Power to allow provisional release of seized cargo - Amendment to Sec 110A - Reasonable Step

By J M Kishore

CLAUSE 46 of The Finance Bill 2011 proposed an amendment in the Section 110A of The Customs Act,1962 empowering the adjudicating authority to allow release of seized goods instead of The Commissioner of Customs. The existing Section 110A reads as below:

“SECTION 110A: Any goods, documents or things seized under 110, may, pending the order of the adjudicating officer, be released to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require.”

This Section 110A was actually inserted in The Customs Act,1962 through THE TAXATION LAWS (AMENDMENT) ACT, 2006 with effect from 14 th July 2006.As seen from the above, at present, the power of provisional release of seized goods has been vested only with the Commissioner of Customs irrespective of the value of the goods.

A step towards a better judiciary system

SECTION 122 of the Customs Act 1962 provides for adjudication limits. Accordingly, in cases of the value of the goods liable to confiscation does not exceed two lakhs rupees the power is vested with an Assistant Commissioner of Customs or Deputy Commissioner of Customs and where the value of the goods liable to confiscation does not exceed, ten thousand rupees, adjudication can be done by a Gazetted Officer of Customs lower in rank than an Assistant Commissioner of Customs. It is possible that the orders issued under section 110A by the Commissioner of Customs relating to provisional release may influence the quasi-judicial adjudicating authority in lower levels subsequently at the time of adjudication. This may be the reason behind the present proposal that instead of Commissioner of Customs, now, the adjudicating authority can permit the provisional release of seized goods.

Board guidelines for detention and provisional release

Board from time to time has given instructions to field formations with a direction to avoid delays in the release and minimize hardship to the trade vide F.No. 450/82/95-Cus. IV, dated 7-7-1997 and also vide Circulars No.42/2001 Dt. 31-7-2001 and No.1/2011 Dt.4-1-2011. It is already clarified that unless the goods are prohibited or involved in serious fraud even if there is a dispute in assessment etc., provisional release option be given to the importers. For the benefit of readers these instructions/guidelines are mentioned hereunder:

++ Import/export goods are not to be detained unless prohibited as per the FTP and/or under other allied laws. Goods are not to be detained on simple valuation or classification disputes.

++ If it becomes necessary to detain the goods for investigation of any serious suspected fraud etc., the importer/exporter must be intimated in writing that he may shift the goods to a bonded warehouse under Section 49 of the Customs Act, 1962, with a clear indication that if he does not avail of this facility and the goods incur demurrage, etc., he would have to bear the demurrage and other charges levied by the custodian/other agencies.

++ But for certain exceptional categories, in any dispute case pending investigation wherever importer or exporter is willing, he should be allowed provisional clearance of the goods by furnishing a bond for full value of the goods supported by adequate bank guarantee as may be determined by the proper officer. The value of bank guarantee shall not exceed twice the amount of duty. The provisional clearance should be allowed as a rule and not as an exception.

++ Provisional release may not be resorted to in the cases mentioned below .However, option for storage in warehouses under Section 49 of the Customs Act, 1962 should be provided to the importers (goods can be allowed entry into the country only after the laid down quality standards etc. are satisfied):

++ Goods prohibited for import/export;

++ Imports not complying with the specifications/conditions/requirements of various Orders/Acts (e.g. Livestock Importation Act, 1898, Prevention of Food Adulteration Act, 1954, etc.); and

++ Where gross fraudulent practices are noticed and release of the goods may seriously jeopardize further investigations as also interests of the revenue.