2023 (12) TMI 697 - HC - Customs

Finalization of provisional assessment - release of Bank Guarantee which had been furnished by the petitioner awaiting finalization of the provisional assessment proceedings - HELD THAT - The claim for interest as raised by the petitioner clearly merits acceptance. As it is found the DRI had duly completed the COO Certificates verification exercise and had also shared the requisite results thereof with the respondents. Despite the above the respondents failed to conclude the provisional assessment proceedings. The information in respect of the COO Certificate verification had been shared with the field authorities way back in 2016. There was thus no justification for the respondents having failed to render a closure to the proceedings at that stage itself. We were also not apprised of any other legal impediment that may have operated and restrained the respondents from finalizing the provisional assessment. It also becomes pertinent to note that the provisional assessment itself was initiated not on an allegation of any undervaluation or wrongful declaration of the value of goods the same was founded solely on the opinion formed by the respondents that the COO Certificates merited verification. In view of the above it is opined that the indolence exhibited by the respondents is rendered wholly arbitrary. The respondents are directed to release the BG and any other monies retained forthwith subject to whatever final orders that they may choose to pass while finalizing the provisional assessment proceedings - petition allowed.

Summary

Issues Involved:
1. Finalization of Provisional Assessment of Bill of Entry.
2. Release of Bank Guarantee.
3. Delay in Finalization of Provisional Assessment.
4. Entitlement to Refund and Interest.

Summary:

1. Finalization of Provisional Assessment of Bill of Entry:
The petitioner, engaged in the import and trading of gold jewelry, sought directions to finalize the provisional assessment for Bill of Entry No. 2894698 dated 12 October 2015. The consignment was supported by valid documentation, including the Certificate of Country of Origin (COO). The Customs authorities invoked Sections 17 and 18 of the Customs Act, 1962, for provisional assessment, doubting the COO Certificates and requiring verification.

2. Release of Bank Guarantee:
To secure the provisional release of the imported goods, the petitioner submitted a Bank Guarantee (BG) and a Bond. Despite complying with all requirements, the provisional assessment was not finalized, prompting the petitioner to seek directions for the release of the BG.

3. Delay in Finalization of Provisional Assessment:
The Customs authorities failed to finalize the assessment despite multiple reminders and representations from the petitioner. The Directorate of Revenue Intelligence (DRI) had verified the COO Certificates by March 2016 and shared the results with the Customs authorities. However, the provisional assessment remained incomplete for over seven years.

4. Entitlement to Refund and Interest:
The Court found the delay in finalizing the provisional assessment unjustified. It emphasized that the Customs authorities had no basis to doubt the COO Certificates and criticized the prolonged retention of the BG. The Court referenced precedents that condemned the practice of holding BGs without timely adjudication. The petitioner was held entitled to a refund of the BG amount along with interest at 6% per annum from 17 March 2016 until repayment, compensating for the wrongful retention of funds.

Conclusion:
The writ petition was allowed, directing the respondents to release the BG and any retained monies immediately. The petitioner was awarded interest on the refund due to the unjustified delay in finalizing the provisional assessment.