TaxTMI 
TaxTMI 
2022 (6) TMI 1226
X X X X Extracts X X X X
X X X X Extracts X X X X
....2022 & 7078318 dated 14.01.2022 3. Import documents as received from the foreign supplier such as invoices, Bill of Lading and Country of Origin Certificate(COO), etc. were filed by the Appellant along with the aforesaid Bills of Entry under Section 46 of Customs Act, 1962 (‗the Act"). The Appellant admittedly have not availed any duty benefit on the basis of the said COO or otherwise and was willing to pay duty at appropriate rate. 4. During the course of physical examination of the goods imported under the Bills of Entry, it was observed by the assessing officer that the said goods appear to be of Iran origin and not Zambia and on the basis of the said observation, Inspector Customs, ICD, Tumb under the instruction of the Respondents issued Detention Memo dated 20.01.2022 informing the Appellant not to remove, sale or part with or deal with, in any other manner without permission of competent authority of Customs, ICD Tumb. 5. Based on the above, an inquiry was initiated against the Appellant, and statements of officials were recorded under Section 108 of the Act. While the investigation was ongoing, seizure memo dated 02.02.2022 was issued by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty at the time of clearance of the goods and further there was no charge of any misclassification or undervaluation of the imported goods. Looking at the submissions made by both the sides, this Tribunal vide Final Order No. A/1041/2022 dated 01.05.2022 was pleased to modify the provisional release order dated 06.04.2022 by directing the Appellant to provide a bond for full value of the seized imported goods and furnish a bank guarantee of 1 crore. 13. The department challenged the aforesaid order before the Hon'ble Gujarat High Court on the ground that the Competent Authority in the matter who had passed the provisional order was the Additional Commissioner of Customs and therefore the Tribunal had no jurisdiction to decide the matter. The appeal filed by the department was registered as Tax Appeal No. 237/2022. 14. The Hon'ble Gujarat High Court vide Order 20.05.2022 was pleased to set aside the final order dated 10.05.2022 on the ground of jurisdiction and directed the Appellant herein to file an appeal before the Commissioner of Customs (Appeals) Ahmedabad and on such appeal being filed, the Commissioner of Customs (Appeals) Ahmedabad was directed to dispose o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Aban Exim Pvt. Ltd. vs. Commissioner of Customs [2014 (309) E.L.T. 485 (Del.)] (ix) Umiya Enterprise vs. Asst. State Tax Officer, SGST Dept., Palakkad [2020 (35) G.S.T.L. 78 (Ker.)] (x) Deenanath Maurya vs. Commissioner of Customs, Lucknow [2021 (378) E.L.T. 626 (Tri. - All.)] 17.1 Without prejudice to the aforesaid and in any event, admittedly, vide letter dated 04.02.2022, the department had permitted clearance of the goods imported vide impugned Bills of Entry by furnishing a bank guarantee equivalent to 15% of the duty payable. The said order was wrongly withdrawn by the Additional Commissioner of Customs through the office of Commissioner of Customs, Ahmedabad, inasmuch as once the provisional release order was passed on 04.02.2022, the office of the Commissioner of Customs became functus officio and had no jurisdiction to review its order. 17.2 There is no provision under the Customs Act which gives power to the department to review the order passed under Section 110A of the Customs Act. Reliance in this regard is placed on the decision: (i) Dharampal Satyapal Limited vs. Union of India - 2010 (257) E.L.T 194 (Ga....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me would have no bearing to the present case as there is no restriction under the Import Export Policy for importing Copper Cathodes from Iran. Para 2.18 of the relevant Foreign Trade Policy is relevant to the said submission. 17.8 On the issue of Country of Origin certificate, it is submitted that while the investigation is ongoing, there is no evidence so far to show that the said Country of Origin certificate is forged and/or false and therefore keeping in mind the facts of the case, the order directing furnishing of bank guarantee to extent of 15% of the value of the seized goods is incorrect more so when the entire duty is being paid. 17.9 The issue is settled in their case insasmuch as for the consignment of similar goods valued at around 35 crores, the Mumbai Bench of this Tribunal vide order no. A/85566/2022 dated 17.06.2022 has allowed provisional release on furnishing Bank Guarantee of Rs. 50,00,000/-. It is submitted that the issue being identical in nature, the order of the Hon'ble Mumbai bench is applicable to the facts of the present case as well. 17.10 Since the Appellants have already incurred cost toward heavy demurrage and detention char....