TMI Blog2023 (12) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... izing the provisional assessment. It also becomes pertinent to note that the provisional assessment itself was initiated not on an allegation of any undervaluation or wrongful declaration of the value of goods, the same was founded solely on the opinion formed by the respondents that the COO Certificates merited verification. In view of the above, it is opined that the indolence exhibited by the respondents is rendered wholly arbitrary. The respondents are directed to release the BG and any other monies retained forthwith subject to whatever final orders that they may choose to pass while finalizing the provisional assessment proceedings - petition allowed. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON'BLE MR. JUSTICE RAVINDER DUDEJA For the Petitioner Through: Mr. Kishore Kunal and Mr. Mahesh Parmar, Advs. For the Respondents Through: Ms. Anushree Narain, standing counsel with Ms. Simran Kumari Adv. for Respondent 1 3. Mr. Aditya Singla Adv. for R-2. Mr. Satish Aggarwala, Sr. Standing Counsel and Mr. Gagan Vaswani, Advocate for Respondent No. 4/Customs JUDGMENT YASHWANT VARMA, J. 1. The instant writ petition has been preferred for directions being framed commanding the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent on 23 January 2016 invoked the powers conferred by Sections 17 18 of the Customs Act, 1962 [the Act] and evinced its intent to undertake a provisional assessment. 5. The aforesaid opinion was based on the fourth respondent taking the position that the COO Certificates were liable to be verified. However, and in order to obtain immediate release of the imported articles, the petitioner made a prayer for provisional release. While dealing with the aforesaid prayer the fourth respondent required the petitioner to submit a BG and a Bond for an amount equivalent to 100% of the differential BCD. 6. Aggrieved by the aforesaid, the petitioner preferred an appeal before the Commissioner of Customs (Appeals), Kolkata [Commissioner], who on 08 April 2016 passed an order permitting the release of the imported goods by acceptance of 20% of the duty along with a Bond. It was pursuant to the aforesaid order that the petitioner on 19 July 2016 submitted a BG for an amount of Rs. 22,07,264/-, a Bond for an amount of Rs. 1,10,36,317/- and also paid Countervailing Duty amounting to Rs. 6,67,936/-. Upon submission of the aforesaid security, the imported articles were provisionally released. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; or (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, furnishes 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.] [(1-A) Where, pursuant to the provisional assessment under subsection (1), if any document or information is required by the proper officer for final assessment, the importer or exporter, as the case may be, shall submit such document or information within such time, and the proper officer shall finalise the provisional assessment within such time and in such manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest, if any, paid on such duty to any other person; (d) the export duty as specified in Section 26; (e) drawback of duty under Sections 74 and 75. 10. Learned counsel also drew our attention to the Customs (Finalisation of Provisional Assessment) Regulations 2018 [2018 Regulations] and the timelines as stipulated therein for the purposes of finalization of provisional assessment. Regulations 4, 5 6 and which would have a bearing on the issue that stands raised, are extracted hereinbelow:- REGULATION 4. Time-limit and manner for submission of documents or information for the purpose of finalisation of provisional assessment. (1) Where a provisional assessment is ordered by the proper officer for the reasons that, (a) the necessary documents have not been produced or information has not been furnished by the importer or the exporter; or (b) the proper officer requires the importer or the exporter to produce any additional documents or information, then such information or documents shall be made available by the importer or the exporter within one month from the date of such order of provisional assessment or the date of such requisition by the proper officer, as the case may be. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mporter or the exporter or requisitioned by the proper officer are made available intermittently, the time period of two months shall be reckoned from the date of last intimation referred to in clause (a) above,: Provided further that where the documents or information required to be furnished by the importer or exporter, as the case may be, or requisitioned by the proper officer are not made available or made partly available and no further extension of time has been allowed under sub-regulations (3), (4) or (5) of regulation 4, as the case may be, the proper officer shall proceed to finalise the provisional assessment within two months of the expiry of the time allowed for submission of the said documents or information. (2) The Commissioner of Customs concerned may allow, for reasons to be recorded in writing, a further time period of three months in case the proper officer is not able