2015 (11) TMI 201 - HC - Customs

Request for quashing provisional release letter asking it to furnish bank guarantee to the tune - Held that - petitioner has already paid Rs. 5, 00, 000/- and is also ready to furnish personal/surety bond equivalent to the declared value of the goods. The respondents have not pointed out any circumstance which may raise an apprehension or presumption that the petitioner will not discharge its liability qua any amount that may be assessed at the time of final adjudication. - we quash the condition (b) requiring the appellant to furnish a bank guarantee of 10% amount of the declared FOB value. The petitioner shall furnish personal/ surety bond and undertaking that in the eventuality of any other amount 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 to the petitioner within two weeks from the date of receipt of certified copy of this order. - petitioner shall not be entitled to claim any duty draw back and the amount of Rs. 5, 00, 000/- deposited by him shall be adjusted in its liability in case any found due against it - Decided partly in favour of assessee.

Summary

Issues:
- Quashing the condition of furnishing a bank guarantee of 10% of the declared FOB value.
- Justifiability of the condition imposed by the respondents.
- Applicability of legal precedents regarding the demand for a bank guarantee.
- Consideration of the petitioner's readiness to furnish a personal/surety bond.

Analysis:

The petitioner sought to quash the condition (b) of a provisional release letter requiring a bank guarantee of Rs. 6,95,000. The petitioner had deposited Rs. 10,00,000 and requested the release of seized goods without a bank guarantee. Subsequently, another container was seized, and a bank guarantee of 10% of the declared FOB value was demanded. The petitioner argued that the bank guarantee condition was unreasonable and illegal, offering to provide a personal/surety bond for 100% of the declared value.

The Court considered the submissions and referred to legal precedents. In the case of 'Om Udyog v/s Joint Commissioner of Customs,' it was observed that demanding a bank guarantee for a dispute on classification or valuation is unjustified. Similarly, in 'Kuber Casting (P) Ltd. v/s Union of India,' it was held that imposing a bank guarantee should not be a tool to pressure the assessee, as it could harm their business.

After evaluating the facts, the Court found that the petitioner had already paid Rs. 5,00,000 and was willing to provide a personal/surety bond equal to the declared value. The respondents failed to show any circumstance raising doubts about the petitioner's ability to fulfill their obligations. Consequently, the Court quashed the bank guarantee condition and directed the petitioner to furnish a personal/surety bond, ensuring the discharge of any assessed amounts without protest, while retaining the right to appeal.

Furthermore, the Court clarified that the petitioner could not claim duty drawback and that the deposited amount of Rs. 5,00,000 would be adjusted against any liabilities. If no liabilities were found, the amount would be refunded, minus any outstanding dues. The Court ordered the release of goods to the petitioner within two weeks of the order, emphasizing that the decision did not express an opinion on the underlying dispute's merits.