Gujarat High Court
Besto Tradelink Limited vs Principal Commissioner Of Customs on 28 April, 2022
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/1796/2022 ORDER DATED: 28/04/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 1796 of 2022
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BESTO TRADELINK LIMITED
Versus
PRINCIPAL COMMISSIONER OF CUSTOMS
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Appearance:
MR TIRTH NAYAK(8563) for the Petitioner(s) No. 1,2
MR DHAVAL D VYAS(3225) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 28/04/2022
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 By this writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the following reliefs:
"(A1) the Respondents to forthwith release the consignment imported under Bill of Exchange No. 4964569 by the Petitioner;
(A2) quash and set aside the communication dated Annexure-A issued by the Respondents No. 2 in so far as the same pertains to the Petitioner No.1; (A3) command the Respondents and/or its concerned officers to pay/refund detention/demmurage/shipping charges paid by the Petitioner No. 1.
In the Alternative Direct the Respondent No. 1 authority to waive the detention/demurrage/shipping charges payable by the Petitioner No. 1.
(B) During the pendency and final disposal of this petition, (1) stay the implementation, operation and execution of the impugned communication dated 25.10.2021 at Annexure-A hereto issued by Respondent No. 2in so far as the same pertains to the Petitioner No.1 Page 1 of 8 Downloaded on : Mon May 02 20:30:14 IST 2022 C/SCA/1796/2022 ORDER DATED: 28/04/2022 and unconditionally release the consignment imported under Bill of Exchange No. 4964569 by the Petitioner;
In the alternative
(ii) stay the implementation, operation and execution of the impugned communication dated 25.10.2021 at Annexure-A hereto issued by Respondent No.2,in so far as the same pertains to the Petitioner No.1 and provisionally release the consignment imported under Bill of Exchange No. 4964569 by the Petitioner.
(C) Grant ex-parte ad-interim relief in terms of para (B) above be granted;
(D) Award cost of this petition.
(E) Pass such other and further orders as may be deemed just and expedient, in facts of the present case, in favour of the Petitioners."
2 We need not delve much into the facts of this case as we intend to dispose of this writ application with appropriate directions and observations and further, the orders passed by this Court time to time would make the picture abundantly clear. While issuing notice, this Court passed the following order dated 28th January 2022:
"1 We have heard Mr. Tirth Nayak, the learned counsel appearing for the writ applicants.
2 Prima facie, it appears from the materials on record that the writ applicants herein imported Raw Magnesite from Abu Dhabi. The goods came to be seized by the respondent No.2 herein at the Adani Port. The respondent No.2 has some information that the writ applicants have, in fact, not imported the subject goods from Abu Dhabi, but those have been imported from Pakistan.
3 Although the respondent No.2 herein has ordered provisional release of the subject goods, yet those have been released on the condition that the writ applicants shall furnish a bond of full value of the goods with bank guarantee of the differential duty calculated at 200% BCD and IGST at appropriate rate. Mr. Nayak would submit that the condition imposed by the respondent No.2 for the provisional release of the subject goods could be termed as unreasonable and onerous. He would submit that even otherwise, the very seizure of the subject goods is illegal as there is no violation of any of the rules or Page 2 of 8 Downloaded on : Mon May 02 20:30:14 IST 2022 C/SCA/1796/2022 ORDER DATED: 28/04/2022 regulations by the writ applicants so far as the import of the subject goods is concerned. He would submit that the goods in question are neither prohibited nor restricted. However, Mr. Nayak pointed out that there appears to be a policy that if the goods are imported from Pakistan, then there shall be a levy of 200% duty on such goods. He reiterated that the goods have not been imported from Pakistan, but those have been imported from Abu Dhabi. He further pointed out that in the past, five times such type of goods have been imported by the writ applicants without any question at the end of the respondents.
4 Let Notice be issued to the respondents, returnable on 3rd February 2022. Direct service is permitted.
5 In the meantime, Mr. Nayak shall furnish one set of his entire paper book to Mr. Devang Vyas, the learned Additional Solicitor General of India, who would be appearing for the respondents.
