2015 (2) TMI 377 - HC - Customs

Provisional release of goods - Condition for imposition of bank guarantee - Held that - A due consideration of the facts of this case reveals that the appellant has paid ₹ 30 lacs and undertaken to deposit the differential duty. The respondents have not pointed out any circumstance that may raise an apprehension that the appellant will not discharge liability qua any amount that may be assessed at the time of final adjudication. The petitioner has agreed to furnish a bond/personal guarantee/undertaking to discharge this liability. Consequently, we quash the condition requiring the assessee to furnish a bank guarantee and direct the petitioner to pay the differential duty as determined and to furnish a personal bond as well as an undertaking that in the eventuality of any other amount being found due, it would discharge its liability without any protest or demure subject however, to its right to file an appeal. The goods if not released, be released within 48 hours of the petitioner complying with this order. - Petition disposed of.

Summary

Issues:
1. Whether the provisional release order directing the petitioner to furnish a bank guarantee of 25% of the differential assessable value is justified?
2. Whether the demand for a bank guarantee is necessary to protect the revenue's interest?
3. Whether the condition of a bank guarantee should be quashed in this case?

Issue 1:
The petitioner sought a writ of certiorari to quash the provisional release order requiring a bank guarantee of 25% of the differential assessable value. The petitioner argued that having already deposited a substantial amount and agreeing to pay the differential duty, the bank guarantee condition was unnecessary. The revenue contended that the bank guarantee was essential to safeguard against any further dues at final adjudication. The court considered a previous ruling that the demand for a bank guarantee can be harsh and agreed that it should not be imposed mechanically. However, it noted that a bank guarantee may be warranted based on genuine concerns such as the assessee's ability to discharge liabilities. In this case, as the petitioner had paid the demanded amount and was willing to provide a personal bond, the court quashed the bank guarantee requirement.

Issue 2:
The court analyzed whether the demand for a bank guarantee was necessary to protect the revenue's interest. It was observed that the petitioner had already paid the demanded sum and committed to fulfilling any additional obligations. The revenue failed to demonstrate any specific circumstances raising doubts about the petitioner's ability to meet future liabilities. Consequently, the court held that the bank guarantee condition was unwarranted in this instance, especially since the petitioner was willing to provide alternative assurances to discharge any further liabilities.

Issue 3:
In deciding whether to quash the condition of a bank guarantee, the court emphasized the importance of considering the specific circumstances of each case. Despite acknowledging the revenue's legitimate interest in securing potential future dues, the court found no valid reason to impose a bank guarantee in this case. Given the petitioner's compliance with the current obligations and willingness to provide alternative guarantees, the court directed the petitioner to pay the determined duty and furnish a personal bond and undertaking instead of a bank guarantee. The court's decision aimed to balance the revenue's interests with the petitioner's rights, ensuring prompt release of goods upon compliance.

This detailed analysis of the judgment highlights the court's considerations regarding the necessity and justification for imposing a bank guarantee in the context of provisional release orders and revenue protection.