Revenue cannot demand provisional assessment when CESTAT classification order remains unstayed despite Supreme Court appeal pending

Delhi HC ruled that goods must be released per CESTAT's classification order despite pending SC appeal. The court held that mere pendency of appeal before SC does not justify Revenue Department's insistence on provisional assessment and bond requirements. Since CESTAT's December 2023 order directing classification under CTH 851770 remains unstayed, goods shall be released accordingly, subject to final SC decision and any directions issued therein. The petitioner's challenge to provisional release conditions succeeded.

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Issues:
Classification of imported goods under Notification No. 24/2005, insistence on provisional assessment by Revenue Department despite CESTAT order, interpretation of Section 18 of the Customs Act, 1962, relevance of pending appeal before the Supreme Court.

Classification of Imported Goods:
The Petitioner, a company providing after-sales support services of telecommunication networking equipment, imported goods that were subject to investigation by the Directorate of Revenue Intelligence (DRI) for misclassification. Despite a favorable settlement of the classification issue in favor of the Petitioner, the Revenue Department insisted on provisional release subject to the Petitioner furnishing bonds. The Petitioner claimed entitlement to exemption under Notification No. 24/2005, which was contested by the DRI.

Insistence on Provisional Assessment:
A show cause notice was issued, demanding a substantial amount, and a statutory appeal was filed before the Customs Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT, in its order, clarified the classification of the imported goods under CTH 851770 instead of CTH 85176290. Despite this order, the Petitioner faced continued insistence on provisional assessment by the DRI for over 400 bills of entry, causing delays and procedural hurdles.

Interpretation of Section 18 of the Customs Act, 1962:
The Revenue Department justified its insistence on provisional assessment based on Section 18(1)(c) of the Customs Act, 1962, citing the pending appeal before the Supreme Court challenging the CESTAT order. However, the Court emphasized that the mere pendency of an appeal does not automatically warrant provisional assessment. The Court clarified that in the absence of a stay on the CESTAT order, goods should be released as per the CESTAT classification, subject to the final judgment of the Supreme Court.

Relevance of Pending Appeal Before the Supreme Court:
The Court held that the Petitioner should be entitled to seek the release of goods as per the CESTAT order, notwithstanding the pending appeal before the Supreme Court. The release of goods was to be subject to the final decision of the Supreme Court in the pending appeal, and any subsequent directions issued by the Court would need to be complied with. The writ petition was disposed of accordingly, with pending applications also being resolved.

In conclusion, the judgment addressed the classification of imported goods, the dispute over provisional assessment post-CESTAT order, the interpretation of Section 18 of the Customs Act, 1962, and the implications of the pending appeal before the Supreme Court on the release of goods.

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