2016 (4) TMI 924 - AT - Customs

Provisional release of seized aircrafts - Section 110A of Customs Act, 1962 - Aircrafts originally imported and assessed provisionally to duty - Assessment and duty liability are yet to be finalized by the authorities even after 5 years of original import. Held that - the appellants sold these aircrafts to foreign buyers. These aircrafts left India and were brought back again on lease agreement. The present seizure and provisional release is with reference to improper export and re-import of these aircrafts. The conditions for release has been fixed as execution of bond for full value of the aircrafts and supported by bank guarantee for full duty liability of these aircrafts. After considering the background, while furnishing bond for the full value can be considered as proper. insistence of bank guarantee of full duty liability is apparently a harsh condition followed by the decision of the Tribunal in appellant s own case involving similar set of facts reported in in 2016 (3) TMI 558 - CESTAT CHENNAI . Accordingly, the orders for provisional release to the extent of reducing the bank guarantee to 20% of the duty liability as fixed and ordered by the original authority is modified, Bond will be for full value of the aircrafts. - Appeal disposed of

Summary

Issues:
- Provisional release of seized aircrafts under section 110A of Customs Act, 1962
- Conditions imposed for provisional release
- Duty liability on re-importation of aircrafts
- Applicability of notifications for exemption and concession
- Similarity with Tribunal's previous decision on the matter

Analysis:
1. Provisional Release of Seized Aircrafts: The judgment involved three appeals concerning the provisional release of seized aircrafts under section 110A of the Customs Act, 1962. The appellants had imported the aircrafts, which were later sold to a foreign company and re-imported to India on a lease agreement. The customs authorities seized the aircrafts due to improper export and re-import procedures, leading to the need for provisional release.

2. Conditions Imposed for Provisional Release: The appellants challenged the conditions set for the provisional release, arguing that they were onerous and required modification. The conditions included furnishing a bond equal to the value of the aircrafts and a bank guarantee equal to the customs duty leviable on the aircrafts. The appellants contended that these conditions were harsh, especially considering the uncertainty surrounding the duty liability of the aircrafts.

3. Duty Liability on Re-importation: The Customs authorities asserted that the aircrafts were liable for confiscation under specific sections of the Customs Act due to improper documentation during export and re-import. The appellants claimed eligibility for exemption under notification No. 94/1996 Cus and concession under other notifications, emphasizing that there was no customs duty implication in the transactions.

4. Applicability of Notifications: The appellants relied on previous Tribunal decisions involving similar circumstances to support their claim for modified conditions of release. They argued that the movement of the aircrafts did not entail duty liability and that they should be granted relief based on the notifications cited.

5. Tribunal's Decision: After hearing both parties and examining the case details, the Tribunal acknowledged the complexity of the situation, noting the unresolved duty liability issues even years after the original import. The Tribunal found the bank guarantee requirement for full duty liability to be overly stringent and decided to modify the provisional release orders. Following the precedent set in a previous case, the Tribunal reduced the bank guarantee to 20% of the duty liability while maintaining the bond for the full value of the aircrafts.

In conclusion, the judgment addressed the challenges faced by the appellants regarding the provisional release of seized aircrafts, the duty liability implications, and the applicability of relevant notifications. The Tribunal's decision to modify the conditions for release based on the specific circumstances of the case demonstrates a balanced approach to resolving the issues at hand.