6 On the returnable date, notify this matter on top of the Board."
3 Thereafter, the following order came to be passed on 10 th February 2022:
"1. We have heard this matter for quite some time. We recollect that this is a litigation in which the Customs Department has not permitted the writ applicant to clear the goods said to have been imported from Abu Dhabi (Saudi Arabia) from the bonded warehouse. The goods are in the form of Manganese Ore. 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. In accordance with the policy, if the goods are imported from Pakistan, the duty leviable is @ 200%. The case of the writ applicant is that the goods have been imported from a Company based at Abu Dhabi (Saudi Arabia).
2. Mr. Dhaval Vyas, the learned senior standing counsel appearing for the Department submitted that the DRI at the instance of the Customs Authority has undertaken necessary inquiry as to whether the goods have in fact been imported from Abu Dhabi or the same have been imported from Pakistan. According to Mr. Vyas, the inquiry may take some time before the Department is able to reach to any proper conclusion.
3. Mr. Tirth Nayak, the learned counsel appearing for the writ applicant would submit that in the past, on five occasions, his client imported such goods from Abu Dhabi. He pointed out that the goods were supplied by a Company named Blue Sky Mineral Insulating Page 3 of 8 Downloaded on : Mon May 02 20:30:14 IST 2022 C/SCA/1796/2022 ORDER DATED: 28/04/2022 Manufacturing Ltd. At this stage, Mr. Vyas pointed that the credentials of this Blue Sky Mineral Insulating Manufacturing Ltd. are doubtful.
4. Be that as it may, if the inquiry is to take more time as regards the aforesaid, should the goods be kept at the bonded warehouse for an indefinite period. The goods are approximately valued at Rs.35 Lakh. We are informed that by now, Rs.10 Lakh has been paid by way of rent to the bonded warehouse.
5. Our attention has been drawn to the Customs (Provisional Duty Assessment) Regulations, 1963, more particularly, Regulation 2 thereof which reads as follows:
"REGULATION2. Condition for allowing provisional assessment:
- Where the proper officer on account of any of the grounds specified in sub-section (1) of section 18 of the Customs Act, 1962 (52 of 1962), is not able to make a final assessment of the duty on the imported goods or the export goods, as the case may be, he shall make an estimate of the duty that is most likely to be levied hereinafter referred to as the provisional duty. If the importer or the exporter, as the case may be executes a bond in an amount equal to the difference between the duty that may be finally assessed and the provisional duty and deposits with the proper officer such sum not exceeding twenty per cent of the provisional duty, as the proper officer may assess the duty on the goods provisionally at an amount equal to the provisional duty."
6. 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. Section 18 of the Customs Act provides for the provisional assessment of duty. Section 18(1) reads thus:
"18. Provisional assessment of duty -
[1] Notwithstanding anything contained in this Act but without prejudice to the provisions of Section 46 [and section 50]
(a) where the importer or exporter is unable to make self-assessment under sub-section(1) of section 17 and makes a request in writing to the proper officer for assessment; or Page 4 of 8 Downloaded on : Mon May 02 20:30:14 IST 2022 C/SCA/1796/2022 ORDER DATED: 28/04/2022
(b) where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test; or
(c) where the importer or exporter has produced all the necessary documents and furnished full information but the proper officer deems it necessary to make further enquiry; or
(d) where necessary documents have not been produced or information has not been furnished and the proper officer deems it necessary to make further enquiry, the proper officer may direct that the duty leviable on such goods be assessed provisionally if the importer or the exporter, as the case may be, furnished such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty as may be finally assessed or re-assessed, as the case may be, and the duty provisionally assessed]"
17. 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. Vs. Union of India reported in 2016(341) E.L.T. 110 (Del.) 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.
18. We await the report as regards the inquiry which has been undertaken by the DRI. If we find something 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 we may order release provisional release 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."
