2017 (3) TMI 1398 - HC - Customs

Provisional release of confiscated goods - validity of SCN - there is no reference to the duty amount which the respondents propose to levy on the petitioner - it is the claim of the petitioner that the condition mentioned in the impugned order is onerous - Held that - in the issuance of SCN, the provisions of Section 28 of the Act will have to borne in mind, in particular, the provisions of sub-Section (1)(a) of the said Section - A perusal of the Section 28(1)(a) would demonstrate that the proper officer is required to indicate in the SCN the amount which the noticee is called upon to pay. This is crucial for various reasons including an instance, where the noticee may not wish to contest the SCN. There could also be other instances, where, while the substance of the charge is accepted, the quantification of duty is disputed by the noticee. Accordingly, the noticee needs to be informed as to the amount which the customs seeks to recover by way of duty. The failure to mention the amount of duty that the petitioner would have to pay, according to me, impregnates the SCN with a fatal weakness - Therefore, insofar as the second condition for provisional release of subject goods is concerned, the same cannot be sustained. The reason being, as indicated above, that there is no duty amount mentioned in the SCN - the only condition which can be sustained and qua which no issue is raised by the petitioner is the first condition prescribed in the impugned order, whereby, execution of PD Bond equivalent to 100% of the value of goods is sought. Goods will be released to petitioner on fulfillment of modified conditions. Petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to order directing provisional release of goods with conditions.

Analysis:
The petitioner, engaged in import and distribution of newsprint, stored goods in customs bonded warehouse as per Exim Policy. Directorate of Revenue Intelligence (DRI) detained newsprint reels based on intelligence. Show cause notice under Customs Act, 1962 issued to petitioner for confiscation and penalty. Notice lacked duty amount, leading to writ petition for provisional release of goods. Petitioner argued against onerous condition of Bank Guarantee in impugned order.

The court noted Section 28(1)(a) of the Act requires duty amount in show cause notice. Absence of duty amount weakens notice, impacting provisional release conditions. Court found second condition for release unsustainable due to lack of duty amount in notice. First condition of PD Bond for 100% value of goods deemed valid. Petitioner agreed to furnish bank guarantee for 10% of disputed amount without prejudice.

Modified order required PD Bond and bank guarantee as specified, keeping bank guarantee active until adjudication. Respondents directed to release goods within two days of compliance. Court clarified observations wouldn't affect final adjudication of show cause notice. Writ petition disposed off without costs.