At, High Court of Gujarat At Ahmedabad
By, THE HONOURABLE MS. JUSTICE HARSHA DEVANI & THE HONOURABLE MR. JUSTICE G.R. UDHWANI
For the Petitioner: Hardik P. Modh, Advocate. For the Respondent: Kshitij M. Amin, Devang Vyas, Hriday Buch, Advocates.
Published In:- Published In 2016 (336) ELT 606
Harsha Devani, J. (Oral)
1. Mr. Hardik Modh, learned advocate, for the petitioner, has tendered a draft amendment. The amendment is allowed in terms of the draft. The same shall be carried out forthwith.
2. This petition is directed against (1) the interim order dated 2-12-2015 passed by the Deputy Director General of Foreign Trade whereby :
(i) Redemption issued to the petitioner on 30-4-2015 stands withdrawn.
(ii) The firm is put under DEL (Denied Entity List).
(iii) The firm is directed to apply a fresh redemption request.
(2) The letter dated 9-2-2016 issued by the Assistant Commissioner of Customs, EPCG Section, JNCH, informing the petitioner that the Commissioner of Customs, NS-IV, JNCH has provisionally released the seized goods to the party covered under Bills of Entry No. (i) 8288223, dated 22-10-2012 and (ii) 8288712, dated 22-10-2012 (iii) 8270493, dated 19-1
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-2012 imported vide EPCG Authorization No. 2430001677, dated 3-7-2012, subject to furnishing of :1. Bond for full value of goods2. Bank Guarantee for full duty amount3. Bank Guarantee equal to 25% of duty amount(3) The letter dated 15-3-2016 of the Assistant Commissioner of Customs, EPCG Section, JNCH informing the petitioner that the Commissioner of Customs, NS-IV, JNCH, has not considered the petitioner’s request of modification of conditions of provisional release order dated 8-2-2016.3. Mr. Saurabh Soparkar, senior advocate, learned counsel with Mr. Hardik Modh, learned advocate, for the petitioner, stated under instructions that at this stage the petitioner is not pressing the relief prayed for vide paragraph 11(a)(i) of the petition as the matter is pending consideration before the concerned authority. It was submitted that insofar as the sealing of the machines imported by the petitioner is concerned, the same does not benefit either of the parties inasmuch as, if the machines remain under seizure, they will be depleted. It was further submitted that assuming for the sake of argument that the petitioner has not completed the export obligation, even then, the period for completion of export obligation is not yet over and hence, the seizure of the machines also prevents the petitioner from fulfilling the export obligation within the stipulated time limit. Referring to Paragraph 5.11 of the Export Promotion Capital Goods (EPCG) Scheme, it was submitted that the scheme provides for extension of the period for fulfilment of the export obligation, and hence, as on date, the machines in question are required to be released at the earliest subject to such terms and conditions, as may be stipulated by this Court. In support of his submission, the learned counsel has placed reliance upon the decision of the Delhi High Court in the case of Navshakti Industries Pvt. Ltd. v. Commissioner of Customs, ICD, TKD, New Delhi, 2011 (267) E.L.T. 483 (Del.), wherein the Court had held that in the absence of any definite parameters having been laid down for the exercise of power under Section 110A of the Customs Act, 1962 the only option that would be available to the Court would be to fall back on the Customs (Provisional Duty Assessment) Regulations, 1963. The Court was of the opinion that the guidelines laid down in these regulations, in the absence of any other guidelines available to it, would equally apply in the case of a seizure under Section 110A of the Act. It was pointed out that the Court in the said case had permitted release of the goods of the appellants therein on furnishing a bond of 20% of the differential duty, that is to say the duty claimed by the respondents, minus the duty already paid by the appellants in the first instance and that the Court did not deem it appropriate to continue with the condition requiring the appellants to deposit 25% of the value of the seized goods by way of a bank guarantee to the satisfaction of the respondents. It was submitted that the petitioner is ready and willing to restore the bank guarantee of Rs. 43.50 lakhs which had been returned to the petitioner upon issuance of the Export Obligation Discharge Certificate and that the petitioner may at best be called upon to deposit an additional bank guarantee of Rs. 50 lakhs.4. Mr. Hriday Buch, learned standing counsel for the respondent No. 3, vehemently opposed the petition by submitting that petitioner had obtained Export Obligation Discharge Certificate (EODC) by misrepresenting the facts before the concerned authority and