2021 (2) TMI 407 - HC - Customs

Non-clearance of goods on the ground that verification / enquiry is pending - Origin of Goods - Principles of Natural Justice - serious allegation is that without affording any opportunity to the petitioner in respect of meeting any deficiency the petitioner had been asked to opt or request for provisional assessment for purpose of clearing the goods on furnishing the security 100% bank guarantee for the difference between the duty provisionally assessed under Section 18 of the Act and the preferential duty claimed - HELD THAT - It is apparent that when the verification was initiated no record was available with the respondents nor any communication was made to the petitioner that the verification was being under Rule 6(1)(a) or Rule 6(1)(b) or Rule 6 (4)(c) of the CAROTAR 2020 and hence there was no reference to the security (BG). However from the records as produced which are the posterior records such as the communication dated 30.10.2020 Annexure-3 to the reply filed by the respondent No.3 and the communication dated 24.11.2020 Annexure-D to the reply filed by the respondent No.3 or the communication dated 20.11.2020 Annexure-E to the reply filed by the respondent No.3 it appears to this court that verification is on mis-declaration . The petitioner was not afforded any opportunity to meet the purported deficiency for which the clearance has been refused. No observation on the legality or regularity of the process of verification on merit is called for at this stage considering that the verification is still inconclusive. But in the emerged circumstances the assessing officer and the other respondent-authorities are directed to provisionally assess the duty and to release the goods on obtaining an indemnity bond to be submitted by the petitioner binding himself to deposit the duty or the difference between the duty that would be assessed by the competent authority on verification and the preferential duty within a period of 7(seven) days. In the event of failure to deposit the assessed duty on completion of verification within the said stipulated time the payable duty shall carry interest at the rate of 15% per annum from 26.09.2020 till the said duty is deposited. The provisional assessment in respect of the goods covered under the Bill of Entry dated 26.09.2020 shall be completed within a period of two days from the date of receipt of a copy of this order. After furnishing of the indemnity bond those goods be released within next 24 (twenty four) hours. Petition disposed off.

Summary

Issues Involved:
1. Verification of Certificate of Origin.
2. Delay in assessment and clearance of goods.
3. Compliance with CAROTAR 2020 and SAFTA regulations.
4. Requirement for provisional assessment and security deposit.
5. Allegation of mis-declaration of origin.

Detailed Analysis:

1. Verification of Certificate of Origin:
The petitioner, an importer, submitted a Certificate of Origin to avail concessional customs duty under SAFTA. The respondents initiated verification of this certificate. The petitioner argued that while verification is permissible, it should not delay the assessment or clearance indefinitely without passing an order, adhering to natural justice principles.

2. Delay in Assessment and Clearance of Goods:
The petitioner imported soybean oil from Bangladesh on 26.09.2020 and submitted all requisite documents. However, the goods were warehoused without duty assessment under Section 17 of the Customs Act. The petitioner contended that the assessment should have been completed promptly, especially given the perishable nature of the goods. The delay led to financial losses and warehousing costs.

3. Compliance with CAROTAR 2020 and SAFTA Regulations:
The petitioner claimed compliance with CAROTAR 2020, providing all necessary information supporting the Certificate of Origin. Despite this, the customs authorities held up the clearance, citing ongoing verification. The petitioner highlighted that the earlier rules under SAFTA were amended by CAROTAR 2020, which required additional information beyond the Certificate of Origin.

4. Requirement for Provisional Assessment and Security Deposit:
The customs authorities suggested provisional assessment under Rule 6(4)(c) of CAROTAR 2020, requiring the petitioner to furnish a security deposit. The petitioner argued that this was unjust and implied a failure to provide requisite information, which was not the case. The petitioner refused to opt for provisional assessment, asserting that all necessary documents had been submitted.

5. Allegation of Mis-declaration of Origin:
The respondents raised doubts about the origin of the goods, suspecting mis-declaration. The petitioner was not informed of specific reasons for these doubts or asked for additional information. The customs authorities' letters indicated a need for further verification but did not communicate this to the petitioner, leading to a lack of opportunity to address the concerns.

Judgment:
The court noted that the petitioner had not challenged the verification process but objected to the lack of opportunity to address deficiencies. The court directed the customs authorities to provisionally assess the duty and release the goods upon the petitioner furnishing an indemnity bond. The bond would cover the difference between the duty assessed after verification and the preferential duty claimed. The provisional assessment was to be completed within two days, and the goods released within 24 hours after the bond submission. The court emphasized adherence to due process and timely resolution to avoid undue financial hardship to the petitioner. The writ petition was disposed of with no order as to costs.