2013 (4) TMI 307 - HC - Customs

Seizure U/s 110 - Provisionally release of goods U/s 110 A of the Customs Act - Valuation - Held that - Section 110-A of the Customs Act, 1962 provides for provisional release of goods, documents and things seized pending adjudication - Should be released to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require - The only reason for non-releasing of the goods is that the petitioner has under-valued the goods in question - The respondents, on investigation, found that the differential duty has to be paid even for the provisional release of the goods - The investigation has to be completed and thereafter, the adjudication has to be done for the assessment of the value - Since the goods are perishable in nature, the petitioner claims for provisional release of the goods in question. As the goods in question are not prohibitory items under the provisions of the Act , provisional release of the goods in question, is ordered with the following conditions - i) The petitioner shall deposit with the custom authorities the duty payable on the value declared by them - ii) The petitioner shall deposit with the customs authorities 50% of the differential duty - iii) The investigation is yet to be completed and the adjudication has also to be done. Therefore, it is needless to state that this order shall not stand in the way of the respondents to proceed with the investigation and also the adjudication process - The petitioner shall co-operate with the respondents for conclusion of the investigation as well as the adjudication proceedings - The Writ Petition is disposed of.

Summary

Issues Involved:

1. Provisional release of imported goods.
2. Allegation of undervaluation and mis-declaration of goods.
3. Applicability of Section 110-A of the Customs Act.
4. Financial hardship due to detention of goods.
5. Legal precedents and conditions for provisional release.

Issue-wise Detailed Analysis:

1. Provisional Release of Imported Goods:

The petitioner sought a direction for the release of 760 Packages (3800 Packets) of Coated Gummed Paper imported from China, which were detained by the DRI Officers. The petitioner had paid the assessed duty of Rs.1,81,532/- on 10.12.2012, but the goods were detained on 03.01.2013. The petitioner requested provisional release under Section 110-A of the Customs Act, which allows for the provisional release of seized goods pending adjudication. Despite several representations, no reply was received from the DRI Officers.

2. Allegation of Undervaluation and Mis-declaration of Goods:

The respondents alleged that the petitioner had undervalued the goods, declaring them at USD 11400.00, whereas the actual value was claimed to be USD 3 per packet, significantly higher than the declared value. The goods were seized under the Customs Act due to this alleged undervaluation. The DRI's investigation suggested that the petitioner mis-declared the goods as "Coated Gummed Paper" instead of "self-adhesive paper," which is the international nomenclature.

3. Applicability of Section 110-A of the Customs Act:

Section 110-A of the Customs Act provides for the provisional release of seized goods on taking a bond with security and conditions as required by the Commissioner of Customs. The petitioner argued that their request for provisional release was fully covered under this section. However, the respondents contended that the investigation was ongoing and provisional release might hamper the investigation and result in revenue loss.

4. Financial Hardship Due to Detention of Goods:

The petitioner claimed that the continued detention of the goods caused acute financial hardship, including demurrage charges, interest on borrowed capital, and deterioration in the quality of the perishable Coated Gummed Paper. The petitioner argued that the respondents' inaction was causing severe financial burden and was void-ab-initio, bad in law, mala-fide, and perverse.

5. Legal Precedents and Conditions for Provisional Release:

The petitioner relied on various legal precedents, including the Supreme Court's decision in Commissioner of Customs V. Navshakti Industries Private Limited, which allowed the provisional release of goods on furnishing a bank guarantee of 30% of the differential duty. The court also referred to a similar ruling by the First Bench of the Madras High Court, which directed the release of goods on depositing 50% of the duty and furnishing a personal bond for the remaining amount.

Judgment:

The court analyzed the entire facts and circumstances, noting that the goods were not prohibitory items under the Act. Considering the ongoing investigation and the perishable nature of the goods, the court ordered the provisional release of the goods under the following conditions:

i) The petitioner shall deposit the duty payable on the declared value of USD 3 per packet.
ii) The petitioner shall deposit 50% of the differential duty with the customs authorities and furnish a personal bond for the remaining 50%.
iii) The respondents are allowed to continue with the investigation and adjudication process, and the petitioner must cooperate.

The writ petition was disposed of with these observations and directions, and the connected miscellaneous petition was closed. No costs were awarded.