Delay in finalising customs assessments for multiple imports after provisional release leads to remand, no new documents allowed

Unexplained inordinate delay in finalising customs assessments for imports covered by multiple bills of entry, despite provisional release, was held to offend statutory discipline and natural justice, warranting judicial intervention. As the record disclosed no justification for the delay, the HC remitted the matter to the customs authority to complete final assessment strictly on existing departmental records, holding that no further documents could be demanded given the age of the imports and earlier provisional release; a personal hearing and adherence to binding CBIC circulars were mandated. The authority was directed to pass the final assessment orders within six weeks, with liberty to relist for compliance.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether, in light of an established inordinate delay in making final assessment after provisional release under Section 110A of the Customs Act, the Court should itself grant the petitioner's substantive relief against the proposed levy, or instead direct the Customs authority to complete final assessment within a fixed time frame after considering the delay contention.

(ii) Whether pending such time-bound final assessment, the Customs authority should be restrained from encashing the unencashed bank guarantees furnished for provisional release, and whether any encashment should be made dependent on the outcome of the final assessment.

(iii) Whether, given that the imports and provisional release are of the year 2014 and documents were already furnished for provisional release, the Customs authority can require the petitioner to furnish further documents for completing final assessment.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Relief for inordinate delay-court adjudication versus remand/time-bound final assessment

Legal framework (as discussed): The Court noted that the imported goods were provisionally released under Section 110A of the Customs Act in 2014 and that final assessment had not been completed for more than 10 years. The Court also required adherence to principles of natural justice and applicable departmental circulars, including grant of personal hearing.

Interpretation and reasoning: The Court accepted that the petitioner established inordinate delay in passing final assessment. However, it found that disputed questions existed regarding communications exchanged between the parties. The Court also noted that the counter affidavit did not address the merits of the petitioner's delay contention, contained no explanation for the delay, and yet expressed willingness to have the matter remanded for fresh consideration. Further, since the petitioner had itself sought final assessment in 2022, the Court considered that directing completion of the assessment within a strict timeline would avoid prejudice while permitting consideration of all contentions, including inordinate delay, by the competent authority.

Conclusion: The Court declined to grant the petitioner a positive/substantive relief on the merits of liability at this stage, and instead directed the Customs authority to pass the final assessment order for all concerned bills of entry within six weeks, after considering the petitioner's contentions (including inordinate delay) and after following natural justice (including personal hearing) and applicable circulars.

Issue (ii): Protection against encashment of bank guarantees pending final assessment

Legal framework (as discussed): Bank guarantees had been furnished as a condition for provisional release under Section 110A. The Court addressed interim protection in relation to those securities until final assessment is completed pursuant to its directions.

Interpretation and reasoning: The Court took note of the petitioner's grievance that bank guarantees were being kept alive for over a decade and the assertion that one guarantee had been encashed in 2022 without notice, creating a likelihood of further encashment. Given the Court's decision to require time-bound completion of final assessment, it considered it appropriate to prevent further encashment pending that determination, while leaving the ultimate consequence to depend on the assessment outcome.

Conclusion: The Court directed that the unencashed bank guarantees furnished for provisional release shall not be encashed, and clarified that any encashment would depend upon the outcome of the final assessment order passed pursuant to the Court's directions.

Issue (iii): Whether further documents can be demanded for completing final assessment

Legal framework (as discussed): The Court dealt with the scope of material to be used for final assessment where the imports and provisional release were in 2014 and documents had already been furnished to obtain provisional release.

Interpretation and reasoning: Considering the age of the imports (2014) and that provisional release had already been granted on the basis of documents earlier produced, the Court held that requiring additional documents at this stage "does not arise." To ensure expeditious completion within the court-fixed timeline, the Court confined the authority to the existing record available with the Customs Department.

Conclusion: The Court made it clear that final assessment must be made only on the basis of documents already produced at the time of provisional release, and the authority shall not direct the petitioner to furnish any further documents for deciding the matter.

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