2013 (9) TMI 386 - AT - Customs

Release of confiscated goods - Import of vessel - vessel for transport of persons / goods or vessel for pleasure - Benefit of Notification No.21/2002- Misdeclaration of Value Undervaluation of Goods - Held that - Almost the entire amount of duty based on the value of the vessel as determined in the show-cause notice stands paid by the appellant - only a small amount remains to be paid towards duty, which the appellant can deposit - The appellant also was said to be willing to deposit interest on duty - Considering the fact that the vessel imported by the appellant was not prohibited goods and that no offence of serious nature had been framed against them in the show-cause notice and that the substantive dispute in this case was one of classification of the vessel - Order modified to such extent - Decided in favour of assessee. After taking into account all the relevant factors - The vessel can be provisionally released to the appellant - The adjudicating authority ought not to have imposed such harsh conditions - it was without particularising the revenue interest involved in the impugned vessel that the Commissioner required the appellant to furnish bank guarantee so as to safeguard the revenue interest.

Summary

Issues involved:
1. Classification of imported vessel under Customs Tariff Act
2. Allegations of misclassification and undervaluation by Directorate of Revenue Intelligence
3. Show-cause notice issued for reclassification, valuation, duty demand, confiscation, and penalties
4. Seizure of vessel under Customs Act
5. Commissioner's order for provisional release with conditions challenged in High Court
6. High Court's decision on appealability and directions to Appellate Tribunal
7. Challenge to conditions of provisional release in Appellate Tribunal
8. Exercise of discretion under Section 110A of Customs Act for provisional release

Analysis:
1. The appellant imported a vessel and classified it under a specific sub-heading of the Customs Tariff Act to claim benefits under a notification. However, the Directorate of Revenue Intelligence alleged misclassification and undervaluation, leading to a show-cause notice proposing reclassification, revised valuation, duty demand, confiscation, and penalties. The show-cause notice was answerable to the Commissioner of Customs, Mangalore.

2. The vessel was seized under Section 110 of the Customs Act, and the appellant requested provisional release, which was granted by the Commissioner with specific conditions, including furnishing a bond and a bank guarantee. The appellant challenged these conditions in a writ petition before the High Court, which directed the matter to be appealed under Section 129A(1)(a) of the Customs Act.

3. The Appellate Tribunal reviewed the case and found that the conditions imposed for provisional release were considered harsh by the appellant, citing guidelines and previous legal decisions. The Tribunal emphasized the need for the exercise of discretion under Section 110A of the Customs Act to be fair and consider relevant factors such as nature of goods, dispute, conduct of parties, and revenue interest. The Tribunal modified the conditions for provisional release based on the specific circumstances of the case, reducing the financial obligations on the appellant.

4. The Tribunal's decision highlighted the importance of balancing the interests of the revenue with fairness towards the importer, especially when almost the entire duty amount had been paid. The revised conditions for provisional release included payment towards duty and interest, along with furnishing a reduced bank guarantee amount. The Tribunal's ruling aimed to address the specific circumstances of the case while ensuring compliance with legal provisions and principles of fairness.