Shri Pijush Banik vs Union Of India
2021 Latest Caselaw 134 Tri

                            HIGH COURT OF TRIPURA
                                  AGARTALA
                              WP(C)No.855 of 2020

       Shri Pijush Banik,
       son of Sri Prafulla Kumar Banik,
       Proprietor of M/s Jagannath Trading N.S. Road,
       Agartala, PIN : 799001, Tripura (West)

                                                               ----Petitioner(s)
                                         Versus

       1. Union of India,
       represented by the Secretary of Revenue,
       North Block, New Delhi, 110001

       2. The Assistant Commissioner,
       Division-1, CGST & Service Tax,
       Old Agartala Municipal Corporation Office,
       Jackson Gate, Agartala, PIN : 799001

       3. The Superintendent of Customs,
       Agartala Land Customs Station Agartala
                                                            ---- Respondent(s)

       For Petitioner(s)    :     Mr. N. Dasgupta, Adv.
                                  Mr. T.K. Deb, Adv.
       For Respondent(s):         Mr. Biswanath Majumder, CGC.
                                  Mr. P. Datta, Adv.
       Date of hearing     :      29.01.2021
       Date of delivery of
       Judgment & Order :         08.02.2021

       Whether fit for
       reporting            :     YES.


                     HON'BLE MR. JUSTICE S. TALAPATRA

                                Judgment & Order

The petitioner is an exporter/importer through the Land Custom Stations

in Tripura and he carries on his business under name and style of M/s Jagannath

Trading, Agartala. On 26.09.2020, the petitioner had imported soybean oil

measuring 97,600 litre in 6,100 cartons from Bangladesh vide Bill of Entry

No.659600/IMP/AGT-LCS/2020-21 dated 26.09.2020 through the Agartala Land

Customs Station. At the time of entry to India through the said land customs

station along with the Bill of Entry [Annexure-1 to the writ petition], the

petitioner had submitted all other requisite import documents. The goods were

directed to be ware housed without assessing the duty under Section 17 of the

Customs Act, 1962 by the respondent No.3. Section 17 of the Customs Act

provides the procedure for assessment of duty. The proper officer may verify the

entries made under Section 46 or Section 50 of the Customs Act and also the

self-assessment of the duty for the goods. For that purpose, the proper officer

examine or test any imported goods provided that selection of cases for

verification shall primarily be on the basis of risk evaluation. The proper officer

may require the importer to produce any document or information and on such

requisition, the importer shall produce such document or information. If it is

found on verification, examination or testing of the goods or otherwise, the self

assessment as done was not done correctly, the proper officer may without any

prejudice to any other action which may be taken under the said Act, reassess

the duty leviable on such goods. The importer may confirm his acceptance of

reassessment in writing. The proper officer shall pass the speaking order for

reassessment within fifteen days from the date of reassessment of the Bill of

Entry.

2. The respondents have admittedly initiated a verification regarding the

Certificate of Origin produced by the petitioner for availing the concessional rate

of customs duty. Though the respondents are at liberty to initiate verification,

but they cannot hold up the assessment/clearance for an indefinite period

without passing an order following the principles of natural justice.

3. The petitioner has seriously alleged that he has been left remediless as

the respondents have not passed any order. According to him, clearance of

goods should have been allowed following the provisions under Sections 17 and

18 of the Customs Act either accepting the concessional rate of duty as claimed

by the petitioner under self-assessment or rejecting it or by doing reassessment

under Section 17 of the said Act. Reassessment could not have been denied for

indefinite period for such freely importable goods particularly when the goods

are of perishable nature. In these circumstances, the petitioner has urged this

court for directing the respondent authorities to assess/clear the soybean oil

imported under the Bill of Entry dated 26.09.2020 within a period as would be

set up by this court. Further, it has been urged that the respondent authorities

be directed to follow the direction of Central Board of Indirect Taxes and

Customs (CBITC) as embodied in their notification No.99/2011 dated 09.11.2011

[Annexure-2 to the writ petition] for purpose of Turant clearance of the goods as

per provisions of law.

