Madras High Court
M/S.Dhriti Enterprises vs The Commissioner Of Customs(Import) on 27 March, 2013
Author: V.Dhanapalan
Bench: V.Dhanapalan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 27.03.2013 CORAM: THE HONOURABLE MR.JUSTICE V.DHANAPALAN W.P.No.3821 of 2013 and M.P.No.1 of 2013 M/s.Dhriti Enterprises Represented by its Proprietor Mr.Shrenik Kumar, No.21, Mukatal Street, 2nd Floor, Purasawalkam, Chennai-600 084. .. Petitioner Vs. 1.The Commissioner of Customs(Import) Custom House, No.60, Rajaji Salai, Chennai-600 001. 2. The Additional Commissioner of Customs, Group 6, Custom House, No.60, Rajaji Salai, Chennai-600 001. 3. The Assistant Director, Directorate of Revenue Intelligence, No.25, Gopalakrishna Iyer Road, T.Nagar, Chennai-600 017. .. Respondents Writ petition has been filed under Article 226 of the Constitution of India seeking a Writ of Mandamus directing the respondents herein to Release the goods viz., 852 Cartons of Picture Frame of Different Model Numbers, Seal Tag, Button, Shirt Pin, Ring Adjusters and Snap Fasteners, imported vide Bill of Entry No.9034581, dated 16.01.2013, which was finally assessed by the Proper Officer under the Customs Act and total duty of Rs.5,65,510/- was also paid on 18.01.2013. For Petitioner : Mr.A.K.Jayaraj For Respondents 1 and 2 : Mr.Vikram Ramakrishnan, CGSC For 3rd Respondent : Mr.Velayutham Pichaya, CGSC O R D E R
Heard Mr.A.K.Jayaraj learned counsel for the petitioner and Mr.Vikram Ramakrishnan, learned Central Government Standing Counsel appearing for the respondents 1 and 2 and Mr.Velayutham Pichaya, learned Central Government Standing Counsel appearing for the third respondent.
2. The petitioner has filed this writ petition for a direction to the respondents herein to release the goods viz., 852 Cartons of Picture Frame of Different Model Numbers, Seal Tag, Button, Shirt Pin, Ring Adjusters and Snap Fasteners, imported vide Bill of Entry No.9034581, dated 16.01.2013, which was finally assessed by the Proper Officer under the Customs Act and total duty of Rs.5,65,510/- was also paid on 18.01.2013.
3. The case of the petitioner in a nut-shell is as follows:-
(a) The petitioner-Company had imported Picture Frame of Different Model Numbers, Seal Tag, Buttons, Shirt Pin, Ring Adjusters and Snap Fasteners from Hong Kong at USD 30,788.31 CNF Chennai totally. The above goods were shipped from M/s.Neworb International Corporation Limited, Hong Kong, vide Invoice No.20121225 dated 25.12.2012 and filed Bill of Entry No.9034581, dated 16.01.2013 and claimed for clearance of goods for Home Consumption.
(b) On the arrival of the subject goods at Chennai Port, the petitioner filed Bill of Entry for Home Consumption and sought for clearance of the goods and they had declared the value of the goods at USD 30,788.31.00 (CNF Chennai) totally. Subsequently, the goods were assessed by the Proper Officer and the appropriate duty of Rs.5,65,510/- as assessed by the Proper Officer has also been debited by the petitioner on 18.01.2013. After payment of duty, on 18.01.2013, the petitioner was informed that the goods have been detained by DRI Officers under Mahazar. The samples from the goods detained on 23.01.2013 were taken by DRI Officers in the presence of representatives.
(c) The petitioner, vide letter dated 11.01.2013 requested the Assistant Director of DRI to provisionally release the goods after taking of samples and weighment of goods. Undertaking was given to the Department that the petitioner will not dispute the quantity of the goods imported. This request was followed, vide other letters also. The petitioner's request for provisional release of goods was fully covered by Provisions of Section 110 A of the Customs Act (hereinafter referred to as 'the Act'), which inter-alia provides that any goods seized under Section 110 of the Act may be provisionally released pending adjudication. However, till date no reply has been received from the DRI Officers. The petitioner's premises were searched by the DRI Officers and nothing incriminating was found. The DRI had issued summons on the partner of the petitioner and they appeared before the Officers, who took statement from the petitioner and they had also furnished Sales Contract made with the supplier for import of the above goods. The DRI officers thereafter, issued another summons to appear before them, for which the petitioner had asked for time.
