Delhi HC orders customs to release Bank Guarantee after finding unreasonable delay in finalizing provisional assessment proceedings

Delhi HC directed customs authorities to release Bank Guarantee and retained monies after finding unreasonable delay in finalizing provisional assessment proceedings. The court noted that DRI had completed COO Certificate verification in 2016 and shared results with respondents, yet assessment remained incomplete. Since provisional assessment was initiated solely for certificate verification rather than undervaluation allegations, and no legal impediment prevented finalization, the respondents' delay was deemed arbitrary. Petition allowed with direction for immediate release of securities.

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Issues Involved:
1. Finalization of Provisional Assessment of Bill of Entry.
2. Release of Bank Guarantee.
3. Delay in Finalization of Provisional Assessment.
4. Entitlement to Refund and Interest.

Summary:

1. Finalization of Provisional Assessment of Bill of Entry:
The petitioner, engaged in the import and trading of gold jewelry, sought directions to finalize the provisional assessment for Bill of Entry No. 2894698 dated 12 October 2015. The consignment was supported by valid documentation, including the Certificate of Country of Origin (COO). The Customs authorities invoked Sections 17 and 18 of the Customs Act, 1962, for provisional assessment, doubting the COO Certificates and requiring verification.

2. Release of Bank Guarantee:
To secure the provisional release of the imported goods, the petitioner submitted a Bank Guarantee (BG) and a Bond. Despite complying with all requirements, the provisional assessment was not finalized, prompting the petitioner to seek directions for the release of the BG.

3. Delay in Finalization of Provisional Assessment:
The Customs authorities failed to finalize the assessment despite multiple reminders and representations from the petitioner. The Directorate of Revenue Intelligence (DRI) had verified the COO Certificates by March 2016 and shared the results with the Customs authorities. However, the provisional assessment remained incomplete for over seven years.

4. Entitlement to Refund and Interest:
The Court found the delay in finalizing the provisional assessment unjustified. It emphasized that the Customs authorities had no basis to doubt the COO Certificates and criticized the prolonged retention of the BG. The Court referenced precedents that condemned the practice of holding BGs without timely adjudication. The petitioner was held entitled to a refund of the BG amount along with interest at 6% per annum from 17 March 2016 until repayment, compensating for the wrongful retention of funds.

Conclusion:
The writ petition was allowed, directing the respondents to release the BG and any retained monies immediately. The petitioner was awarded interest on the refund due to the unjustified delay in finalizing the provisional assessment.

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