2024 (2) TMI 780 - HC - Customs

Court Orders Release of Areca Nuts with Duty Exemption; Requires Indemnity Bond and Bank Guarantee for Security.

The court ordered the provisional release of 540 bags of areca nuts under customs duty exemption, subject to the petitioner providing an indemnity bond ... Certificate of origin verification - customs duty exemption under trade agreement - Verification Authority - proper officer's power to request additional information under the CAROTA Rules - provisional release of goods subject to safeguards - indemnity bond - bank guaranteeCertificate of origin verification - Verification Authority - customs duty exemption under trade agreement - Authenticity of the certificate of origin and entitlement to provisional release of goods under the ISFTA and the CAROTA Rules. - HELD THAT: - The Court found that a certificate of origin dated 22.06.2023 was issued by the Commercial Research Officer, Colombo, and that the Department of Commerce, Government of Sri Lanka, issued a verification dated 31.10.2023 certifying that the certificate was digitally signed by the authorized officer for ISFTA certificates. In view of the verification by the designated verification authority and the definition of 'verification' and 'Verification Authority' in the CAROTA Rules, the verified certificate supports the claim for exemption under the trade agreement. The determinative legal reasoning is that where the exporting country's designated authority has verified the genuineness and correctness of the certificate of origin, the importer is entitled to the benefit of duty exemption subject to permissible safeguards to protect revenue interests. [Paras 6, 7, 8, 10]Certificate of origin was held to be verified by the Sri Lankan authority and, on that basis, the petitioner is entitled to provisional release of the goods subject to safeguards.Proper officer's power to request additional information under the CAROTA Rules - provisional release of goods subject to safeguards - indemnity bond - bank guarantee - Whether the respondents could withhold release pending further information and the conditions, if any, for provisional release to protect revenue. - HELD THAT: - The respondents relied on a communication from the alleged exporter claiming fraudulent claims by other importers and invoked sub rule (2) of Rule 6 to seek additional information. The Court noted that the communication did not mention the petitioner and that no request for further information was placed on record. While recognising the proper officer's power to call for additional information under the CAROTA Rules, the Court exercised its discretion to permit provisional release with limited safeguards because verification by the exporting country's authority had been produced and no recorded request for further information specific to the petitioner existed. To protect the revenue, the Court mandated an indemnity bond for the full duty and a bank guarantee for a limited percentage of duty for an initial term of one year, to be furnished within the timeline fixed by the Court. [Paras 5, 9, 10, 11]Respondents' reliance on the exporter's communication was insufficient to deny provisional release; goods to be provisionally released on submission of an indemnity bond (100% of duty) and a bank guarantee (10% of duty) within the prescribed time.Final Conclusion: Writ petition disposed of by directing provisional release of the imported areca nuts upon petitioner furnishing an indemnity bond for 100% of the duty and a bank guarantee for 10% of the duty (initial term one year), to be submitted within one week; no order as to costs. Issues involved: Release of areca nuts under customs duty exemption, verification of certificate of origin, request for additional information, entitlement to release of goods without bank guarantee.The petitioner sought the release of 540 bags of areca nuts of Sri Lankan origin under customs duty exemption. The petitioner claimed that the goods were imported under the Indo-Sri Lanka Free Trade Agreement and had submitted a certificate of origin verified by the Department of Commerce, Sri Lanka. The petitioner argued for release without a bank guarantee, suggesting an indemnity bond instead. The petitioner's counsel emphasized that the certificate of origin was issued by the Commercial Research Officer in Colombo and was subsequently verified by the Department of Commerce in Sri Lanka. Despite this verification, the respondents insisted on further information based on a communication from the exporter, D.L.K. Spice Export. The court noted that the communication did not mention the petitioner and that no request for additional information was on record. The court observed that the certificate of origin was duly verified by the relevant authorities in Sri Lanka and that the lack of specific information regarding the petitioner in the exporter's communication warranted the provisional release of the goods. The court directed the petitioner to provide an indemnity bond for 100% of the duty payable and a bank guarantee for 10% of the customs duty from a nationalized bank. Upon fulfilling these conditions, the goods were to be provisionally released by the respondents. In conclusion, the court disposed of the writ petition by ordering the petitioner to provide the specified bonds and guarantees within a week. The provisional release of the goods was contingent upon meeting these conditions, and the connected miscellaneous petition was closed without any costs imposed.