(d) The continued seizure of goods is causing acute financial hardship, as the goods are incurring demurrage, interest on borrowed capital, besides the goods viz., Picture Frame and Snap Fasteners are having short life and got damaged. The action of the respondents in not ordering the release of the goods is causing much prejudice to the petitioner. Therefore, the withholding of the subject goods covered under the aforesaid Bill of Entry is exposing the petitioner to severe financial burden of demurrage charges and the action of the respondents herein is therefore void-ab-initio, bad in law, mala-fide and perverse, as there is no fault on the part of the petitioner.
(e) The petitioner has made several representations to the respondents herein for the provisional release of the goods which are now lying in Chennai Port. The respondents have failed to exercise the statutory functions vested in them and not ordered the release of the goods, for which duty was also paid and thereby they have violated the fundamental rights of the petitioner guaranteed under Articles 19 and 21 of the Constitution of India. Aggrieved by the inaction on the part of the respondents in not ordering the release of the goods, for which duty has also been paid and also on the unreasonable attitude of the respondents, the petitioner has filed this writ petition for the above relief.
4. I have heard the learned counsel appearing for the parties and perused the material documents available on record.
5. On an analysis of the entire facts, it would reveal that the petitioner-Company imported Picture Frame of Different Model Numbers, Seal Tag, Buttons, Shirt Pin, Ring Adjusters and Snap Fasteners from Hong Kong at USD 30,788.31 CNF Chennai totally. The above goods were shipped from M/s.Neworb International Corporation Limited, Hong Kong and claimed for clearance of goods for Home Consumption. On the arrival of the subject goods at Chennai Port, the petitioner filed Bill of Entry for Home Consumption and sought for clearance of the goods and they had declared the value of the goods at USD 30,788.31.00 (CNF Chennai) totally. Subsequently, the goods were assessed by the Proper Officer and the appropriate duty of Rs.5,65,510/- as assessed by the Proper Officer has also been debited by the petitioner on 18.01.2013. After payment of duty, on 18.01.2013, the petitioner was informed that the goods have been detained by DRI Officers under Mahazar. The samples from the goods detained on 23.01.2013 were taken by DRI Officers in the presence of representatives. The petitioner requested the Assistant Director of DRI to provisionally release the goods after taking of samples and weighment of goods. Undertaking was given to the Department that the petitioner will not dispute the quantity of the goods imported. The petitioner's request for provisional release of goods was fully covered by Provisions of Section 110 A of the Act, which inter-alia provides that any goods seized under Section 110 of the Act may be provisionally released pending adjudication. However, till date no reply has been received from the DRI Officers. The petitioner's premises were searched by the DRI Officers and nothing incriminating was found. The DRI had issued summons on the partner of the petitioner and they appeared before the Officers, who took statement from the petitioner and they had also furnished Sales Contract made with the supplier for import of the above goods. The petitioner has made several representations to the respondents herein for the provisional release of the goods which are now lying in Chennai Port.
6. It is the case of the respondents that the goods in question were undervalued and they were seized under the Act. Further investigation in the subject matter is in progress and hence, provisional release of the goods as sought for by the petitioner could not be entertained.
7. While examining the claim of the petitioner for the provisional release of goods, the circumstances under which the import was done, have to be looked into and thereafter, the value so declared by the petitioner is a matter to be taken into account. The petitioner declared the value of the goods as USD 30,788.31 (CNF Chennai) totally, which according to the respondents is low. The further investigation is yet to be completed and the adjudication proceedings are also to be made thereafter. When such is the situation, what is the condition for provisional release to be made, has to be examined.
8. In this regard, the learned counsel for the petitioner relied on various decisions of this Court and also the decision of the Supreme Court in the case of Commissioner of Customs V. Navshakti Industries Private limited, (2011 (269) ELT A146 (SC)), wherein the Apex Court has held as follows:-
".... having considered the facts and circumstances of the case and also taking notice of the fact that the goods in question are newsprint which is perishable in nature, we issue a direction that the goods of the respondents shall be cleared by the appellants herein on the respondents' furnishing a bank guarantee of 30% of the differential duty to the satisfaction of the Commissioner of Customs. The goods shall be released in terms of this order immediately on furnishing of the aforesaid bank guarantee and satisfaction of the concerned Commissioner of Customs. We also direct the Commissioner of Customs to hear the adjudication proceedings pending before him as early as possible, preferably within a period of three months, from the date of receipt of a copy of this order.