therefore, such EODC is liable to be revoked. It was submitted that under the provisions of Section 110A of the Act, the adjudicating authority is vested with discretion to impose conditions as regards the bond as well as security, etc., subject to which the goods seized under Section 110 may be released to the owner. It was submitted that in the present case, the Commissioner of Customs has exercised discretion and has permitted provisional release of the goods in favour of the petitioner subject to the conditions stipulated in the provisional release order and hence, no interference is warranted by this Court. It was pointed out that the decision of the Delhi High Court in the case of Navshakti Industries Pvt. Ltd. v. Commissioner of Customs, ICD, TKD, New Delhi (supra), was carried before the Supreme Court and the Supreme Court in the case of Commissioner of Customs, ICD, TKD, New Delhi v. Navshakti Industries Pvt. Ltd., 2011 (269) E.L.T. A146, has modified the order passed by the Delhi High Court by directing the respondents to furnish bank guarantee of 30% of the differential duty to the satisfaction of the Commissioner of Customs for release of the goods in question. It was accordingly submitted that if at all the Court is inclined to modify the conditions stipulated by the Commissioner of Customs; the same may be modified in terms of the decision of the Supreme Court.5. In the light of the fact that the principal relief prayed for in this petition has not been pressed, it is not necessary to enter into the merits of the impugned order dated 2-12-2015 withdrawing the redemption issued to the petitioner. However, consequent to the said order, as on date, the petitioner’s redemption stands withdrawn. Resultantly, the petitioner firm would be required to fulfil the export obligation in terms of the EPCG scheme authorisation granted to it. Since the first part of the export obligation was to be completed within a period of four years, it appears that the petitioner still has time to fulfil the export obligation. As rightly submitted by the learned counsel for the petitioner, if the machines imported under EPCG scheme remain under seizure, the condition thereof is likely to deteriorate, which would not benefit either the petitioner nor the Revenue. On the other hand, if the petitioner firm is permitted to use the machines, it may be in a position to fulfil the export obligation, which would be in the benefit of the scheme. On a perusal of the order of provisional release, it is apparent that three conditions have been imposed for the purpose of provisional release of the goods. Firstly, the petitioner is required to furnish of a bond for the full value of the goods, to which the petitioner has no objection. Secondly, the petitioner is required to furnish a bank guarantee for the full duty amount, which is the main bone of contention. Thirdly, the petitioner is required to furnish a bank guarantee equal to 25% of duty amount. This condition is in the nature of penalty, and hence, at this stage, the question of furnishing a bank guarantee towards penalty would not arise.6. Under the circumstances, without entering into the merits of the contentions of the rival parties, the Court is of the view that the interests of justice would be served if the order of provisional release of the seized goods as contained in the communication dated 9-2-2016, is modified to the following extent :(i) The first condition which requires the petitioner to furnish a bond for the full value of the goods is required to be sustained(ii) The second condition which requires the petitioner to furnish bank guarantee for full duty amount is required to be modified by directing the petitioner to furnish a bank guarantee to the extent of 30% of the duty amount in line with the decision of the Supreme Court in Commissioner of Customs, ICD, TKD, New Delhi v. Navshakti Industries Pvt. Ltd. (supra).7. And the petitioner is further required to be directed to furnish a bank guarantee of Rs. 43,50,000/- (rupees forty two lacs) which had been returned to it on account of issuance of the Export Obligation Discharge Certificate.8. In the light of the above discussion, the petition is disposed of in the following terms :(1) The order of provisional release of the seized goods dated 9-2-2016 issued by the Commissioner of Customs, NS-IV, JNCH, shall stand modified to the following extent :The seized goods shall be provisionally released subject to :(i) the petitioner furnishing of a bond for the full value of goods;(ii) The petitioner furnishing a bank guarantee to the extent of 30% of the duty amount;(2) The petitioner shall also furnish a bank guarantee for a sum of Rs. 43.50 lakhs.9. Notice is discharged with no order as to costs.
"2016 (336) ELT 606,"