4. It has been asserted by the petitioner that for import from Bangladesh,

Government of India has extended Custom Tarrif Concession under the South

Asian Free Trade Area [SAFTA] Arrangement. Some changes in law was made in

September, 2020 regarding criteria on origin of goods for the SAFTA Beneficiary

[Bangladesh] to avail the concessional rate of customs duty on the strength of

the Certificate of Origin of the goods. The earlier rule namely Rules of

Determination of Origin of Goods under the Agreement of South Asian Free

Trade Area 2006 stood amended from time to time. As per the provision of the

said rules, the Certificate of Origin issued by the designated authority of the

originating country [Bangladesh] in the case in hand was acceptable as valid

instrument with regard to Customs Tarrif Concession under SAFTA. The said

rules of 2006 has been changed by the new rule namely Customs Administration

of Rules of Origin under Trade Agreement Rules, 2020 [the CAROTAR 2020 in

short] which came into effect from 21.09.2020 under Section 156 read with

Section 28(d)(a) of the Customs Act, 1962 [Annexure-4]. Under the CAROTAR

2020 mere production of Certificate of Origin as was treated sufficient under the

Rules of 2006 was not adequate. It is required that importer should possess

information in support of the Certificate of Origin under Rule 4 of the CAROTAR,

2020. The assessing officer authorized to call for additional information under

Rule 5 of the CAROTAR, 2020. Rule 6 of the CAROTAR, 2020 provides that

exemption of concession of customs duty under SAFTA can be suspended or

denied at clearance state directing the security deposit from the importer in the

following situations :

"(i) Rule 6(1)(a) : mismatch of signatures or seal when compared with specimens of seals and signatures in the Certificate of Origin.

(ii) Rule 6(1)(b) : there is reason to believe derived, where the importer fails to provide the requisite information sought for under rule 5.

(iii) Rule 6(4)(c) : the proper officer may, on the request of the importer, provisionally assess and clear the goods, subject to importer furnishing a security amount."

[Emphasis added]

5. The petitioner has asserted that he has met all criteria of the CAROTAR,

2020 and possessed all information regarding the country of Origin of Goods as

per Rule 4 of the new rule and have furnished requisite information under Rule 4

of the CAROTAR, 2020. He has averred that the imported soybean oil is not

wholly originated in Bangladesh and for that reason, he has submitted that cost

breakup for imported soybean oil showing the value addition in Bangladesh by

producing the declaration dated 14.09.2020 issued by the Head of Supply Chain

Shun Shing Edible Oil Limited [Annexure-5 to the writ petition] in Bangladesh.

The break up as referred is as under :

"Imported component in Bangladesh : 62.75% Value addition in Bangladesh : 37.25%"

6. Even though, the petitioner has produced all relevant documents for

import of soybean oil, the custom authorities have not given the clearance of the

imported goods and held up the clearance since 26.09.2020. The petitioner has

thus been compelled to bear the wire house rent and run the risk of gradually

having the goods damaged for their highly perishable nature. On 30.10.2020

and 08.12.2020 [respectively Annexure-6 and 7], the Superintendant, Agartala

Land Custom Station, the respondent No.3, had communicated to the petitioners

that his declaration under Rule 5(1) of CAROTAR, 2020 in Form-1 is being

verified by the appropriate authority. But the petitioner was never asked to

furnish requisite information under Rule 6(1)(b) of the CAROTAR, 2020. He was

straightway asked to assess the Bill of Entry dated 26.09.2020 provisionally

under provision 6(4)(c) of CAROTAR 2020 to avoid hardship by way of payment

of demurrage charges and other financial losses. By the communication dated

08.12.2020 [Annnexure-7 to the writ petition], it had been informed that the

said declaration submitted by the petitioner had been forwarded to the Director

[International Customs Division, Central Board of Indirect Taxes and Customs

(CBIC), New Delhi] through the Commissioner of Customs (Prevention) NER,

Shillong for verification under Rule 6(1) of CAROTAR, 2020. The reply of the

competent verification authority is still waited. In the said communication dated

08.12.2020, the respondent No.3 has apprised the petitioner that under Rule

6(4)(c) of the CAROTAR 2020, the following option is available to him and if he

wished to opt that provision, a written intimation be made to his office :

"6. Verification request-

(4) Where verification in terms of clause (a) or (b) of sub- section (1) is initiated, during the course of customs clearance of imported goods,.....

