2022 (2) TMI 969 - HC - Customs

Rejection of permission to clear the goods said to have been imported from Abu Dhabi (Saudi Arabia) from the bonded warehouse - the case of the Department is that there are reasons to believe that the goods have not been imported from Saudi Arabia but those have been imported from Pakistan - HELD THAT - It is not in dispute that till this stage, there has been no seizure of the goods under Section 110 of the Customs Act. If there would have been a seizure under Section 110 of the Customs Act, then probably the writ applicant could also have moved an application for provisional release of the goods under Section 110-A of the Customs Act. Regulation 2 of the Regulations 1963 referred to above would come into play when the proper officer on account of any of the grounds specified in Sub-section 1 of Section 18 of the Customs Act is not able to make a final assessment of the duty on the issue of imported goods. There are many judgments of different High Courts which have been placed by Mr. Nayak for our consideration. One of the judgment of Delhi High Court in the case of SPIROTECH HEAT EXCHANGERS PVT LTD VERSUS UNION OF INDIA 2016 (3) TMI 37 - DELHI HIGH COURT takes the view that the provisional release of seized goods on the condition of payment of 100% of differential duty along with bank guarantee equivalent to 25% of differential duty and bond for 100% of value of the goods would be termed as very harsh condition and contrary to the judgments of the High Courts and Supreme Court. In the said case, the Delhi High Court directed to release the goods subject to the petitioner executing a bond in a sum equivalent to 100% value of the goods and further furnishing security in the form of bank guarantee for a sum equivalent to 30% of the differential duty. If something is found credible in the report on basis it could be said that the apprehension expressed by the Department as regards import of the goods from Pakistan is well founded, then we may put the writ applicant to certain terms and conditions for the purpose of release of the goods. Otherwise the provisional release is ordered subject to the writ applicant herein furnishing a bond of the amount equivalent to 200% of the duty which is leviable on such goods. Post this matter for further hearing on 03.03.2022 of top of the Board.

Summary

Issues: Customs Department's refusal to clear imported goods from bonded warehouse; Dispute over origin of goods; Application of Customs (Provisional Duty Assessment) Regulations, 1963; Provisional release of goods under Section 110-A of the Customs Act; Interpretation of Section 18 for provisional assessment of duty; Comparison with judgments of different High Courts on provisional release conditions.

Analysis:
1. The judgment concerns a dispute where the Customs Department has not allowed the petitioner to clear goods, alleged to be imported from Abu Dhabi, from a bonded warehouse, suspecting they are actually from Pakistan. The petitioner contends the goods are from a company in Abu Dhabi. The Department is conducting an inquiry to verify the origin, which may take time.

2. The petitioner's counsel highlights previous imports from Abu Dhabi and the supplying company's credentials. The Department questions the credibility of the supplying company. The issue arises whether the goods should be held in the bonded warehouse indefinitely during the inquiry, considering the value and rent paid for storage.

3. Reference is made to Customs (Provisional Duty Assessment) Regulations, 1963, which allow provisional assessment if the final duty cannot be determined immediately. The judgment clarifies the conditions for provisional assessment under Section 18 of the Customs Act, which includes situations where further inquiry is needed or documents are incomplete.

4. The judgment distinguishes between cases with and without seizure under Section 110 of the Customs Act, noting that provisional release under Section 110-A could be sought if there was a seizure. The application of Regulation 2 of the 1963 Regulations depends on the proper officer's inability to finalize duty assessment.

5. Various High Court judgments, including one from Delhi, are referenced regarding provisional release conditions. The judgment awaits the inquiry report to decide on the release terms. If the Department's concerns are substantiated, specific conditions may be imposed; otherwise, provisional release may be granted upon furnishing a bond equivalent to 200% of the duty leviable.

The judgment is scheduled for further hearing on 03.03.2022.