M/s. Kuber Casting (P) Ltd. vs Union of India and Another <BR> M/s Ujjwal Enterprises Vs Union of India and Others

Bharat Bhushan Parsoon, J.—These three writ petitions having common questions of facts and law to be adjudicated, are being decided

together. The petitioners are engaged in importing and trading of goods. In their day-to-day conduct of business, they import certain articles which

are used as raw material for finished goods in which they trade or such articles are traded as such by them. In the course of importing of goods,

those were seized for one reason or the other, making the petitioners to undergo an arduous path for securing orders for provisional release of

goods imported by them. Petitioner in CWP No. 17123 of 2013 even had to knock at the doors of this Court by way of a civil writ petition with

prayer for deciding its representation pending with the authorities for provisional release of goods seized/detained by them.

For clarity of the issues for adjudication in these writ petitions, facts have been taken from CWP No. 10279 of 2013.

Petitioner-company located at Mandi Gobindgarh, in regular course of its business, had imported milling scrap being used by it as a raw material

for its finished products. Nine containers of heavy milling scrap were imported by the petitioner on 30.1.2013 under declaration of the goods as

heavy melting scrap in the bills of entry. In April 2013, again the petitioner had imported 19 containers of material consisting of re-rollable scrap

from Dubai whereas bills for entry were filed at CFS Ludhiana. For excess weight, the whole amount of duty was deposited. The respondents, in

stead of permitting clearance of goods, put those under seizure, vide seizure memo of 2.5.2013, alleging that there is mis-declaration in the

description as also in the weight at the time of filing IGM with an intention to evade custom duty. On request for provisional release of the goods

from the petitioner, provisional release letter was issued imposing certain conditions, alleged to be onerous, and aggrieved of which action of the

respondents, the petitioner has approached this Court by way of this writ petition.

Contesting the petitioner''s claim, stand of respondent No. 2 is that the petitioner had made mis-declaration about the description and weight of

the goods at the time of filing IGMs. Provisional release was ordered on the request of the importer to avoid levy of further detention charges.

Validity and legality of action of the respondents was asserted.

We have heard learned counsel for the parties and during that process, have perused the paper book.

Challenge of the petitioner is against seizure of the goods as also against legality of order of provisional release of the goods. On the other hand,

counsel for the respondents has asserted validity of the seizure of goods as also of order regarding provisional release thereof.

So far as seizure of goods, documents etc. is concerned, Section 110 of the Customs Act, 1962 (in short, the Act) holds the field. Provisional

release of the goods, documents etc. seized, pending adjudication may be released in terms of provisions of Section 110-A of the Act. In terms of

Section 128 of the Act, order of seizure of goods etc. made u/s 110 of the Act is appealable to Commissioner (Appeals) but order for provisional

release of goods made u/s 110 of the Act is claimed by the petitioner to be non-appealable. For ready reference, provisions of Section 110 of the

Act are reproduced hereunder:-

SECTION 110A. Provisional release of goods, documents and things seized pending adjudication. -

Any goods, documents or things seized u/s 110, may, pending the order of the adjudicating authority, be released to the owner on taking a bond

from him in the proper form with such security and conditions as the adjudicating authority may require.

Provisional release of goods in case of the petitioner was ordered by the competent authority, communication of which order was made to the

petitioner on 3.5.2013. For provisional release of the goods ordered by the authorities, following conditions were imposed:-

i. Furnishing of Bond for the full value of seized goods along with Bank Guarantee/cash deposit/fix deposit of nationalized Bank equal to 25% of

value of seized goods; and

ii. Payment of differential duty on the seized goods.

The question is whether the conditions so imposed by the authorities are onerous and thus, are required to be set aside?

It is a conceded case that duty has already been paid by the petitioner. There is dispute of classification of goods. Concededly the goods are

not prohibited. Even though duty stood paid even prior to examination of the petitioner, chances of dispute of value and classification of the goods

would normally be there.

