2015 (4) TMI 989 - HC - Customs

Benefit of concessional rate of duty - Imports from Srilanka under the Indo-Srilanka Free Trade Agreement - Held that - Respondent authorities have not, in the impugned communications, referred to any instances of defaults or irregularities in the imports effected by the petitioners. The sole reason, on the basis of which a provisional assessment is contemplated, is the fact that there are investigations currently under way in respect of certain other imports of betel nuts,at Cochin. - mere existence of an investigation in respect of other persons cannot be the basis for a detention of goods that have been imported by the petitioners, more so, in a case where the respondent authorities have not been able to identify any irregularity in the imports effected by the petitioners. I do take note, however, of the fact that, the investigation that is currently underway is essentially one that is undertaken to determine whether there is any irregularity in the certificates issued by the Government of Srilanka, to support the contention of the importers that they are entitled to the benefit of the concessional rate of duty. In that sense, therefore, there is an interest of the revenue, that needs to be protected while permitting clearance of imported consignments of arecanut. - on the petitioners complying with the aforesaid conditions, which are in modification to the conditions specified in Exts.P6 and P7 communications, the respondent authorities shall forthwith release the imported consignments to the petitioners. - Decided partly in favour of assessee.

Summary

Issues:
Import of betel nuts under Indo-Srilanka Free Trade Agreement, provisional assessment of duty, genuineness of documents, differential duty demand, detention of goods, Bank Guarantee requirement, completion of enquiry within specified time limit.

Analysis:
The judgment involves two writ petitions concerning the import of betel nuts under the Indo-Srilanka Free Trade Agreement. The petitioners claimed the concessional rate of duty for their imports. In one case, the bill of entry was assessed, and duty was paid, while in the other case, assessment was pending despite customs examination of the goods. The customs authorities raised doubts about the genuineness of documents proving the goods' Srilankan origin, citing ongoing investigations into other betel nut imports. The authorities demanded a portion of the differential duty as a condition for clearing the goods, leading to the petitions challenging these demands.

The court noted that the provisional assessment was based solely on ongoing investigations into other imports, without identifying any irregularities in the petitioners' imports. While acknowledging the revenue protection interest in verifying certificates supporting concessional duty claims, the court found no grounds for detaining the petitioners' goods. Consequently, the court allowed the petitions, permitting provisional clearance of the imported goods upon payment of admitted duty liability at the concessional rate, furnishing a bond for the differential duty, and providing a Bank Guarantee for 20% of the demanded differential duty.

The modified conditions specified by the court required compliance with the Indo-Srilanka Free Trade Agreement, submission of a Bank Guarantee, and payment of differential duty if the concessional rate was found inapplicable. The court directed the customs authorities to release the goods upon meeting these conditions. Additionally, the authorities were instructed to conclude the ongoing enquiry within six months from the judgment's receipt to ensure timely resolution of the matter.