Tribunal modifies terms for seized goods release, stresses fair discretion under Customs Act

The Tribunal allowed the appeal, modifying the terms for provisional release of seized goods. The goods were permitted to be released upon furnishing a bond for the value of the goods and a bank guarantee of Rs. 50,00,000. The Tribunal emphasized the importance of a fair and equitable exercise of discretion under Section 110A of the Customs Act, 1962, and held that administrative instructions should not override statutory provisions.

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Issues Involved:
1. Misdeclaration of the origin of imported goods.
2. Terms of provisional release of seized goods.
3. Discretionary power under Section 110A of the Customs Act, 1962.
4. Judicial interpretation of the provisional release mechanism.
5. Applicability of CBEC Circular No. 35/2017-Customs.

Detailed Analysis:

1. Misdeclaration of the Origin of Imported Goods:
M/s Amglo Resources Pvt Ltd imported consignments of 'copper cathode' purportedly of Zambian origin, supported by certificate no. N 2741/08.11.2021. However, investigators concluded that the goods were of Iranian origin, leading to the seizure of the consignments under Section 110 of the Customs Act, 1962. The misdeclaration was considered a violation under Section 111(m) of the Customs Act, 1962.

2. Terms of Provisional Release of Seized Goods:
The initial terms for provisional release required a bond for five times the value of the goods and a bank guarantee for 15% of the value. Upon appeal, the Tribunal modified these terms to a bond for the value of the goods and a bank guarantee of Rs. 1,00,00,000. Later, for another consignment, the terms included a bond for the revised value of the goods and a bank guarantee covering estimated differential duty, probable redemption fine, and penalty. The appellant challenged these terms as excessively onerous and sought modification.

3. Discretionary Power under Section 110A of the Customs Act, 1962:
The Tribunal emphasized that the power to seize goods under Section 110 must be followed by proceedings under Section 124, leading to a decision under Section 125. The Tribunal cited judicial precedents to highlight that provisional release under Section 110A is discretionary and should be exercised fairly and equitably. The Tribunal noted that the circulars and administrative instructions should not supplant statutory provisions.

4. Judicial Interpretation of the Provisional Release Mechanism:
The Tribunal referred to various judicial decisions, including those of the Hon'ble Supreme Court and High Courts, to assert that provisional release is an interlocutory measure and does not adjudicate liability. The Tribunal noted that harsh conditions for provisional release could effectively deny access to goods, contrary to legislative intent. The Tribunal emphasized that the exercise of discretion under Section 110A must align with the principles of fairness and equity.

5. Applicability of CBEC Circular No. 35/2017-Customs:
The Tribunal scrutinized the CBEC Circular No. 35/2017-Customs, which prescribed conditions for provisional release. The Tribunal observed that the circular could not override statutory provisions and should not impose conditions that effectively deny provisional release. The Tribunal held that the circular's restrictions on provisional release were void and unenforceable, as they contravened Section 110A of the Customs Act, 1962.

Conclusion:
The Tribunal allowed the appeal, modifying the terms for provisional release. The seized goods were permitted to be released upon furnishing a bond for the value of the goods and a bank guarantee of Rs. 50,00,000. The Tribunal emphasized the need for fair and equitable exercise of discretion under Section 110A and held that administrative instructions should not supplant statutory provisions. The order was pronounced in the open court on 17/06/2022.

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