to finalise the provisional assessment within the period of two months as specified in sub-regulation (1) above. (3) This regulation shall not apply to such cases of provisional assessments, where Board has issued directions to keep that pending. REGULATION 6. Manner of finalisation of provisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of five months within which provisional assessment proceedings must be drawn to a close. Learned counsel also laid stress upon Regulation 5(2) of the 2018 Regulations and which while enabling the Commissioner of Customs to extend the time period for finalisation of assessment subjects the exercise of that power to the requirement of reasons being recorded by that authority in justification of extending the time line for passing final orders. According to learned counsel, even this procedure was not followed. 12. We note that in the instant case it is not the stand of the respondents that the petitioner was remiss in acceding to any request for submission of documents or material or for that matter effecting compliance with any condition or requirement communicated by the respondents. Quite apart from the respondents having failed to allude to any material which compelled the competent authority to doubt the self-assessment returns that had been submitted by the petitioner, it becomes pertinent to note that the self-assessment made by an importer or exporter, as the case may be, is liable to be accepted except where the proper officer deems it necessary to make further inquiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enclosed). 2. In this regard, this office vide various letters to Board office, sought for status of verification of COOs in respect of 12 provisionally assessed Bills of Entry pertaining to 2015 against which Gold jewellery was cleared through Kolkata Air Cargo under Notification No. 46/2011-Cus. 3. Further, in response to aforesaid letter, the FTA Cell vide letter dated 11.05.2023 (copy enclosed) informed that, multiple verification requests pertaining to verification of COOs issued for the export of Gold and Silver articles from the ASEAN countries under AIFTA were received from the field formations, namely Hyderabad, Delhi, Chennai among others, in light of DRI Alert Circular no. 10/2015-CI dated June 19, 2015. It was also stated that DRI vide its letter bearing reference no. 50/28/2015-CI/2785 dated July 28, 2015 forwarded verification request of a total of Twelve (12) COOs to the Board, 456/73/2023-FTA Cell 4 referred to it by Kolkata Customs vide letter bearing reference no. S60(Misc)-221/2015CC dated July 22, 2015. 4. Further, it was stated by FTA Cell that verification requests for the representative CoOs along with Questionnaire were forwarded for causing verification fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubhankar Jha, learned counsel for the Petitioner, states that till date no adjudication order in the SCN dated 29th November, 2017 has been passed. He points out that there is no justification in law for the DRI's instructions to the MMTC not to release the security amount to the Petitioner. He referred to the decision of the Bombay High Court in Lawson Tours and Travels (India) P. Ltd. v. Dy. Director, DGCEI, Zonal Unit, Mumbai, (2015) 317 ELT 248 (Bom.) where in similar circumstances, the Bombay High Court quashed the communications issued to the banks freezing the accounts of those Petitioners pending the adjudication of the SCN. 14. Mr. Satish Aggarwala, learned Senior Standing Counsel for the DRI, on the other hand, refers to the decision of the Supreme Court in Commissioner of Customs v. Euroasia Global, (2009) 236 ELT 627 (SC) and a decision dated 19th August, 2010 of the Division Bench of this Court in LPA No. 146/2010 (Directorate of Revenue Intelligence v. Laxman Overseas). Mr. Aggarwala adds that despite hearing being fixed in the adjudication proceedings on 20th December and 27th December 2018, the Petitioner's representative failed to appear. He accordingly com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said provision in regard to such seizure . Once there is a seizure made under Section 110(3) of the Act, the time limit for issuance of an SCN would begin to run in terms of Section 110(2) of the Act. In the present case, the instructions to the MMTC were first issued on 29th October 2015, and reiterated on 17th December, 2015. If this was to be treated as some kind of a seizure , for the purpose of Section 110(3) of the Act, then clearly the SCN issued to the Petitioner, would be well beyond the time permitted in terms of Section 110(2) of the Act. Perhaps conscious of this difficulty, the DRI has nowhere in its counter affidavit sought to justify the impugned instructions given to the MMTC as a seizure under Section 110(3) of the Act. Consequently, the Court understands the DRI as not seeking to justify the impugned instructions to the MMTC as a seizure in terms of Section 110(3) of the Act. 19. In any event, the Court fails to understand as to how the instructions to the MMTC by the DRI that it should not release to the Petitioner the BG/security deposited by the Petitioner with the MMTC, could amount to a seizure . The Court is unable to find any legal justification for issuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition today, the petitioner has really not only won the case (because of the interim order of this Court) he has really earned Rs. 300 for every Rs. 100 he had to pay. Thus, even though we are dismissing this petition the petitioner has got three time more amount than what he has to pay now. All this happened because of the interim order of this Court staying the demand. 