2018 (10) TMI 1379 - HC - Customs

Seizure of goods - seeking release of bank guarantee furnished for release of goods and refund based on subsequent circular - Held that - For one or the other reasons, the matter is not heard effectively and subsequently, Circular No.22/2009-Cus dated 19.08.2009 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, Directorate General of Export Promotion, to all Chief Commissioners of Customs/Central Excise and all Commissioners of Customs/Central Excise, with regard to subject viz. use of duty free raw material for capital goods manufactured within EOU for captive use. Mr.Parth Divyeshwar, learned advocate states that on the next date of hearing, he will argue the case on merits, if any.

Issues:
1. Seizure of goods under Section 110(1) of the Customs Act, 1962.
2. Utilization of imported steel plates for manufacturing violating permissions.
3. Release of seized goods upon depositing a specified amount.
4. Appointment of an expert to ascertain the quality of seized goods.
5. Compliance with tax liabilities and furnishing a bank guarantee.
6. Circular No.22/2009-Cus regarding the use of duty-free raw material for capital goods within EOU.

Analysis:

1. Seizure of Goods under Section 110(1) of the Customs Act, 1962:
The Court directed the respondent to keep the original file ready for perusal to understand the basis of the seizure of goods under Section 110(1) of the Customs Act. The Court emphasized the importance of following the provisions of Section 111 of the Act to determine when goods become liable for confiscation.

2. Utilization of Imported Steel Plates for Manufacturing Violating Permissions:
The respondent authorities argued that the utilization of imported steel plates for manufacturing Jigs, Dies, and Tools violated the permission granted for manufacturing Submerged Arc Welded Steel Pipes. The Court sought clarification on the legal basis for this argument and directed both parties to propose a workable solution to ensure the manufacturing activity was not halted permanently.

3. Release of Seized Goods upon Deposit:
The Court ordered the release of seized goods upon the petitioner depositing a specified amount towards basic duty and other levies. The petitioner was directed to allocate a sum from the bond towards potential future liabilities. Additionally, an expert was to be appointed to assess the quality of goods seized and a supplemental affidavit was to be submitted.

4. Compliance with Tax Liabilities and Bank Guarantee:
The petitioner was required to comply with tax liabilities by paying a specified amount and furnishing a bank guarantee within a week. The Court acknowledged the petitioner's compliance with the conditions and directed the release of the goods in favor of the petitioner company.

5. Circular No.22/2009-Cus Regarding Duty-Free Raw Material:
The petitioner raised contentions based on Circular No.22/2009-Cus, arguing that no adjudication was required as the amount was paid and bank guarantee furnished. The petitioner sought relief and the return of the amount paid.

6. Future Proceedings:
The case was adjourned for further arguments on merits. The Court indicated that future hearings would involve a detailed discussion on the case's substantive aspects, potentially including the utilization of duty-free raw material and compliance with permissions and tax liabilities.

This comprehensive analysis outlines the key issues addressed in the judgment, detailing the Court's directives and considerations concerning the seizure of goods, compliance with legal provisions, and the release of seized goods upon fulfilling specified conditions.

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