2020 (10) TMI 233 - HC - Customs

Release of imported watch of petitioner - Direction to the respondents to give effect to the order-in-appeal dated 29.11.2019 and to allow clearance of the imported watch covered by bill of entry No.9494939 dated 02.01.2019 on payment of duty on the declared value - whether respondent No.3 is justified in not releasing the imported watch of the petitioner in terms of the order-in-appeal dated 29.11.2019 and insisting on provisional release of the same subject to the conditions mentioned in the letter dated 04.02.2020? HELD THAT - On going through the order-in-appeal we do not find presence of any departmental representative in the appeal hearing though appellants i.e., the petitioners were duly represented by learned counsel who had also filed written submission. It does not appear that any objection or written submission were filed on behalf of the respondents before the appellate authority. From the affidavit of the respondents it is seen that the order-in-appeal dated 29.11.2019 was received by the respondents on 18.12.2019. Committee of Commissioners took the decision on 05.03.2020 that the Customs Department should file appeal against the order-in-appeal before CESTAT whereafter the appeal alongwith stay application were filed on 09.06.2020 before CESTAT, Mumbai Bench. Be that as it may, since the Customs Department has preferred appeal before the CESTAT, we would refrain from expressing any opinion on merit. That leaves us with the question which we have formulated on the basis of objections raised by the respondents. The period of limitation of three months commences from the date on which the order sought to be appealed against is communicated and not from the date of decision of the Committee of Commissioners. Reverting back to the facts of the present case, according to the respondents themselves the order-in-appeal dated 29.11.2019 was received by the respondents on 18.12.2019. The limitation period of three months therefore commences from this date - The word month is not defined in the Customs Act. We therefore take recourse to the definition of the said word as provided in the General Clauses Act, 1897. Section 3 of the said act provides for various definitions and says that after commencement of the General Clauses Act, 1897, the meaning given to the expressions contained in various sub-sections of section 3 would be applicable to all central acts and regulations unless there is anything repugnant in the subject or context. As per sub-section (35) of section 3, the word month has been defined to mean a month reckoned according to the British calendar. In the present case the limitation period of three months which commenced on 18.12.2019 had expired on 18.03.2020. When the order-in-assessment has been set aside by the appellate authority, the original order no longer survives until and unless the order-in-appeal is either stayed or in the ultimate analysis itself is set aside. Therefore, basing upon the order-in-assessment which no longer survives, it is not open to the departmental authorities to grant provisional release of the good in question that too subject to fulfillment of certain conditions which are clearly beyond the order-in-appeal. When the petitioners themselves sought for provisional release of the imported watch and the same having been granted by the respondents subject to fulfillment of the conditions mentioned in the letter dated 04.02.2020, whether it is open to the petitioners to seek the relief as is being sought in the present proceeding? - HELD THAT - The only provision in the Customs Act which deals with provisional release of goods etc. is section 110-A. This provision says that any goods, documents or things seized under section 110 may pending the order of the adjudicating authority be released to the owner on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require. From the above, it is seen that section 110-A will come into play only if two pre-conditions are fulfilled, namely, there must be seizure under section 110 and the goods, documents or things so seized may be subject to proceeding before the adjudicating authority. Seizure is dealt with in section 110. Sub-section (1) makes it very clear that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. In the instant case, admittedly there was no seizure and secondly, assessment of the good in question was not pending consideration. Assessment was already made by way of the order-in-assessment dated 25.03.2019. It is another matter that even that order-in-assessment has been set aside by the order-in-appeal. Since there is neither any seizure nor pendency of proceeding before the adjudicating authority, question of application of section 110-A does not arise. The objections raised by the respondents are legally and factually unsustainable and thus are hereby rejected - respondent Nos.2 and 3 to release the imported watch of the petitioners forthwith in terms of the order-in-appeal dated 29.11.2019 - Petition allowed.

Issues Involved:
1. Compliance with the order-in-appeal dated 29.11.2019.
2. Validity of the provisional release conditions imposed by the Customs Department.
3. Limitation period for filing an appeal before the CESTAT.
4. Legal implications of setting aside an order-in-assessment.

Issue-wise Detailed Analysis:

1. Compliance with the order-in-appeal dated 29.11.2019:
The petitioners sought a direction to the respondents to give effect to the appellate order dated 29.11.2019 and allow the clearance of the imported watch on payment of duty on the declared value. The appellate authority had set aside the order-in-assessment and directed that the bill of entry should be assessed at the invoice price. Despite this, the respondents did not permit the clearance of the imported watch. The petitioners argued that the respondents were bound to comply with the appellate order as no stay had been granted by the CESTAT.

2. Validity of the provisional release conditions imposed by the Customs Department:
The respondents offered provisional release of the watch subject to conditions such as submission of a bond, a bank guarantee, and payment of duty. The petitioners contended that these conditions were unreasonable post the order-in-appeal. The court noted that the provisional release conditions were not applicable as there was no seizure of the goods, and the assessment had already been set aside by the appellate authority.

3. Limitation period for filing an appeal before the CESTAT:
The respondents argued that the appeal was filed within the extended limitation period due to the COVID-19 pandemic. However, the court observed that the limitation period of three months commenced from the date of communication of the order, which was 18.12.2019. Therefore, the limitation period expired on 18.03.2020. The court held that the reliance on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 was misplaced as the limitation period had already expired before the ordinance came into effect.

4. Legal implications of setting aside an order-in-assessment:
The court emphasized that when an order is set aside by a superior authority, it loses its effectiveness and becomes inoperative. Therefore, the order-in-assessment dated 25.03.2019 no longer survived after being set aside by the appellate authority. The court held that the respondents' insistence on provisional release conditions was not permissible as it amounted to non-compliance with the appellate order.

Conclusion:
The court directed the respondents to release the imported watch forthwith in terms of the order-in-appeal dated 29.11.2019, rejecting the objections raised by the respondents as legally and factually unsustainable. The petition was allowed, and no costs were imposed.

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