2018 (8) TMI 1413 - HC - Customs

SEZ Unit - Reexport the consignment of goods which the petitioner desired to import - detention of goods on the ground of wrong valuation - Held that - Since investigation is still going on, the petitioner would also have full liberty to defend its position in adjudication that may be initiated - there is no observation made to prejudice one side or the other. What prima facie appears is that now that the goods are allowed to be re-exported, the question of payment of customs duty, on revised valuation even if it were to be ultimately established, would not survive. Of course there would be question of penalty and personal penalties in case the charges of mis-declaration while attempting to import the goods are established - the condition of Bank Guarantee to 25% of the customs duty that may be leviable on the re-determined value of the goods. The condition for providing bond for the remaining value of the goods remains unchanged upon which condition being fulfilled within three weeks, the petitioner may be permitted to reexport the goods. Petition disposed off.

Summary

Issues: Challenge to condition in communication for re-export of goods, valuation dispute, imposition of penalties under Customs Act.

Challenge to Condition in Communication for Re-export of Goods:
The petitioner, a private limited company with a manufacturing unit in SEZ, Kandla, challenged a condition in a communication dated 03.07.2018 regarding the re-export of imported goods detained by Customs authorities. The permission for re-export was subject to executing a bond for the full value of the goods redetermined by DRI and furnishing a bank guarantee equivalent to 25% of its value. The petitioner no longer wished to clear the goods due to a valuation dispute. The DRI estimated the value at &8377; 253.38 lacs, significantly higher than the declared value of &8377; 14.29 lacs. The authorities alleged undervaluation by the petitioner's Director, supported by an independent valuation report.

Valuation Dispute:
The petitioner argued that the valuation declared cannot be changed without proper basis, especially as a SEZ unit with an established history. They contended that since they no longer wished to import the goods, customs duty on the differential value should not apply. The respondents, however, claimed strong evidence of gross undervaluation to evade customs duty and potential loss due to diversion of goods. The Court acknowledged the ongoing investigation and the possibility of penalties under section 112 of the Customs Act for misdeclaration.

Imposition of Penalties under Customs Act:
In light of the circumstances, the Court modified the condition of the bank guarantee to 25% of the customs duty leviable on the re-determined value of the goods. The petitioner was required to provide a bond for the remaining value within three weeks to re-export the goods. The judgment highlighted that while penalties under section 112 of the Customs Act could apply if misdeclaration charges were proven, maximum penalties were not mandatory in every case. The decision aimed to balance the interests of both parties and facilitate the re-export process while addressing potential penalties under the Act.