(c) the proper officer may, on request of the importer, provisionally assess and clear the goods, subject to importer furnishing a security amount equal to the difference between the duty provisionally assessed under Section 18 of the Act and the preferential duty claimed."

7. The petitioner has contended that such request of the respondent No.3

is unwarranted, unjust and prejudicial to the petitioner. Exercise of such option

would imply that the petitioner has admitted that he has failed to furnish the

requisite information with regard to the Certificate of Origin and consequently

requiring him to furnish the bank guarantee for whole of the duty for which

exemption is eligible. For that reason, the petitioner has not made any request

for provisional assessment under Rule 6(4)(c) of the CAROTAR 2020 nor is it

required to, inasmuch as the petitioner has submitted all the relevant

documents/information. Moreover he possess all the relevant information.

Hence, the petitioner is not required to furnish the bank guarantee [BG] for the

whole of the custom duty which is eligible for exemption.

8. On 16.11.2020, the petitioner submitted a written memorandum to the

Commissioner of Customs, Shillong apprising him "unlawful" holding up of

clearance [assessment]. In the letter dated 24.11.2020 [Annexure-9 to the writ

petition], the Assistant Commissioner of Agartala LCS was directed by the

Additional Commissioner of Customs, Shillong to take necessary action as per

law but no such action has been taken. CBIC in their circular No.53/2020-

Customs dated 08.12.2020 has provided that in some other notified preferential

Rules of Origin where specific provision for third party invoices is provided, the

origin of goods is none the less based on the value addition done in the country

of origin alone with FOB in country of origin being the base for arriving at the

local value content. The petitioner had submitted the documents beforehand

and intimated the same to the respondent authorities by the letter dated 2020

and urged them "to assess duty immediately" but the respondent authorities had

refused to assess the goods.

9. The apparent reason according to the petitioner for not passing an

assessment order following the CBIC circular dated 08.12.2020 is that the

respondent authorities had earlier compelled the other importers to furnish the

bank guarantee under Rule 6(4)(c) of the CAROTAR 2020 and hence, the

petitioner could not be accommodated by the lawful action. Even, the wrong

interpretation of Rule 6(4)(c) CAROTAR, 2020 has been made by the respondent

authorities.

10. The petitioner has not questioned the right of the respondent authorities

to initiate verification for all import documents produced by the importer. But

there is no provision to hold up assessment under Section 17 or 18 of the

Customs Act, 1992 read with the CAROTAR, 2020 for verification without

following the due process of law. Finally, in terms of the CBIC circular dated

04.09.2020 [Annexure-12 to the writ petition] the petitioner had urged to direct

the respondents Turant clearance.

11. Mr. N. Dasgupta, learned counsel appearing for the petitioner has stated

that in terms of the circular No.38/2016-Customs dated 22.08.2016 the amount

of bank guarantee or cash deposit to be obtained as security of the differential

duty is 0% for the cases selected on random basis for verification of the

declaration made in the country of origin. Mr. Dasgupta, learned counsel has

further submitted that the petitioner is entitled to Turant clearance in terms of

the circular No.40-2020-Customs dated 04.09.2020 [Annexure-12].

12. The respondent No.2 by filing the reply has, however, categorically

stated that the Assistant Commissioner CGST and service tax has been made the

party-respondent No.2 unnecessarily. True it is that the party respondent No.2

as added is not even a proper party. The necessary party is the Assistant

Commissioner, Customs Division. But since the superior Officers having

jurisdiction have been made party, this objection should not have any effect so

far the maintainability of the writ petition is concerned. However, the respondent

No.3 has filed a comprehensive reply and raised the question of maintainability

of the writ petition for existence of alternative remedy for release of the goods

imported to, under Bill of Entry dated 26.09.2020. As provisional assessment of

the duty of the goods is provided under Section 18 of the Customs Act, 1956

read with Rule 5 and 6(4)(c) of CAROTAR, 2020. According to the said

respondent, the disputed facts cannot be examined under Article 226 of the

Constitution.

