2022 (4) TMI 216 - AT - Customs

Seeking provisional release of goods - no notice issued for seizure of goods - quantum of security - Section 110A of the Customs Act, 1962 - HELD THAT - This appeal is against an order fixing the terms of provisional release of goods sought by the appellant. The value of goods is ₹ 1,91,91,322.23 and the approximate differential duty comes to ₹ 20,65,915/-. The competent authority has fixed the terms of provisional release as a bond equal to goods and bank guarantee equal to 2.5% times the duty amount. The competent authority has relied on circular no. 35 of 2017-Cus dated 16.08.2017 - It is apparent that in terms of clause i, ii and iii of para 2.2. of the said Circular, the Bank Guarantee should include the differential duty, the amount of fine that may be levied in lieu of confiscation under Section 125 of the Customs Act, 1962 and the amount of penalties that may be levied under Customs Act, 1962. The said Circular gives discretion to the Competent Authority to increase or decrease the amount of security deposit depending on facts of the case. In the instant case the Competent Authority has fixed the security amount as 2.5 times the duty amount. From the defense presented by the appellant, it has not been denied that the goods seized were imported goods. The grounds of appeal do not contest the quantification of duty on merits as there is no specific arguments in the appeal memorandum or in the written submissions filed by the appellant except some general statements. No notice issued for seizure of goods - HELD THAT - The seizure was made on 13.10.2020 and the said seizure order is not subject matter of challenged in the present proceedings. The entire appeal of the appellant before the lower authorities as well as Tribunal is only for the relaxation in the terms of Provisional release, there has not been any challenge to seizure before lower authorities. Validity of quantum of security fixed by the lower authorities - HELD THAT - In the instant case, the goods were cleared from the Customs area and were lying in the premises of the appellant. Part of the goods were further processed. Moreover, from the entire quantity detained by the Revenue, 75% of the same was found to be of Indian Origin and for the rest the Revenue is yet to issue the Show Cause Notice - the amount of security of 2.5 times the differential duty is excessive, the same is reduced to the amount equal to differential duty quantified in the order. The bond amount will continue to remain equal to the value of the goods. Appeal allowed in part.

Summary

Issues:
1. Challenge to terms of provisional release under Section 110A of the Customs Act, 1962.
2. Discretion of Competent Authority in fixing the security amount for provisional release.
3. Delay in issuing a notice post-seizure.
4. Quantum of security deposit in relation to differential duty amount.

Analysis:

1. The appeal filed by M/s Mukesh Steel challenges the terms of provisional release set by the Deputy Commissioner under Section 110A of the Customs Act, 1962. The appellant contests the stringent conditions imposed, arguing that the Circular No. 35/2017-Cus does not provide specific guidelines for determining the bond and bank guarantee amounts. The appellant relies on precedents where lower security amounts were accepted for release of goods. The appellant asserts that a significant portion of the detained goods were domestically procured, emphasizing the undue delay in releasing them.

2. The Competent Authority's discretion in setting the security deposit is a key issue. The Authorized Representative highlights Circular No. 35/2017-Cus, which grants flexibility to the authority in fixing provisional release conditions. The representative cites a Tribunal case where a high bank guarantee was set relative to the duty amount, emphasizing the authority's power to determine security amounts based on case specifics. The ongoing investigation status is mentioned to justify the delay in issuing a Show Cause Notice.

3. The appellant raises concerns regarding the delay in issuing a notice post-seizure, citing a Bombay High Court case to support the argument that in such instances, the seizure should be vacated. However, the Tribunal notes that the challenge in the present appeal solely pertains to the terms of provisional release and not the seizure itself, as no challenge to the seizure was made before lower authorities.

4. Evaluating the quantum of security deposit, the Tribunal finds the 2.5 times differential duty amount as excessive. Considering that a significant portion of the detained goods were of Indian origin and the remaining goods were yet to receive a Show Cause Notice, the Tribunal reduces the security amount to match the differential duty quantified in the order. The bond amount remains unchanged at the value of the goods, and the appeal is partly allowed based on these adjustments.

This comprehensive analysis of the judgment delves into the issues raised by the appellant, the Competent Authority's discretion, the delay in issuing a notice post-seizure, and the Tribunal's decision on the quantum of security deposit, providing a detailed overview of the legal reasoning and precedents considered in reaching the final decision.