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2021 DIGILAW 435 (AP)

Brightway International v. Union of India

2021-07-15

JOYMALYA BAGCHI, K.SURESH REDDY

body2021
ORDER : 1. Petitioner/firm has approached this Court praying for return of bank guarantees furnished by it bearing Nos. 0095BG000012019, dated 22.03.2019, for the amount of Rs. 5,26,500/- and No. 0180BGFD000121, dated 19.05.2020, for the amount of Rs. 10,53,000/- as a condition for provisional release of imported goods vide order, dated 20.03.2020, in I.A. No. 1 of 2019 in Writ Petition No. 20419 of 2019. 2. The factual matrix, giving raise to this proceeding, is as follows: On 16.02.2019, the petitioner/firm had imported a consignment of Areca nuts from Colombo, Srilanka, at Krishnapatnam port and the Bill of Entry, dated 16.02.2019, was furnished by the petitioner. In the course of provisional assessment, the goods were detained subject to verification of the certificate of origin. At this stage, the petitioner had approached this Court vide Writ Petition No. 20419 of 2019, wherein a Co-ordinate bench of this Court, inter-alia, passed the following order: “Shri V.R. Reddy Kovvuri, counsel for the petitioner. Shri Suresh Kumar Routhu, Counsel for the respondents. Heard on I.A. No. 1 of 2019, which is an application seeking release of the goods seized by the respondents. Considering the order passed in other connected case i.e. W.P. No. 10030 of 2019, dated 31.10.2019, we direct the petitioner to furnish bank guarantee equivalent to 30% of the differential duty and for the remaining amount, solvent surety to the satisfaction of the officer concerned. On furnishing such bank guarantee and solvent surety, the goods shall be released. It is made clear that bank guarantee so furnished by the petitioner shall be renewed from time to time until finalization of the proceedings.” 3. Pursuant to the said order, the petitioner had furnished bank guarantees equivalent to 30% of differential duty and the remaining amount was secured by furnishing solvent surety as per the order. As adjudication proceedings had not commenced within six (6) months and goods ought to be un-conditionally released, the petitioner has approached this Court in Writ Petition No. 20419 of 2019 praying that the customs authorities be directed to return the bank guarantees furnished by them. 4. As adjudication proceedings had not commenced within six (6) months and goods ought to be un-conditionally released, the petitioner has approached this Court in Writ Petition No. 20419 of 2019 praying that the customs authorities be directed to return the bank guarantees furnished by them. 4. Learned counsel appearing for the petitioner submits that the goods had been seized under Section 110 of the Custom Act, 1962 (for short ‘the Act’) and as no show-cause notice under Section 124(a) of the Act had been issued within six (6) months of its seizure, the goods are required to be un-conditionally released. Hence, the customs authorities be directed to return the bank guarantees furnished by them. 5. On the other hand Sri. Suresh Kumar Routhu, learned senior standing counsel for Customs, submits that the goods in question had not been seized under Section 110 of the Act but they were kept in the custody of proper officer in terms of Section 45(1) of the Act, for the purpose of verification of country of origin certificate furnished by the importer. 6. We have considered the rival submissions of the parties. 7. Petitioner/firm had imported a consignment of Areca nuts from Colombo, Srilanka, under Bill of Entry No. 2084046, dated 16.02.2019. At the port of entry, the Customs authorities kept the goods in the custody of the proper officer for the purpose of provisional assessment and verification of the certificate of origin furnished by the petitioner. 8. In view of the aforesaid facts, we are unable to persuade ourselves that the goods had been seized in exercise of powers under sub-section (1) of Section 110 of the Act. On the other hand, it appears that they had been kept in the custody of the proper officer, pending verification of the country of origin certificate. At this stage, the petitioner had approached this Court in Writ Petition No. 20419 of 2019, whereupon this Court passed an order of conditional release directing the petitioner/firm to furnish bank guarantee equivalent to 30% of the differential duty. As such guarantee was furnished along with solvent surety for the remainder, the goods were cleared. Claiming that no show-cause notice has been issued under Section 124(a) of the Act within six (6) months from the date of seizure of the goods, the petitioner/firm seeks return of the bank guarantees furnished by him. 9. As such guarantee was furnished along with solvent surety for the remainder, the goods were cleared. Claiming that no show-cause notice has been issued under Section 124(a) of the Act within six (6) months from the date of seizure of the goods, the petitioner/firm seeks return of the bank guarantees furnished by him. 9. From the aforesaid factual matrix, it appears that there was no seizure of goods, as envisaged under Section 110(1) of the Act. On the other hand, the instant case relates to clearance of imported goods as governed by Chapter VII of the Act. Sections 45, 48 and 49 deal with the manner in which the imported goods ought to be kept pending their clearance upon submission of bills of entry under Section 46 thereof. 10. For appreciation of the aforesaid arguments, Sections 45 and 110 of the Customs Act are set out herein-below: “45. Restrictions on custody and removal of imported goods: (1) Save as otherwise provided in any law for the time being in force, all imported goods, unloaded in a customs area shall remain in the custody of such person as may be approved by the [Principal Commissioner of Customs or Commissioner of Customs] until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. (2) The person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force: (a) shall keep a record of such goods and send a copy thereof to the proper officer. (b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer [or in such manner as may be prescribed]. (3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilfered after unloading thereof in a customs area while in the custody of a person referred to in sub-section (1), that person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an [arrival manifest or import manifest] or as the case maybe, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods were carried. 