2006 (2) TMI 187 - HC - Customs

Court allows release of imported paper goods with deposit requirements

The court ruled in favor of the petitioner, an importer of coated and uncoated paper, allowing the release of goods subject to conditions. The petitioner ... Provisional assessment and release on deposit of 20% of provisional duty - furnishing of surety bond with or without security under Regulation 4 - bank guarantee as security for recovery of provisional duty - provisional release subject to deposit of duty declared value - restriction on challenging identity of goods during adjudication/prosecutionProvisional assessment and release on deposit of 20% of provisional duty - provisional release subject to deposit of duty declared value - Whether the goods seized may be released provisionally and on what monetary deposit the release should be conditioned - HELD THAT: - The Court held that release of the goods was permissible subject to conditions protecting the revenue. Regulation 2 of the Customs (Provisional Duty Assessment) Regulations, 1963 permits release of goods upon assessment of provisional duty provided the importer deposits a sum not exceeding 20% of the duty so assessed. The Court found no reason to displace this statutory limit and directed that the petitioner deposit the customs duty on the value declared and, in addition, 20% of the differential duty provisionally assessed by the authorities (calculated on the provisional value of US$ 500 PMT). This deposit scheme was adopted as the appropriate financial condition for provisional release while preserving the revenue's interest. [Paras 9, 10]Goods to be released on payment of duty on declared value and deposit of 20% of the provisional differential duty.Furnishing of surety bond with or without security under Regulation 4 - bank guarantee as security for recovery of provisional duty - What security is required to protect the balance of the provisionally assessed amount and other recoverable sums - HELD THAT: - The Court applied Regulation 4 which requires a surety bond to be furnished with or without security for the balance of the provisionally assessed duty. The petitioner offered to furnish a bond and a bank guarantee covering 75% of the remaining 80% of the differential amount. The Court accepted that combination as sufficient to protect the revenue's apprehension of non-recovery. Accordingly, the petitioner was directed to furnish a bank guarantee for 75% of the balance 80% of the differential duty and a bond for the remaining 25% of that differential together with security for redemption fine and penalty provisionally assessed. [Paras 9, 10]Petitioner to furnish a bank guarantee for 75% of the remaining differential and a bond for the remainder, covering redemption fine and penalty as provisionally assessed.Restriction on challenging identity of goods during adjudication/prosecution - Whether the petitioner may be restrained from disputing the identity of the goods in subsequent proceedings as a condition of release - HELD THAT: - The Court accepted the respondents' submission that release should safeguard the investigation and adjudication process. It directed that the petitioner file an affidavit undertaking not to challenge the identity of the goods during adjudication or in any prosecution arising from the matter. The Court clarified that this undertaking does not prevent the authorities from retaining proper samples of the goods if they deem it necessary. [Paras 7, 10]Petitioner to file an affidavit undertaking not to challenge the identity of the goods in adjudication or prosecution; authorities may retain samples.Final Conclusion: Writ petition disposed permitting release of the imported goods subject to (i) payment of duty on declared value, (ii) deposit of 20% of the provisionally assessed differential duty, (iii) bank guarantee for 75% of the remaining differential, (iv) a bond for the balance including redemption fine and penalty as provisionally assessed, and (v) an affidavit undertaking not to challenge the identity of the goods; parties to bear their own costs. Issues:Import of coated and uncoated paper, provisional release of goods, differential duty assessment, bond and bank guarantee requirements, interest of revenue protection.Analysis:The petitioner, an importer of coated and uncoated paper falling under the OGL category, imported goods through ICD Tughlakabad and paid customs duty on a declared value ranging from US$ 204 to US$ 225 PMT. Subsequently, an investigation by the Directorate of Revenue Intelligence led to the seizure of goods and the arrest of the petitioner's Managing Director. The petitioner sought a mandamus for the clearance of goods on declared value or provisional clearance upon depositing a specified amount. Respondent argued mis-declaration and under-valuation, proposing a deposit of the differential amount provisionally assessed at Rs. 29,42,954. Petitioner contended legality of imports and readiness to deposit 20% of the differential duty as per Customs Regulations.The court considered the submissions and determined the release of goods in favor of the petitioner, subject to conditions. The court acknowledged no real resistance to the release but emphasized the need for depositing the provisional duty amount and providing security for any recoverable balance. Regulation 2 of the Customs (Provisional Duty Assessment) Regulations, 1963 allows the release of goods upon depositing up to 20% of the assessed duty. The court agreed with the petitioner's proposal to deposit 20% of the duty and provide a bank guarantee for 75% of the remaining balance to secure the revenue's interest adequately.In conclusion, the court directed the petitioner to deposit customs duty, 20% of the differential duty, furnish a bank guarantee for 75% of the remaining balance, provide a bond for the rest of the differential value, redemption fine, and penalty. Additionally, the petitioner had to file an affidavit not challenging the goods' identity during adjudication or prosecution. The writ petition was disposed of with these directions, and each party was to bear its own costs.