13. In the reply, the respondent No.3 has further stated that the goods were

warehoused so that the proper officer can check the goods, since the goods in

the present case is refined soybean oil "need to be tested or to be having such

test report which proves the goods fit for human consumption". As such, the

sample was taken by the proper officer vide the sample No.897 dated

26.09.2020 and were sent to Food Testing Lab, Bodhjungnagar. Thereafter, the

respondent No.3 has averred as follows :

"On scrutiny of the documents provided by the Importer under Rule 5(1) of CAROTAR 2020 in Form-1 some doubts were raised by the Proper Officer, i.e. Assistant Commissioner, Agartala Land Customs Station and the same was communicated to M/s Jagannath Trading (IEC 204022410) vide letter dated 12.10.2020. The above said importer was requested on 30.10.2020 and 08.12.2020 because goods are perishable in nature self life is there to get Customs clearance of the imported goods by provisional assessment under section 18 of Customs Act 1962 to prevent any kind of financial losses/constraints. Further, for verification of Certificate of Origin the nodal officer (i.e. Commissioner of Customs (P), NER, Shillong) was requested to verify the CoO (SAFTA) in terms of Rule 6 of CAROTAR 2020, vide letter dated 30.10.2020. Moreover, the issue has already been escalated by the Headquarter Customs (P), NER, Shillong to The Director (International Customs Division), CBIC, New Delhi, of which no verification status is received by this office till date."

Thus, it is apparent that no document was available with the

respondents to hold back the clearance. It is simply for decision of the

competent authority.

14. It has been further asserted in the reply that in terms of the notification

No.81/2020-Customs(N.T.) dated 21.08.2020 issued by the Ministry of Finance,

Department of Finance, Government of India, New Delhi under the CAROTAR,

2020, the proper officer found that there are grounds for verification of Bill of

Entry dated 21.09.2020. Accordingly, he initiated the proceeding and subject to

verification, the preferential tariff treatment of such good was suspended till

conclusion of the verification in view of Rule 6(4)(a) of the CAROTAR which

provides that preferential tariff treatment of such goods may be suspended till

conclusion of the verification and the proper officer may on the request of the

importer provisionally assess and clear the goods subject to that the importer

furnished a security amounting equal to the difference between the duty

provisionally assessed under Section 18 of the Customs Act and the preferential

duty claimed. To that effect, the respondent No.3 had issued letters to the

importer [the petitioner] but he did not avail that provision for clearance of the

goods under Bill of Entry dated 26.09.2020. In para-14 of the reply, the

respondent No.3 has stated as follows :

"On scrutiny of the documents provided by the Importer under Rule 5(1) of CAROTAR 2020 in Form-1 some doubts were raised by the Proper Officer, i.e. Assistant Commissioner, Agartala Land Customs Station and the same was communicated to M/s Jagannath Trading (IEC 204022410) vide letter dated 12.10.2020. The above said importer was requested on 30.10.2020 and 08.12.2020 because goods are perishable in nature self life is there to get Customs clearance of the imported goods by provisional assessment under section 18 of Customs Act 1962 to prevent any kind of

financial losses/constraints. Further, for verification of Certificate of Origin the nodal officer (i.e. Commissioner of Customs(P), NER, Shillong) was requested to verify the CoO (SAFTA) in terms of Rule 6 of CAROTAR 2020, vide letter dated 30.10.2020. Moreover, the issue has already been escalated by the Headquarter Customs (P), NER, Shillong to The Director (International Customs Division), CBIC, New Delhi, of which no verification status is received by this office till date."

