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2014 DIGILAW 381 (ALL)

J. S. Designers Ltd. v. Union of India

2014-02-03

D.Y.CHANDRACHUD, DILIP GUPTA

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JUDGMENT Dilip Gupta, J. The petitioner is a government recognised Star Export House. On the basis of an export certificate for 2013-14 granted by the Apparel Export Promotion Counsel (AEPC), the petitioner has been granted an import entitlement of Rs.3.05 crores equivalent to 3% of the export performance. Accordingly, a certificate has been issued to the petitioner on 3 June 2013. The petitioner received a purchase order from two foreign buyers for supply Men's Jacket with Lining and has allegedly imported Knitted Fabric Polyester Lining. 2. A bill of entry was filed on 29 October 2013 declaring a total value of Rs.22.07 lacs at the Inland Container Depot, Dadri. An import certificate dated 26 October 2013 was issued to the petitioner by AEPC. After an examination of the goods on 2 November 2013 and since the consignment was not released, the petitioner applied on 18 November 2013 to the Commissioner of Customs seeking provisional release. The second respondent has passed an order on 21 November 2013 permitting provisional release subject to the following conditions: - "(i) Execution of PD Bond for Rs.32,60,829/- (differential amount of duty); (ii) Cash Security/Bank Guarantee for 100% of the Bond amount; (iii) Execution of ITC Bond for the determined value of imported goods to the tune of Rs.44,34,686/-; (iv) Cash Security/Bank Guarantee for 20% of the Bond amount." 3. On behalf of the petitioner, it has been submitted that the conditions which have been imposed for provisional release of the goods requiring the petitioner to furnish a bank guarantee well in excess of 100% of the determined value of the goods is unreasonable and at the highest a guarantee for 20% of the differential duty could have been demanded. On the other hand, it has been urged on behalf of the Department that on 21 January 2014 a notice to show cause has been issued to the petitioner and though a personal hearing was fixed on 21 February 2014 the petitioner did not appear, consequent upon which the next date of hearing is 4 February 2014. 4. In our view, the fact that a notice to show cause has been issued to the petitioner would not by itself debar the petitioner from seeking the remedy of provisional release of the goods. 5. 4. In our view, the fact that a notice to show cause has been issued to the petitioner would not by itself debar the petitioner from seeking the remedy of provisional release of the goods. 5. Section 110-A of the Customs Act 1962 specifically provides for an order of provisional release pending the order of the adjudicating authority subject to the furnishing of a bond with such security and conditions as the adjudicating authority may require. 6. Prima facie, at this stage the material on record would indicate that as against an export performance of Rs.101.99 crores for 2012-13, the petitioner has an import entitlement of Rs.3.05 crores for 2013-14 of which an amount of Rs.78.12 lacs has been utilised. The attention of the Court has been drawn, inter alia, to the order of the Supreme Court in Commissioner Vs. Navshakti Industries Pvt. Ltd., 2011 (269) E.L.T. 146 (SC) where, in the facts and circumstances of the given case, provisional release was ordered subject to a bank guarantee being furnished in an amount representing 30% of the differential duty. 7. Having regard to the totality of the facts and circumstances of the present case, we are of the view that the conditions which have been imposed by the second respondent are arbitrary and excessive. Instead and in place of the conditions which have been imposed by the second respondent, we direct that provisional release under Section 110 -A of the Customs Act, 1962 shall be granted to the petitioner in respect of the consignment in question subject to the petitioner executing a bond for the entire differential duty and furnishing a bank guarantee of a nationalised bank to the satisfaction of the second respondent for an amount representing 30% of the differential duty. The guarantee shall be furnished to the satisfaction of the second respondent and shall be kept alive pending the disposal of the adjudication proceedings and for a period of 8 weeks thereafter. The goods shall be released within a period of three days of compliance of the above directions. The order for provisional release shall stand modified to the aforesaid extent. 8. The petitioner also undertakes to furnish a reply to the notice to show cause within a period of two weeks from today and to appear before the adjudicating authority on 17 February 2014 so that the adjudication proceedings can be completed at an early date. The order for provisional release shall stand modified to the aforesaid extent. 8. The petitioner also undertakes to furnish a reply to the notice to show cause within a period of two weeks from today and to appear before the adjudicating authority on 17 February 2014 so that the adjudication proceedings can be completed at an early date. 9. The writ petition is, accordingly, disposed of. There shall be no order as to costs.