2014 (9) TMI 797 - HC - Customs

Retention of goods - payment of admitted duty done - Undervaluation of goods - provisional assessment of duty - Held that - Petitioner, was before this Court when the Proper Officer had initiated proceedings under Section 18. This Court by judgment directed consideration of the petitioner's representation, in accordance with law. The petitioner's representation essentially sought for release of the goods on provisional assessment. Going by the provisions and the interpretation placed on it by the Division Bench of this Court, what has to be done, in accordance with law, is to make a provisional assessment, if the officer is satisfied that an enquiry has to be conducted - assessee is conferred with no right to seek a provisional assessment but that would be solely in the realm of the satisfaction of the 'Proper Officer'. Exhibit P4 reflects the satisfaction of the 'Proper Officer' that a provisional assessment is to be made. It has to be noticed that such an offer made by the Officers of the Department is not one sanctioned by the Act or the Rules. The mere practice of such an offer having been extended over the years would not give it the sanctity it requires, under law, especially when the Act and the Rules contemplate the passing of a provisional assessment - In any circumstance, it has to be noticed that even Ext.P2 judgment directed consideration of the representation in accordance with law. The Department ought to have then passed a final order under Section 17 or a provisional order under Section - Decided partly in favour of assessee.

Summary

Issues:
1. Retention of goods after paying admitted duty due to undervaluation.
2. Anomaly in provisions regarding provisional duty and final duty.
3. Interpretation of provisions regarding provisional assessment and release of goods.
4. Validity of the conditions set by the Department for release of goods.
5. Whether an offer made by the Department for provisional assessment is legally binding.

Issue 1: Retention of goods after paying admitted duty due to undervaluation
The petitioner was aggrieved by the retention of goods despite paying the admitted duty, which were imported and detained for undervaluation. The Customs Act, 1962, allows for provisional assessment of duty by the Proper Officer pending further inquiry. The Customs (Provisional Duty Assessment) Regulation 2011 outlines the procedure for provisional assessment and the security required for releasing goods.

Issue 2: Anomaly in provisions regarding provisional duty and final duty
A Division Bench of the Court clarified that provisional assessment is done to determine the final duty on a provisional basis for releasing goods. The Department is not limited to imposing duty based only on the provisional assessment value. The Department must assess the provisional value of goods, calculate the difference between the provisional and admitted duty, demand 20% of the difference, and collect security for the remaining balance.

Issue 3: Interpretation of provisions regarding provisional assessment and release of goods
The Court directed consideration of the petitioner's representation seeking release on provisional assessment. The Department issued conditions for release, including payment of duty, bank guarantee, and executing a bond. The Court emphasized that the decision for provisional assessment rests with the Proper Officer, and an offer like Ext.P4 does not constitute a provisional assessment order as required by law.

Issue 4: Validity of the conditions set by the Department for release of goods
The Department's offer in Ext.P4, although a practice over the years, lacks legal sanction as it does not align with the Act or Rules requiring a provisional assessment order. The Department should have passed a final or provisional order as directed by the Court, considering the binding Division Bench decision.

Issue 5: Whether an offer made by the Department for provisional assessment is legally binding
The Court noted the Department's offer in Ext.P4 indicated the need for an enquiry, but it did not fulfill the legal requirements for a provisional assessment order. Considering the hardship faced by the petitioner due to demurrage and the revenue concerns of the Department, the Court determined the provisional assessable value and outlined the payment and security requirements for releasing the goods.

In conclusion, the writ petition was disposed of without prejudice to the parties' contentions regarding the actual duty leviable, emphasizing the importance of following legal procedures for provisional assessment and release of goods.