The Bombay High Court has held that when no Show Cause Notice is issued, to ask the importer to furnish a Bank Guarantee even to secure the anticipated redemption fine and anticipated penalties, would be rather harsh.
The bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla has observed that interest of justice would be served if the said goods imported by the Petitioner under all six Bills of Entry are allowed to be provisionally released on the Petitioner executing a Provisional Duty Bond as per the assessable value of all six Bills of Entry and a Bank Guarantee equivalent to a sum of Rs.85 Lakhs. This Bank Guarantee would secure the Revenue for approximately 50% of the differential duty, if payable by the Petitioner.
The Petitioner/assessee is a proprietary concern engaged in the import of “Wheat Flour Sheet Dough” , for preparation of various savoury items, which is further sold to local purchasers in India. According to the Petitioner, since the commencement of its business in 2008, it has been regularly importing the said goods from one Tee Yih Jia Food Manufacturing Pte Ltd., who is situated in Singapore.
During the course of its business, the Petitioner, imported “Wheat Flour Sheets-Dough” (for Spring Roll). According to the Petitioner, as per some alleged intelligence received from the officers, it is the case of the department that the Petitioner was mis-classifying the goods under Customs Tariff Heading (CTH) 1901 2000, thereby resulting in short payment of duty.
Based on the alleged information, the Petitioner’s import consignments of the goods under Bills of Entry were put on hold.
Apart from the first two Bills of Entry, there are four other Bills of Entry under which the said goods are imported from time to time by the Petitioner. As far as the four Bills of Entry are concerned, no order of provisional release has yet been passed. Since the said goods of the Petitioner are stuck and not being cleared, the Petition is filed.
The petitioner contended that even the goods covered under the four Bills of Entry listed be directed to be provisionally released on such terms and conditions as the court deem fit.
When the court enquired from the Petitioner as to why the same conditions should not be imposed as the ones imposed when provisional release was granted under the Bills of Entry listed at items (a) and (b) of paragraph 2 of this order, the petitioner submitted that the condition of a furnishing a Bank Guarantee is exorbitant because the differential duty, even according to the Department, for the first two Bills of Entry [for which provisional release is already granted] is Rs. 56,85,374/-.
According to the Petitioner, the Department can seek to secure itself only for the differential duty and not for any anticipated redemption fine and anticipated penalties. This is more so when no Show Cause Notice has yet been issued to the Petitioner, was the submission. According to the Petitioner, therefore, what should be secured by a Bank Guarantee, if at all, should only be the differential duty or any part thereof.
The court directed the Provisional Duty Bond as well as the Bank Guarantee shall be furnished by the Petitioner to Respondent department within a period of one week from today. On the aforesaid Bond and Bank Guarantee being furnished, the Customs Department shall provisionally release the said goods of the Petitioner covered under the aforesaid six Bills of Entry within a period of one week thereafter.
The court ordered the department to issue a Show Cause Notice as expeditiously as possible and in any event within a period of six weeks from today. Once the Show Cause Notice is issued, the Petitioner shall file its reply within a period of two weeks from the issuance of the said Show Cause Notice. The Show Cause Notice shall be adjudicated as expeditiously as possible and in any event within a period of 12 weeks from the date of the reply being filed by the Petitioner.
Case Details
Case Title: BMS Enterprises Versus Union of India & Ors
Case No.: Writ Petition No. 2258 Of 2025
Date: February 18, 2025
Counsel For Petitioner: Dr. Sujay Kantawala, with Mr. Anupam Dighe, Ms. Chandni Tanna, Ms. Renita Alex i/b India Law Alliance
Counsel For Respondent: Ashutosh Mishra, Jitendra Mishra with Sangeeta Yadav
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