Misclassification of PVC Coated Fabrics: Madras HC modifies directs to Execute Rs. 11L Bond instead of Bank Guarantee [Read Order]
The Court modified the order by directing the petitioner to remit the declared duty, pay 50% of the differential duty execute a bond for ₹39 lakh, and execute an additional bond for ₹11 lakh in place of the bank guarantee.
Misclassification - PVC Coated Fabrics - Madras HC - Execute - instead of Bank Guarantee - taxscan
Misclassification - PVC Coated Fabrics - Madras HC - Execute - instead of Bank Guarantee - taxscan
The Madras High Court modified conditions imposed in a provisional release order concerning a consignment of imported PVC coated fabrics to the extent of furnishing bank guarantee. The court modified it to execution of bond.
The petitioner, K P Impex had imported 69,903 square meters (793 rolls) of PVC coated fabrics from China, declared at USD 9,786.42, through Chennai Port. The Directorate of Revenue Intelligence (DRI) initiated proceedings alleging misclassification and undervaluation, leading to seizure of the goods under Section 110 of the Customs Act, 1962.
The Additional Commissioner of Customs had ordered provisional release of the consignment subject to payment of re-determined duty, execution of a bond for ₹39 lakh, and furnishing of a bank guarantee of ₹11 lakh.
Challenging this, the petitioner argued that the insistence on a bank guarantee was harsh, relying on precedents including Green Line v. Commissioner of Customs and the Division Bench ruling in Sri Venkateshwara Paper Boards (2022), where courts had replaced bank guarantee requirements with bond execution.
Justice N. Anand Venkatesh, after reviewing the earlier judgments, observed that while safeguarding revenue is important, unnecessary hardship should not be imposed on the importer when adjudication is still pending.
The Court held that the Department’s interest could be adequately protected by requiring execution of bonds. Accordingly, the Court modified the order by directing the petitioner to (i) remit the declared duty, (ii) pay 50% of the differential duty, (iii) execute a bond for ₹39 lakh, and (iv) execute an additional bond for ₹11 lakh in place of the bank guarantee.
Tax Audit Deadline Is Near! Are you prepared? Click here
After complying with these conditions, Customs authorities were directed to release the goods within seven days. The Court also directed both sides to cooperate to ensure expeditious completion of adjudication proceedings.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
