2022 (9) TMI 1649 - HC - Customs

Provisional release of seized gold - petitioner has failed to cooperate in response to the show cause notice issued to him - HELD THAT - Looking to the fact that the objections have already been filed before the competent authority in so far as the seizure of the gold is concerned the order passed by the Tribunal assailed on the ground urged before us has lost its relevance. The release of the seized gold however is bound to be secured against an adequate bank guarantee. The Tribunal having considered the matter has already directed the respondent to furnish bond for full value of the seized gold. In so far as the release of gold on the basis of bank guarantee of 30% of the value of the gold with auto renewal clause is concerned the said clause is modified and it is provided that the respondent shall extend bank guarantee to the tune of 50% of the value of the gold with auto renewal clause in favour of the revenue authority. On fulfilling the two conditions modified above the gold seized by the revenue is directed to be released forthwith and preferably within a period of 10 days. The release of gold shall abide by the proceedings arising out of show cause notice dated 2.11.2021 issued under Section 124 of the Customs Act 1962. Appeal disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The legal judgment from the Allahabad High Court involves the following core legal questions:

• Whether the Customs, Excise & Service Tax Appellate Tribunal's order for the provisional release of seized gold was lawful and appropriate.
• What are the legal requirements for the provisional release of goods under the Customs Act, 1962?
• How should the objections filed in response to a show cause notice under Section 124 of the Customs Act, 1962, be addressed?
• What modifications, if any, should be made to the Tribunal's conditions for the release of the seized gold?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Lawfulness of the Tribunal's Order for Provisional Release

• Relevant Legal Framework and Precedents: The Customs Act, 1962, particularly Section 130, governs appeals against orders passed by the Customs, Excise & Service Tax Appellate Tribunal. The Tribunal's decision relied on precedent from a similar case, "Its My Name Pvt Ltd Vs. Additional Director General."
• Court's Interpretation and Reasoning: The High Court considered whether the Tribunal's decision to allow provisional release was appropriate given the appellant's alleged non-cooperation with the show cause notice.
• Key Evidence and Findings: The Tribunal permitted provisional release with conditions, including a bond for the full value of the gold and a bank guarantee for 30% of its value.
• Application of Law to Facts: The High Court affirmed the Tribunal's decision to require a bond for the full value of the gold but modified the bank guarantee requirement to 50% of the gold's value.
• Treatment of Competing Arguments: The appellant argued that the Tribunal's order was unsustainable due to non-cooperation. The High Court noted that objections had been filed and directed their resolution.
• Conclusions: The High Court upheld the Tribunal's order with modifications, emphasizing the need for security in the form of a bank guarantee.

Issue 2: Addressing Objections to the Show Cause Notice

• Relevant Legal Framework and Precedents: Section 124 of the Customs Act, 1962, outlines the procedure for issuing a show cause notice and addressing objections.
• Court's Interpretation and Reasoning: The High Court directed the Commissioner of Customs (Preventive) to address the objections filed by the petitioner in response to the show cause notice.
• Key Evidence and Findings: The petitioner filed objections on 1.2.2022, which needed to be addressed by the competent authority.
• Application of Law to Facts: The High Court emphasized the need for a reasoned and speaking order from the Commissioner of Customs.
• Treatment of Competing Arguments: The respondent did not object to the petitioner's request for the objections to be addressed.
• Conclusions: The High Court ordered the Commissioner to resolve the objections within two months, ensuring due process.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The release of the seized gold, however, is bound to be secured against an adequate bank guarantee."
• Core Principles Established: The necessity of securing provisional release with adequate financial guarantees; the importance of addressing objections to show cause notices promptly and fairly.
• Final Determinations on Each Issue: The High Court affirmed the Tribunal's order with modifications to the bank guarantee condition and directed the Commissioner of Customs to address the petitioner's objections expeditiously.

The judgment underscores the balance between allowing provisional release of seized goods and ensuring compliance with customs procedures through adequate security measures. It also highlights the importance of resolving procedural objections to uphold legal fairness and due process.