Provisional release of seized goods - Need for uniform code
FEBRUARY 22, 2016
By Manish Jain
SECTION 110A of the Customs Act, 1962 provides for provisional release of goods, documents and things seized pending adjudication. Any goods, documents or things seized under Section 110 of the Act, 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. For ready reference, provisions of Section 110A of the Act are reproduced hereunder:-
"SECTION 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."
From reading of above it is evident that Section 110A provides for provisional release of goods, etc. states that the concerned customs authorities may in their discretion, pending the order of the adjudicating authority, release to the owner the goods or documents, etc., seized on furnishing of a bond, in the proper form in addition to such security and conditions as may be imposed. As is apparent, Section 110A enables the concerned customs authorities to exercise discretion.
It may be noted that there is no guideline for customs officer to exercise their discretion with regards to conditions of the provisional release of goods. Further even courts have taken different stands with regards to the conditions for release of seized goods.
Some the following illustrations would show that how different courts have put different conditions for provisional release of goods;
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Decision and forum
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Conditions imposed for provisional release of goods
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Commissioner v. Navshakti Inds. Pvt. Ltd. - (S.C.)
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Furnishing a bank guarantee of 30% of the differential duty to the satisfaction of the Commissioner of Customs.
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Shivam marketing vs UOI - 2015-TIOL-1909-HC-MP-CUS
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• On execution of Bond equal to assessed value of the goods.
• Payment of applicable duty
• Security as per norms under Customs Law and procedure for likely fine and penalty.
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Kuber Casting (P) Ltd. (P & H)
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• condition of furnishing of bond for value of seized goods
• payment of differential duty
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Veetrag enterprises Vs Chennai - 2013-TIOL-506-HC-MAD-CUS
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• deposit with the customs authorities the duty payable on the value declared by importer.
• deposit 50% of the differential duty i.e., the difference between the value declared by them and the value provisionally assessed
• for the balance 50% of the differential duty,
• personal bond to the satisfaction of the customs authorities
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Kundan Rice Mills Ltd. (supra) - 2008-TIOL-624-HC-P&H-CUS
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Court has held that mere existence of power of confiscation not sufficient to justify harsh conditions unless case for confiscation is shown. Exercise of power to impose harsh conditions without valid justification will be arbitrary exercise of power hit by Articles 14, 19 and 21 of the Constitution.
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Zest Aviation Pvt. Ltd. v. Union of India - 2013-TIOL-132-HC-DEL-CUS
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Bank guarantee of 30% of differential duty with undertaking of self-renewal till final disposal of the case was held to be reasonable
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From the above it is evident that various courts have imposed various different conditions for provisional release of goods.
Recourse to The Customs (Provisional Duty Assessment) Regulations, 1963
Hon'ble Delhi High Court in case of Bhaiya Fibres Ltd. v. Additional Director General Revenue Intelligence has held that principles laid down by the Customs (Provisional Duty Assessment) Regulations, 1963 would be binding for provisional release of the goods in the absence of any method for safeguarding the interest of Revenue. The Customs (Provisional Duty Assessment) Regulations, 1963, Regulation 2 thereof reads as follows:-
"REGULATION 2. Conditions for allowing provisional assessment. - Where the proper officer on account of any of the grounds specified in sub-section (I) of Section 18 of the Customs Act, 1962 (52 of 1962), is not able to make a final assessment of the duty on the imported goods or the export goods, as the case may be, he shall make an estimate of the duty that is most likely to be levied hereinafter referred to as the provisional duty. If the importer or the exporter, as the case may be, executes a bond in an amount equal to the difference between the duty that may be finally assessed and the provisional duty and deposits with the proper officer such sum not exceeding twenty per cent of the provisional duty, as the proper officer may direct, the proper officer may assess the duty on the goods provisionally at an amount equal to the provisional duty."
Conclusion:
Since Section 110A of the Act, providing for provisional release does not lay down specific conditions or definite parameters for exercise of such power, resort can definitely be made to the Customs (Provisional Duty Assessment) Regulation, 1963 as guidelines contained therein would also apply to seizure of goods to be dealt with under Section 110A of the Act. Thus, for uniformity of law, there is need that section 110A of the Customs Act has to be amended to this effect.
(The author is Principal Associate, Lakshmikumaran & Sridharan, Ahmedabad.)
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