2022 (2) TMI 1180 - HC - Customs

Seeking direction against the Respondents to allow the export of the goods detained by D.R.I. - HELD THAT - The intervenor has no locus to seek any relief in respect of goods which are subject matter of this Petition in this Writ Petition. The rights, if any, claimed by the intervenor on the basis of the agreement entered into between the Applicant and the Intervenor are subject matter of the arbitration proceedings. We are thus not inclined to Applicant/Intervenor to intervene in these proceedings. Intervention Application filed by the Intervenor bearing Interim Application No. 3417 of 2021 is accordingly rejected. There is no dispute that, the Writ Petition filed by the Petitioner seeking various reliefs is already admitted by this Court and is pending for hearing and final disposal. The goods in-question were seized on 27th December 2021. The goods are of perishable nature. The Assistant Commissioner of Customs himself has considered the grant of provisional release and allowed on two conditions. In so far as condition No.(a) is concerned, the Applicant has no objection to comply with the said condition. In so far as the condition No.(b) is concerned, in our view the bank guarantee insisted by the Respondents in the sum of ₹ 1,07,98,800/- can be reduced on the condition that, if the Applicant makes any claim for refund of any amount or any other incentive due to the Petitioner on completing the export of the consignments which are subject matter of the Order dated 12th January 2022, will not press for such claim during the pendency of the Writ Petition filed by it. The Applicant is directed to execute bond of full FOB value in the sum of ₹ 5,39,93,999/- within two weeks from today - In addition to the execution bond, the Applicant is directed to furnish bank guarantee in the sum of ₹ 25,00,000/- of a Nationalized Bank in the name of Principal Commissioner of Customs, Nagpur, in accordance with the Order dated 12th January 2022, duly modified by this Order within two weeks from today.

Issues:
1. Detention of goods by D.R.I., Mumbai Zonal Unit, Mumbai for export.
2. Provisional release conditions set by Assistant Commissioner of Customs.
3. Dispute over bank guarantee requirement for release of goods.
4. Intervention application by M/s. Golden Tobacco Limited.
5. Rights of intervenor in arbitration proceedings.
6. Co-operation of Applicant with investigation.
7. Concerns over recovery of amount by Respondents.
8. Modification of conditions for provisional release.

Issue 1: Detention of Goods
The Applicant sought permission to export goods detained by D.R.I., Mumbai Zonal Unit, through an interim application and a writ petition. The goods, high-value tobacco products, were detained on 22nd/23rd September 2021. The Applicant argued that the goods were perishable, and continued detention would lead to deterioration.

Issue 2: Provisional Release Conditions
The Assistant Commissioner of Customs permitted provisional release of the goods subject to two conditions: execution of a bond of full FOB value and furnishing a bank guarantee with a self-renewal clause. The Applicant agreed to execute the bond but objected to the bank guarantee requirement as harsh and arbitrary, citing significant losses due to the detention.

Issue 3: Dispute Over Bank Guarantee
The Respondents insisted on the bank guarantee to ensure recovery of any amount owed by the Applicant post-export. The Court modified the bank guarantee amount to ?25,00,000 and directed its submission along with the bond within two weeks. The bank guarantee would remain valid based on the Writ Petition's pendency.

Issue 4: Intervention Application
M/s. Golden Tobacco Limited filed an intervention application opposing the export of goods by the Applicant, citing an arbitration petition in Delhi High Court. The Court rejected the intervention, stating the matter was subject to arbitration proceedings and not within the intervenor's locus.

Issue 5: Rights of Intervenor
The Court highlighted that the intervenor's claims based on an agreement with the Applicant were part of arbitration proceedings. The Court emphasized that the intervenor had no right to seek relief regarding the goods in question in the Writ Petition.

Issue 6: Co-operation with Investigation
The Respondents alleged lack of cooperation from the Applicant in the investigation. The Respondents expressed concerns that allowing export without the bank guarantee could hinder recovery efforts post-export.

Issue 7: Recovery of Amount by Respondents
The Respondents argued that without the bank guarantee, they might face challenges in recovering amounts owed by the Applicant post-export. They expressed apprehension that the Applicant might claim refunds and other benefits post-export.

Issue 8: Modification of Conditions
The Court modified the conditions for provisional release, directing the Applicant to comply with the bond and reduced bank guarantee requirements. The Court emphasized that any claims for refunds or incentives post-export would be kept in abeyance during the Writ Petition's pendency.

In conclusion, the Court disposed of the interim application, directing the Applicant to fulfill the bond and bank guarantee requirements for the provisional release of goods, emphasizing the importance of compliance with the modified conditions to ensure justice and fair proceedings.

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