2020 (9) TMI 659 - AT - Customs

Provisional release of the seized goods - IGST refund - duty drawback - it was opined that the goods were grossly overvalued to claim undue benefits of enhanced IGST refund and Drawback - Section 113(i) and 113(ia) of the Customs Act, 1962 - HELD THAT - From the facts available it appears that while determining the quantum of bank guarantee, departmental authorities have taken into account the amount of IGST paid and would be admissible as refund on exportation of the impugned goods. The prima facie case of the department is that appellant have overvalued the goods to claim higher export benefits. If the goods have been overvalued then the appellants would have paid the higher IGST at the time of the clearance of goods for export. We do not find any merits in inclusion of the IGST amount paid while determining the quantum of bank guarantee. The amount of IGST which may be refunded is available with the revenue. Revenue may continue investigating the case against the appellant and finalize their refund only after completion of investigation. If we deduct the amount of ₹ 35,19,450/- from the total value of ₹ 38,14,125/- recorded in order of Commissioner (Appeal) the case of overvaluation to claim undue benefit against the Appellants will be of ₹ 2,94,675/-. In the present case when the goods have not been released even after the lapse of 18 months, there are no justification for imposing such harsh conditions by the Revenue while permitting provisional release of the goods - the appellant is directed to execute a bond equivalent to the value of the seized goods as has been directed by the Revenue vide its letter dated 02.05.2019 supported by a bank guarantee of ₹ 5,00,000/- only, which is in accordance with the spirit of the Board Circulars referred. The appeal is disposed of, by modifying the letter dated 02.05.2019 to the extent that the value of bank guarantee to be executed is reduced to ₹ 5,00,000/-.

Issues Involved:
1. Provisional release of seized goods.
2. Conditions imposed for provisional release.
3. Non-cooperation of the appellant with the investigation.
4. Applicability of Board Circulars for provisional release.
5. Assessment of IGST refund and overvaluation.

Issue-wise Detailed Analysis:

1. Provisional Release of Seized Goods:
The appellant filed 10 shipping bills for the export of goods, claiming IGST refund and drawback. However, the goods were seized on 18.02.2019 for being grossly overvalued to claim undue benefits. The original authority offered provisional release of the seized goods on execution of a bond equivalent to the value of the goods and a bank guarantee of ?30,00,000/-. The appellant appealed against this order, but the Commissioner (Appeals) upheld the original conditions for provisional release.

2. Conditions Imposed for Provisional Release:
The appellant argued that the conditions for provisional release were too harsh and not feasible to comply with. The goods had been under seizure for over 18 months, causing significant financial damage due to the delay in IGST refund. The appellant cited Board Circular No. 30/2013-Cus. dated 05.08.2013, which advises against imposing harsh conditions for the provisional release of export goods. The tribunal found that the inclusion of the IGST amount in the bank guarantee calculation was unjustified since the amount was already with the revenue. The tribunal directed the appellant to execute a bond equivalent to the value of the goods and reduced the bank guarantee to ?5,00,000/-.

3. Non-cooperation of the Appellant with the Investigation:
The revenue argued that the appellant had not been cooperating with the investigation despite repeated summons. The Commissioner (Appeals) noted that the appellant's non-cooperation prima facie indicated an attempt to delay the investigation. The tribunal emphasized that while the appellant must cooperate with the investigation, the adjudicating authority must also provide an opportunity for the appellant to present their case before passing any adverse orders.

4. Applicability of Board Circulars for Provisional Release:
The tribunal referred to Board Circulars No. 01/2011-Cus dated 04.01.2011 and No. 30/2013-Cus. dated 05.08.2013, which stress the importance of facilitating exports and avoiding delays. The circulars mandate provisional release of export goods suspected of misdeclaration on execution of a bond and suitable security. The tribunal found that the conditions imposed by the revenue were not in line with the spirit of these circulars and adjusted the conditions accordingly.

5. Assessment of IGST Refund and Overvaluation:
The tribunal noted that the revenue's case was based on the premise that the appellant overvalued the goods to claim higher export benefits. However, the tribunal found that the IGST amount paid by the appellant should not be included in the bank guarantee calculation since it was already with the revenue. The tribunal determined that the overvaluation to claim undue benefits amounted to ?2,94,675/- after deducting the IGST amount. The tribunal directed the reduction of the bank guarantee to ?5,00,000/-.

Conclusion:
The appeal was disposed of by modifying the conditions for provisional release. The appellant was directed to execute a bond equivalent to the value of the seized goods and a bank guarantee of ?5,00,000/-. The tribunal emphasized the need for the appellant to cooperate with the investigation for its speedy completion. The observations made by the tribunal were preliminary and not binding on the final adjudication of the case.

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