2013 (7) TMI 761 - HC - Customs

Provisional relaease - validity of the Order of provisional release was challenged - Held that - Without expressing any view on the correctness of the contentions raised by the Petitioners court deem it appropriate to direct that the Commissioner of Customs (Preventive) shall reconsider the basis on which provisional release of the goods has been ordered under the provisions of the Customs Act, 1962 - the matters involving a factual determination - it is but necessary that all relevant facts having a bearing on the determination of value even for the purposes of provisional assessment should be duly considered by the Commissioner of Customs (Preventive) petition decided against the assessee.

Summary

Issues:
Challenge to order for provisional release and substitution of corporate guarantee instead of a bank guarantee.

Issue 1: Challenge to Order for Provisional Release
The Petitioners challenged an order for provisional release dated 11 October 2012, seeking to release goods detained due to suspected customs duty evasion. The goods, imported via high seas sale, were detained based on intelligence suggesting duty evasion. The Department claimed that the assessed value was incorrect, seizing the consignments under Section 111(m) of the Customs Act, 1962. The Petitioners sought provisional release, complying with conditions like customs duty payment, bond, bank guarantee, and an undertaking. A subsequent request for substitution of a corporate guarantee instead of a bank guarantee was declined by the Additional Commissioner of Customs (Preventive) on 4 March 2013.

Issue 2: Basis of Provisional Release Calculation
The Petitioners disputed the computation of provisional duty, raising three objections during the hearing. Firstly, they argued that the unit values used did not reflect the standard manufacturer discount. Secondly, they contested the addition of charges not part of their agreement with the supplier. Thirdly, they objected to the classification of the goods under different Customs Tariff headings. The Court found merit in these objections, directing the Commissioner of Customs (Preventive) to reconsider the basis of the provisional release. The Court emphasized the need for a factual determination considering all relevant facts affecting the value assessment.

Issue 3: Reconsideration and Fresh Order
The Court directed the Petitioners to appear before the Commissioner of Customs (Preventive) for a hearing on 1 April 2013. The Commissioner was instructed to review the provisional release basis and issue a fresh order within two weeks of the hearing. The Commissioner was granted the authority to modify the terms of provisional release after due consideration in accordance with the law. The Court disposed of the challenge to the extension of the notice issuance period, noting the ongoing investigation by Customs authorities.

In conclusion, the High Court of BOMBAY HIGH COURT addressed the challenge to the order for provisional release and the request for substitution of a corporate guarantee. The Court found discrepancies in the computation of provisional duty and directed the Commissioner of Customs (Preventive) to reconsider the basis for the release. The Petitioners were granted a hearing to present their submissions, and the Commissioner was tasked with issuing a fresh order post-hearing. The Court upheld the extension of the notice issuance period, emphasizing the ongoing investigation by Customs authorities.