20. Reiterating the principles which were laid down in Wig Brother, Katju J. while speaking as a member of the Bench of the Supreme Court in Alok Shanker Pandey v. Union of India Ors. (2007) 3 SCC 545 had held as follows:- 8. We are of the opinion that there is no hard-and-fast rule about how much interest should be granted and it all depends on the facts and circumstances of each case. We are of the opinion that the grant of interest of 12% per annum is appropriate in the facts of this particular case. However, we are also of the opinion that since interest was not granted to the appellant along with the principal amount, the respondent should then in addition to the interest at the rate of 12% per annum also pay to the appellant interest at the same rate on the aforesaid interest from the date of payment of ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest under Section 214 of the Act which had been withheld by the Revenue. The case of the Revenue was that interest payable to an assessee under Section 214 of the Act was not a refund as defined in Section 237 of the Act and hence no interest could be granted to the assessee under Section 244 of the Act. The Court held that for this purpose Section 240 of the Act was relevant which referred to refund of any amount becoming due to an assessee and that the said phrase would include interest and hence the assessee was entitled to further interest on interest wrongfully withheld. It is also important to appreciate that the Delhi High Court also referred to the Gujarat High Court decision in D.J. Works case [(1992) 195 ITR 227 (Guj)] and read it as taking the same view. This supports the view of the appellant on the correct reading of the Gujarat decision. xxx xxx xxx 44. In the present context, it is pertinent to refer to the circular or trade notice issued by the Central Excise Department on the subject of refund of deposits made in terms of Section 35-F of the Central Excise Act, 1944 and Section 129-E of the Customs Act, 1962. The circular is reproduced hereunder: Refund/Retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the authorities will also be treated as simple letters asking for return of the deposits, and will be processed as such. Similarly, bank guarantees executed in lieu of cash deposits shall also be returned. 4. The above instructions may be brought to the notice of the field formations with a request to comply with the directions and settle all the claims without any further delay. Any deviation and resultant liability to interest on delayed refunds shall be viewed strictly. 5. All the trade associations may be requested to bring the contents of this circular to the knowledge of their members and the trade in general. 6. Kindly acknowledge receipt. 45. A close scrutiny of the contents of the circular dated 2-1-2002 would disclose as to the modalities for return of pre-deposits. It again reiterated that in terms of the Supreme Court order such pre-deposit must be returned within three months from the date of the order passed by the tribunal, court or other fiscal authority unless there is a stay on the order of the fiscal authority, tribunal or court by a superior court. The Department has very clearly stated in the above circular that the delay beyond the period of three months i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents is discriminatory in nature and thereby causing great prejudice to lakhs and lakhs of assesses. Very large number of assesses are adversely affected inasmuch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to them as has happened in the instant case. It is a case of the appellant as set out above in the instant case for Assessment Year 1978-79, it has been deprived of an amount of Rs 40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law. 47. The word compensation has been defined in P. Ramanatha Aiyar's Advanced Law Lexicon, 3rd Edn., 2005, p. 918 as follows: An act which a court orders to be done, or money which a court orders to be paid, by a person whose acts or omissions have caused loss or injury to another in order t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid taxes pursuant to a special order passed by the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/deductor was retained by the Government till a direction was issued by the appellate authority to refund the same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorisedly by the Department. When the collection is illegal, there is corresponding obligation on the Revenue to refund such amount with interest inasmuch as they have retained and enjoyed the money deposited. Even the Department has understood the object behind insertion of Section 244-A, as that, an assessee is entitled to payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
