AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 688
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....s Act on execution of a bond of Rs. 1,91,07,522/- and security deposit of Rs. 1,50,96,851/- . 3. Section 110A of the Customs Act provides that any goods seized under section 110 of the Customs Act, may, pending the order of the adjudicating authority, be released to the owner on taking a bond from him with such security and conditions as the adjudicating authority may require. 4. Section 110 of the Customs Act stipulates that if the proper officer has reason to believe that any goods are liable to confiscation, he may seize such goods. 5. In order to appreciate the contentions advanced by learned counsel for the appellant and the learned Authorized Representative of the Department, it would be necessary to state the relevant facts relating to the both the appeals. Elvance 6. Elvance claims to be engaged inter-alia in import of various types of fabrics. It entered into a contract with M/s. Dauer International Limited London for purchase of 100% Polyester Knitted Fabric at US$0.95 per kg. Elvance filed a Bill of Entry dated 26.09.2020 through its Customs Broker and sent an e-mail to shipping agencies and ICD Pithampur on 28.09.2020 with a request for First Check examin....
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....sad has also stated in Open Court that there is no statutory provisions which is requires for a report from the Directorate or Revenue Intelligence. Mr Prasana Prasad was also not able to state out any statutory provision which provides for a report from Directorate of Revenue Intelligence. He has stated that it‟s a Departmental Protocol. In the consideration opinion of this court, in case there is no statutory provision for obtaining a report from Directorate of Revenue Intelligence, then there is no justification in not deciding the application submitted by the petitioner for provisional release of the goods. Otherwise also, the Directorate of Revenue Intelligence as informed by learned counsel for Directorate of Revenue Intelligence has already submitted a report to respondents No. 2 and 5. Resultantly, the respondents No. 2 and 5 are directed to decide the petitioner's application for provisional release of goods, within a period of ten days, from today, in accordance with law, on merits. Respondents shall pass a speaking order without begin influenced by the order passed by this court. With the aforesaid observation, the writ petition stands al....
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....towards penalty which may be imposed under Section 114A of the Customs Act, 1962 and 20% of value of goods towards redemption fine under Section 125 of the Customs Act, 1962. 10. In view of the above, the amount of bond and security deposit is worked out as under: Value of Bond - Rs. 3,81,23,274/- Amount Security deposit- Rs. 3,01,47,151/- 11. Accordingly, the subject seized goods imported under Bill of Entry No. 8913720 dated 23.09.2020 (new Bill of Entry No. 9344504 dated 27.10.2020), Bill of Entry No. 9261058 dated 21.10.2020 & Bill of Entry No. 9261178 dated 21.10.2020 Bill are of ordered to be provisionally released on execution of a Bond for the value of Rs. 3,81,23,27/- and furnishing of Security deposit of Rs. 3,01,47,151/-" 8. It is this order dated 17.12.2020 that has been assailed in the appeal filed by Elvance. Sedna 9. Sedna also entered into a contract with M/s. Dauer International Limited London, for import of 100% Polyester Knitted Fabric at US$0.95 per kg. It filed a Bill of Entry dated 23.09.2020 and the proper officer passed an order dated 23.09.2020 for examination of the goods. Sedna assessed the duty and paid the du....
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....on of the transaction value determined on the basis of sales contract.; iv) Similar goods were allowed to be imported by other importers at much lower value even after enhancement of the value by the Customs authorities, but in the present case, the value has been enhanced to US$2.83 per kg; v) There is no justification for the Commissioner to include 100% of differential duty towards penalty under 114A of the Customs Act; vi) Value of US$2.83 per kg has been arrived at on the basis of a letter dated 17.12.2020, but as copy of the said letter was not provided to Elvance or Sedna, they could not offer any comments to dispute the amount; vii) The differential duty has been wrongly calculated without considering the benefit of the Notification dated 30.06.2018 that was available to the appellant. This will, in turn, effect the bond amount and the security deposit amount for provisional release of the goods; and viii) Penalty under section 112 and 114A of the Customs Act is not imposable and, therefore, the amount of security deposits deservers to be reduced. 13. Learned Authorized Representative of the Department, however, supported the ....
