2010 (7) TMI 198 - HC - Customs

Release of goods Bank guarantee Order seeking bank guarantee assailed on the ground that authorities empowered to demand surety or security in the nature of bond and not bank guarantee. Held that discretion cannot be said as exercised improperly when petitioner required to furnish security by way guarantee. Provisions permitting order to deposit 20% of differential amount provisionally assessed and request for furnishing bank guarantee in lieu of such amount rejected. Impugned order upheld.

Summary

Issues Involved:
1. Legality of the order dated 12.05.2010 by the Assistant Commissioner, Customs.
2. Requirement to furnish a bank guarantee for the differential duty.
3. Compliance with the earlier court order dated 07.05.2010.
4. Provisional assessment of duty under Section 18 of the Customs Act, 1962.

Detailed Analysis:

1. Legality of the Order Dated 12.05.2010 by the Assistant Commissioner, Customs:
The petitioners challenged the order dated 12.05.2010, where the Assistant Commissioner directed them to deposit Rs.40,62,907/- (20% of the provisional duty) and furnish a bank guarantee for Rs.1,62,51,627/-. The court examined this order in light of Section 18 of the Customs Act, 1962, and the Customs (Provisional Duty Assessment) Regulations, 1963. The court found that the Assistant Commissioner acted within his powers as per these provisions, which allow the proper officer to require such security as deemed fit for the payment of any deficiency between the duty finally assessed and the provisional duty.

2. Requirement to Furnish a Bank Guarantee for the Differential Duty:
The petitioners argued that the Customs authorities should not demand security by way of a bank guarantee. The court referred to Regulation 4 of the Customs (Provisional Duty Assessment) Regulations, 1963, which permits the proper officer to require a bond with surety or security, or both, as deemed fit. The court held that a bank guarantee is a recognized mode of security and that the proper officer's discretion to demand it was valid and exercised properly.

3. Compliance with the Earlier Court Order Dated 07.05.2010:
The petitioners had previously approached the court, resulting in an order on 07.05.2010, which required them to file a Bill of Entry and complete provisional assessment formalities by 15.05.2010. The court noted that the Assistant Commissioner's subsequent order on 12.05.2010 was consistent with this prior directive, as it outlined the steps for provisional assessment and security requirements. The court found no deviation from the earlier order.

4. Provisional Assessment of Duty under Section 18 of the Customs Act, 1962:
The court emphasized that Section 18 of the Customs Act, 1962, allows for provisional assessment when necessary documents or information for duty assessment are not available. The proper officer is authorized to direct the importer to furnish security for any potential duty deficiency. The court confirmed that the Assistant Commissioner followed this statutory framework, requiring the petitioners to execute a bond and provide a bank guarantee.

Conclusion:
The court concluded that the Assistant Commissioner's order dated 12.05.2010 was lawful and in accordance with the statutory provisions. The petition was dismissed, and the court clarified that upon compliance with the bond and security requirements, the proper officer must finalize the provisional assessment and permit the removal of the wreck within three working days. The court also rejected the petitioners' request to secure the entire differential duty by way of a bank guarantee instead of depositing 20% of the provisional duty, as this would contradict the statutory provisions.