2022 (5) TMI 590 - HC - Customs

Court orders provisional release of goods with bank guarantee, undertaking, and bond for duty differential.

The court ordered the provisional release of the goods upon the applicants furnishing a bank guarantee, an undertaking, and a bond for the differential ... Seeking provisional release of imported consignment - Magnesium Lump - HELD THAT:- The provisional release of the goods (Magnesium lump) ordered upon furnishing of the bank guarantee, bond and the undertaking subject to the following terms and conditions: [a] The writ applicants shall submit a bank guarantee of Rs.10 Lakh (Rupees Ten Lakh only) for a period of twelve weeks of any nationalized bank or a private bank in favour of the respondent No.1. [b] The Managing Director of the writ applicant company shall file an undertaking with the respondents authorities and before this Court that he possess sufficient assets and in the event the consignment is found to have origin from Pakistan, he shall pay the differential duty if the petitioner No.1 is not in a position to pay the differential amount as may be adjudicated. [c] Additionally, the writ applicants shall file a bond for the differential duty as per the Customs Act, 1962 and the rules made thereunder, before the authority. Once the bank guarantee is furnished of the requisite amount as above, the goods shall be provisionally released in favour of the writ applicants - application disposed off. Issues Involved:1. Provisional release of imported goods.2. Validity of seizure based on the origin of goods.3. Conditions imposed for provisional release.4. Inquiry into the origin of goods.5. Delay in the inquiry process.6. Financial implications of detention and demurrage charges.Issue-wise Detailed Analysis:1. Provisional Release of Imported Goods:The writ applicants sought the provisional release of their consignment imported under Bill of Exchange No. 4964569. Initially, the respondents allowed provisional release on the condition of furnishing a bond of full value and a bank guarantee of 200% BCD and IGST. The applicants contended that these conditions were unreasonable and onerous. The court, considering the undue delay in the inquiry, ordered provisional release upon furnishing a bank guarantee of Rs.10 Lakh, an undertaking by the Managing Director, and a bond for the differential duty.2. Validity of Seizure Based on the Origin of Goods:The respondents seized the goods on suspicion that they were imported from Pakistan, which would attract a 200% duty, as opposed to the claimed origin of Abu Dhabi, which would attract a 5% duty. The applicants argued that the seizure was illegal as there was no violation of rules or regulations, and the goods were neither prohibited nor restricted. The court noted that there had been no formal seizure under Section 110 of the Customs Act, which would have allowed for provisional release under Section 110-A.3. Conditions Imposed for Provisional Release:The court examined the reasonableness of the conditions imposed for provisional release. Citing judgments from other High Courts, including the Delhi High Court’s decision in Spirotech Heat Exchangers Pvt. Ltd. Vs. Union of India, the court found that the conditions imposed by the respondents were harsh. The court ordered the provisional release of the goods upon less stringent conditions, emphasizing the need for a balance between securing the revenue and not imposing undue hardship on the importer.4. Inquiry into the Origin of Goods:The respondents undertook an inquiry to verify the origin of the goods. Despite multiple adjournments, the inquiry remained inconclusive. The court expressed concern over the prolonged inquiry and emphasized the need for a timely conclusion. The court directed the respondents to complete the inquiry within twelve weeks, allowing for an extension only upon a formal application demonstrating the necessity for additional time.5. Delay in the Inquiry Process:The court was critical of the delay in the inquiry process, noting that the goods had been lying in the customs warehouse for over seven months. The court highlighted the financial burden on the applicants due to the prolonged detention and emphasized the importance of concluding the inquiry within a reasonable timeframe. The court warned that further delays would not be entertained without substantial justification.6. Financial Implications of Detention and Demurrage Charges:The applicants sought a refund of detention and demurrage charges or a waiver of these charges due to the delay caused by the respondents. The court acknowledged the financial strain on the applicants, noting that they had already paid Rs.10 Lakh in rent to the bonded warehouse. While the court did not provide an immediate resolution on this issue, it allowed the applicants to file a further writ application for additional relief.Conclusion:The court ordered the provisional release of the goods upon the applicants furnishing a bank guarantee, an undertaking, and a bond for the differential duty. The respondents were directed to conclude the inquiry within twelve weeks, with the possibility of an extension upon a formal application. The court emphasized the need for a balance between securing revenue and not imposing undue hardship on the importer, and allowed the applicants to seek further relief through additional writ applications if necessary.