2018 (12) TMI 804 - HC - Customs

Mis-declaration of value of export goods - rejection of valuation - attachment / seizure order - Held that - The exports were made in the year 2015. Nearly four years have been passed since then. The department has so far not produced any material prima facie suggesting that there is likelihood of demand for recovery of money from the petitioner. Learned counsel for the department also pointed out that the show-cause notice was issued without prejudice to the penal action which may be taken later on - We are neither preventing the department from further investigation into the petitioner s past export and if found necessary, to issue show-cause notice in that respect nor are we preventing the department from taking any further action with respect to the later exports, if otherwise available under the law. At this stage, however, there being no further material on record, the prohibitory orders must be rescinded. The attachment of the petitioner s six bank accounts is set aside. Refund of amount deposited under protest - Held that - Whether the said amount was deposited under protest or voluntarily, the department cannot appropriate the same unless a legal demand is crystallized against the assessee. Admittedly, no such demand has been raise - we would direct the respondents to refund such amount to the petitioner, however, by imposing a condition of providing bank guarantee of matching amount to safeguard the interest of the department if any such demand arises in future. Petition disposed off.

Summary

Issues:
1. Prohibitory order on director's residential property
2. Freezing of six bank accounts
3. Retention of deposited amount by the petitioner

Prohibitory Order on Director's Residential Property:
The petitioner's grievance pertains to the action of the authorities in passing a prohibitory order concerning the director's residential property. This action was taken in relation to export consignments of 'Gas Injected Co-Axial Cable' made by the petitioner. The department halted the export and undertook steps like addressing the Sub-Registrar not to alienate the property, freezing bank accounts, and retaining a sum of ?1.50 crores. The department issued a show-cause notice regarding the valuation of the consignments, drawback claims, and confiscation of goods. The final order by the Adjudicating Authority rejected the declared values, reduced the drawback claims, and confiscated the goods without offering redemption. However, no monetary demand was raised against the petitioner in the order.

Freezing of Six Bank Accounts:
The department froze six bank accounts of the petitioner as part of the investigation into the export consignments. The Adjudicating Authority's order reduced the drawback claim based on the revised valuation of the consignments. The petitioner argued that no monetary demand was raised against them in the order. The High Court noted that no further material was presented by the department to suggest a likelihood of recovery demand from the petitioner. As such, the court directed the rescinding of the prohibitory orders on the director's property and the attachment of bank accounts.

Retention of Deposited Amount:
The petitioner had deposited ?1.50 crores with the department, claiming it was done under protest. However, the department presented a letter where the petitioner stated the deposit was voluntary. The court held that unless a legal demand crystallizes against the petitioner, the department cannot appropriate the deposited amount. As no demand was raised, the court directed the respondents to refund the amount to the petitioner, with a condition of providing a matching bank guarantee to safeguard the department's interests in case of future demands. The court disposed of the petition with specific directions regarding the refund and bank guarantee.

This detailed analysis of the judgment highlights the issues surrounding the prohibitory order, freezing of bank accounts, and retention of the deposited amount, providing a comprehensive overview of the legal proceedings and the court's decision.