110. Seizure of goods, documents and things: (1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods: Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. (1A) The Central Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification in the Official Gazette, specify the goods or class of goods which shall, as soon as maybe after its seizure under subsection (1), be disposed of by the proper officer in such manner as the Central Government may, from time to time, determine after following the procedure hereinafter specified. (1B) Where any goods, being goods specified under subsection (1A), have been seized by a proper officer under sub-section (1), he shall prepare an inventory of such goods containing such details relating to their description, quality, quantity, mark, numbers, country of origin and other particulars as the proper officer may consider relevant to the identity of the goods in any proceeding under this Act and shall make an application to a Magistrate for the purpose of: (a) certifying the correctness of the inventory so prepared. (b) taking, in the presence of the Magistrate, photographs of such goods and certifying such photographs as true. (c) allowing to draw representative samples of such goods, in the presence of the Magistrate and certifying the correctness of any list of samples so drawn. (1C) Where an application is made under sub-section (1B), the Magistrate shall, as soon as maybe, allow the application. (c) allowing to draw representative samples of such goods, in the presence of the Magistrate and certifying the correctness of any list of samples so drawn. (1C) Where an application is made under sub-section (1B), the Magistrate shall, as soon as maybe, allow the application. (2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend such period to a further period not exceeding six months and inform the person from whom such goods were seized before the expiry of the period so specified: Provided further that where any order for provisional release of the seized goods has been passed under section 110A, the specified period of six months shall not apply. (3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act. (4) The person from whose custody any documents are seized under sub-section (3) shall be entitled to make copies thereof or take extract therefrom in the presence of a officer of customs.” 11. Section 45 of the Act provides all goods imported into India and unloaded in customs area shall remain in the custody of such person as may be approved by the Principal Commissioner of Customs or Commissioner of Customs unless they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII of the Act. On the other hand, Section 100 deals with seizure of goods on a reasonable belief that the goods are liable to confiscation under the Act. 12. In the present case the customs authorities had not seized the goods on such reasonable belief that they are liable to confiscation. On the other hand, the goods had been kept in custody in exercise of powers under Section 45 of the Act, pending its clearance. Therefore, we are of the considered opinion no case of unconditional release of the goods in the factual matrix with reference to sub-section (2) of Section 110 of the Act is made out. On the other hand, the goods had been kept in custody in exercise of powers under Section 45 of the Act, pending its clearance. Therefore, we are of the considered opinion no case of unconditional release of the goods in the factual matrix with reference to sub-section (2) of Section 110 of the Act is made out. Even if the argument of the petitioner that the goods had been seized in exercise of powers under Section 110 of the Act is accepted, proviso to the said Section clearly mandates that in the event of provisional release of the seizure under Section 110A of the Act [110A. Provisional release of goods, documents and things seized pending adjudication - Any goods, documents or things seized under Section 110, may, pending the order of the (adjudicating authority), be released to the owner on taking a bond from him in the proper form with such security and conditions as the (adjudicating authority) may require.] specified period of six (6) months with regard to unconditional release will not apply. It is in the present case this Court in Writ Petition No. 20419 of 2019 had directed conditional release of goods and therefore even for argument sake, it is assumed that the goods were seized, the fact situation being analogous to one covered under Section 110A of the Act, the importer cannot claim unconditional release of the goods. 13. However, we note with concern that the provisional clearance of the goods is pending consideration for over 2 and ½ years purportedly on the ground of verification of genuineness of the certificate with regard to country of origin. The scheme of the Act does not permit the customs authorities to undertake such an exercise for an indefinite period of time. Hence, the customs authorities cannot be permitted to continue such exercise indefinitely and keep the petitioner bound to the sureties furnished by them. In order to balance the aforesaid equities, while we are not inclined to direct return of the bank guarantees furnished by the petitioner/firm as prayed for, we direct that the customs authorities shall conclude the provisional assessment positively within six (6) months from the date of communication of this order, failing which they shall return the bank guarantees furnished by the petitioner. 14. With the above directions, the Writ Petition is disposed of. No order as to costs. 15. 14. With the above directions, the Writ Petition is disposed of. No order as to costs. 15. As a sequel, miscellaneous applications pending, if any, shall stand closed.