By TIOL News Service

MUMBAI, SEPT 14, 2016: APPEALS have been filed challenging the order of the Commissioner of Customs dated 04.05.2016 communicated by the Dy. Commissioner of Customs, wherein the appellants were allowed to take the provisional release of the seized goods in terms of Section 110A of the Customs Act, 1962 subject to the following conditions -

(i) Payment of differential duty of Rs.18,18,164/- along with payment of declared duty payable of Rs.7,28,823/-

(ii) Execution of Bond for full ascertained value of goods i.e. Rs.98,19,424/-.

(iii) Furnishing security in the form of Bank Guarantee (BG) containing self-renewable clause or cash security equivalent to 25% of ascertained value of seized goods.

The appellant submitted that for provisional release of the goods the differential duty cannot be demanded and execution of bond and BG of 25% should suffice. Reliance is, inter alia , placed on the decisions in Daya Enterprises - 2016-TIOL-695-HC-DEL-CUS, Zest Aviation Pvt. Ltd. - 2013-TIOL-132-HC-DEL-CUS, Printwell Offset - 2016-TIOL-633-HC-AHM-CUS and Ridhi Siddhi Collection - 2014-TIOL-2962-CESTAT-MUM.

The AR submitted that the Bill of Entry has been assessed with the enhanced value/duty and, therefore, there is no option to avoid the payment of duty as assessed by the assessing authority. Furthermore, the provisional release u/s 110A on execution of Bond of value of the goods and 25% of the Bank Guarantee is permitted only in a case where duty is yet to be determined. Inasmuch as the conditions imposed by the Commissioner are proper and do not require any interference, the AR emphasised.

Section 110A of the Customs Act, 1962 is extracted below -

"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."

After considering the submissions made by both sides and upon visiting section 110A, the Bench observed -

++ On going through the above reproduced Section 110A, it is observed that in the said section, provisional release of the goods is allowed on execution of Bond for the value of the goods and on furnishing a Bank Guarantee only in case where matter is pending for adjudication.

++ In the present case, the differential duty is part of the total assessed duty under the assessment of Bill of Entry. Therefore, the assessment of Bill of Entry has determined the differential duty. In such case, Section 110A shall not apply, but Section 125 shall apply, according to which the assessee can take the release of the goods on payment of duty.

++ Since confiscation of the goods has not yet concluded, therefore, the Bond for full value of the goods and Bank Guarantee of 25% is required. After the assessment of the Bill of Entry, the release cannot be allowed without payment of duty as assessed in the Bill of Entry in addition to execution of Bond for the full value of the goods and furnishing of Bank Guarantee for 25% as ordered by the Commissioner.

The case laws cited by the appellant were distinguished and held inapplicable to the issue on hand.

Concluding that there is no merit in the appellant's case, the conditions imposed by the Commissioner for provisional release of the goods were upheld and the appeals were dismissed.

(See 2016-TIOL-2413-CESTAT-MUM)