2024 (2) TMI 1220 - HC - Customs

Provisional Release of seized of vehicle - Vehicle sold by the diplomat in breach of conditions of import - bona fide purchaser - liability of paying the entire differential duty and executing a bank guarantee - HELD THAT - Since the importer appears to be from the Embassy of the Lao People's Democratic Republic, and is currently not in India, it is highly unlikely that the Customs Department would be in a position to recover the duty from the original importer. In those circumstances, I am not inclined to accede to the request that the petitioner be permitted provisional release against payment of 50% duty. At the same time, it appears prima facie that the petitioner was a bona fide purchaser who purchased the vehicle not directly from the diplomat who imported it, but after it was transferred to other individuals in India. In those circumstances, it would be onerous and unreasonable to impose the requirement of the execution of a bank guarantee for a sum of Rupees one crore. Thus, W.P. is disposed of by modifying the conditions imposed under the impugned order by deleting the requirement under serial No.3 thereof pertaining to the provision of a bank guarantee for a sum of Rupees one crore. Subject to fulfilment of the two subsisting conditions in the impugned order, the vehicle shall be provisionally released within a period of one week.

Summary

Issues: Challenge to order directing conditional provisional release of a Toyota Land Cruiser imported without payment of duty by a diplomat, subsequent sale, and seizure under Customs Act.

Summary:
The Toyota Land Cruiser imported into India by a diplomat without payment of duty, subsequently sold in breach of conditions, and seized under the Customs Act. Upon the petitioner's application for provisional release, an order was issued with three conditions. The petitioner challenged the first and third conditions, arguing that the diplomat and the Embassy admitted liability for customs duty. The petitioner sought modification of conditions based on precedents from other High Courts. The respondents countered, stating that the diplomat breached import conditions, and referred to judgments dismissing similar petitions. The Court noted diplomatic immunity under international conventions but found it unlikely for the Customs Department to recover duty from the original importer, who was not in India. Recognizing the petitioner as a bona fide purchaser, the Court deemed it unreasonable to require a bank guarantee of Rupees one crore. Consequently, the Court modified the conditions, deleting the bank guarantee requirement and ordered provisional release of the vehicle within a week, subject to fulfilling the remaining conditions. No costs were awarded, and connected petitions were closed.