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2014 (1) TMI 12 - HC - CustomsConfiscation of goods - Import of PU Coated Fabric - Provisional release under Section 110A - Held that - relevant guidelines to the effect that the Bank Guarantee shall not exceed twice the amount of duty is not to apply to a case involving a serious fraud. In the present case, as the affidavit in reply indicates, there are allegations of serious fraud and malpractice on the part of the petitioners. Hence, we do not find that there is substance in that contention of the petitioners - an amount of Rs. 2 crores is lying in deposit with the Customs authorities, the extent of the Bank Guarantee demanded appears to be disproportionate. The adjudication is still pending and the allegations against the petitioner are still to be proved in the course of adjudication. What should be the correct assessable value has to be still determined on adjudication. The ends of justice would be met if the quantum of the Bank Guarantee is duly modified from 30% of the redetermined assessable value to 15% of the redetermined assessable value - no need to interfere with the terms and conditions imposed in the order for provisional release - Decided against assessee.
Issues:
Challenge to order of provisional release under Section 110A of the Customs Act, 1962 with specific conditions imposed. Detailed Analysis: Issue 1: Challenge to Order of Provisional Release The petitioners contested an order by the Commissioner of Customs granting provisional release under Section 110A of the Customs Act, 1962. The order included conditions such as payment of differential duty, furnishing a bond, securing a Bank Guarantee, and providing an undertaking regarding the goods' identity during adjudication/prosecution. Issue 2: Interpretation of Section 110(2) The petitioners argued that if no notice to show cause is issued within one year of goods' detention, Section 110(2) mandates unconditional release. However, the Court explained that Section 110(2) requires the return of goods if no notice under Section 124(a) is given within six months of seizure, extendable by the Commissioner for another six months. The absence of a time limit in Section 124(a) does not affect the validity of a notice issued beyond six months. Issue 3: Conditions for Provisional Release The petitioners specifically challenged the requirement to furnish a Bank Guarantee as part of the provisional release conditions. The Court noted discrepancies in the Bank Guarantee amount demanded compared to the differential duty, citing guidelines from the Manual of C.B.E. & C. regarding Bank Guarantee limits. Allegations of serious fraud and malpractice influenced the decision to uphold the Bank Guarantee condition. Issue 4: Modification of Bank Guarantee Quantum Considering the substantial amount already deposited with Customs authorities and the pending adjudication, the Court modified the Bank Guarantee requirement from 30% to 15% of the redetermined assessable value. The judgment directed the modification of the Commissioner's order accordingly. In conclusion, the petitions challenging the Commissioner's order were disposed of, with the modification of the Bank Guarantee quantum being the primary adjustment made. The judgment clarified the interpretation of relevant sections of the Customs Act and upheld the conditions for provisional release while making a specific alteration to the Bank Guarantee amount demanded.
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