2024 (8) TMI 1417 - HC - Customs

Customs authority's demand for bank guarantee struck down for provisional release of goods under Section 110A

Prime Home Collection (OPC) Ltd. Versus Union of India, Superintendent, NS-II, Special Investigation and Intelligence Branch (Export), JNCH, Nhava Sheva, Deputy Commissioner of Customs, NS-II Special Investigation and Intelligence Branch (Export), Office of Commissioner of Customs, NS-II, Office of Commissioner of Customs, NS-II Centralized Export Assessment Cell, JNCH, Nhav Sheva, District - Raigad, Maharashtra

The Bombay HC set aside the customs authority's demand for bank guarantee/cash security of Rs.68,65,140.60 for provisional release of goods back to town. ... Request for provisional release of the goods for ‘back to town’ - It is Petitioner’s case that there is no point in keeping the goods in the port anymore because the goods are not going to be exported and unnecessarily detention charges, container rental charges etc. are being incurred - HELD THAT:- Respondent No.3 has annexed documents relating to various other cases where Petitioner has been imposed with penalty which, according to Dr. Kantawala, are under challenge in this Court. In the affidavit-in-reply, it appears that this past history of Petitioner is being narrated to justify insistence of a security by way of bank guarantee / cash security. According to Respondent No.3 since investigation is in progress, the adjudicating authority has allowed provisional release of the goods on execution of bond equivalent to total FOB value of Rs.4,57,67,604/- and furnishing a security cover in form of bank guarantee / cash security of Rs.68,65,140.60/- being 15% of the declared FOB value. Reliance placed upon paragraph 4 of the Board Circular No.01 of 2011 dated 4th January 2011 - the Circular says endeavour should be to quickly undertake the necessary action and take appropriate legal action there is nothing to indicate this has been achieved. There is no explanation as to how a Board Circular can be issued in variance with the provisions of Section 110A of the Act - Section 110A only provides for releasing goods to the owner on taking a bond with such security and conditions as the adjudicating authority may require where goods are seized under Section 110A. In this case admittedly there is no seizure of any goods. The impugned communication dated 18th June 2024 set aside - Respondent No.3 shall release the goods ‘back to town’ within two weeks upon Petitioner submitting (i) a bond in the format as prescribed by the department, (ii) solvency certificate from its bank and (iii) an undertaking from Petitioner’s Director Mr. Yadavendra Kumar Roy to remain present whenever summoned subject to atleast 5 days advance notice being given - petition disposed off. Issues:1. Petition seeking Writ of Certiorari to quash two letters issued by Respondent No.5.2. Petitioner's challenge regarding the conditions imposed for the release of goods.3. Interpretation of Section 110A of the Customs Act, 1962 in relation to the seizure of goods.4. Respondent's reliance on Board Circular No.01 of 2011 for provisional release conditions.5. Validity of the conditions imposed by Respondent No.3 without any seizure of goods.Analysis:1. The petition sought the issuance of a Writ of Certiorari to quash two letters issued by Respondent No.5, challenging the legality and validity of the communications. The petitioner contended that the conditions imposed for the release of goods were not justified as there was no seizure of goods under the Customs Act, 1962.2. The petitioner approached the court due to the conditions set by Respondent No.5 for the provisional release of goods, which included submitting a bond for 100% FOB value and a cash security/bank guarantee. The petitioner argued that such conditions could only be imposed in case of a seizure of goods under Section 110 of the Act, which was not the case here.3. The court analyzed Section 110A of the Customs Act, 1962, which allows the release of goods to the owner upon fulfilling conditions set by the adjudicating authority in case of seized goods. Since there was no actual seizure of goods in this case, the conditions imposed by Respondent No.5 were deemed unjustified and not in accordance with the law.4. Respondent No.3 relied on Board Circular No.01 of 2011 to justify the conditions for provisional release. However, the court found discrepancies in the application of the circular and highlighted that the circular could not override the provisions of Section 110A of the Customs Act, 1962.5. The court quashed the impugned communication dated 18th June 2024 and directed Respondent No.3 to release the goods 'back to town' within two weeks upon the petitioner fulfilling specific requirements. The court emphasized the lack of seizure of goods and the invalidity of the conditions imposed, ensuring the release of goods without undue delays.This judgment clarifies the legal principles surrounding the release of goods under the Customs Act and emphasizes the importance of adhering to statutory provisions while imposing conditions for the release of goods.