2021 (7) TMI 697 - HC - Customs

Rejection of request for provisional release of consignments - imported black pepper - Section 110A of the Customs Act 1962 - applicability of N/N. 21/2015-20 dated 25.07.2018 - Balance of convenience - HELD THAT - The commodity in question is agricultural produce. The variety of black pepper imported is stated to be specific to the region of Srilanka, an important ingredient in the making of spices used in Indian cuisine, with a short shelf life. Assuming for the sake of argument that investigation is concluded in favour of the petitioner, if the provisional release is not granted, the entire consignments would have been compromised. The balance of convenience would thus require that the consignments be released, subject to the petitioner being put to terms. This would also ensure that the interests of the Department are securely protected. The petitioner will remit the entire duty and furnish bond to the satisfaction of the Assessing Authority in regard to interest payable, penalty or charges that may be deemed necessary. The impugned order is set aside. It is made clear that nothing contained in this order will stand in the way of an independent enquiry by the authorities in the on-going investigation - Petition disposed off.

Summary

Issues:
Challenge to communication rejecting request for provisional release of seized black pepper consignments, interpretation of valuation under Customs Act, concerns regarding overvaluation by petitioner, ongoing investigation by DRI, rejection of provisional release request, confusion over adjudicating authority, rejection by Chief Commissioner, concerns over valuation and import practices, lack of incriminating material, balance of convenience for provisional release, agricultural nature of the commodity, direction for release of goods subject to conditions, waiver of demurrage charges.

Analysis:
1. The Writ Petition challenges the communication rejecting the petitioner's request for provisional release of seized black pepper consignments and seeks release under Section 110A of the Customs Act. The petitioner imported five consignments and sought their release from both DRI and Customs authorities, citing concerns raised by DRI regarding the valuation of the goods imported.

2. The crux of the litigation revolves around the valuation of the consignments as per a specific notification. The DRI expressed apprehensions that the goods were overvalued to facilitate their import under the notification, leading to an investigation into the pricing and payment practices of the importer. The DRI gathered information suggesting discrepancies in the declared value of the imports and the actual prices paid to overseas suppliers.

3. The DRI's communication indicated ongoing investigations and expressed no objection for provisional release of the goods, while the Deputy Commissioner rejected the request citing policy conditions. However, there was confusion over the adjudicating authority's identity, and the rejection by the Chief Commissioner was cryptic, considering the ongoing investigation.

4. The investigation revealed details of import practices by the petitioner, including discrepancies in pricing, payment terms, and sales prices in the domestic market. Despite concerns raised by the DRI, no concrete incriminating material was provided to substantiate the allegations of overvaluation, emphasizing that the current apprehensions lacked tangible evidence.

5. The High Court considered the balance of convenience and the nature of the agricultural commodity involved, emphasizing the importance of provisional release to prevent spoilage. The Court set aside the impugned order, directing the Deputy Commissioner to quantify duty and bond amounts, release the goods upon compliance, and left the issue of demurrage charges open for further consideration.

6. The judgment highlighted the need for a cautious approach balancing the interests of the petitioner and the Department, ensuring provisional release subject to specified conditions to safeguard both parties' rights. The Court emphasized the importance of ongoing investigations while granting relief to the petitioner to prevent irreparable harm to the consignments.

7. The Writ Petition was disposed of with no costs, allowing for an independent inquiry by authorities and directing the release of goods upon compliance with specified terms. The issue of demurrage charges was left open for further review, ensuring a comprehensive resolution to the complex legal and factual issues involved in the case.