2019 (5) TMI 1716 - AT - Customs

Provisional release of goods - mis-declaration of goods - appellant has declared as base oil whereas the department s contention is that it is a HSD - HELD THAT - The submission of the Ld. Counsel regarding the fact that as per IS specifications 1460 2005 in respect of HSD, it provides 21 specifications whereas the testing was done only in respect of 14 out of 21 specifications. This appears to be very vital discrepancy in conducting the test. However, at this stage, we do not incline to make any observation as regard the merit of the case. As regard the quantum of condition for release of the goods for re-export, we find that once the goods is re-exported the custom duty, if any, stand neutralized, therefore, to secure the interest of Revenue particularly in this case where the goods have to be re-exported, the quantum of bank guarantee decided by the Commissioner is exorbitant. As the SCN was issued, the quantum of duty as per revenue was worked out to ₹ 5,15,61,820/- hence the appellant is required to furnish Bank guarantee of ₹ 1,29,00,000/- i.e. 25% of duty. The appellant needs to execute the bond for 100% of the value of the goods. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Provisional release order subject to bond and bank guarantee conditions, Mis-declaration of goods, Technical characteristics of the product, Quantum of bank guarantee for re-export

Analysis:
The appeal was against a provisional release order by the Commissioner of Customs Kandla, which required a bond for 100% value of goods and a bank guarantee for 50% of the value. The appellant contested the mis-declaration accusation, arguing that the goods were correctly declared as base oil. The appellant requested retesting of all parameters, citing technical definitions under the Customs Tariff Act and Indian standards. The appellant also sought re-export of the goods without impact on customs duty, offering a bank guarantee of 25% of the duty amount based on a Gujarat High Court precedent.

The Revenue representative highlighted a Tribunal order directing provisional release based on suitable bond and bank guarantee conditions. The Tribunal found the merit issue debatable due to technical product characteristics, noting discrepancies in testing against IS specifications. However, the Tribunal refrained from making observations on the case's merit at that stage. Regarding the bank guarantee for re-export, the Tribunal considered the neutralization of custom duty upon re-export and deemed the Commissioner's amount as exorbitant. Citing a Gujarat High Court judgment, the Tribunal reduced the bank guarantee to 25% of the duty amount, requiring the appellant to furnish a bank guarantee of ?1,29,00,000 (25% of duty) and execute a bond for 100% of the goods' value, ultimately allowing the appeal in those terms.