2021 (4) TMI 1231 - HC - Customs

Verification regarding the Certificate of Origin produced - Concessional rate of Customs Duty - whether the verification is random verification falling under Rule 6(1)(c) of the CAROTAR, 2020 or the verification falls under the category leveled by Rule 6(1)(b) of the CAROTAR, 2020? - HELD THAT - The petitioner has brought categorical allegation against the respondents that he has furnished all requisite documents and information for clearance but the imported goods have been ware-housed without any reason being disclosed to the petitioner whether those goods were held up for any verification regarding the Certificate of Origin produced by the petitioner for availing the concessional rate of the customs duty or for any other reason. This allegation has been levelled in para-7 of the writ petition and in reply thereof, the respondents have evaded any specific reply - The said reply does not conform to any verification under Rule 6(1)(b) of the CAROTAR, 2020 which is structured on the failure to provide the requisite information, as no such information was asked from the petitioner. The said verification cannot be treated as prima facie verification under Rule 6(1)(b) of the CAROTAR, 2020, rather it would prima facie come under Rule 6(1)(C) of the CAROTAR, 2020. Thus, Rule 5(b) of CBEC s circular No.38/2016-customs dated 22.08.2016 will apply in the present case. The respondents are directed to release the imported goods under the Bill of Entry No.659390/INP/AGT-LCS/2020-21 dated 26.12.2020 on obtaining an indemnity bond to be submitted by the petitioner binding himself to deposit the duty meaning the difference between the duty that would be assessed by the competent authority on verification and the preferential duty which has been paid by the petitioner - Petition allowed.

Summary

Issues Involved:
1. Non-assessment and warehousing of imported goods without reason.
2. Non-communication of verification status regarding the Certificate of Origin.
3. Application of CAROTAR, 2020 and the requirement of a bank guarantee.
4. Legal implications of random verification under CAROTAR, 2020.
5. Petitioner's remediless situation due to non-clearance of perishable goods.

Detailed Analysis:

1. Non-assessment and warehousing of imported goods without reason:
The petitioner imported soybean oil but the goods were directed to be warehoused without assessing the duty under Section 17 of the Customs Act, 1962, and without assigning any reason. The petitioner had deposited IGST amounting to ?2,34,191/- and requested clearance of the imported goods, but the respondent authority did not clear the goods nor assessed the duty. The petitioner questioned the order passed by the respondent authorities as impermissible under Sections 17 and 18 of the Customs Act, 1962.

2. Non-communication of verification status regarding the Certificate of Origin:
The petitioner alleged that he was not informed whether his goods were held up for verification regarding the Certificate of Origin or for any other reason. The petitioner declared and observed the requirements of the CAROTAR, 2020, and submitted the Certificate of Origin issued by the competent authority in Bangladesh. The respondents did not provide a specific reply to the petitioner's allegation, merely stating that preferential treatment of customs duty was denied until the doubt on the Country of Origin certificate was resolved.

3. Application of CAROTAR, 2020 and the requirement of a bank guarantee:
The petitioner contended that under Rule 6 of the CAROTAR, 2020, no bank guarantee is required when the department initiates verification on a random basis. This was supported by CBEC’s circulars which provide guidelines for provisional assessment under Section 18 of the Customs Act. The petitioner argued that his case fell within the category of random verification and thus no bank guarantee should be required. The respondents, however, stated that the verification was initiated under Rule 6(1)(b) of the CAROTAR, 2020, due to the petitioner's failure to provide requisite information.

4. Legal implications of random verification under CAROTAR, 2020:
The petitioner relied on a previous court decision which directed provisional assessment and release of goods on obtaining an indemnity bond without requiring a bank guarantee for random verification. The respondents maintained that the verification was not random but due to discrepancies in the cost break-up and packaging materials provided by the petitioner. The court needed to determine whether the verification was random under Rule 6(1)(c) or due to failure to provide information under Rule 6(1)(b) of the CAROTAR, 2020.

5. Petitioner's remediless situation due to non-clearance of perishable goods:
The petitioner emphasized that the assessment could not be denied indefinitely for perishable goods and urged the court to direct the respondents to release the goods and assess the duty without requiring a bank guarantee. The court directed the respondents to release the imported goods on obtaining an indemnity bond from the petitioner, binding him to deposit the duty difference assessed after verification.

Conclusion:
The court concluded that the verification initiated by the respondents did not conform to Rule 6(1)(b) of the CAROTAR, 2020, as no specific information was requested from the petitioner. The verification was deemed to fall under Rule 6(1)(c), thus no bank guarantee was required. The respondents were directed to release the goods on obtaining an indemnity bond from the petitioner, with the duty difference to be deposited within seven days of assessment. The writ petition was allowed to the extent indicated, and the record was returned.