2015 (12) TMI 1433 - HC - Customs

Request for permission to sell an aircraft - Concessional rate of duty - Customs authorities formed a belief that the valuation declared by the petitioner at the time of import was not accurate and further that the petitioner had breached the condition on which the concessional rate of duty was applied - Held that - Principal duty liability as indicated in the show cause notice is ₹ 8.78 crores. This principal amount of duty may further invite interest and penalties. However, it is not necessary that in every case maximum penalty would be levied. There is also a proposal for confiscation, of course, with the statutory provision of permitting redemption fine in lieu of confiscation. In totality of the facts of the case, we would adopt sum of ₹ 20 crores in all which would safeguard the interest of the revenue. In other words, as long as the petitioner offers full security for such sum, the permission for sale of the aircraft should be granted. - petitioner has already provided the bank guarantee of ₹ 10 crores to the department in addition to bond of ₹ 30 crores. The first condition would therefore be that these guarantees would be kept alive till the disposal of the show cause proceedings. - Petition disposed of.

Summary

Issues:
Challenge to communication refusing permission to sell aircraft under concessional rate of duty.

Analysis:
The petitioner imported an aircraft under a concessional rate of duty, but customs authorities alleged inaccurate valuation and breach of conditions. A show cause notice was issued in 2010, pending which the aircraft was released under a bond. The petitioner sought permission to sell the aircraft due to delays in the show cause notice proceedings causing financial losses. The High Court directed reconsideration of the sale request, leading to permission being granted with conditions involving bank guarantees.

The petitioner argued that delays in the show cause notice proceedings were due to the department's inaction, causing financial losses. They requested modification of stringent conditions, suggesting a reduction in the bank guarantee amount and the use of corporate guarantees to avoid high bank charges. The department maintained that the acceptance of bank or corporate guarantees should be at the Commissioner's discretion, highlighting the duty liability, interest, and penalties mentioned in the show cause notice.

After hearing both parties and reviewing the case documents, the Court noted the duty liability of Rs. 8.78 crores, with potential additional interest and penalties. Considering a sum of Rs. 20 crores to safeguard revenue interests, the Court required full security for this amount to grant permission for the aircraft sale. The petitioner had already provided a bank guarantee of Rs. 10 crores in addition to a bond of Rs. 30 crores, which needed to be maintained until the show cause proceedings concluded.

The Court modified the conditions by requiring the petitioner to provide additional bank guarantees based on the excess sale value of the aircraft over Rs. 10 crores. Any remaining amount up to Rs. 20 crores would be secured through bank or corporate guarantees as directed by the Commissioner. The petitioner was instructed to provide guarantees accordingly, ensuring compliance with the modified conditions. The Court disposed of the petition with these directions, allowing direct service.