2022 (6) TMI 629 - HC - Customs

Seeking provisional release of imported goods - Goods detained on the ground of undervaluation and it was alleged that the declared value was only 10% of the actual value - HELD THAT - Admittedly, permission to ware house the said goods imported under section 49 of the Act, was given on 01.06.2015 and summons dated 04.06.2015 under section 108 of the Act, came to be issued, calling upon the Director of the respondent / writ petitioner to appear for enquiry on 04.07.2015, which was a Saturday. Thereafter, no communication / show cause notice was issued nor the goods detained were released, according to the respondent / writ petitioner and therefore, they preferred petition seeking a mandamus to the appellants to release the subject goods in terms of section 110A of the Act. The learned counsel appearing for both sides made elaborate arguments, citing case laws, for and against the impugned order passed by the learned Judge, in directing the appellants to release the subject goods unconditionally. Ultimately, they fairly submitted that the same were raised only for academic interest and the Act was subsequently, amended and the subject matter in issue is pending consideration before the Hon'ble Supreme Court. It is also submitted that the subject goods lying in the custody of the Department, which are perishable in nature, have now, become obsolete and therefore, the same are of negligible value. This court is of the opinion that no further orders need be passed with respect to release of the subject goods at this stage, except directing the appellants to complete the adjudication proceedings, if not completed earlier, and pass appropriate orders, on merits and in accordance with law, as expeditiously as possible - Appeal disposed off.

Summary

Issues Involved:
1. Provisional release of imported goods.
2. Issuance of show cause notice under Section 124(a) of the Customs Act, 1962.
3. Conditions imposed for provisional release.
4. Delay in clearance and release of goods.
5. Jurisdiction and maintainability of subsequent writ petitions.

Issue-wise Detailed Analysis:

1. Provisional Release of Imported Goods:
The respondent imported LED spare parts and filed Bill of Entry No. 8915658 dated 15.04.2015. The goods were not cleared due to alleged undervaluation. The respondent sought provisional release under Section 110A of the Customs Act, 1962, but the conditions imposed were considered onerous. The court noted that the appellants allowed provisional release subject to execution of a bond for the full value of the goods and a bank guarantee for 110% of the estimated duty evasion amount.

2. Issuance of Show Cause Notice under Section 124(a) of the Customs Act, 1962:
The court observed that no show cause notice was issued within six months or the extended period as stipulated under Section 110(2) of the Act. The learned Judge in the writ petition directed the release of goods as no action was initiated within the prescribed time frame. The court cited the principle that the failure to issue a show cause notice within the stipulated time entitles the person from whose possession the goods were seized to their return.

3. Conditions Imposed for Provisional Release:
The appellants imposed conditions for provisional release, including a bond for the full value of the goods and a bank guarantee for 110% of the estimated duty evasion. The court acknowledged that while passing an order for provisional release, the appellants could impose necessary conditions to protect revenue interests. However, the respondent argued that these conditions were onerous and led to further legal action.

4. Delay in Clearance and Release of Goods:
The respondent faced significant delays in the clearance and release of goods, causing business disruptions. The court noted that the goods arrived in April 2015, and despite repeated requests and legal actions, the goods were not released. The learned Judge in the writ petition directed the release of goods due to the appellants' failure to issue a show cause notice within the prescribed time.

5. Jurisdiction and Maintainability of Subsequent Writ Petitions:
The respondent filed multiple writ petitions seeking the release of goods. The appellants argued that the second writ petition was not maintainable as the respondent did not comply with or challenge the provisional release order. The court noted that the right to unconditional release under Section 110(2) of the Act is absolute and independent of provisional release under Section 110A. The learned Judge allowed the second writ petition, directing the release of goods unconditionally.

Conclusion:
The court concluded that no further orders were necessary regarding the release of the subject goods, which had become obsolete. The appellants were directed to complete the adjudication proceedings and pass appropriate orders on merits and in accordance with law. The writ appeal was disposed of accordingly, with no costs.