15. As stated, the respondent No.3 had issued two letters dated 30.10.2020

and 08.12.2020 apprising the petitioner to assess the Bill of Entry dated

26.09.2020 provisionally under provisions of Rule 6(4)(c) of the CAROTAR 2020

to avoid hardship by avoiding demurrage charges and other financial losses. By

the letter dated 08.12.2020, the respondent No.3 had apprised the petitioner

that the declaration submitted by the petitioner in respect of the Bill of Entry of

dated 26.09.2020 had been sent for verification by the competent authority

under Rule 6(1) of CAROTAR, 2020. The reply from the competent authority in

respect of the verification was still awaited. Therefore, he was asked to opt for

self-assessment under Rule 6(4)(c) of the CAROTAR, 2020. It is apparent from

the letter dated 30.10.2020 [Annexure-C to the reply filed by the respondent

No.3] that on purported scrutiny of the declaration in Form-1 as submitted by

the petitioner with all supporting documents that the petitioner sought for the

concessional benefit under Rule 8 of the notification No.75/2006 dated

30.06.2002. The petitioner has claimed the origin criterion "B" 62.75 % (DVA-

37.25%) under Rule 10 of SAFTA. But the Assistant Commissioner (ICP) Land

Customs Station, Agartala has expressed some doubts which have been noticed

in the following terms:

"1. As per Notification No.83/2020-CUSTOMS (N.T.), dated, 31.08.2020 the Tariff Value of Crude Soybean Oil (HSN=1507.10.00) is S 821 per MT. On the other hand, value of crude soybean oil is S 688.76 per MT vide the cost breakup

dated 14.09.2020 (issued by Bangladesh manufacturer). The importer explained that it was their old stock vide letter dated 14.10.2020.

2. It shows the difference in tariff price, crude palm oil and RBD palm oil from 3% to 5.8% over the last one year. It appears that the production cost of the final product (crude palm oil to RBD palm oil) may be below 6%. Where Supplier (BD) DVA showed 37.25%. This seems suspicious. The importer no comments in the issue vide letter dated 14.10.2020.

3. In the cost break up dated 14.10.2020 they shown the presentence of profit 21.01%.

4. The composition which consider value adding :

a) Percentage of local value content: 37.25% and components which constitute as :

i) Packages & packing material, ii) Labour charge iii) Electricity iv) coal rice husk/Furnace oil v) indirect chemical

vi) spares vii) Salary & wages, viii) over head cost & profit.

b) Cost of packing material may be deducted because it is non originating components vide their declared in table of part B of the Form-1 and the goods imported from India vide letter dated 14.10.2020 attach sheets.

4. In the cost break up dated 14.10.2020 they shown the total costing S 1111.37 [less deprecation S16] and non-origin material is 697.42. it appears the DVA may be [(1095.37 - 697.42]x 100/1095.37]=36.33% and value of non-originating material is 63.67%.

The importer submitted another cost break up against bill of entry no.659600/IMP/AGT-LCS/2020 dated 26.09.2020 for clearing the soybean oil packing in Tin wherein they shown the percentage of profit is 14.56% (Copy enclosed). It appears that their profit directly affect the DVA. The both consignment are same different only costing of packing materials and percentage of profit.

In view of the above, if approved, (a) the Certificate of origin (SAFTA) may be verified in terms Rule 6 of CAROTAR, 2020 or order as deem fit."

16. The respondent No.3 has also referred the content of an interoffice

communication dated 24.11.2020 addressed to the Assistant Commissioner,

Land Customs Station, Agartala by the Additional Commissioner of Customs

[Preventive] North Eastern Region [Annexure-D to the reply]. On erroneous

interpretation of Section 28(D)(1) of the Customs Act, 1962 read with Rule 4, 5

and 6 of the CAROTAR, 2020, according to the petitioner, the action holding up

the clearance/assessment of soybean oil imported under SAFTA exemption was

adopted in a case where no security is required, for such random verification

initiated without knowledge of the importer as per Para-3 serial No.5(b) CBIC‟s

circular No.38/2016-Customs, as amended. It has been acknowledged in that

communication that the goods lying warehoused since September, 2020 at

Agartala LCS and in Bangladesh [not the case of the petitioner], causing huge

loss/demurrage to the importers. In that backdrop, the petitioner‟s request for

immediate direction has been acknowledged. The said communication has its

root in the representation dated 16.11.2020 as filed for the petitioner. It has

been clearly observed that the matter has been referred to CBITC for verification

in terms of Rule 6(1)(b) of the CAROTAR 2020 which provides that the proper of

officer may during the course of customs clearance or thereafter, request for

verification of the Certificate of Origin from the Verification Authority where (b)

there is reason to believe that the country of origin criterion stated in the

certificate of origin has not been met or the claim of preferential rate of duty

made by importer is invalid. Apparent it is that no such contention has been

raised expressly by the respondent authority.

