2013 (8) TMI 473 - HC - Customs

Provisional Assessment - Held that - The assesse was directed to deposit 20% of the provisional assessment duty in cash or by way of demand draft as the case may be - For remaining amount of duty assesse shall furnish a bond along with bank guarantee. Conditions for allowing provisional assessment - Following the Judgement of Mohammed Fariz and Co. Vs. Commissioner of Customs 2011 (3) TMI 1338 - KERALA HIGH COURT - Where the proper officer on account of any of the grounds specified in section 18(1) of the Customs Act, 1962 was not able to make a final assessment of the duty on the imported goods or the export goods, as the case may be, he shall make an estimate of the duty that is most likely to be levied hereinafter referred to as the provisional duty - If the importer or the exporter, as the case may be, executes a bond in an amount equal to the difference between the duty that may be finally assessed and the provisional duty and deposits with the proper officer such sum not exceeding twenty per cent of the provisional duty, as the proper officer may direct, the proper officer may assess the duty on the goods provisionally at an amount equal to the provisional duty. Surety or security of the bond The proper officer may require that the bond to be executed under these regulations may be with such surety or security, or both, as he deems fit - assesse shall further execute a bond that penalty was also imposed upon the assesse in respect of undervaluing the goods.

Summary

Issues Involved:
1. Jurisdiction under Regulation 2 of the Customs (Provisional Duty Assessment) Regulations, 1963.
2. Delay in final assessment order.
3. Requirement of depositing provisional duty and furnishing bond and bank guarantee.

Issue-wise Detailed Analysis:

1. Jurisdiction under Regulation 2 of the Customs (Provisional Duty Assessment) Regulations, 1963:

The petitioner argued that under Regulation 2, only 20% of the provisional assessment duty could be directed to be deposited, and for the remaining duty, a bond with or without surety or security could be demanded. The court referred to Regulation 2, which states that the proper officer shall make an estimate of the duty likely to be levied and if the importer executes a bond and deposits up to 20% of the provisional duty, the officer may assess the duty provisionally. Regulation 4 allows the officer to require a bond with surety or security. The court concluded that the order demanding the entire provisional duty was without jurisdiction and contrary to the regulations, as only 20% of the provisional duty should be deposited, and the remaining amount should be secured by a bond.

2. Delay in final assessment order:

The petitioner highlighted that the goods had been lying with the respondents since February 2011, and no final assessment order had been framed. The court noted that the goods were retained for a considerable period, and the delay in final assessment was unjustified. The court emphasized that the provisional assessment order was framed on 20.6.2012, and nearly seven months had elapsed since then. The prolonged retention of goods without a final assessment was deemed unreasonable.

3. Requirement of depositing provisional duty and furnishing bond and bank guarantee:

The respondents argued that the goods were undervalued, with the price shown as USD 7 per sq. yard instead of USD 22 per sq. yard. The provisional duty was assessed at Rs. 9,65,585/-, and the petitioner was directed to execute a bond and bank guarantee for Rs. 38,25,658/-. The court found that the provisional assessment duty was Rs. 9,65,585/-, and the expected duty was Rs. 38,25,658/-. The court held that the amount demanded from the petitioner should be 20% of the provisional assessment duty, and for the remaining duty, a bond with or without surety or security could be asked. The order was modified to direct the petitioner to deposit 20% of the provisional duty in cash or by demand draft and furnish a bond and bank guarantee for the remaining amount. The petitioner was also directed to execute a bond for the expected duty and any potential penalties.

Conclusion:

The court modified the order to align with Regulations 2 and 4, directing the petitioner to deposit 20% of the provisional assessment duty and furnish bonds and guarantees for the remaining amounts. The petition was disposed of with no order as to costs.