4 Thereafter, on 31st March 2022, the following order was passed:
"1 We have heard the learned counsel appearing for the respective Page 5 of 8 Downloaded on : Mon May 02 20:30:14 IST 2022 C/SCA/1796/2022 ORDER DATED: 28/04/2022 parties for quite some time.
2 Both the matters have been adjourned time to time only on one ground that the inquiry as regards the origin of the goods is still in progress. To recapitulate the facts, the controversy involved in the present litigation is whether the writ applicants imported the goods which are in the nature of Magnesium lump from UAE or the Turkey. The case of the Revenue is that the goods have travelled from Pakistan. If the goods have travelled from Pakistan, then the levy of duty shall be at the rate of 200%. Whereas if the goods have travelled from UAE, then the levy of duty shall be at the rate of 5%.
3 The Revenue is not able to make any headway so far as this inquiry is concerned. The goods are lying at the customs warehouse past almost more than seven months. We explore the possibility of passing an interim order releasing the goods subject to certain terms and conditions. However, the writ applicants are not in a position to furnish any tangible security. All that has been offered is a bond.
4 We once again impress the Revenue to conclude this inquiry within a period of fifteen days from today and place an appropriate report on record. We do not want to come in the way of the Revenue so far as this inquiry is concerned. However, inquiry should not continue for an indefinite period of time. By the next date of hearing, if the inquiry is not concluded, then this Court may consider releasing the goods subject to certain terms and conditions.
5 Post both the matters on 21st April 2022 on top of the Board.
6 One copy of this order shall be furnished at the earliest to Mr. Dhaval Vyas, the learned Senior Standing Counsel appearing for the Revenue for its onward communication."
5 Today, when the matter was taken up for further hearing, Mr. Dhaval Vyas, the learned Senior Standing Counsel appearing for the respondents submitted that the inquiry is still in progress and may take some further time before it is concluded.
6 In such circumstances referred to above, we are of the view that we should order provisional release of the goods (Magnesium lump) upon furnishing of the bank guarantee, bond and the undertaking subject to the following terms and conditions:
Page 6 of 8 Downloaded on : Mon May 02 20:30:14 IST 2022C/SCA/1796/2022 ORDER DATED: 28/04/2022 [a] The writ applicants shall submit a bank guarantee of Rs.10 Lakh (Rupees Ten Lakh only) for a period of twelve weeks of any nationalized bank or a private bank in favour of the respondent No.1.
[b] The Managing Director of the writ applicant company shall file an undertaking with the respondents authorities and before this Court that he possess sufficient assets and in the event the consignment is found to have origin from Pakistan, he shall pay the differential duty if the petitioner No.1 is not in a position to pay the differential amount as may be adjudicated.
[c] Additionally, the writ applicants shall file a bond for the differential duty as per the Customs Act, 1962 and the rules made thereunder, before the authority.
7 Once the bank guarantee is furnished of the requisite amount as above, the goods shall be provisionally released in favour of the writ applicants. We would like to observe at this stage that the respondent No.1 shall see to it that the inquiry is concluded within a period of twelve weeks from today. If for any good reason or if the respondent No.1 has some information as regards the origin of the goods and need some more time, then it shall be open for the respondent No.1 to file an appropriate application seeking extension of time period to complete the inquiry. If such extension is granted by the Court concerned, then the bank guarantee may also stand extended accordingly. However, if the same position continues even after a period of twelve weeks, then it will be too much thereafter for the respondent No.1 to pray for further time.
Page 7 of 8 Downloaded on : Mon May 02 20:30:14 IST 2022C/SCA/1796/2022 ORDER DATED: 28/04/2022 8 We dispose of this writ application with liberty to the writ
applicants to file a further writ application with respect to any further relief which they would like to seek in future.
(J. B. PARDIWALA, J) (NISHA M. THAKORE,J) CHANDRESH Page 8 of 8 Downloaded on : Mon May 02 20:30:14 IST 2022