17. By the officer letter dated 20.11.2020 [Annexure-E to the reply filed by

the respondent No.3], it has been referred further action cannot be taken unless

the necessary procedure is completed under Rule 5 of the CAROTAR, 2020. On

scrutiny of the said letter dated 20.11.2020, which deals with verification of the

Country of Origin under Rule 6 (1)(b) of the CAROTAR, 2020 it appears apposite

that the text thereof is reproduced :

GOVERNMENT OF INDIA Ministry of Finance, Department of Revenue Office of the Commissioner of Customs (Preventive) North Eastern Region 110 MG Road, Shillong, Meghalaya Phone: 0364-2222597,2225325, 2229005, 2210103 Fax: 0364-2223440, 2229007 Email: [email protected]

E-Mail File No.VIII(48)10/CUS/TECH/2020/Pt.I Dated 20th November, 2020

The Director (International Customs Division) Central Board of Indirect Taxes & Customs Department of Revenue, Ministry of Finance, Room No.49, North Block, New Delhi-110001, Email: [email protected]

Sub:Verification of Country of Origin under Rule 6(1)(b) of CAROTAR 2020-reg.

Sir,

It is to inform you that the following importers have filed Bills of Entry for import of soybean oil/galvanized steel sheet claiming preferential duty under Notification No.75/2006-Cus(N.T) dated 30.06.2006, as amended. During the course of clearance, there were reasons to believe that the Rules of Origin have not been met and accordingly, further information and supporting documents were sought under Rule 5(1) of CAROTAR 2020 :

Sl.    Name of Importer                                       Bill of Entry No.
No.
1.     M/s Delwara Steel Industries Pvt. Ltd.                 659629 dt. 29.09.2020
2.     M/s Swarupananda Trading Co.                           659604 dt. 28.09.2020
3.     M/s Swarupananda Trading Co.                           659617 dt. 28.09.2020
4.     M/s Rajesh Auto Merchandise Pvt. Ltd.                  659607 dt. 27.09.2020
5.     M/s Tarakeswar Enterprise                              659603 dt. 25.09.2020
6.     M/s Tarakeswar Enterprise                              659602 dt. 25.09.2020
7.     M/s Jagannath Trading                                  659600 dt. 26.09.2020

The importers have submitted supporting documents and on scrutiny of the documents, it is found that there are some components of manufacture costs/expenses which cannot be determined/attributed to the goods under import from the documents submitted by the importer.

As such, it is felt that further verification is required from the issuing authority in terms of Rule 6(1)(b) of CAROTAR 2020 with respect to the information on the factors taken into consideration for arriving at the declared DVA. The information as per the prescribed Annex along with legible copies of the Certificate or Origin, Commercial Invoice, Bill of Lading, Form-I and Cost Break-up are forwarded herewith for taking further necessary action, please.

This issues with the approval of the Commissioner.

Enclo : As above.

Yours faithfully, Illegible Jitesh Kumar Jain Deputy Commissioner(Tech)

18. Mr. N. Dasgupta, learned counsel appearing for the petitioner has

categorically submitted in the rejoinder that when the goods were warehoused

for purpose of "verification" nature of which has been sought to be clarified by

the letters dated 30.10.2020 [Annexure-6 to the writ petition] and the letter

dated 08.12.2020 [Annexure-7 to the writ petition], the respondents did not

disclose the reasons for verification of Form-I. Form-I was the declaration under

Rule 5(1) of the CAROTAR, 2020. Rule 5(1) of the CAROTAR, 2020 [Annexure-4]

provides that where during the course of Custom clearance or thereafter, the

proper officer has reasons to believe that the origin criteria prescribed in the

respective rules of origin have not been met, he may seek information a

production supportive documents as may be deemed necessary from the

importer, in terms of Rule 4 of the CAROTAR, 2020 to ascertain the correctness

of the claim.

