TMI Blog2022 (6) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the provisional order dated 4th February 2022 which was to provide a bank guarantee to the extent of 15% of the duty payable. In TG ENTERPRISE VERSUS UNION OF INDIA], the Hon ble Gujarat High court, in a case relating to alleged mis-declaration of country of Origin, was looking into the challenge to the provisional release condition by which the Petitioner was directed to furnish a Bank Guarantee to the extent of 25% of differential duty amount. The High court was pleased to set aside the said condition by observing that Of course further investigation is going on and we cannot foresee what further evidence may be collected. Be that as it may, when yet show-cause notice for final adjudication has not been issued and even after issuance of show-cause notice, completion of the adjudication is bound to consume time, it would not be in anyone's interest to stop the clearance of goods when it is not the case of the department that the import of such materials has any other legal impediment. In the present case undisputedly, nothing has been placed on record showing any undervaluation of goods. While the department has submitted before the Commissioner (Appeals) that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... originating country. However, at this point in time, it is also important to note that the investigation is ongoing and country of origin of the goods will be determined only after the investigation is concluded. At this point of time, it cannot be said with certainty that the goods were imported from Iran. Be that as it may, the issue before this Tribunal is limited to the provisional release of goods and the same be decided keeping in mind the fact that the Appellant never intended to avail any benefit basis the COO and were and are willing to pay the duty on the goods imported vide the 4 bills of entry. The order of Commissioner (Appeals) is liable to be set aside to the extent it directs provision of BG of 15% of value of goods - the ends of justice shall be met if the appellant is allowed the provisional release of the subject imported goods on execution of Bond of full value of such goods and furnishing the bank guarantee of Rs.1 Crore - Appeal allowed. - CUSTOMS Appeal No. 10292 of 2022-DB - A/10735/2022 - Dated:- 27-6-2022 - MR. RAMESH NAIR, MEMBER (JUDICIAL) MR. RAJU, MEMBER (TECHNICAL) Shri Jitendra Motwani, Advocate for the Appellant Shri Dinesh M. Prith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restrictions in terms of Act and prayed for the goods to be released at the earliest. 7. Thereafter, Vide letter dated 04.02.2022, the Deputy Commissioner of Customs, ICD Tumb allowed provisional release of the seized goods under Section 110A of the Act subject to submission of Bond amounting to five times of the value of the goods and bank guarantee amounting to 15% of the duty payable. 8. Vide letter dated 09.02.2022, issued under the office of the Commissioner of Customs, the Respondent herein, the provisional release letter dated 04.02.2022 was cancelled and withdrawn on the grounds that:- (a) The origin of the goods is still under examination along with verification of authenticity of Certificate of Origin and investigation in this regard may require inspection and testing of the goods by the experts on the subject, if required. (b) Provisional release of such goods at this stage is premature in as much as the goods appear to be in nature of prohibited goods 9. The Appellant being aggrieved by the said letter, requested the Respondent to reconsider the aforesaid decision and requested for provisional release of the goods. 10. Pursuant to the above, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) vide the impugned Order has rejected the appeal of the appellant by relying upon the decision of 27.01.2022 passed by the Hon ble Gujarat High Court in the case of Additional Director General v. Hazel Mercantile by which the Hon ble High Court had directed Hazel Mercantile to furnish a bank guarantee of Rs. 15 crores for goods valued at Rs. 79 crores to protect the interest of the Revenue. Being aggrieved by impugned order dated 02.06.2022the present appeal has been filed before this Tribunal by the appellant. 17. Shri Jitendra Motwani, Learned Counsel appeared on behalf of the appellant. The Appellant assails the impugned order on the following grounds: (a) The direction to provide 15% of bank guarantee towards the value of the goods is without any basis and bad in law inasmuch as the appellant at the time of hearing is willing to pay the entire duty without claiming benefit under any FTA Regulation. (b) Once the entire duty is paid then the question of giving any further bank guarantee towards provisional release of goods is uncalled for and contrary to the law laid down on the issue. The following decisions are relied upon: (i) T. G. Enterprise vs. Union of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner [2015 (326) ELT 561] (iv) Commissioner of Customs vs. Narendra Plastic Pvt Ltd [2016 (342) ELT 497] 17.4 There is no difference between provisional release order dated 04.02.2022 and 06.04.2022 and the Counsel for the department before High court in Tax Appeal No. 237/2022 has accepted that the same is appealable under the Customs Act 1962. 