2011 (3) TMI 1338 - HC - Customs

Provisional assessment - Held that - What is clear from Section 18(1) read with the above Regulations is that the Officer could make provisional assessment and release goods under Section 18 of the Act pending final adjudication only after ensuring that the actual duty that could be levied later will be recoverable from the party - Regulation 2 makes it clear that besides remittance of the admitted duty in terms of the claim of the importer / exporter the officer can demand payment of duty up to 20% of the duty provisionally determined by him which is over and above the admitted duty payable in accordance with the claim of the party and assessed by the Officer - credentials of the importer / exporter and such other matters should weigh with the Department in relaxing the condition for security, which in the normal course should be Bank Guarantee.

Issues Involved:
1. Dispute on valuation for duty assessment.
2. Request for provisional assessment under Section 18 of the Customs Act, 1962.
3. Discretion of the proper officer in granting provisional assessment.
4. Conditions for provisional assessment and release of goods.
5. Legal provisions and regulations governing provisional assessment.

Detailed Analysis:

1. Dispute on Valuation for Duty Assessment:
The appellants, regular importers of Betel Nuts, faced a dispute when the proper officer doubted the invoice and other documents supporting the appellants' claim of the value of the imported goods. This dispute arose during the assessment of duty, leading to the appellants requesting a provisional assessment.

2. Request for Provisional Assessment under Section 18 of the Customs Act, 1962:
The appellants requested a provisional assessment of duty under Section 18 of the Customs Act, 1962, to facilitate the release of goods upon part payment of duty and execution of a bond for the balance amount. However, the Assistant Commissioner of Customs declined this request, prompting the appellants to file a Writ Petition for a Court direction to allow provisional assessment and release of goods.

3. Discretion of the Proper Officer in Granting Provisional Assessment:
The learned Single Judge held that provisional assessment is exclusively within the discretion of the officer assessing the duty, and importers cannot claim it as a matter of right. The appellants challenged this judgment, fearing it would bar them from obtaining provisional assessment for future consignments. The Court noted that a Division Bench had previously directed the release of goods on provisional assessment upon payment of 50% of the duty and furnishing a Bank Guarantee for the balance.

4. Conditions for Provisional Assessment and Release of Goods:
The Court emphasized that provisional assessment under Section 18 of the Act is an exception to the normal procedure of final assessment under Section 17. Section 18 allows provisional assessment in specific situations:
- When the importer/exporter is unable to produce necessary documents or information.
- When the officer deems it necessary to subject the goods to chemical or other tests.
- When the officer needs to make further inquiries despite the importer/exporter having produced all necessary documents.

The Court clarified that provisional assessment is at the officer's discretion and cannot be claimed as a right by the importer/exporter, except under clause (a) where the party genuinely needs time to produce required documents or information.

5. Legal Provisions and Regulations Governing Provisional Assessment:
The Court detailed the conditions under which provisional assessment can be granted, as outlined in Sections 17 and 18 of the Customs Act and the relevant Regulations. Regulation 2 specifies that the officer must estimate the provisional duty and require the importer/exporter to execute a bond and deposit up to 20% of the provisional duty. Regulation 4 allows the officer to demand surety or security for the bond.

The Court stressed the importance of ensuring recoverability of the duty by demanding proper security, preferably a Bank Guarantee, to avoid revenue loss. The judgment concluded that while importers/exporters can request provisional assessment under specific circumstances, the final decision rests with the proper officer, who must ensure compliance with the Act and Regulations.

Conclusion:
The Writ Appeal was disposed of by modifying and elaborating the judgment of the learned Single Judge, emphasizing the discretionary power of the proper officer and the conditions under which provisional assessment can be granted. The Court highlighted the need for proper security to safeguard revenue interests.

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