2017 (5) TMI 1234 - HC - Customs

Detention of goods - provisional release of goods - Held that - The power u/s 110 A of the Act involves exercise of discretion. The scope of judicial review is to examine if the discretion has been rightly exercised; that it is not based on irrelevant materials and is fair and reasonable in the circumstances. It is not an appellate power. The drawing of a distinction between seizure of imported goods as a result of undervaluation and seizure of imported goods upon misdeclaration cannot per se be said to be irrational. - goods ordered to be released provisionally subject to conditions. It is further clarified that nothing said in this order on merits will influence the final orders to be passed in the adjudication proceedings. Petition disposed off.

Summary

Issues Involved:
1. Provisional release of imported goods seized by the Directorate of Revenue Intelligence (DRI).
2. Conditions imposed for provisional release of goods.
3. Distinction between provisional release under Section 110A and provisional assessment under Section 18 of the Customs Act.
4. Treatment of mis-declared goods under the Customs Act.
5. Judicial review of the discretion exercised under Section 110A of the Customs Act.

Detailed Analysis:

1. Provisional Release of Imported Goods Seized by the DRI:
The petitioner, engaged in the import of chemicals, sought provisional release of goods seized by the DRI. The goods were detained on 22nd March 2017, and a seizure memo was issued on 21st April 2017. The petitioner argued that the Respondents were not passing orders for provisional release of the goods against the live Bill of Entry (B/E) or the goods seized at their premises.

2. Conditions Imposed for Provisional Release of Goods:
The Assistant Commissioner SIIB-Import granted provisional release of the goods imported against the live B/E subject to conditions: furnishing a Bank Guarantee (BG) representing 30% of the differential duty, a bond equivalent to the value of the goods, and an undertaking not to contest the identity of the provisionally released goods. The petitioner challenged these conditions as onerous and contrary to settled legal positions, citing several judgments.

3. Distinction Between Provisional Release Under Section 110A and Provisional Assessment Under Section 18 of the Customs Act:
The court noted that provisional release of seized goods is governed by Section 110A, while provisional assessment is under Section 18. The distinction is crucial as provisional release involves discretion and is not regulated by specific guidelines, unlike provisional assessment, which follows the Customs (Provisional Duty Assessment) Regulations.

4. Treatment of Mis-Declared Goods Under the Customs Act:
The DRI's case was that the petitioner mis-declared the imported goods as 'ammonium sulphate' instead of 'PVC Resin Suspension Grade,' subject to anti-dumping duty. Mis-declared goods attract confiscation under Section 111(m) and penalties under Sections 112, 114A, and 114AA of the Customs Act. The court emphasized that mis-declared goods must be treated differently from undervalued or wrongly classified goods.

5. Judicial Review of the Discretion Exercised Under Section 110A of the Customs Act:
The court examined whether the discretion under Section 110A was exercised fairly and reasonably. It acknowledged that each case turns on its facts and that the conditions for provisional release should reflect the nature of the infraction. The court modified the conditions for provisional release of the goods imported against the live B/E, reducing the BG requirement to 15% of the differential duty and retaining other conditions. For goods seized from the premises, the court directed the Customs to issue a provisional release order, retaining the differential duty and 15% of it, and returning the balance to the petitioner.

Conclusion:
The court balanced the petitioner's financial constraints and the need to secure the revenue's interest. It modified the conditions for provisional release to ensure fairness while retaining the right of the authorities to adjudicate the matter. The petitions were disposed of with specific directions for compliance, ensuring the provisional release of the seized goods under modified conditions.