The High Court of Delhi directed the release of the Bank Guarantee with interest due to an unjustified delay in finalizing the provisional assessment of imported gold jewellery.
Om Gems And Jewellery,petitioner-assessee,imported gold jewellery from Indonesia and claimed an exemption under two notifications that allowed a NIL rate of Basic Customs Duty (BCD). However, on January 23, 2016, the authorities directed the assessee to submit a Bank Guarantee and Bond covering 100% of the differential BCD.
How to Audit Public Charitable Trusts under the Income Tax Act Click Here
On appeal, the goods were released after depositing 20% of the duty and furnishing a Bank Guarantee of ₹22,07,264. The Countervailing Duty (CVD) of ₹6,67,936 was also paid, and a provisional assessment was completed on July 19, 2016. Despite multiple requests, the final assessment was delayed, leading to the filing of W.P.(C) 11831/2023, seeking finalization and release of the Bank Guarantee with interest.
On December 14, 2023, the High Court ruled in favor of the assessee, ordering the release of the Bank Guarantee with 6% interest per annum from March 17, 2016, until repayment, subject to the final assessment. However, Customs did not release the Bank Guarantee.
Meanwhile, on February 23, 2024, the final assessment order denied the claimed exemption, imposed a 15% BCD, and ordered the recovery of the differential duty and interest from the Bank Guarantee. The order also stated that the assessee’s dues should be adjusted against the 6% interest granted by the High Court before any further payment.
The assessee’s counsel argued that the delayed final assessment should be quashed and that Customs had failed to release the Bank Guarantee. The department’s counsel, Mr. Aggarwala, stated that ₹1,02,68,969 was payable with interest but admitted that the counter affidavit overlooked the Division Bench’s order.
The two member bench of Prathiba M.Singh (Justice) and Dharmesh Sharma(Justice) ruled that the Division Bench’s judgment had to be followed and that Customs could not delay compliance by adjusting amounts in the final order. It stated that the assessee could challenge the final assessment on the grounds of delay through an appeal. Since the order was appealable, the Court did not examine its merits but allowed the assessee to file an appeal within 30 days with the required pre-deposit.
Want a deeper insight into the Income Tax Bill, 2025? Click here
It also directed Customs to release the Bank Guarantee with interest within eight weeks as per the December 14, 2023, judgment, and clarified that both actions should be carried out separately.
The Court noted a serious lapse in the reply affidavit from the Commissioner of Customs, Calcutta, as it failed to consider the December 14, 2023, judgment and warned against such errors. It further stated that if the Bank Guarantee with interest was not released, the responsible officer would be held personally accountable, and the assessee could file an application before the Court.
In short,the writ petition is disposed of.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