In terms of the aforesaid order, the appeal stands disposed of. We, however, make it clear that while passing the aforesaid order, we have not expressed any opinion or views on the merits of the dispute which shall be independently considered by the competent authority."
9. Similarly, in the very same recent ruling of the First Bench of this Court in W.A.No.582 of 2011, dated 01.04.2011, the Division Bench took a view, while modifying the order of the learned single Judge, by directing the respondent therein instead of depositing entire customs duty and the redemption fine, the respondent therein shall deposit 50% duty of the value of the goods and on such deposit being made, the goods shall be released forthwith in favour of the respondent therein. Therefore, the case of petitioner in the present case also stands on the same footing and their claim for provisional release of goods shall be considered along with a reasonable condition.
10. Refuting the above submissions, the learned counsel for the respondents contended that in the case of Commissioner of Customs V. Navshakti Industries Private limited, (2011 (269) ELT A146 (SC)), relied upon by the petitioner, the condition imposed for provisional release of the goods is only by a bank guarantee and in order to safeguard the interest of the Department, the petitioner has to pay 30% of the differential duty and shall furnish bank guarantee for 20% of the differential duty and for remaining 50%, the petitioner-Company should furnish a bond. The learned counsel further submitted that in case the Department succeeds in the adjudication proceedings, it is not possible for the Department to recover any 'amount' if the goods are released.
11. It is seen that in Notification No.81/2011-Customs (N.T.), dated 25.11.2011 issued by the Government of India, Ministry of Finance, Department of Revenue (Central Board of Excise and Customs), the Customs (Provisional Duty Assessment) Regulations, 2011 were brought into force, which inter-alia provided the following:-
"1. Short title and commencement: (1) These regulations may be called the Customs (Provisional Duty Assessment) Regulations, 2011.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. Conditions for allowing provisional assessment.-
(1) Where-
a) an importer or an exporter, as the case may be, is unable to make self-assessment under sub-section (1) of Section 17 of the Customs Act, 1962 (52 of 1962) and makes a request in writing to the proper officer for assessment; or
b) the proper officer on account of any of the grounds specified in sub-section (1) of Section 18 of the said Act, is not able to verify the self-assessment or make re-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 to be levied (hereinafter referred to as the provisional duty)."
12. Section 110-A of the Customs Act, 1962 provides for provisional release of goods, documents and things seized pending adjudication. Any goods, documents or things seized under Section 110 of the Act, may, pending the order of the adjudicating officer, be released to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require.
13. The only reason for non-releasing of the goods is that the petitioner has under-valued the goods in question. The respondents, on investigation, found that the differential duty has to be paid even for the provisional release of the goods. The investigation has to be completed and thereafter, the adjudication has to be done for the assessment of the value.
14. In the light of the above stated legal position and as the goods in question are not prohibitory items under the provisions of the Act and having regard to the foregoing reasons and discussions and considering the facts and circumstances of the case, provisional release of the goods in question, is ordered with the following conditions:-
i) The petitioner shall deposit with the customs authorities the duty payable on the value declared by them.
ii) The petitioner shall deposit with the customs authorities 50% of the differential duty i.e., the difference between the value declared by them and the value provisionally assessed by the Department in the light of the decision of the First Bench of this Court in W.A.No.582 of 2011, dated 01.04.2011 and for the balance 50% of the differential duty, the petitioner shall furnish personal bond to the satisfaction of the customs authorities.
iii) The investigation is yet to be completed and the adjudication has also to be done. Therefore, it is needless to state that this order shall not stand in the way of the respondents to proceed with the investigation and also the adjudication process. In such an event, the petitioner shall co-operate with the respondents for conclusion of the investigation as well as the adjudication proceedings.
15. With the above observations and directions, the Writ Petition is disposed of. No costs. Consequently, the connected miscellaneous petition is closed.
ssn To
1. The Commissioner of Customs (Imports) Custom House, No.60, Rajaji Salai, Chennai-600 001.
2. The Additional Commissioner of Customs, (Group 6) Custom House, No.60, Rajaji Salai, Chennai-600 001.
3. The Assistant Director, Directorate of Revenue Intelligence, No.25, Gopalakrishna Iyer Road, T.Nagar, Chennai 600 017