold jewellery, and silver seized from the warehouse premises of the respondent, as well as 25400.06 grams of gold jewellery covered by a registered Bill of Entry. The court noted that the assessing officer had allowed clearance of this jewellery after satisfying himself that it was the same as that exported for exhibition. The court found no reason to interfere with the CESTAT's decision on this point.However, the court set aside the CESTAT's decision to allow provisional release of 25299.68 grams of gold jewellery, which was not covered by any registered Bill of Entry. The court held that the importation of this quantity was invalid and irregular ab initio, and the exercise of discretion by the CESTAT in allowing provisional release of this quantity was untenable in law.Terms of Provisional ReleaseThe court modified the terms of provisional release set by the CESTAT. It directed the respondent to furnish a bond for the full value of the seized goods, along with a Bank Guarantee for Rs. 10 crores, containing an auto-renewal clause. The court noted that this would sufficiently safeguard the interests of the Revenue.Conclusion1. The CESTAT has the power to direct provisional release and fix the terms thereof.2. The CESTAT's jurisdiction includes passing orders for provisional release if the adjudicating authority's decision is found unsustainable.3. The court upheld the provisional release of certain quantities of gold and set aside the provisional release of gold not covered by a registered Bill of Entry. The terms of provisional release were modified to require a bond for the full value of the goods and a Bank Guarantee for Rs. 10 crores.