2019 (4) TMI 1275 - AT - Customs

Provisional release of seized goods - Section 110A of the Customs Act, 1962 - Valuation - enhancement of value as per NIDB data for similar goods - HELD THAT - The Tribunal has proceeded to redetermine the value of the imported goods for the purpose of executing the Bond backed by the Bank Guarantee as a condition for provisional release of the seized goods. For such purpose Tribunal has taken note of the range of values for the imported goods as appearing in the NIDB Database - the dispute with the Customs Department has progressed to the next stage in as much as the show cause notice on the alleged customs offence has been issued by the DRI, on completion of investigation. The show cause notice has indicated the basis for redetermination of the value of the imported goods. Section 110A does not create an absolute right in favour of the importer, but vests a discretion in the customs authorities to follow such course in appropriate case goes without saying that it is only a discretion to be exercised in accordance with the well settled principles of law governing the exercise of a statutory discretion vested in a public authority, but not caprice. In either case the respondents are required to take a decision expeditiously either to make a regular assessment or a provisional assessment or a decision to confiscate the goods in question if it is permissible under law after following appropriate procedure or provisionally release the goods under Section 110-A of the Customs Act. As already noticed, even in a case where the goods are liable for confiscation, Section 125 of the Customs Act provides for redemption of goods on payment of fine so long as the goods are not goods falling under the category of prohibited goods for the purpose of import. Appeal allowed.

Summary

Issues:
- Challenge against Orders for Provisional Release
- Allegation of undeclared goods and misdeclaration
- Conditions imposed by the Commissioner for release of goods
- Valuation of imported goods
- Dispute over Bank Guarantee/Security Deposit
- Comparison of valuation based on NIDB data
- Arguments for and against valuation methods
- Show cause notice and proposed confiscation
- Legal observations from the Hon'ble Kerala High Court

Detailed Analysis:

Challenge against Orders for Provisional Release:
The appellants filed appeals against the Orders for Provisional Release issued by the Commissioner of Customs for seized goods imported by M/s Open Exports. The goods were under investigation by DRI for suspicion of containing undeclared items and misdeclaration.

Allegation of Undeclared Goods and Misdeclaration:
DRI found that the consignments contained both declared and undeclared goods, leading to suspicion of under-valuation and misdeclaration. The investigation resulted in the seizure of goods and redetermination of their value.

Conditions Imposed by the Commissioner for Release of Goods:
The Commissioner ordered the execution of a Bond for the estimated value of imported goods and a Bank Guarantee/Security Deposit for differential duty, fine, and penalty. The importer objected to these conditions as onerous and based on inflated valuations.

Valuation of Imported Goods:
The dispute centered around the valuation of goods by DRI without following Customs Valuation Rules. The appellants argued for adopting a more reasonable valuation based on NIDB data, emphasizing the need for fair assessment.

Dispute Over Bank Guarantee/Security Deposit:
The appellants challenged the high amount stipulated for the Bank Guarantee/Security Deposit, claiming it was unreasonably high. The Revenue defended the Commissioner's decision, stating it was necessary to safeguard revenue interests.

Comparison of Valuation Based on NIDB Data:
The appellants sought to use NIDB data for valuation, similar to a previous Tribunal order in another case. However, the Revenue argued against this method, stating that NIDB data did not cover branded goods, which were part of the consignments.

Show Cause Notice and Proposed Confiscation:
The DRI issued a show cause notice proposing confiscation of the goods due to misdeclaration and under-valuation. The Tribunal noted the progression of the dispute to the next stage with the issuance of the notice.

Legal Observations from the Hon'ble Kerala High Court:
The Tribunal referred to a decision by the Hon'ble Kerala High Court emphasizing the need for expeditious adjudication or provisional release of goods under Section 110A of the Customs Act. The Court highlighted the discretion of customs authorities in such cases and the importance of following due process.

In conclusion, the Tribunal directed the adjudicating authority to complete the case adjudication within two months and allowed provisional release of seized goods upon execution of a Bond and redetermined Bank Guarantee/Security Deposit based on the valuation proposed in the show cause notice.