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.... Naturally, they would have to provide an opportunity to the petitioner of being heard." 18. The learned counsel of the appellants and the learned Authorized Representative of the Department have placed reliance on the Board Circular dated 16.08.2017 that provides guidelines for provisional release of the goods seized under section 110 of the Customs Act. While paragraph 2 of the said Circular provides for circumstances under which provisional release shall not be allowed, paragraphs 2.1 and 2.2 relate to execution of a bond and taking of a Bank Guarantee or Security Deposit. Paragraph 2.3 specifically provides that depending on the specific nature of the case, the competent authority may, for reasons to be recorded in writing, increase or decrease the amount of security deposit indicated in paragraph 2.2. Paragraphs 3 and 4 of the Circular remind the Authorities about the observations made by the Madras High Court and the Delhi High Court while allowing provisional release of goods. The relevant portion of the Circular is reproduced below: Circular Dated 16.08.2017 "Subject: Guidelines for provisional release of seized imported goods pending adjudication under Secti....
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....he Customs Act, 1962, as applicable, at the time of adjudication of the case. 2.3. Depending on the specific nature of a case, the competent authority may, for reasons to be recorded in writing, increase or decrease the amount of security deposit as indicated above. 3. xxxxxxxxx 4. xxxxxxxxx 4.1. The above mentioned observation of the Hon‟ble Madras High Court and Hon‟ble Delhi High Court may be kept in mind while allowing provisional release of goods." 19. The Delhi High Court in Mala Petrochemicals drew a distinction between provisional assessment and provisional release of goods and also observed that each case has to turn on its own peculiar facts. The Madras High Court in Malabar Diamond Gallery Pvt. Ltd. vs. Additional Director General, DRI Chennai & Ors. [Writ Appeal No. 377 of 2016 decided on 28.07. 2016], observed that sufficient discretion has to given to the adjudicating authority in passing an order for provisional release of the goods. 20. It is in the light of the aforesaid principles that the factual position relating to these two appeals has to be examined. 21. What transpires from the records is that both Elv....
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....nes the value of the Bond and value of the Bank Guarantee and Security Deposit in a mechanical manner in terms of paragraphs 2.1 and 2.2 of the Circular without even examination of the facts stated by the appellants and without exercising its discretion. 25. The calculation of the amount under the two orders is as follows : Elvance Particulars Amount (in Rs.) Calculation of the amount Bond 3,81,23,274/- Full value of seized goods: Rs. 3,81,23,274/- Security Deposit/Bank Guarantee 3,01,47,151/- Total differential duty calculated by department Rs. 1,07,24,903/- 20% of value of impugned goods towards redemption fine under section 125 of the Customs Act, (20% of Rs. 3,81,23,274/-) Rs. 76,24,655/- 10% of differential duty towards penalty under section 112 of the Customs Act, (10% of Rs. 1,07,24,903/-) Rs. 10,72,490/- 100% of differential duty towards penalty under section 114A of the Customs Act, (100% of Rs. 1,07,24,903/-) Rs. 1,07,24,903/- Extra amount Rs. 200/- Sedna Particulars Amount (in Rs.) Calculation of the amount Bond 1,91,07,522/- Full value of se....
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....on. 30. It has also been submitted that penalty under section 112 of the Customs Act is linked to confiscation under section 111 of the Customs Act. Thus, it is only where the goods are liable to confiscation under section 111 that penalty can be imposed under section 112 of the Customs Act and as there arises no case for confiscation of the goods under section 111(m) of the Customs Act no case for invoking section 112 for imposing penalty as the appellant declared the value as per the contract. It is, therefore, the submission that since the transaction value has to be accepted, differential duty is not payable and hence there is no question of any penalty to be imposed under section 114A of the Customs Act. It has also been submitted that section 114A provides that no penalty can be imposed under it as well as under section 112 of the Customs Act. 31. It will not be appropriate to determine the aforesaid submissions made on behalf of the appellants as they may have a bearing on the final decision to be taken by the adjudicating authority. However, these factors can be taken into consideration, on a prima facie basis, while exercising discretion conferred under section 110A ....