2020 (9) TMI 450 - HC - Customs

Provisional release of car imported - only area of dispute is that according to the petitioner, the imported vehicle is a brand new one whereas according to the respondents, it is a second hand model - HELD THAT - It is admitted that petitioner has paid the entire duty of ₹ 72,48,875.00 on the declared assessable value of the imported car of ₹ 33,71,569.00. It is also an admitted position that the vehicle is under seizure, seizure being made on 20.03.2020 though under detention since 11.01.2020 and that it has neither been confiscated nor adjudication has commenced. Section 110 of the Act deals with seizure of goods, documents and things. Sub-section (1) says that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. While we are not called upon to adjudicate on the correctness of the decision to seize the imported vehicle in the present proceeding, what is relevant to note is that the condition precedent for seizure of any goods is that the proper officer must have reason to believe that such goods are liable to confiscation under the Customs Act. Confiscation is provided under section 111. Therefore, contention of the respondents that the vehicle was seized under section 111(d) is not correct. Seizure was made under section 110 perhaps on the belief that the vehicle is liable to confiscation under section 111(d). As a matter of fact, section 110A provides a pragmatic mechanism to facilitate provisional release of seized goods etc. to the owner pending adjudication but at the same time protecting the interest of the revenue. Keeping the above in mind, the provision is required to be understood and applied. This Court modified the order of provisional release by directing provisional release of the Ferrari F 430 car subject to petitioner executing a bond for full value and furnishing bank guarantee of any nationalized bank for ₹ 15 lakhs. Further condition imposed was that petitioner should not create any third party right, title or interest in the said imported car till adjudication proceedings reached finality - When the statute itself provides for provisional release of seized goods, merely on the ground that the good in question is a prohibited one or that the aggrieved person has filed appeal before the CESTAT cannot be the reason not to exercise the statutory discretion conferred by section 110-A. Petition disposed off.

Summary

Issues Involved:
1. Provisional release of the imported car.
2. Classification of the car as new or second-hand.
3. Compliance with the Customs Act, 1962.
4. Application of Section 110-A of the Customs Act.
5. Reference to past judicial decisions.

Issue-wise Detailed Analysis:

1. Provisional Release of the Imported Car:
The petitioner sought a direction for the provisional release of a car imported and seized by customs authorities. The car, a brand new 2019 RHD Ford Mustang GT Coupe, was detained and seized, and the petitioner had paid the customs duty amounting to ?72,48,875.00. Despite requests for provisional release, no decision was taken, prompting the petitioner to file an appeal with the CESTAT, which was non-functional due to the lockdown. The petitioner then filed the present writ petition.

2. Classification of the Car as New or Second-hand:
The customs authorities, upon examination, found modifications suggesting the car was a second-hand model, possibly from 1967, thus violating the import policy and categorizing it as a prohibited good. The petitioner disputed this, asserting that the car was brand new and questioning the examination by customs officers and a chartered engineer.

3. Compliance with the Customs Act, 1962:
The vehicle was seized under Section 111(d) of the Customs Act, 1962, for being a prohibited good. The petitioner contended that the seizure was unjustified and that the vehicle had been under detention and seizure for over six months without adjudication or confiscation.

4. Application of Section 110-A of the Customs Act:
Section 110-A allows for the provisional release of seized goods pending adjudication. The petitioner argued that this provision confers a right to seek provisional release, and the respondents must exercise discretion judiciously. The respondents, however, emphasized the car's classification as a prohibited good, arguing against provisional release without the petitioner's cooperation.

5. Reference to Past Judicial Decisions:
The petitioner referenced the case of Ashish Puravankara Vs. Commissioner of Customs (Import), where the court directed the provisional release of an imported Ferrari F 430 car under certain conditions. The court found this case applicable, noting that Section 110-A does not restrict provisional release based on the classification of goods as prohibited.

Judgment Summary:
The court considered the facts, noting the dispute over the car's classification and the petitioner's payment of customs duty. The court clarified that Section 110-A provides a mechanism for provisional release of seized goods, protecting revenue interests while pending adjudication. The court referenced the Ashish Puravankara case, emphasizing that the statute allows for provisional release without restrictions based on the classification of goods.

The court issued the following directions:
1. The petitioner must execute a bond for the assessable value of the car.
2. The petitioner must furnish a bank guarantee of 50% of the assessable value.
3. The petitioner must not create any third-party rights in the car until adjudication reaches finality.
4. Upon compliance, the respondents must provisionally release the car and all original documents within two weeks.

The writ petition was disposed of with these directions, and the order was to be digitally signed and acted upon by all concerned parties.