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Letter allowing Provisional release u/s 110A of the Customs Act, 1962 is Appealable: Bombay HC [Read Judgment]

Business Income - Bombay High Court 2 - Tax Scan

Recently, a two-judge bench of Bombay High Court in The Commissioner of Customs (Import -I) vs. S.S. Offshore Pvt. Ltd. held that the Customs, Excise & Service Tax Appellate Tribunal has the jurisdiction to entertain an appeal against a letter allowing provincial release under Section 110A of the Customs Act, 1962.

The main question for consideration before the Court was regarding the Jurisdiction of the said Tribunal in allowing an Appeal under Section 129 (1)(a) against a letter issued by the Commissioner of Customs allowing provincial release of a vessel under Section 110A of the Act.

The Respondents, S.S. Offshore Pvt. Ltd had filed a Bill of Entry for the import of a second hand vessel. The Bill of Entry was assessed and vessel allowed to be cleared for home consumption. However the officers of the Intelligence and Investigation Branch of the Commissioner of Customs on a reasonable belief that the vessel is liable for confiscation on account of incorrect classification/declaration seized it.

The Respondents met the Commissioner of Customs (I) and sought provisional release of the vessel under Section 110A of the Customs Act. Later, the Deputy Commissioner of Customs communicated the decision of the Commissioner of Customs (I) via a letter, allowing provisional release of the vessel subject to conditions.

Being aggrieved by the conditions imposed for the release, the Respondent filed an appeal to the Tribunal. The appeal as filed by the Respondent was entertained by the Tribunal under Section129A (1) (a) of the Act. On merits, the Tribunal by the impugned order dated 31st October 2017 set aside the letter dated 25 September 2017 which allowed conditional provisional release of the vessel under Section 110A of the Act and restored the issue to the Commissioner of Custom (I) to decide the issue afresh.

The Appellant-The Commissioner of Customs (Import -I), challenged the order of the Tribunal by an appeal questioning the jurisdiction of the Tribunal in entertaining an appeal against the letter allowing provincial release under Section 110A of the Customs Act, 1962.

The main contention of Mr.Jetly, Learned Counsel for the Appellant was that the jurisdiction of the Tribunal under Section 129A (1)(a) of the Act is only to entertain appeals from decision or an order passed by the Commissioner of Customs as an adjudicating authority. He pointed out that in this case the letter dated 25 September 2017 of provisional release of the vessel under Section 110A of the Act, was not an order or decision but only a letter.

Mr. Sridharan, the learned counsel appearing for the Respondent argued that the letter dated 25 September 2017 allowing provisional release of the vessel by the Commissioner of Customs is in the nature of interim order / decision pending final disposal of the dispute by adjudication. He relied on the decision taken by a larger bench of the Tribunal in Commissioner of Central Excise and Service Tax v. Gaurav Pharma Ltd 2015(326) ELT 561 where it was held that an appeal from a letter directing provisional release of seized goods under Section 110A of the Act is an appealable order under Section 129A(1)(a) of the Act to the Tribunal.

The court made it clear that no fault could be found in the Tribunal entertaining the appeal from the letter dated 25 September 2017 directing provisional release of the vessel as at the time the division bench of the Tribunal entertained the appeal and passed the impugned order, it was bound to do so, as the issue was concluded by the decision of its larger Bench in Gaurav Pharma (supra) and that decision of the larger bench would continue to be binding in the absence of any stay from higher forum. The Court reminded that the doctrine of precedents oblige the Tribunal to entertain the appeal from the letter dated 25 September 2017 allowing provisional release of the seized goods.

The Court reproduced the order of the Tribunal in Gaurav Pharma Case wherein the tribunal had observed that “36. Apart from the above, we find that the distinction sought to be made by categorizing some orders (like the one under Section 110 A) as an interim order will not sustain legal scrutiny. Section 110A provides for restoring seized goods to the owner. No doubt the offence case is still pending final outcome. However, an order for provisional release is a stand-alone order irrespective of the final outcome of investigation or adjudication. The same is not predicated by possible later outcomes. Refusal to release the goods or imposing harsher conditions for release wills certainly has legal adverse consequences to the owner of the goods. Hence, the owner has to have a remedy which is statutorily provided under Section 129A.”

In complete agreement with the analysis done by the larger bench of the Tribunal in Gaurav Pharma case, the bench comprising of  Justice M.S. Sanklecha & Justice Riyaz I. Chagla, held that the communication / letter dated 25thSeptember 2017 is a decision taken by the adjudicating authority and is appealable to the Tribunal under Section 129(1)(a) of the Act.

Dismissing the appeals, the Court answered in affirmative, in favor of the Respondent – Assessee and against the Revenue.

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