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he nature of prohibited goods 21. The overall value of goods in the present case is over 100 crores. It is submitted that under the Customs Act, there is no provision granting power to the department to review an order passed under Section 110A and accordingly the impugned order is bad in law. Reliance is placed on the decision of Gauhati High court in the case of Dharampal Satyapal Limited (supra) Which reads as under: "26. It is well settled that a Court or Tribunal or adjudicating authority becomes functus officio (ceases to have control over the matter) once a judgment is pronounced or the order is made. Such judgment and order, when becomes final, cannot be altered, changed, varied or modified unless the statute, where under the Court, Tribunal or the adjudicating authority functions, so permit. There can also be no doubt that the power of review is not an inherent power. The right to seek review of an order is neither natural nor fundamental right of an aggrieved party. Such power must be conferred by law. If there is no power of review, the order cannot be reviewed. However, a Court, having plenary power, is not affected by any statutory restrictions in rev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 110A is administrative or interim in nature is misconceived. (b) provisions of Section 129A(1)(a) clearly authorize an appeal against an order or decision by the Adjudicating Authority issued under Section 110A. There is no legal basis to restrict the scope of such appeal in the absence of any restrictive conditions in the provision. 47. In view of our above findings the reference is answered as follows : An appeal lies before this Tribunal against an order passed by Commissioner of Customs under Section 110A of the Customs Act, 1962 for provisional release of the goods." 25. The aforesaid decision of Larger Bench has been upheld by the Hon'ble Punjab and Haryana High court in the case of Commissioner vs. Gaurav Pharma Limited - 2020 (373) ELT 233 (P & H) wherein it is held as under: "14. It cannot be disputed that the powers vested with the adjudicating authority to be exercised for considering the prayer for provisional release of goods is circumscribed with well-settled principles of law governing the same. Such an order is not based on any policy, rather on settled principles of law. These orders ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 110A of the Customs Act and to hold that one order was executive and accepting appeal against 06.04.2022 is self contradictory stand. In any event as held above the same is contrary to the law settled by larger bench of this Tribunal which was ultimately upheld by the Punjab and Haryana High Court (supra). 27. Without prejudice to our above discussion and in any event, the condition of furnishing the bank guarantee to the extent of 15% of the value of goods or 15% of the duty value itself requires to tested in terms of the law delivered on the issue in the case of T.G. Enterprises (Supra) and various other decisions cited before this Hon'ble Tribunal. 28. In T.G. Enterprise, the Hon'ble Gujarat High court, in a case relating to alleged mis-declaration of country of Origin, was looking into the challenge to the provisional release condition by which the Petitioner was directed to furnish a Bank Guarantee to the extent of 25% of differential duty amount. The High court was pleased to set aside the said condition by observing as under: "These petitions arise in common background. Petitioners attempted to import areca nuts and black pepper claiming Sri Lank....
X X X X Extracts X X X X
X X X X Extracts X X X X
....py space in the warehousing godowns. While thus expressing our anxiety to release the goods on provisional basis, we cannot ignore the interest of the revenue. If ultimately the department succeed in establishing the allegations of misdeclaration of origination of goods, the import would invite much higher rate of duty. The penalties may also follow. Under such circumstances, the question of balancing the equities and protecting the interest of the revenue is often times considered by the Courts. The trend during the period of time that has emerged is unless there are special facts, to release the goods on bank guarantee of a certain percentage of the probable differential duty of customs and securing the rest of the amount through personal bond. In this context, we had examined the prima facie material at the command of the department more minutely. What appears is that the department relies heavily on various statements of the petitioners and other persons including Sarfaraz Pathan to contend two things. Firstly, that the goods were not of the origination of Sri Lanka and secondly, that the real importer behind the scene is Sarfaraz Pathan, the present petitioners being mere fron....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ank guarantee equal to 25% of the full market value of the seized goods is also, in the facts and circumstances of the case, arbitrary. Mere fact that condition of 10% of bank guarantee was upheld by this Court in T.L. Verma and M/s. Kundan Rice Mills cannot be justification to impose such conditions in each and every case. In those cases, this Court was satisfied that the importers had adopted fraudulent tactics which, prima facie, justified opinion for confiscation of goods. The said judgments cannot apply to every case of detention. Mere allegation of liability to confiscation is not enough. Circumstances and grounds justifying opinion about liability to confiscation is open to judicial scrutiny. 12. Power of detention of goods is a drastic power and exercise of such power has to be hedged by safeguards to check its abuse and limit its exercise only to situation where it is intended by law to be exercised. Existence of power and exercise of power are independent. Mere fact that there is a power to confiscate does not mean that such power could be exercised mechanically or arbitrarily. The authority exercising such power must strictly justify the same. Balance has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e (ii) the procedure must withstand the test of one or more of the fundamental rights conferred under Article 19 which may be applicable in a given situation; and (iii) it must also be liable to be tested with reference to Article 14. As the test propounded by Article 14 pervades Article 21 as well, the law and procedure authorizing interference with personal liberty and right of privacy must also be right and just and fair and not arbitrary, fanciful or oppressive. If the procedure prescribed does not satisfy the requirement of Article 14 it would be no procedure at all within the meaning of Article 21." 