17.5 Without prejudice to the above and in any event, it is submitted that the department is completely secured in the present case as the appellant is willing to deposit the entire amount of duty which was over 25 crores (BCD + IGST) and therefore, the direction to impose an onerous condition of furnishing bank guarantee to the extent of 15% of the value of goods over and above the duty being paid at the time of clearance is clearly bad in law. 17.6 The issue on the basis of which the investigation has been initiated is admittedly the Country-of-Origin Certificate. The case of the department is that the COO appears to be false and the goods have been imported from Iran instead of Zambia. It is submitted that even if the said allegation is taken to be true, it is an undisputed fact that the appellant had no role in issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow for the ease and reference. Sr. No Bill of Entry No. Date Description of Goods imported as per import document Weight of the goods (in MT) Value of the goods (in Rs.) 1 7078275 dated 14.01.2022 Copper Cathode Conforming to LME Grade A 496.452 352074983/- 2 7078197 dated 14.01.2022 500.67 355065655/- 3 7078308 dated 14.01.2022 350.603 248641497/- 4 7078318 dated 14.01.2022 150.105 106451811/- Total 1497.83 106,22,33,946/- 20. The issue in the present case relates to whether the order dated 2nd June 2022 passed by the Commissioner of Customs (Appeals) is correct and proper in law to the extent it directs the appellant to provide a bank guarantee to the extent of 15% of the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll settled that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. No provision in the Act was brought to (our) notice from which it could be gathered that the Government had power to review its own order, it is obvious that its delegate could not have reviewed its order. The position of law, so laid down in Patel Narshi Thakershi (supra), has been reiterated by the Supreme Court in other later cases. 22. In the present case, once the provisional release order was passed, the Office of the Deputy Commissioner of Customs, Ahmedabad, had no jurisdiction under the Customs Act to review the earlier order dated 4th February 2022 granting provisional release to the goods imported vide the Bills of Entry impugned in the present case. The correct approach would have been for the Respondent to challenge the correctness of the said provisional release order before this Tribunal. 23. Further to the above, there have been no reasons provided in the order dated 6th April 2022 as to why the department has changed its stand by directing the appellant to furnish a bank guarantee to the extent of 15% of the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 110A of the Act is quasi judicial in nature and so the order passed. 15 . The language of Section 110A(l)(a) of the Customs Act is quite wide in its application to take within its umbrella such an order passed, against which appeal would lie to the Tribunal. Restrictive meaning as is suggested by the Revenue cannot be given to the provisions. Power of judicial review in exercise of extraordinary jurisdiction under Article 32 and 226 of the Constitution of India is altogether different and cannot be compared with a statutory right of appeal where the scope of interference is larger. The terms used in Section 129(l)(a) of the Customs Act are decision or orders . Meaning thereby it is not limited to any final decision. 16 . Similar view has been expressed by Delhi High Court in the case of Gurdeep Kaur passed in WP (C) 4152/2015 on 17-9-2015 [2015 (325) E.L.T. 490 (Del.)] and in Cantex Chemical Fibres Private Limited, 2014 (310) E.L.T. 50, by Rajasthan High Court in the case of Shivmahal Textiles Private Limited in CWP No. 4946/2012, decided on 18-12-2012 and Gentleman Suitings Private Limited, 2012 (12) TMI 1001. 26. There is no provision under the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the goods. An inquiry was therefore instituted. During the course of investigation, statements of the importers and several other persons under Section 108 of Customs Act were recorded. As per the affidavits filed by the departments, such statements reveal a clandestine attempt to misdeclare the origination of goods as Sri Lanka though the goods originated from Indonesia or Vietnam. According to the departmental authorities, there was thus a clear attempt to evade duty. The goods were seized under seizure memos. The petitioners' request for provisional release came to be rejected upon which, these petitions are filed. 3. 4. 5. .. . 6. Having heard Learned Counsel for the parties and having perused the documents on record, it prima facie appears that the department s case of mis-declaration of origination of goods to evade customs duty is based primarily on the statements of importers and others, recorded under Section 108 of the Customs Act. Of course further investigation is going on and we cannot foresee what further evidence may be collected. Be that as it may, when yet show cause notice for final adjudication has not been issued an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on record showing any undervaluation of goods. While the department has submitted before the Commissioner (Appeals) that the issue of valuation is under investigation, however what cannot be ignored is that the goods imported are copper cathodes and the value of the same is determined basis the LME price. Also the provisional release order dated 06.04.2022 and the seizure memo dated 02.02.2022 is totally silent on the aspect of undervaluation. The seizure memo in fact gives the complete history of the matter but does not contain any allegation about the undervaluation of goods. Given the above it is submitted that the condition to furnish BG of 15% of value is extremely onerous, more so when the Appellant has shown his will to deposit entire amount of duty on value declared by it. 30. In Amit Enterprises vs. Union of India (supra), wherein the Hon ble Punjab and Haryana High Court was pleased to modify the condition of furnishing of bank guarantee of 25% of the market value of the seized goods on the ground that the petitioner therein had paid duty as per the valuation of the department. The relevant extract of the said decisions is reproduced below: 11 . We find mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Another v. Canara Bank etc., AIR 2005, SC 186, it was observed :- 33. Intrusion into privacy may be by - (1) legislative provisions, (2) administrative/executive orders, and (3) judicial orders, the legislative intrusions must be tested