2022 (6) TMI 139 - AT - Customs

Tribunal modifies release conditions for seized goods, requiring customs duty, bond, and bank guarantee.

AMGLO RESOURCES PRIVATE LIMITED Versus C.C.E & S.T. -VALSAD

The tribunal found the conditions imposed in the provisional release order dated 06.04.2022 to be unjustified and incorrect. It modified the conditions, ... Seeking provisional release of seized imported goods - misdeclaration of origin of goods - the said goods appear to be of Iran origin and not Zambia - validity of demand from Appellants to furnish a bank guarantee to the extent of 15% of value of seized imported goods - Power of Department to review an order passed under section 110A of Customs Act - HELD THAT:- The overall value of goods in the present case is over 100 crores. The fact that the earlier order dated 04.02.2022 issued by the deputy commissioner of Customs, Tumb was withdrawn by the office of Respondent shows that the issue of provisional release was being done under the approval of the Respondent. Under the Customs Act, there is no provision granting power to the department to review an order passed under Section 110A and accordingly the impugned order is bad in law - In the present case, once the provisional release order was passed, the Office of the Commissioner of Customs, Ahmedabad, Respondent herein had no jurisdiction under the Customs Act to review the earlier order dated 4th February 2022 granting provisional release to the goods imported vide the Bills of Entry impugned in the present case. The correct approach would have been for the Respondent to challenge the correctness of the said provisional release order before this tribunal. The condition of furnishing the bank guarantee to the extent of 15% of the value of goods or 15% of the duty value itself requires to be tested in terms of the law delivered on the issue in the case of AMIT ENTERPRISES VERSUS UNION OF INDIA [2011 (5) TMI 375 - PUNJAB & HARYANA HIGH COURT], wherein the Hon’ble Punjab and Haryana was pleased to modify the condition of furnishing of bank guarantee of 25% of the market value of the seized goods on the ground that the petitioner therein had paid duty as per the valuation of the department. Tribunal in the case of M/S SRK MANUFACTURING VERSUS COMMISSIONER OF CUSTOMS, LUHIANA (VICE-VERSA) [2022 (1) TMI 220 - CESTAT CHANDIGARH] had deleted the condition of furnishing the bank guarantee equivalent to the 30% of the value of goods on the ground that the appellant therein had paid duty on the declared value and had accepted to pay the entire differential duty as well. The present case stands at a better footing as the Appellant is agreeable to pay entire duty to secure provisional release of goods. As evident from the Bills of entry, the appellant was always willing to deposit the entire duty of BCD + IGST which is over 25 crores and therefore, the condition to direct the appellant to furnish a bank guarantee of 15% of the value of the goods which is over 100 crores is excessive and arbitrary more importantly when the appellant is willing to deposit the duty payable on the seized goods. There is no dispute on the valuation or classification of the goods as is clear from the impugned provisional release order - the law laid down in the aforesaid decisions is squarely applicable to the facts of the present case as well and the condition to direct the Appellant to furnish bank guarantee of 15% of the value of goods is arbitrary, excessive and bad in law. The conditions imposed in the impugned provision release order is not justified and correct. However keeping in mind the interest of justice and safeguard of revenue’s interest also, it is held that the seized goods shall be released provisionally on payment of custom duty on the conditions that the appellant shall execute a bond of full value of the seized imported goods and shall furnish bank guarantee of Rs. 1 Crore. Appeal allowed. Issues Involved:1. Legality of the provisional release order dated 06.04.2022 requiring a bank guarantee of 15% of the value of seized goods.2. Jurisdiction of the Customs Department to review the provisional release order dated 04.02.2022.3. Adequacy and reasonableness of the conditions imposed for the provisional release of goods.Detailed Analysis:1. Legality of the Provisional Release Order:The appellant contested the order dated 06.04.2022, which mandated a bank guarantee of 15% of the value of the seized goods. The appellant argued that this requirement was 'without any basis and bad in law' since they were willing to pay the entire duty without claiming any benefit under Free Trade Agreements (FTA). They relied on several judicial precedents, including Amit Enterprises Vs. Union of India and Om Udyog vs. Joint Commissioner of Customs, which supported their stance that once duty is paid, additional guarantees are unwarranted. The tribunal agreed, noting that the condition of furnishing a bank guarantee of 15% of the value of goods was 'arbitrary, excessive, and bad in law.'2. Jurisdiction of the Customs Department to Review the Provisional Release Order:The appellant argued that the Customs Department lacked the authority to review the provisional release order dated 04.02.2022. They cited the decision in Dharampal Satyapal Ltd. Vs. Union of India, which states that once a judgment or order becomes final, it cannot be altered unless the statute explicitly permits it. The tribunal concurred, stating, 'Under the Customs Act, there is no provision granting power to the department to review an order passed under Section 110A.' Thus, the tribunal found the impugned order dated 06.04.2022 to be 'bad in law.'3. Adequacy and Reasonableness of the Conditions Imposed:The appellant contended that the condition to furnish a bank guarantee of 15% of the value of the goods was excessive, especially since they were willing to pay the entire duty amounting to over 25 crores. They argued that the department's focus on the Country of Origin Certificate (COO) was irrelevant since they did not seek any duty benefit based on the COO. The tribunal found merit in this argument, noting that 'there is no restriction under the Import Export Policy for importing Copper Cathodes from Iran.' The tribunal also emphasized that the appellant's willingness to pay the entire duty should have been considered when imposing conditions for provisional release.Conclusion:The tribunal concluded that the conditions imposed in the provisional release order dated 06.04.2022 were 'not justified and correct.' It modified the conditions, directing the provisional release of the seized goods upon payment of customs duty, execution of a bond covering the full value of the seized goods, and furnishing a bank guarantee of Rs. 1 Crore. The appeal was allowed in these terms, balancing the interests of justice and safeguarding revenue.Pronouncement:The judgment was pronounced in the open court on 10.05.2022.