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2022 (2) TMI 265 - HC - CustomsSeeking provisional release of goods - Classification of imported goods - Naphtha - classified under the CTH 27101229 or not - seeking that the goods be released having regard to the fresh test report of the Indian Institute of Petroleum - Section 110A of the Customs Act, 1962 - HELD THAT - At this point of time without entering into any other controversy, we must pass an appropriate interim order that may protect the interest of both, the respondent No.1 also and at the same time the writ applicant DRI. It is very clear that even if the respondent No.1 is permitted to re-export the goods as ordered by the Tribunal, it is always open for the Department to initiate appropriate proceedings for the purpose of confiscation of the goods by issue of a show cause notice. All larger issues involved in this litigation shall be looked into and decided. The respondent No.1 is permitted to re-export the goods on the condition that the respondent No.1 shall furnish a running Bank Guarantee of an amount of ₹ 15 Crore of any Nationalized Bank in favour of the respondent No.2, Commissioner of Customs, Kandla. This would definitely protect the interest of the Revenue to some extent - The respondent No.1 be permitted to re-export the goods by using the nomenclature Naphtha and it is observed that using of the said nomenclature would not bind the Department (DRI) and would not entitle the respondent No.1 to raise a plea of estoppel in the proceeding that may be initiated by the DRI against the respondent No.1. Let Notice be issued to the respondents returnable on 17.02.2022. No notice now be issued to the respondent No.1 as Mr. Modh, the learned counsel already entered his appearance. Notice be issued respondent No.2 shall be served by Email. Direct service is permitted.
Issues Involved:
1. Legality of seizure of imported goods. 2. Provisional release of seized goods for export. 3. Maintainability of the writ application by the Directorate of Revenue Intelligence (DRI). 4. Compliance with the Tribunal's order by the Customs authorities. Detailed Analysis: 1. Legality of Seizure of Imported Goods: The respondent imported goods declared as "Naphtha" under CTH 27101229 at Kandla Port. The Commissioner of Customs, Kandla, doubted the declaration and sent samples for testing, which revealed the goods as "Natural Gasoline Liquid." Consequently, the entire consignment was seized under Section 110 of the Customs Act, 1962. The respondent challenged the seizure in the High Court, seeking to quash the seizure memo and release the goods based on fresh test reports from the Indian Institute of Petroleum and Geo-Chem Laboratories, which confirmed the goods as Naphtha. The High Court rejected the application, stating that seizure was an interim measure pending investigation, and the issue involved disputed facts. 2. Provisional Release of Seized Goods for Export: The respondent's application for provisional release under Section 110A of the Customs Act was rejected. The respondent appealed to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which set aside the Commissioner's order and allowed provisional release for export. The Tribunal noted that the goods were intended for export and withholding them would not prejudice the revenue. The Tribunal emphasized provisions of the Foreign Trade Policy and Hand Book Procedure, which discourage withholding export consignments and allow re-export of warehoused goods without customs duty. The Tribunal directed provisional release upon execution of a bond for the full value of the goods. 3. Maintainability of the Writ Application by the Directorate of Revenue Intelligence (DRI): The respondent raised a preliminary objection regarding the writ application's maintainability, arguing that an appeal under Section 130 of the Customs Act should be filed instead. The respondent also questioned the propriety of the writ application being affirmed by an Assistant Director of DRI, subordinate to the Commissioner of Customs. The High Court noted these objections but proceeded to hear the writ application on its merits. 4. Compliance with the Tribunal's Order by the Customs Authorities: The respondent filed a Miscellaneous application for the implementation of the Tribunal's order, which the Tribunal directed to be complied with immediately. The DRI challenged the Tribunal's order in the High Court, arguing that Section 110A does not allow provisional release for export and that the goods are liable to confiscation. The High Court acknowledged the need to protect both parties' interests and permitted the respondent to re-export the goods upon furnishing a bank guarantee of ?15 Crore by 31.01.2022. The Court allowed the re-export using the nomenclature "Naphtha" without binding the DRI or entitling the respondent to raise a plea of estoppel in future proceedings. Conclusion: The High Court balanced the interests of both the respondent and the DRI by allowing the re-export of goods under specific conditions while ensuring that the DRI's rights to pursue confiscation proceedings were preserved. The Court's interim order aimed to mitigate potential irreparable injury to the respondent while safeguarding the revenue's interests.
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