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2025 (3) TMI 698 - AT - CustomsSeeking provisional release of seized goods under Section 110A of the Customs Act 1962 - appropriateness of the bank guarantee and bond requirements imposed by the Commissioner of Customs for the provisional release of goods - applicability of Board Circular No. 35/2017-Cus dated 16.08.2017 - HELD THAT - It is found that exports to be undertaken by the party must not be hinded through the supporting manufacturer i.e. Vasundhra as of now in the view of new authorisation dated 16.04.2024. The bond condition as laid down by the Commissioner will prevail till the time the duty penalty interest redemption fine etc. are paid by the party as may be adjudicated. As far as protection of revenue is concerned it is directed that an undertaking may be taken from the supporting manufacturer to the effect that (a) he has machinery and other infrastructure to process these imported goods (b) he will carry out processing of the remaining seized goods and will hand over the same to the appellant for its exportation. While the bank guarantee condition is quite onerous and deserves to be reduced. The interest of Revenue ad-interim may need protection. Conclusion - The impugned order modified by reducing the bank guarantee requirement and allowing the appellant to offer immovable property as security. The provisional release of the goods are released. Appeal is partly allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS Provisional Release of Seized Goods The legal framework for provisional release under Section 110A of the Customs Act, 1962, allows for the release of goods pending investigation, subject to conditions such as furnishing a bond and bank guarantee. The Court acknowledged the perishable nature of the goods (chickpeas) and their eligibility for provisional release under the said section. The Court noted that the DRI's ongoing investigation into the alleged violation of the advance authorization scheme does not preclude provisional release, especially given the perishable nature of the goods. Bank Guarantee and Bond Requirements The Commissioner of Customs required a bank guarantee of Rs. 1,06,56,771/- and a bond equal to the value of the goods (Rs. 2,42,19,936/-). The Court examined the reliance on Board Circular No. 35/2017-Cus, which outlines the requirement for a bond and bank guarantee to cover potential duty, fine, and penalties. The Court found that the Commissioner had adhered to the Circular's guidelines but failed to provide specific reasoning for the bank guarantee amount, as required by para 2.3 of the Circular. The Court emphasized the necessity for the adjudicating authority to exercise independent judgment rather than solely relying on the Circular. Amendments to Advance Authorization The appellant argued that subsequent amendments to their advance authorization, including naming M/s. Vasundhara Industries as the supporting manufacturer, were not considered by the adjudicating authority. The Court recognized the potential impact of these amendments on the appellant's obligations and the procedural nature of any violations. The Court acknowledged that if the goods are released and exported, the duty element may be mitigated, thereby reducing the appellant's financial burden. Balancing Revenue Interests and Business Operations The Court highlighted the need to balance the interests of revenue protection and the appellant's business operations. It acknowledged the appellant's offer to hypothecate immovable property as an alternative to the bank guarantee, provided the property's value exceeds the bank guarantee amount and is free from encumbrances. The Court directed that an undertaking be obtained from the supporting manufacturer, Vasundhara Industries, confirming their capability to process and export the goods. This measure aims to ensure that the export proceeds are realized, benefiting the national interest. SIGNIFICANT HOLDINGS The Court modified the impugned order by reducing the bank guarantee requirement and allowing the appellant to offer immovable property as security. The Court directed the provisional release of the goods within a week of submitting the requisite documents, thereby facilitating the appellant's export activities. "The bond condition as laid down by the Commissioner will prevail till the time the duty, penalty, interest & redemption fine, etc. are paid by the party as may be adjudicated." The Court emphasized the need for the adjudicating authority to provide specific reasoning for the bank guarantee amount, aligning with para 2.3 of the Board Circular. The appeal was partly allowed, with the Court ensuring that the appellant's business operations are not unduly hindered while safeguarding revenue interests through alternative security measures.
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