2018 (10) TMI 846 - HC - Customs

Project Import - Finalization of provisional assessment - time limit for claiming provisional assessment - Held that - Admittedly the provisional assessment in respect of the goods imported has not taken place so far. There is no dispute to the fact that there is no time limit for making such provisional assessment. No doubt the report of the DRI dated 04.10.2007 is now taken by the respondents for issuing the impugned communication. Perusal of the said communication would only show that the petitioner was called upon to explain their case regarding levy of differential duty along with applicable interest and personal penalty as discussed in the said communication. In the absence of any statutory time limit fixed for making the provisional assessment and when the second respondent has issued the impugned communication and called upon the petitioner only to give their explanation I do not think that this Court at this stage is to interfere with such communication or the proceedings pending before the second respondent since an order of adjudication is yet to be passed. No doubt there is some delay on the part of the respondents in completing the provisional assessment at the same time when the alleged duty evasion is to the tune of 9.54 crores and that too based on the DRI report this Court is of the view that it is for the petitioner to make their reply to the said letter and explain all their stand in detail so that the second respondent will be in a position to finally make the provisional assessment without loss of any further delay. This Court is not expressing any view on the merits of the contentions raised by both parties with regard to the liability of the petitioner to pay the differential duty as alleged by the respondents as this Court has only remitted the matter back to the second respondent to consider the same based on the reply submitted by the petitioner - petition dismissed.

Summary

Issues Involved:
1. Finalization of assessments for imports under the project import scheme.
2. Refund of security deposit and return of bank guarantees.
3. Challenge to the proceedings dated 22.05.2018 regarding alleged under-valuation of imported goods.

Issue-wise Detailed Analysis:

1. Finalization of Assessments for Imports:
The petitioner sought a Mandamus directing the respondents to finalize the assessments of all imports made under the project import scheme. The petitioner had registered their project under the Project Import Regulations, 1986, and executed a bond and provided a security deposit and bank guarantees. Despite multiple requests and submissions of necessary documents, the provisional assessments remained incomplete. The respondents argued that the delay was due to an investigation by the Directorate of Revenue Intelligence (DRI), which alleged under-valuation of imports and a resultant differential duty of ?9.54 crores.

2. Refund of Security Deposit and Return of Bank Guarantees:
The petitioner requested the refund of the ?84,00,000/- security deposit, the return of bank guarantees amounting to ?13.77 crores, and the cancellation of the bond for ?6,38,05,72,000/-. The petitioner argued that the prolonged delay in finalizing the provisional assessments caused financial strain due to the continuous renewal of bank guarantees. The petitioner cited CBEC Circular No.22/2011-Cus, which stipulates that bank guarantees should not be retained beyond six months after submission of necessary documents. The respondents contended that the circular did not apply due to the ongoing DRI investigation and the substantial alleged duty evasion.

3. Challenge to the Proceedings Dated 22.05.2018:
The petitioner challenged the communication dated 22.05.2018, which was perceived as a show cause notice issued after 16 years, arguing it was barred by limitation. The respondents clarified that the communication was not a show cause notice but a letter seeking clarification based on the DRI report. The court construed the communication as a show cause notice and directed the petitioner to respond to it. The court emphasized that the provisional assessment should be completed expeditiously, considering the significant delay and financial implications for the petitioner.

Conclusion:
The court acknowledged the substantial delay in completing the provisional assessments but highlighted the serious nature of the DRI's allegations. It directed the petitioner to submit a reply to the impugned proceedings within two weeks, after which the second respondent should provide a personal hearing and complete the provisional assessment within four weeks. If the petitioner succeeds, the security deposit, bank guarantees, and bond should be released immediately. If the petitioner fails, the second respondent should not invoke the bank guarantees within the appeal period, allowing the petitioner to seek interim relief from the Appellate Authority. The court did not express any view on the merits of the contentions regarding the differential duty liability.