14. Reasonableness being part of fundamental right under Article 14, doctrine of proportionality can be invoked so that unequals are not treated as equals. The exercise of discretion has to be proportionate to the wrong which has led to the action. The doctrine of proportionality has been explained in Om Kumar v. Union of India, AIR 2000 SC 3689, wherein it was observed :- "28. By "proportionality", we mean the question whether, while regulating exercise of fundamental rights, the appropriate or least-restrictive choice of measures has been made by the legi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rative portion of the impugned order has already been reproduced above. As per the order the conditions imposed for provisional release are as under: The goods are to be provisionally released:- (i) the goods are to be subjected to mutilation so as to render them as scrap (ii) furnish bond equal to the value of the impugned good. (iii) furnish Bank Guarantee equivalent to 30% of the value of the goods. (iv) pay the differential duty assessed by the department. 29. The Ld. Counsel for importer has submitted that they have no objection to comply with all the above conditions except the condition to furnish Bank Guarantee equivalent to 30% of the value of the goods. It is submitted by him that they have paid the entire duty on the declared value and also willing to pay the differential duty if any assessed by the department. We find that when the importer has made such payments and the goods having been mutilated to render them as scrap so as not to be reused as such for any purpose, the condition to furnish BG in addition to bond is not warranted or justified. 30. The commissioner (Appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh Bank Guarantee equivalent to 30% of value of the goods requires to be waived which we hereby do. 32. In the result, the impugned order is modified to the limited extent of setting aside the direction to furnish Bank Guarantee of 30% equivalent to the value of the goods. The appeal filed by importer C/60419/2021 is partly allowed in above terms. The appeal filed by Revenue C/60469/2021 is dismissed." 32. Similar view was taken by the Hon'ble Gujarat High court, in the case of Veer Impex vs. Union of India - 2016 (332) E.L.T. 87 (Guj) where the condition to provide bank guarantee was set aside. 33. We find that in the present case as well, as discussed above and evident from the Bills of entry, the appellant was always willing to deposit the entire duty of BCD + IGST which is over 25 crores and therefore, the condition to direct the appellant to furnish a bank guarantee of 15% of the value of the goods which is over 100 crores is excessive and arbitrary more importantly when the appellant is willing to deposit the duty payable on the seized goods. There is no dispute on the valuation or classification of the goods as is clear from the impugned prov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fact that the department has alleged mis-declaration on the part of the appellant based on Country of Origin certificate which in normal cases is issued by the appropriate authority of the exporting country and the importer in India has no role in the issuance of the same. The investigation on this behalf is ongoing and yet to be concluded. 36. In view thereof, the facts in the present case are completely different than the facts in the case of Hazel Mercantile case (supra). Apart from the above, a perusal of the Order dated 27.11.2022 passed by the Hon'ble High court would show that the same was an interim order and was passed by the Hon'ble High Court keeping in mind the peculiar facts of that case. In the case before the Hon'ble High Court on the date of hearing, 50% of the goods was on the verge of being exported and keeping the said fact in mind as an interim measure, the High Court was pleased to direct the assessee to provide bank guarantee of Rs. 15 crores. While it is a settled law that interim orders have no binding precedent even then the order passed in the Hazel Mercantile (supra) was passed in the peculiar facts of that case. Ultimately the Petition was dispo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... before this Tribunal has not controverted the submissions of the Appellant that in terms of para 2.18 of the Foreign Trade Policy, the goods are freely importable even when imported from Iran. In other words it is not even the case of the department before us that there was any restriction on import of goods from Iran. The said fact can be seen from the decision of the Hon'ble Bombay High court in the case of Global Ace Shipping Lines Inc (supra) where the department has conceded that there is no restriction in import of goods from Iran. 39. Further it is a settled law that an importer unless proven otherwise beyond doubt cannot be said to have any role in the issuance of a COO as the same is issued by the competent authority of the originating country. However, at this point in time, it is also important to note that the investigation is ongoing and country of origin of the goods will be determined only after the investigation is concluded. At this point of time, it cannot be said with certainty that the goods were imported from Iran. Be that as it may, the issue before this Tribunal is limited to the provisional release of goods and the same be decided keeping in mind t....