Ideal Carpets Ltd. vs Union of India

Heard on the question of admission and interim relief. The petitioner, who is a company dealing in sale and export of carpets, has filed this petition being aggrieved by order date 12-10-2011 passed by the Dy. Commissioner (Customs), Mandideep and order dated 16-12-2011 passed by the Assistant Commissioner of Customs, Mandideep, whereby the petitioner has been directed to furnish bond and bank guarantee of Rs. 16832900/- which include differential duty of Rs. 8416450/- and penalty of Rs. 8416450/- and an additional deposit Rs. 2878410/- towards provisional duty for provisionally releasing the goods and by the second impugned order had further been informed that the goods have infact not been seized but would be subjected to provisional assessment u/s 18 of the Customs Act, 1962 (hereinafter referred to as ''the Customs Act'') only in case the amount is deposited. It is submitted by the learned counsel for the petitioner that the petitioner had initially exported the carpets put on account of recession has re-imported them and the respondent-authorities have stored and placed the carpets in the godown in Mandideep. As the products are perishable, the petitioner had filed an application seeking release of the goods in response to which the respondent Dy. Commissioner (Customs), Mandideep, District Raisen passed the impugned order dated 12-10-2011 permitting the same subject to deposit of the aforementioned amount. The petitioner filed a presentation before the authorities against the order dated 12-10-2011 in response to which the respondent authorities by the second impugned order dated 16-12-2011 have informed the petitioner that the goods have not been seized or confiscated in the proceedings u/s 110 of the Customs Act and, therefore, Section 110A of the Customs Act is not applicable to their case and provisional assessment u/s 18 of the Customs Act would be made only after they fulfill the conditions mentioned in the letter dated 12-10-2011.

It is submitted by the learned counsel for the petitioner that the petitioner is reimporting the goods and had produced all the relevant documents before the concerned authorities and in case the authorities are not satisfied with the same, it may adopt the procedure prescribed by Section 18 of the Customs Act and proceed to provisionally assess the petitioner, but the authorities have not done so and on the contrary have issued the impugned order dated 12-10-2011 on the application for release filed by the petitioner directing the petitioner to deposit the amount which includes differential duty, penalty and provisional duty which is not permissible in law.

It is next contended that the authorities can only ask the petitioner to deposit the amount of provisional assessment in case any such provisional assessment is made u/s 18 of the Customs Act, and prior to that no amount towards differential duty, penalty or provisional duty can be recovered form the petitioner. It is also contended that in such circumstances the respondent-authorities were only required to impose some reasonable conditions and in any case issue a show cause notice to the petitioner, hear them on their application seeking release of the goods and thereafter pass orders in accordance with law.

The learned counsel for the respondents submits that the petitioner has filed an application seeking provisional release of their goods and it is in response to the said application, the respondent-authorities have passed order dated 12-10-2011 and the petitioner had also been informed by subsequent letter dated 16-12-2011 that on the deposit of the said amount the authorities would proceed to provisionally assess the petitioner u/s 18 of the Custom Act after releasing the goods.

Having heard the learned counsel for the parties, we are of the considered opinion that the authorities have not properly applied their mind to the amount required to be deposited by the petitioner as there is no order of assessment, penalty or provisional assessment quantifying their liability and admittedly no proceedings for confiscation have been initiated u/s 110 or 110A of the Customs Act against the petitioner. The learned counsel for the respondents has failed to point out any provision of law empowering the authorities to pass such as an order. In the circumstances, the authorities could not have asked the petitioner to furnish bond and bank guarantee for an amount which includes differential duty, penalty and provisional duty. As best the authorities could have required the petitioner, if they had any doubt, to produce all relevant documents and thereafter pass orders on the application for release of the goods in accordance with law, keeping in mind the duty imposed upon them when the goods were exported previously.

In view of the aforesaid facts and circumstances of the case and taking note of the statement of the learned counsel for the petitioner that the amount of duty required to be paid by them is much less than the amount for which they have been asked to furnish bank guarantee for release of the goods, therefore, in the circumstances we are of the considered opinion that the authorities should reconsider the matter and pass orders after duly hearing the petitioner and therefore, we are of the considered opinion that the impugned orders dated 12-10-2011 and 16-12-2011 deserve to be and are hereby quashed.

Looking to the facts and circumstances of the case, it is directed that the petitioner shall appear before the Dy. Commissioner (Customs), Mandideep, Raisen on 21st of May 2012 and thereafter the said authority shall take up proceedings, hear the petitioner and pass orders in accordance with law on their application preferably within a period of one month thereafter.

With the aforesaid direction the petition, filed by the petitioner, stands allowed.

There shall be no order as to the costs. C.C as per rules.