2013 (6) TMI 9 - HC - Customs

Furnishing of bank guarantee - provisional release of goods - held that - condition of furnishing a bank guarantee in the sum of Rs.16 crores is clearly harsh and burdensome being far in excess of even the differential duty amount ascomputed by the respondents. Therefore, that condition has to go. However, a reasonable condition may be imposed. In the case of Navshakti Industries (2011 (5) TMI 149 - SUPREME COURT) the Supreme Court imposed the condition of furnishing a bank guarantee to the extent of 30% of the differential duty. We feel that such a condition would be appropriate in the present case also. - Decided in favor of assessee.

Issues:
1. Seizure of Aircraft under Customs Act, 1962.
2. Non-Scheduled Operator's Permit (NSOP) conditions and alleged violation.
3. Conditions imposed for provisional release under Section 110A of the Customs Act, 1962.
4. Applicability of guidelines for imposing security for provisional release.
5. Discrepancy in differential duty amount and conditions for bank guarantee.
6. Comparison with previous judgments on similar issues.

Analysis:
1. The judgment pertains to a writ petition challenging the seizure of an Aircraft under the Customs Act, 1962, and subsequent provisional release conditions. The petitioner imported the Aircraft under specific notifications and alleged that the seizure was unjustified. The respondents contended that the petitioner violated conditions of exemption. The court refrained from adjudicating on the violation issue but assessed the reasonableness of the provisional release conditions imposed.

2. The petitioner held a Non-Scheduled Operator's Permit (NSOP) allowing charter flights for specific entities. The dispute arose as the respondents alleged misuse by the petitioner's promoters. The petitioner saved duty through exemptions, while the respondents claimed a higher differential duty amount. No show cause notice was issued at the time, focusing the issue on the provisional release conditions' fairness rather than the alleged violation.

3. The court analyzed the reasonableness of the conditions for provisional release under Section 110A of the Customs Act, 1962. The petitioner accepted executing a bond but objected to the security requirement. The court referred to previous judgments and guidelines for provisional duty assessment to determine a fair security amount. The Supreme Court's decision in a similar case influenced the court's decision on the bank guarantee percentage.

4. The court discussed the absence of specific guidelines for imposing security under Section 110A, leading to the application of regulations for provisional duty assessment. The petitioner argued that the security amount was excessive, considering the differential duty. The court found the imposed bank guarantee harsh and burdensome, thus modifying the condition based on the precedent set by the Supreme Court in a related case.

5. Discrepancies in differential duty amount calculations and the security requirement led to a detailed analysis of previous judgments and legal provisions. The court found the imposed bank guarantee disproportionate and adjusted it to align with the Supreme Court's decision in a similar case. The judgment emphasized the need for fairness and reasonableness in imposing security for provisional release under the Customs Act.

6. The judgment compared the present case with previous decisions, highlighting the evolution of conditions for provisional release under the Customs Act. The court referred to specific judgments and legal provisions to justify the modification of the security amount, ensuring a balanced approach considering the differential duty and fairness to the petitioner. The decision aimed to maintain consistency and uphold principles of justice in similar cases.

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