Court orders release of vessel MT Global Rani, citing Customs Act provisions, rejecting Circular reliance.

The High Court set aside the refusal of provisional release for vessel MT Global Rani, directing its release upon the vessel owner furnishing a bond and bank guarantee. The Court emphasized the applicability of section 110-A of the Customs Act for provisional release, rejecting the reliance on Circular No.35/2017-Customs. Previous similar cases were considered, leading to the Court's decision to grant provisional release in this instance. The order mandated compliance with formalities and reserved further contentions for subsequent proceedings, with no costs awarded.

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Issues Involved:
1. Legality of the seizure of the vessel.
2. Justification for the refusal of provisional release of the vessel.
3. Validity of Circular No.35/2017-Customs dated 16.08.2017.
4. Applicability of section 110-A of the Customs Act for provisional release.
5. Consideration of previous similar cases involving other vessels.

Detailed Analysis:

1. Legality of the Seizure of the Vessel:
The seizure memorandum dated 26.09.2020 stated that the vessel was carrying cargo with mis-declared country of origin as Iraq and port of loading as Basrah, Iraq, making it liable for confiscation under section 115 of the Customs Act. The Senior Intelligence Officer seized the vessel under section 110(1) of the Customs Act, valuing it at approximately Rs. 12,74,00,000.00. The vessel was handed over to the master of the vessel with specific directions not to remove or deal with the vessel without permission.

2. Justification for the Refusal of Provisional Release of the Vessel:
The order dated 28.10.2020 rejected the request for provisional release on several grounds:
- Locus standi of the agent was doubted due to the absence of ownership and contractual documents.
- The vessel owner should apply for provisional release and execute a bond and bank guarantee equivalent to five times the market value of the vessel.
- The vessel was engaged in repeated offenses, and investigation was not complete.
- The vessel was under detention by the Directorate General of Shipping for being unseaworthy.
- As per Circular No.35/2017-Customs, provisional release shall not be allowed for prohibited goods.
- The offenses were of a grave nature likely to affect trade and friendly relations with the USA, rendering such imports prohibited under section 11 of the Customs Act.

3. Validity of Circular No.35/2017-Customs dated 16.08.2017:
The High Court clarified that section 110-A of the Customs Act does not impose any restriction on provisional release for goods categorized as prohibited under section 2(33). Therefore, reliance on the Board’s circular dated 16.08.2017 was misplaced, and it was unnecessary to examine its vires.

4. Applicability of Section 110-A of the Customs Act for Provisional Release:
Section 110-A allows for provisional release of seized goods, documents, or things pending adjudication upon taking a bond with security and conditions as required by the adjudicating authority. The High Court emphasized that this provision facilitates provisional release while protecting revenue interests. The Court found that the refusal of provisional release based on the vessel being under detention by the Directorate General of Shipping was not a valid ground to preclude the exercise of power under section 110-A.

5. Consideration of Previous Similar Cases Involving Other Vessels:
The petitioner had cited instances of two vessels, MT R-Ocean and MT Clayton, which were similarly placed. MT R-Ocean was allowed to discharge similar cargo without action, while MT Clayton was granted provisional release on furnishing a bond and cash deposit. The Court noted that the respondents’ evasive denial of these instances amounted to an admission.

Conclusion:
The High Court set aside the order dated 28.10.2020 rejecting the provisional release of the vessel. It directed the respondents to grant provisional release of the vessel MT Global Rani upon furnishing a bond of Rs. 12,74,00,000.00 and a bank guarantee of Rs. 25,00,000.00. The provisional release would be subject to necessary formalities, including clearance from the Directorate General of Shipping, and without prejudice to any permissible legal actions by the respondents. The Court kept all contentions open for subsequent stages and allowed the writ petition to the extent discussed, without any order as to costs.

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