2008 (8) TMI 163 - HC - Customs

Goods imported had been seized and subsequently ordered to be released provisionally on fulfilment of certain conditions since evasion of duty is clearly established condition imposed in respect of payment of duty in cash & by bank guarantee is fair since goods are liable to confiscation so condition of executing indemnity bond is justified - since condition imposed for provisional release of goods are not arbitrary it is not possible for HC in its writ jurisdiction to interfere them

Issues Involved:
1. Legality of seizure of imported goods by the Directorate of Revenue Intelligence (DRI).
2. Conditions imposed for provisional release of the seized goods.
3. Alleged undervaluation of imported goods and evasion of customs duty.
4. Jurisdiction of the court in matters of customs duty assessment and valuation.

Detailed Analysis:

1. Legality of Seizure of Imported Goods by the Directorate of Revenue Intelligence (DRI):

The petitioner-company challenged the seizure of imported glass goods by the DRI, arguing that the goods were imported legally, with customs duty paid as per the valuation guided by the Directorate of Valuation (DOV). The petitioner contended that the DRI had no authority to seize the goods once the declared value had been accepted and the duty paid. The court noted that the DRI acted on specific intelligence regarding the evasion of customs duty through undervaluation. The DRI conducted searches and detained the goods for further investigation under Section 110 of the Customs Act, 1962, on the belief that the goods were misdeclared to evade customs duty and were liable for confiscation under Section 111 of the Act.

2. Conditions Imposed for Provisional Release of the Seized Goods:

The petitioner argued that the conditions imposed for the provisional release of the goods, such as executing an indemnity bond equal to the market value, depositing 50% of the differential duty in cash, and furnishing a bank guarantee, were onerous and unjustified. The court held that the conditions were fair and reasonable, considering the prima facie evidence of duty evasion. The indemnity bond ensured that the authorities could recover the amount in case of an order of confiscation. The requirement of a bank guarantee for possible fines and penalties was also deemed justified.

3. Alleged Undervaluation of Imported Goods and Evasion of Customs Duty:

The respondents alleged that the petitioner was part of a cartel involved in the systematic undervaluation of imported glass to evade customs duty. The investigation revealed evidence of undervaluation and fraudulent invoices. The court noted that the data from the DOV, based on past imports, could not be entirely relied upon due to the alleged cartel's influence. The court emphasized that the issue of undervaluation was a matter for the adjudicating authority to determine based on the evidence presented during the investigation.

4. Jurisdiction of the Court in Matters of Customs Duty Assessment and Valuation:

The court highlighted that the determination of the correct valuation and the extent of customs duty payable were factual questions to be adjudicated by the departmental authorities. The court's writ jurisdiction was not the appropriate forum to resolve such factual disputes. The petitioner was advised to present its case before the adjudicating authority to establish the correctness of the declared value and the customs duty paid.

Conclusion:

The court dismissed the writ petition, upholding the legality of the seizure and the conditions imposed for the provisional release of the goods. The court reiterated that issues of undervaluation and duty evasion were to be adjudicated by the relevant authorities, and the writ jurisdiction was not suitable for resolving such factual matters. The petitioner's arguments regarding the alleged duress and the legality of the conditions for provisional release were found to be without merit.

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