CESTAT directs to Release Seized Imported Garlic on Furnishing Bond and Bank Guarantee Covering Demand of Differential Duty [Read Order]

The Chandigarh bench of the Customs, Excise & Service Tax Appellate Tribunal( CESTAT ) directed the revenue department to release seized imported garlic on furnishing bond and bank guarantee covering demand of differential duty.

M/s Shanus Impex and M/s S.K. Overseas appealed on the conditions of the provisional release of seized garlic imported, availing the benefit of Notification No.99/2011-CUS dated 09.11.2011, applicable to the imports under South Asia Free Trade Area Agreement ( SAFTA ).

Based on an investigation conducted by the Directorate of Revenue Intelligence, the goods imported appeared to be of non-Afghanistan origin contrary to the claim of the appellants and therefore, the same were seized. On a request made by the appellant-importers, the provisional release was ordered by the Department, subject to the conditions specified therein; the appellants challenged the orders to vide CWPs before the High Court of Delhi, who set aside the impugned order and remanded the case back to the Commissioner. 

The Commissioner allowed provisional release subject to the fulfilment of certain conditions laid down therein. The appellants challenged the conditions, specified for provisional release. The High Court dismissed the writ petitions as withdrawn and allowed the appellants to file an appeal against the impugned order, within two working days and directed the Appellate Authority to dispose of the same as expeditiously as possible.

Further directed M/s Shanus Impex to execute a Bond and to furnish a Bank Guarantee for Rs.3,70,24,887/; directed M/s S.K. Overseas to execute a Bond amounting to Rs.3,14,46,822/- and to furnish a Bank Guarantee of Rs.2,62,05,685/- while binding both the importers to pay the alleged differential duty, fines and penalties.

Shri Vikrant Kackaria, Counsel for the appellants, reiterated the grounds of appeal and submitted that the goods were imported from Afghanistan by road to India and all the goods are covered by a Certificate of Origin issued by the authorities in Afghanistan. He further submits that in respect of M/s S.K Overseas, they may be permitted to pledge a property instead of a Bank Guarantee.

Shri Narinder Singh, assisted by Shri Shivam Syal, Authorized Representative for the Department, reiterated the findings of the impugned orders and submitted that it is prima facie proved that the goods were not of Afghanistan origin. The only investigation left is to decide the exact origin of the goods which in no way would help the appellant as it is evident that they have misused the benefit of the Notification with an intent to evade payment of duty.

He further submitted that, unlike a manufacturer-importer, a trader-importer leaves nothing in the control of the Department to enable the recovery of differential duty, fines and penalties and therefore, the conditions of provisional release were correctly placed by the competent authority.

A two-member bench comprising Mr S S Garg, Member ( Judicial ) and Mr P Anjani Kumar, Member ( Technical ) observed that the goods were perishable and it would not be anybody’s gain to keep the goods rotting under seizure.

that prima facie, the evidence available to the Department is in the form of transcripts of messages the investigation is in progress and the Department is yet to negate the certificate issued by the authorities in Afghanistan. Understandably, the enquiry as per the procedure laid down under the Notification regarding the rules of origin is likely to take some time. Therefore, there is nothing wrong in releasing the goods provisionally as has been ordered by the competent authority. However, the only difference of opinion lies in the quantum of Bond and Bank Guarantee to be furnished for such release. 

 It was found that the goods have been cleared by the jurisdictional Customs Authorities after satisfying themselves about the conditions of import and the same were seized by DRI at a later date; the goods are perishable and the exact origin of the goods is yet to be ascertained.

The CESTAT directed that the respondents shall allow provisional release of seized goods within two working days of the appellants’ fulfilling the conditions specified. 

To Read the full text of the Order CLICK HERE

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