on the touchstone of reasonableness as guaranteed by the Constitution and for that purpose the court can go into the proportionality of the intrusion vis-a-vis the purpose sought to be achieved. (2) So far as administrative or executive action is concerned, it has again to be reasonable having regard to the facts and circumstances of the case. (3) As to judicial warrants, the court must have sufficient reason to believe that the search or seizure is warranted and it must keep in mind the extent of search or seizure necessary for the protection of the particular State interest. In addition, as stated earlier, common law recognized rare exceptions such as where warrantless searches could be conducted but these must be in good faith, intended to preserve evidence or intended to prevent sudden danger to person or property. (underlining supplied). xx xx xx xx xx 55. In Smt. Maneka Gandhi v. Union of India and Another (1978) 1 SCC 248 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nality. 15. In the present case, dispute is about the classification and valuation. The petitioner already paid duty even as per valuation of the department. The department has not kept in mind guidelines of expeditious investigation and of not detaining the goods on simple dispute of valuation/classification. The department has not shown prima facie case for exercise of power of confiscation and has only relied upon existence of power. In these circumstances, the requirement of bank guarantee equal to 25% of the value of goods is clearly arbitrary and mala fide and the said condition cannot be sustained. 16 . Accordingly, this petition is allowed and detained goods are directed to be released forthwith subject to the conditions contained in the order of provisional release except requirement of a declaration by the petitioner that it will not dispute the value and requirement of furnishing bank guarantee. It is, however, made clear that this order will not affect the merits of the controversy which will be finally adjudicated upon in accordance with law independently. 31. Also, the Tribunal in the case of SRK Manufacturing versus Commissioner of Customs, Ludhiana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent and on the basis of the value Prima facie determined by the Respondent, that is US $ 1640/PMT and the value declared by the Petitioner, that is between US$ 870/PMT and US$ 1000/PMT. The Petitioner will, of course, be also obliged to execute a bond to pay the balance of the differential duty as and when it I finally assessed. The Respondent will issue a show cause notice to the Petitioner before taking a final view in the matter. 31. The case of Max Enterprises (supra) the Hon ble High Court in para 14 observed as under: 14. The cases cited at the Bar indicate the consistent view that release of the consignments be permitted in terms of Section 110A of the Act upon condition that the petitioner directed to remit 30 to 50% of 30% of the differential duty and execute a personal bond for the remaining70%., upon remittance and furnishing of which, the goods shall be released forthwith. On the aspect of under invoicing, the Department is at liberty to initiate proceeding for adjudication that will be concluded after hearing the petitioner and in accordance with law. From the above, it can be seen that the reliance placed by the Commissioner (Appeals) to impose the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n before this Hon ble Tribunal no evidence has been placed to show any under valuation of goods. 34. We are further of the view that the decision of the Hon ble Gujarat High Court in the case of Directorate of Revenue Intelligence Vs. Hazel Mercantile Ltd., relied upon by the Commissioner (Appeals) is not applicable to the facts of the present case for more than one reason. In the case of Hazel Mercantile undisputedly it was the case of the department that the assessee had misclassified the description of the imported goods which had an impact on the rate of duty, whereas, in the present case, it is an undisputed fact that there is no issue with regard to the classification of goods, description or valuation of the imported goods as declared by the appellant. The Seizure memo dated 02.02.2022 and the withdrawal order dated 09.09.2022 clarify that the only issue in the present case is with respect to country of origin certificate supplied by the supplier of goods to the Appellants. Accordingly, it can be prima facie said that, as on date there is no Lis between the Appellant and the department in relation to classification of the goods, valuation of the goods on which duty is so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... release as the same is an interim order whereas the decisions relied upon by the Appellants of the Hon ble Gujarat High Court and Punjab Haryana High court has held that once the differential amount of duty is paid, the provisional release of goods should be permitted on assessee, furnishing a bond full value of the goods. 37. Looking at the facts of the present case, we find that the law laid down in the decision of T.G. Enterprise, where the issue like in the present case related to mis-declaration of country of Origin Certificate, Veer Enterprises (Supra) and Amit Enterprise (supra) is squarely applicable to the facts of the present case as well and the condition to direct the Appellant to furnish bank guarantee of 15% of the value of goods is arbitrary, excessive and bad in law. 38. We also find that a perusal of the seizure memo clarifies that it is the case of the department that the goods in the present case were imported from Iran as against the declared country viz., Zambia. Keeping the above allegation in mind, the department had seized the goods imported vide 4 impugned Bills of Entry. The argument of the appellant that no benefit is accrued to the appellant b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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