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2018 (10) TMI 115 - HC - CustomsDetention of goods - mis-declaration of the value of the cargo - ownership of the Cargo - whether the conditions imposed in the order dated 19.01.2018 for provisional release are fair and reasonable or is it onerous and unreasonable? Held that - Undoubtedly there is room for exercise of discretion while considering an application for provisional release exercising powers under Section 110A of the Act. However such exercise cannot be unguided or unbridled. The exercise of discretion and imposition of conditions should satisfy the test of reasonableness vis-a-vis the factual matrix - What is required to be seen in the instant case is whether there was justification on the part of Customs Department to insist upon Bank Guarantee for 1, 00, 00, 000/-. Admittedly in the order dated 19.01.2018 no reasons have been assigned by the Customs Department to impose such a condition. The circular does not foreclose exercise of the discretion by the competent authority who imposes condition on examination of the Cargo. On a reading of the show cause notice it appears that there are several materials which have been referred to in the show cause notice and it is for respondent to reply to the show cause notice and participate in the adjudication. Since show cause notice has been issued to the respondent this Court would be fully justified in considering the allegations made in the show cause notice while considering as to what would be the reasonable conditions to be imposed in the respondent s case while ordering release. Non-cooperation of the respondent with the investigation - Held that - It was noted that the respondent did not co-operate with the DRI Ahmedabad and one Senior Intelligence Officer of DRI Ahmedabad was present in Court and directions were issued after which the respondent appeared before the Officer at Chennai and a statement was recorded. Therefore Mrs.R.Hemalatha is right in her submission that the non-cooperative attitude of the assessee also to be borne in mind so that ultimately when the adjudication is completed the amount of duty if determined should not become irrecoverable. Provisional release of goods allowed subject to conditions imposed - appeal allowed in part.
Issues Involved:
1. Whether the Tribunal was correct in its interpretation of the Supreme Court's decision in Nav Shakthi Industries. 2. Whether the Tribunal erred in following the Delhi High Court's decision in Bhaiya Fibres Ltd. regarding the imposition of provisional duty under Section 110A of the Customs Act. Issue-wise Detailed Analysis: 1. Interpretation of the Supreme Court's Decision in Nav Shakthi Industries: The Revenue contended that the Tribunal misinterpreted the Supreme Court's decision in Nav Shakthi Industries. The Tribunal directed the release of goods on submission of a Bank Guarantee for 30% of the differential duty and a bond for 70% of the differential duty. The Revenue argued that the Supreme Court's decision in Commissioner vs. Navshakti Inds. Pvt. Ltd. [2011 (269) E.L.T. A146 (SC)] did not affirm the Delhi High Court's decision in Navshakti Industries P. Ltd. vs. Commissioner of Customs [2010 (253) E.L.T. 771 (Delhi)]. The Tribunal's decision was based on the precedent set by the Supreme Court, which the Revenue claimed was not universally applicable. The High Court noted that the Tribunal's reliance on the Supreme Court's decision was not entirely misplaced but emphasized that each case of provisional release should be considered on its specific facts and circumstances. 2. Following the Delhi High Court's Decision in Bhaiya Fibres Ltd.: The Tribunal followed the Delhi High Court's decision in Bhaiya Fibres Ltd., which emphasized Regulation (2) of the Customs (Provisional Duty Assessment) Regulations, 1963, suggesting a 25% provisional duty even in cases involving Section 110A of the Customs Act. The Revenue argued that the Tribunal failed to distinguish between provisional assessment under Section 18 and provisional release under Section 110A of the Act. The High Court observed that the Tribunal did not fully appreciate the distinction between provisional assessment and provisional release. The High Court referenced the Board Circular No.35/2017-Cus., dated 10.08.2017, which provides guidelines for provisional release but also allows for discretion based on specific case facts. Detailed Analysis of the Judgment: Background: The respondent imported two consignments, and based on intelligence of mis-declaration, the DRI detained the consignments. The transaction value was found to be significantly higher than the declared value, leading to the seizure of goods. The respondent sought provisional release, which was initially granted with onerous conditions. The respondent challenged these conditions, leading to the Tribunal's order for a more lenient provisional release. Contentions: - The Revenue argued that the respondent admitted the goods were not owned by them and were imported by another individual. The Revenue emphasized the lack of cooperation from the respondent and the inadequacy of the Bank Guarantee amount. - The respondent argued that the Tribunal's conditions were fair and reasonable, considering the 100% examination of goods and the absence of discrepancies in description and quantity. They also contended that there was no substantial question of law warranting the appeal. Court's Observations: - The High Court noted that the consignment's description and quantity were undisputed, with the primary issue being the valuation and ownership of the cargo. - The Court found the conditions imposed by the Customs Department for provisional release to be onerous and lacking justification. - The High Court emphasized the need for reasonableness in exercising discretion under Section 110A of the Act. The Court acknowledged the Tribunal's reliance on previous decisions but stressed that each case must be evaluated on its specific facts. Conclusion: The High Court modified the Tribunal's order to balance the interests of the Revenue and the respondent: 1. The respondent must pay the duty on the declared import value. 2. The respondent must furnish a Bank Guarantee for 50% of the differential duty. 3. The respondent must execute a personal bond for the remaining 50% of the differential duty. 4. The goods shall be released provisionally within two weeks of fulfilling these conditions. 5. Demurrage and detention charges from the date of detention to clearance shall be waived. 6. The respondent must reply to the show cause notice and cooperate in the adjudication process. The substantial questions of law were answered accordingly, and the appeal was partly allowed with no costs.
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