2006 (4) TMI 65 - HC - Customs

Application filed to initiate contempt proceedings against revenue for demanding to furnish bond and guarantee earlier goods were released provisionally subject to determination of final liability misdeclaration to evade duty - held that if the goods are released unconditionally, it would be difficult to recover the amount of penalty imposed held that release would be provisional no case of initiating contempt proceeding against revenue for demanding bond or guarantee

Summary

Issues:
1. Interpretation of the term "provisional release" in a court order.
2. Dispute regarding payment of differential duty and submission of bond/guarantee for seized goods.
3. Allegation of evasion of duty by mis-description of imported goods.
4. Determination of final liability for duty, penalty, and fine.
5. Authority of the department to insist on bond/guarantee for protecting revenue.

Analysis:

1. The court order in question allowed provisional release of seized goods subject to final liability determination. An application was filed seeking clarification on the term "provisional release" after the Custom Department demanded a bond and guarantee from the writ petitioner. The petitioner argued that such demands were beyond the court order, while the Department contended that the bond/guarantee was necessary to cover penalty and fine under the Customs Act.

2. The controversy arose from the mis-description of imported goods, with Titanium Dioxide being declared as Sodium Sulphate to evade duty. The Department insisted on penalty and fine in addition to the differential duty paid by the petitioner. The court order specified that the release was provisional pending final liability assessment.

3. The court noted that the petitioner's payment of the differential duty did not absolve them of further liabilities, considering the apparent attempt to evade duty. The Department justified the demand for bond/guarantee to secure penalty amounts as per the Customs Act, emphasizing the need to protect revenue and prevent evasion.

4. The Department argued that the duty paid by the petitioner was insufficient compared to the total liability, including potential penalties under Section 112 of the Customs Act for improper importation. The court upheld the Department's right to insist on the bond/guarantee until the final determination of liability, emphasizing the provisional nature of the release.

5. Ultimately, the court disposed of the application and contempt petition, affirming the Department's authority to demand a bond and guarantee for protecting revenue. The decision clarified that the release was provisional and subject to final liability assessment, preventing the petitioner from claiming unconditional release of the goods and ruling out contempt action against the officials involved.