2015 (9) TMI 28 - HC - Customs

Execution of Bank Guarantee Release of goods Petitioner challenges calculation which relates to execution of bank guarantee for provisional release of goods Petitioner was willing to furnish bank guarantee equivalent to 30% of differential value of duty calculated by respondent Held that - Supreme Court in Commissioner v. Navshakti Industries Ltd. 2011 (5) TMI 149 - SUPREME COURT directed provisional release of subject goods based on condition that security in form of bank guarantee equivalent to 30% of differential duty be furnished In present case, vide impugned order value of bank guarantee stipulated was 1.75 times differential rate of duty Said condition was clearly onerous and burdensome Thus petitioner to furnish bank guarantee in sum equivalent to 30% of differential duty Petition disposed of Decided in favour of Petitioner.

Summary

Issues involved:
1. Calculation of bank guarantee for provisional release of goods
2. Dispute over the amount of bank guarantee
3. Comparison with previous court decisions
4. Modification of the order regarding the bank guarantee

Issue 1: Calculation of bank guarantee for provisional release of goods
The respondent provided calculations for the bank guarantee required for the provisional release of goods, based on the under-valuation of goods and the applicable duty rate. The differential duty leviable was determined to be Rs. 44,40,454/-.

Issue 2: Dispute over the amount of bank guarantee
The petitioner proposed to furnish a bank guarantee equivalent to 30% of the differential duty amount calculated by the respondent. This would amount to Rs. 44,40,454/-. The court noted the discrepancy between the proposed amount and the initially stipulated bank guarantee of Rs. 77,70,795/-, which was considered excessive and burdensome.

Issue 3: Comparison with previous court decisions
Reference was made to a previous Division Bench decision where provisional release of goods was allowed upon furnishing a bank guarantee equivalent to 30% of the differential duty. The court found the current stipulated amount of Rs. 77,70,795/- to be onerous in comparison to the precedents cited.

Issue 4: Modification of the order regarding the bank guarantee
In light of the excessive nature of the bank guarantee amount, the court modified the order to require the petitioner to furnish a bank guarantee equivalent to 30% of the calculated differential duty amount, i.e., Rs. 44,40,454/-. The rest of the conditions in the order remained unchanged, including the auto-renewal clause for the bank guarantee. Upon fulfilling this modified condition, the goods in question would be provisionally released to the petitioner.

The judgment, delivered by Justice Rajiv Shakdher, addressed the dispute regarding the bank guarantee amount for the provisional release of goods. By comparing the proposed guarantee with previous court decisions, the court found the initially stipulated amount to be excessive and modified the order to align with the standard practice of requiring a bank guarantee equivalent to 30% of the differential duty amount.