2021 (7) TMI 1113 - HC - Customs

Seeking return of bank guarantees furnished - import of Areca Nuts - no SCN issued within six months from the date of seizure of the goods - HELD THAT - The goods had been seized in exercise of powers under Sub-section (1) of Section 110 of the Act. On the other hand, it appears that they had been kept in the custody of the proper officer, pending verification of the country of origin certificate. It appears that there was no seizure of goods, as envisaged under Section 110(1) of the Act. On the other hand, the instant case relates to clearance of imported goods as governed by Chapter VII of the Act. Sections 45, 48 and 49 deal with the manner in which the imported goods ought to be kept pending their clearance upon submission of bills of entry under Section 46 thereof. In the present case the customs authorities had not seized the goods on such reasonable belief that they are liable to confiscation. On the other hand, the goods had been kept in custody in exercise of powers under Section 45 of the Act, pending its clearance. Therefore, no case of unconditional release of the goods in the factual matrix with reference to sub-section (2) of Section 110 of the Act is made out - with concern that the provisional clearance of the goods is pending consideration for over 2 and years purportedly on the ground of verification of genuineness of the certificate with regard to country of origin. The scheme of the Act does not permit the customs authorities to undertake such an exercise for an indefinite period of time. Hence, the customs authorities cannot be permitted to continue such exercise indefinitely and keep the petitioner bound to the sureties furnished by them. Petition disposed off.

Summary

Issues:
1. Return of bank guarantees furnished by petitioner for provisional release of imported goods.
2. Interpretation of provisions under Section 110 and Section 45 of the Customs Act, 1962.
3. Whether goods were seized under Section 110 or kept in custody under Section 45 of the Act.
4. Duration of provisional assessment and return of bank guarantees.

Issue 1: Return of Bank Guarantees
The petitioner approached the High Court seeking the return of bank guarantees furnished for the provisional release of imported goods. The goods were detained for verification of the certificate of origin, and the petitioner had complied with the court's order to furnish bank guarantees equivalent to 30% of the differential duty. The petitioner argued that as no show-cause notice was issued within six months of seizure under Section 110 of the Act, the goods should be unconditionally released, and the bank guarantees returned.

Issue 2: Interpretation of Sections 110 and 45
The Court analyzed Sections 45 and 110 of the Customs Act. Section 45 mandates that imported goods remain in custody until cleared for home consumption or warehousing. Section 110 deals with the seizure of goods liable for confiscation. The Court noted that in this case, the goods were kept in custody under Section 45 for provisional assessment, not seized under Section 110 based on a reasonable belief of confiscation.

Issue 3: Seizure or Custody under the Act
The Court determined that the goods were not seized under Section 110 but kept in custody for provisional assessment under Section 45. Even if the goods were considered seized, the Court held that the situation fell under Section 110A, allowing for conditional release, not unconditional release. The Court emphasized the need for timely conclusion of provisional assessments and the impermissibility of indefinite verification processes.

Issue 4: Duration of Provisional Assessment
The Court directed the customs authorities to conclude the provisional assessment within six months from the order's communication. Failure to do so would result in the return of the bank guarantees furnished by the petitioner. The Court balanced the equities by not immediately returning the guarantees but ensuring a time-bound resolution of the assessment process.

In conclusion, the High Court disposed of the Writ Petition, providing directions for the customs authorities to expedite the provisional assessment and return the bank guarantees if the assessment is not concluded within the specified timeframe.