2015 (9) TMI 292 - HC - Customs

Provisional release of goods Fulfilment of condition for release Applicant stated that entire duty of consignment have already been deposited based on value approved by Government approved valuer s report and, thus, no Bank Guarantee/Security was required for release of goods Assistant Commissioner(Customs) directed release of seized goods provisionally on conditions However later Assistant Commissioner(Customs), requested to retain 25% of value of goods as security in lieu of Bank Guarantee and release remaining goods Held that - without expressing any opinion on merits of case, at this stage, court to stay condition of retaining 25% goods and direct respondents to release whole goods on other conditions imposed on letter of provisional release In view of aforesaid application allowed Decided in favour of Applicant.

Issues:
1. Provisional release of seized goods under Section 110(A) of the Customs Act, 1962.
2. Retention of 25% of goods by customs authorities for security.
3. Legal framework for imposing conditions on release of goods.
4. Justification for retaining goods and safeguarding against penalty.
5. Comparison with previous cases and legal precedents.

Provisional Release of Seized Goods:
The petitioner imported goods from China and paid the required amount. However, the goods were seized, and custom duty was accepted by the Department. The petitioner filed a writ petition seeking provisional release under Section 110(A) of the Customs Act, 1962. The High Court, after hearing both parties, ordered the release of goods subject to a bond and security as required by the adjudicating authority. The Court emphasized that the decision did not reflect on the case's merits and allowed the petitioner to comply with the provisions of law.

Retention of 25% Goods for Security:
Following the interim order, the customs authorities directed the retention of 25% of the goods as security despite the petitioner already furnishing a bond covering 100% of the imported cargo's value. The petitioner argued that retaining 25% of the goods was unnecessary, especially since the goods were perishable and needed immediate sale in the market. The authorities defended their decision, citing the legal framework under Section 112 of the Customs Act, 1962, to safeguard against potential penalties for smuggling activities.

Legal Framework for Imposing Conditions:
The respondent contended that the conditions imposed were within the legal framework to prevent potential penalties for smuggling. The authorities justified the retention of goods as a precautionary measure against possible fines or penalties during adjudication. The petitioner, however, argued that the goods could not be confiscated under Section 111(M) of the Customs Act, 1962, and cited legal precedents to support their position.

Justification for Retaining Goods and Safeguarding Against Penalty:
The petitioner highlighted that they had paid the full duty amount for the consignment and questioned the need for retaining 25% of the goods. Citing previous court decisions, the petitioner argued that imposing harsh conditions without valid justification would be arbitrary and against constitutional rights. The Court considered the arguments and stayed the retention of 25% of the goods, directing the release of the entire consignment based on the duty payment made by the petitioner.

Comparison with Previous Cases and Legal Precedents:
The petitioner referenced decisions from Punjab & Haryana High Court and Bombay High Court to support their argument against the retention of goods. The Court considered these precedents and emphasized that imposing onerous conditions without valid justification could hinder normal business operations. Relying on legal principles from previous cases, the Court stayed the retention of goods and directed the release of the entire consignment, pending the outcome of the writ petition.

In conclusion, the High Court granted relief to the petitioner by allowing the application for setting aside the order of retaining 25% of the goods as security. The judgment focused on the legal framework, precedents, and the necessity of justifying conditions imposed on the release of seized goods under the Customs Act, 1962.

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