2022 (11) TMI 650 - AT - Customs

Seeking provisional release of imported goods seized - dry dates - country of origin - department is of the contention that the packing bags bear the name of some Pakistani Company - whether the goods imported by importer is of Pakistan origin or UAE origin? - HELD THAT - As per the facts all the bags do not bear the name of Pakistani Company. It is also found that the bags do not bear name of any dates manufacturer Company or dates supplier of Pakistan. All the documents submitted by the appellant show that the goods are of UAE origin. However, the investigations are under process, therefore on the basis of investigation and outcome of the adjudication, it can be finally ascertained that whether the goods imported by the appellant is of Pakistan origin or UAE origin. Therefore, at present considering the stage of investigation only a prima facie view can be drawn. Since the goods have been provisionally released. The dispute of ownership of the goods is no longer subject matter in the present case. Moreover, there is no dispute that Ms. Bharti is the proprietor of M/s. K L International and the department also issued summons to her, a criminal case was also filed in the court of law against her. Therefore, at this stage, the issue of identity cannot be said to be in dispute. Section 110A of the Customs Act, 1962 provides for provisional release of goods, documents and things seized pending adjudication. Any goods, documents or things seized under Section 110 of the Act, may, pending the order of the adjudicating officer, be released to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require - Discretion is cast upon the adjudicating authority for determining the value of the bond to be taken and the security deposit as also the conditions to be imposed while passing an order for provisional release of the goods. The exercise of this discretion has to be fair and reasonable and should not be exercised on irrelevant considerations. The goods namely dry dates being edible is obviously in the perishable nature. It has been considered consistently by various forums that in case of perishable goods provisional release of the goods should be allowed expeditiously. On this ground also the appellant deserve for leniency as regard the condition for provisional release of the goods. The ends of justice will be met when provisional release of the goods is allowed on execution of bond for 100% value of seized imported goods with Bank guarantee for an amount of Rs. 1 crore and an payment of duty applicable on the import of dry dates of UAE origin - Appeal allowed.

Summary

Issues Involved:

1. Dispute over the country of origin of imported goods.
2. Reasonableness of conditions imposed for provisional release of seized goods.
3. Provisional release of perishable goods.
4. Adjudication of alleged mis-declaration and evasion of customs duty.

Detailed Analysis:

1. Dispute over the country of origin of imported goods:
The primary issue in this case is whether the imported dry dates are of UAE origin as declared by the importer or of Pakistani origin as alleged by the Department of Revenue Intelligence (DRI). The DRI's contention is based on the presence of bags bearing the name of a Pakistani company. However, the appellant argues that only a few bags had such markings and that these were reused bags, while the dates themselves were produced in the UAE. The tribunal noted that not all bags bore the name of a Pakistani company and that the documents submitted by the appellant indicated UAE origin. The tribunal concluded that the final determination of the country of origin would depend on the ongoing investigation and adjudication process.

2. Reasonableness of conditions imposed for provisional release of seized goods:
The appellant challenged the condition requiring a bank guarantee or cash deposit of Rs. 12 crores for the provisional release of the seized goods. The tribunal examined Section 110A of the Customs Act, 1962, which allows for the provisional release of seized goods pending adjudication, subject to the execution of a bond and security as required by the Commissioner of Customs. The tribunal emphasized that the discretion exercised by the adjudicating authority must be fair and reasonable. Citing precedents such as *Spirotech Heat Exchangers Pvt. Ltd. v. Union of India* and *Kundan Rice Mills Ltd.*, the tribunal found that the condition of a Rs. 12 crore bank guarantee was excessively harsh and contrary to established legal principles.

3. Provisional release of perishable goods:
The tribunal recognized that the imported dry dates are perishable and have been stored in a warehouse for almost a year, leading to a decrease in their market value. The tribunal noted that various forums have consistently held that perishable goods should be released expeditiously. In light of this, the tribunal found that leniency should be applied in setting the conditions for the provisional release of the goods.

4. Adjudication of alleged mis-declaration and evasion of customs duty:
The tribunal clarified that the question of whether the appellant mis-declared the country of origin and evaded customs duty would be adjudicated by the appropriate authority. The tribunal's focus was solely on the reasonableness of the conditions imposed for the provisional release of the goods.

Conclusion:
The tribunal modified the impugned order, allowing the provisional release of the seized goods upon execution of a bond for 100% of the value of the goods and a bank guarantee of Rs. 1 crore, along with the payment of applicable duty on the import of dry dates of UAE origin. The tribunal emphasized that this decision was limited to the provisional release and would not influence the ongoing investigation and adjudication. The appeal was allowed in these terms.