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2022 (1) TMI 776 - HC - CustomsRefund of excess amount deposited - Mandatory pre-deposit - Seeking closure of bonds and return of Bank Guarantee - Import of oxygen sensors and loud speakers for use and inputs in the manufacture of ICU ventilators without payment of customs duty - benefit of exemption Notification No.20/2020-CUS dated 09.04.2020 read with Customs (Import of goods at Concession rate of duty) Rules, 2017 availed - HELD THAT - In the light of the undisputed fact that the Order-in-Original dated 10.03.2021 itself states that the petitioner had a period of 60 days to prefer an appeal under Section 128 of the said Act of 1962 coupled with the Circular dated 16.09.2014 and the decision of this Court in M/S ORACLE INDIA PVT. LTD. VERSUS UNION OF INDIA, NEW DELHI OTHS. 2013 (7) TMI 720 - KARNATAKA HIGH COURT , the impugned letters dated 11.03.2021 and 16.03.2021, whereby the respondents have encashed the bank guarantee and invoked the continuity bonds in respect of the entire disputed amount as directed in the impugned order is not only contrary to law and the facts and probabilities of the case but also opposed to the principles of natural justice, in that no opportunity, much less reasonable or sufficient opportunity was provided to the petitioner to prefer an appeal within the statutory period of 60 days and the respondents have hastily and hurriedly proceeded to issue the impugned letters which cannot be countenanced under any circumstances whatsoever and the same deserve to be quashed. The petitioner is right in his contention that the maximum liability to deposit the disputed amount in the appeal already preferred by the petitioner, which is pending adjudication is 7.5% of the disputed amount out of the total sum of ₹ 34,09,343/- as directed in the Order-in-Original; it follows therefrom that in view of my finding that the impugned letters / orders are illegal and arbitrary and deserve to be quashed, by also applying the principles of restitution, it is necessary to direct the respondents to refund / repay any sum in excess of ₹ 34,09,343/- back to the petitioner pending disposal of the appeal and by issuing necessary directions in this regard - Petition allowed.
Issues:
1. Quashing of impugned letters dated 11.03.2021 and 16.03.2021 2. Recovery of customs duty and encashment of bank guarantee 3. Violation of statutory appeal period 4. Legal validity of invoking continuity bonds 5. Refund of excess amount and principles of restitution Analysis: 1. The petitioner sought quashing of letters dated 11.03.2021 and 16.03.2021 issued by respondent No.2. The petitioner imported goods availing customs duty exemption but was later asked to pay customs duty. Respondent No.2 enforced recovery without waiting for the statutory appeal period, leading to the petitioner's grievance. 2. The petitioner contended that recovery before the appeal period expired was unjust. The Court found the action illegal and arbitrary, citing Section 128 of the Customs Act, Circular dated 16.09.2014, and precedents. The Court held that encashment of bank guarantee and invoking continuity bonds prematurely was against the law and principles of natural justice. 3. The Court emphasized that the respondents were not justified in recovering the disputed amount before the 60-day appeal period. The impugned letters were deemed contrary to law and natural justice. The Court directed the quashing of the letters and emphasized the need for providing a reasonable opportunity to appeal within the statutory period. 4. The petitioner's counsel argued for the maximum liability to deposit in the pending appeal. The Court agreed that the impugned actions were illegal and arbitrary. It ordered the respondents to refund any excess amount to the petitioner and retain only 7.5% of the disputed sum. The Court invoked the principles of restitution to ensure fairness in the process. 5. In the final order, the Court allowed the petition, quashed the impugned letters, and directed the respondents to refund the excess amount to the petitioner. The respondents were instructed to retain a specified sum as a pre-deposit for the pending appeal. The Appellate Authority was directed to consider and decide on the appeal in accordance with the law. This detailed analysis covers the issues raised in the judgment comprehensively, outlining the legal arguments, court findings, and the final directives issued by the Court.
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