2023 (11) TMI 72 - AT - Customs

Provisional release of seized crude gold bullion allowed on bond and bank guarantee pending adjudication

CESTAT Chennai allowed provisional release of seized crude gold bullion from appellant's premises. Gold was allegedly procured from importers who diverted ... Provisional release under Section 110A of the Customs Act, 1962 - bond and bank guarantee as security for provisional release - inspection and accounting safeguards for released goods - prohibited goods and consequential risk of confiscation - balance of convenience in interlocutory reliefProvisional release under Section 110A of the Customs Act, 1962 - bond and bank guarantee as security for provisional release - inspection and accounting safeguards for released goods - balance of convenience in interlocutory relief - Application for provisional release of crude gold bullion seized from the appellant's premises. - HELD THAT: - The Tribunal held that the question of the seized gold's foreign provenance and licit origin is a matter for adjudication and declined to decide those issues at the interlocutory stage. Noting the long pendency of adjudication and the competing interests of Revenue and the appellant, the Tribunal applied the balance of convenience in favour of granting provisional release subject to adequate safeguards for the Revenue. Reliance was placed on the approach in the judgment referred to as Its My Name, where provisional release was ordered on furnishing a bond and a bank guarantee; the Tribunal noted that the Supreme Court has enhanced the security in that line of cases but, on the facts before it, directed release on specified terms. The Tribunal therefore ordered release of the seized goods on condition that the appellant furnishes a bond for the full value of the seized goods and a bank guarantee with an auto-renewal clause for 30% of the value, keeps the premises open for Revenue inspection at reasonable hours, duly accounts for all utilization or sale, and furnishes weekly account statements to the Revenue. These conditions were considered sufficient to protect Revenue's interest while permitting the appellant to continue its business pending adjudication.The impugned refusal to provisionally release the seized gold is set aside and the goods are directed to be released subject to a full-value bond, a bank guarantee for 30% with auto-renewal, open premises for inspection and weekly accounting by the appellant.Final Conclusion: Appeal allowed in part; provisional release of seized crude gold bullion ordered on the stated security and compliance conditions, and the impugned order refusing release set aside. Issues Involved:1. Seizure of crude gold bullion by DRI officers during search and seizure operations at the appellant's premises.2. Request for release of the seized crude gold bullion.3. Rejection of the request for release of seized gold by the Principal Commissioner of Customs.4. Appeal against the rejection order filed by the appellant.Seizure of Crude Gold Bullion:The appellant, engaged in the local trade of gold and silver bullion and jewellery, had their premises searched by DRI officers who seized 3516 grams of crude gold bullion. The appellant claimed that the seized stock was duly accounted for and submitted supporting documents on the date of search and seizure.Request for Release of Seized Gold:The appellant sought the release of the seized crude gold bullion, which was not granted by the authorities initially. Subsequently, the appellant approached the High Court through Writ Petitions, leading to directions for the lower authority to reconsider the release request.Rejection of Release Request:The Principal Commissioner of Customs rejected the request for provisional release of the seized gold, citing that the gold was allegedly procured from importers who diverted imported gold to the local market, making it 'prohibited goods' under the Customs Act 1962. The Commissioner feared that provisional release could defeat the purpose of absolute confiscation.Appeal Against Rejection Order:The appellant appealed the rejection order, arguing that the gold was duly recorded in their books of account and should be provisionally released. The appellant highlighted a judgment from the High Court of New Delhi to support their claim.The Tribunal considered the arguments presented by both sides and noted that the gold seized was in crude form without foreign markings, indicating it may not be of foreign origin. The Tribunal refrained from making a definitive judgment pending adjudication but emphasized the need to balance the interests of the Department and the appellant.The Tribunal referenced a judgment from the High Court of New Delhi regarding the release of seized goods, suggesting the provision of a Bank Guarantee and Bond as safeguards. Following this guidance, the Tribunal ordered the provisional release of the seized goods upon the appellant furnishing a bond for the full value of the goods and a Bank Guarantee for 30% of the value, with specified conditions for inspection and reporting to the Revenue.In conclusion, the Tribunal set aside the impugned order and disposed of the appeal by directing the release of the seized goods under the outlined terms and conditions to safeguard the interests of both the Revenue and the appellant.