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2015 (10) TMI 831 - HC - CustomsWaiver of pre-deposit - Dispute regarding deposit of Bank guarantee Judgment held earlier directs petitioner to give a Bank Guarantee for 20% of the differential duty Petitioner contends that all necessary documents with full information as per the statutory provisions certified by the Sri Lankan authorities have been produced and there cannot be any doubt regarding the origin of goods Further held that condition for providing Bank Guarantee is unreasonable and arbitrary Revenue supported the stand taken by the Commissioner of Customs on imposing the condition of bank guarantee and cited the case of Mohammed Fariz and Co. v. Commissioner of Customs 2011 (3) TMI 1338 - KERALA HIGH COURT in support. Held That - Direction to call upon the petitioners to furnish Bank Guarantee/Cash deposit to the extent of 35% or 20% of the differential duty will be too harsh - Petitioners shall be permitted to release the goods covered on condition of their executing Indemnity Bond agreeing and undertaking to pay the amount of differential duty imposed by the Customs authorities while making the final assessment, instead of Bank Guarantee Order modified in favour of the Petitioner.
Issues:
Challenge to judgment on provisional assessment orders demanding Bank Guarantee/Cash Deposit for Sri Lankan Arecanuts import under Notification No. 26/2000 - Customs Act, 1962, Section 18(1)(c) - Reasonableness and legality of the condition - Comparison with precedent. Analysis: Issue 1: Provisional Assessment Orders and Bank Guarantee/Cash Deposit Requirement The appeal challenges the judgment concerning Exts.P30 to P32 orders issued by the Deputy Commissioner of Customs, demanding Bank Guarantee/Cash Deposit for 35% of the differential duty for Sri Lankan Arecanuts import under Notification No. 26/2000. The Commissioner made provisional assessment due to an ongoing investigation by the Directorate of Revenue Intelligence (DRI) regarding the consignment's origin. The petitioner argued that all necessary documents were provided, and there was no doubt about the goods' origin. The respondents justified the requirement for Bank Guarantee/Cash Deposit to safeguard revenue interests, citing the Customs Act provisions. The Single Judge upheld the provisional assessment but reduced the deposit to 20% from 35%. Issue 2: Legal Justification for Bank Guarantee/Cash Deposit The respondents supported the Commissioner's decision, referencing a prior judgment related to provisional assessment under the Customs Act. The judgment highlighted the process of provisional assessment, the duty determination based on available documents, and the requirement for security for the balance of provisional duty. The respondents argued that the ongoing investigation justified the Bank Guarantee/Cash Deposit demand to ensure the recoverability of duty if the goods were not of Sri Lankan origin. Issue 3: Legality and Reasonableness of Bank Guarantee/Cash Deposit Condition The Court examined whether the impugned orders were legally sustainable. It was noted that there was no indication of Customs doubting the goods' origin; the main reason for the requirement was the ongoing DRI investigation into another consignment. The Court found the 35% or 20% deposit condition too harsh, considering the lack of evidence of doubt regarding the petitioner's consignment. Instead, the Court proposed that an Indemnity Bond could suffice to secure payment of any differential duty imposed during the final assessment, modifying the direction to release the goods based on the execution of such a bond. In conclusion, the Court modified the judgment to permit the release of goods upon the execution of an Indemnity Bond, replacing the Bank Guarantee/Cash Deposit requirement. This decision aimed to balance the revenue protection concerns with the lack of evidence supporting the necessity of the deposit condition.
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