Now the question arises as to whether notwithstanding payment of duty as declared and assessed in the bills of entry and when no duty is

outstanding to be paid, the petitioner is still required to do the following:-

(i) to furnish a bond for the full value of the seized goods;

(ii) furnish bank guarantee/cash deposit/fix deposit of nationalized Bank to the tune of 25% of the value of seized goods; and

(iii) payment of differential duty on the goods seized.

No doubt, in terms of provisions of Section 110 of the Act, the adjudicating authority may require furnishing of a bond from the owner with

security and conditions as he may require but it would still remain subject matter of judicial scrutiny as to whether the conditions so imposed have

requisite relationship with the object of securing interest of the revenue to be achieved or on the face of these are onerous and amount to

harassment to the petitioner.

When Section 110 of the Act, providing for provisional release does not lay down specific conditions or definite parameters for exercise of

such power, resort can definitely be made to the Customs (Provisional duty assessment) Regulation, 1963 as guidelines contained therein would

also apply to seizure of goods to be dealt with u/s 110 of the Act.

In a case where bank guarantee of 25% of value of goods under challenge was demanded, such condition was held to be not proper,

particularly when the seized goods were cleared by the Customs and duty as demanded was paid. Reference may be made to Nav Shakti

Industries Pvt. Ltd. v. Commissioner of Customs, ICD, New Delhi 2001 (267) E.L.T. 438. Modifying the order of High Court of Delhi, Hon''ble

Supreme Court of India had issued direction for clearance of the goods by the customs authorities on furnishing of a bank guarantee of 30% of the

differential duty.

In Zest Aviation Private Ltd. and Another Vs. Union of India and Others, bank guarantee of 30% of differential duty with undertaking of self-

renewal till final disposal of the case was held to be reasonable and condition of bank guarantee of Rs. 16.00 crore was termed as harsh and

burdensome.

Claim of the custom authorities is that the petitioner has indulged in genuine transactions, and thus, should not be allowed any relief particularly

when statutory remedy is available to it and making short-circuiting, the petitioner had invoked the forum of judicial review under the writ

jurisdiction.

When questioned what statutory remedy is available to the petitioner vis-a-vis justiciability of conditions being reasonable, no convincing

answer has come forth.

No doubt, this Court does not act as a court of appeal against the decision of customs authorities but when no remedy is available to the

petitioner against an order imposing highly onerous conditions passed by the authorities and circumstances are peculiar, this Court will not hesitate

to interfere by entertaining a petition under Article 226 of the Constitution of India to come to the rescue of the petitioner who has been left

remediless under the statute.

When duty levied by the authorities at the time of initial clearance of the goods has been paid, then furnishing of bank guarantee/cash deposit/fix

deposit, even to the extent of 25% of the full value of seized goods is certainly highly onerous condition which makes the relief of provisional

release to be nugatory for them.

So far as condition of furnishing of bond for the value of seized goods and payment of differential duty is concerned, these do not put

extraordinary financial burden on the petitioner and do not constitute impediment in normal business functioning of the petitioner.

Sequelly, condition of furnishing of bank guarantee/cash deposit/fix deposit equal to 25% of the full value of seized goods is not only harsh but

squeezes out the petitioner to the extent of pushing it out of the system.

Goods were seized on 2.5.2013. Order of provisional release was communicated to the petitioner on 3.5.2013. Because of the onerous

conditions imposed by the authorities, relief of provisional release could not be availed by the petitioner. Exercise of powers in such autocratic and

despotic manner by the authorities is deprecated.

While accepting the writ petition partly, the order of provisional release is set aside retaining it to the extent of furnishing of bond equivalent to

the value of the seized goods and deposit of differential duty. Availing of facility of provisional release, by no means, would be taken as

acquiescence on the part of the petitioner to the order of seizure of goods which the petitioner would be within its right to challenge in appropriate

proceedings.