19. According to Mr. Dasgupta, learned counsel, no such document

has been asked to be submitted by the petitioner. On the contrary, the

petitioner was advised to exercise the option/request for provisional assessment

for release of the goods on furnishing security amounting equal to the difference

between the duty provisionally assessed under Section 18 of the Act and the

preferential duty claimed. But the petitioner has refused to make such request

inasmuch as, the said provision cannot be applied when the proper officer did

not mention the reasons for his doubt to the petitioner when the Certificate of

Origin had been sought to be verified.

20. Mr. Dasgupta, learned counsel has drawn attention of this court

to the representation filed by the petitioner on 16.11.2020 where it had been

asserted that the new provision as introduced by Section 28(D)(A)(1) of the

Customs Act, 1962 has shifted onus on importer to possess origin related

information [see Rule 4 of the CAROTAR] which the custom authority can

requisition, if the origin criteria is found not met in the course of verification as

prescribed. That can be made under Rule 5 of the CAROTAR. No assessment

under Section 17 or provisional assessment under Section 18 of the Customs Act

has been done and consequently the soybean oil imported from Bangladesh

under SAFTA are warehoused without assessment by the assessing authority

causing demurrage and financial loss to the petitioner. It has been submitted by

Mr. Dasgupta, learned counsel that for import of soybeans oil the minimum

value addition of 30% has been certified by the Export Promotion Beauro of

Bangladesh for qualifying the SAFTA exemption in respect of the product which

was not wholly originated in Bangladesh.

21. What has been emphatically submitted by Mr. Dasgupta learned

counsel and is noted by this court is that the assessing officer has never

indicated any reason for suspecting the same and the import clearances were

allowed till 26.09.2020. According to Mr. Dasgupta, learned counsel, the nature

of verification is random and according to the circular No.38/2016-Customs

dated 22.08.2016 which was lastly amended by the board circular No.42/2020

dated 29.09.2020, no bank guarantee can be obtained as security of the

differential value. It is to be noted that the said circular contains the guidelines

regarding provisional assessment under Section 18 of the Customs Act, 1962. In

the said circular, it has been reiterated that the provisions of Section 18 of the

Customs Act, 1962 requires that where the goods are to be provisionally

assessed (a) the importer binds himself for the payment of deficiency, if any,

between the duty as may be finally assessed and the duty provisionally

assessed; and (b) furnishes such security as the proper officer deems fit for the

payment of the deficiency.

22. Mr. Dasgupta, learned counsel has further referred to the mode

of determination of the Origin of Goods under SAFTA as introduced and modified

by the Rules called Rules of Determination of Origin of Goods under the

agreement of South Asian Free Trade Area (SAFTA) which has come into effect

from 01.07.2006. Article 15 of the said rules or protocol is relevant for our

purpose and for that reason, Article 15 is being extracted hereunder :

"ARTICLE 15

(a) The importing Contracting State may request to the Issuing Authority of the exporting Contracting State for a retrospective check at random and/or when it has reasonable doubt as to the authenticity of the document or as to the accuracy of the information regarding the true origin of the products in question or of certain parts thereof.

(b) The request shall be accompanied with the Certificate of Origin concerned and shall specify the reasons and any additional information suggesting that the particulars given on the said Certificate of Origin may be inaccurate, unless the retroactive check is requested on a random basis.

(c) The Customs Authority of the importing Contracting State may suspend the provisions on preferential treatment while awaiting the result of verification. However, without prejudice to the national legislations the competent authority of the importing Contracting State shall not suspend the customs clearance of the consignment subject to a guarantee in any of its modalities in order to preserve fiscal interests, as a pre- condition for completion of customs clearance.

(d) The Issuing Authority receiving a request for retrospective check shall respond within three (3) months after the receipt of the request."

Mr. Dasgupta, learned counsel has therefore emphatically submitted that

the verification is entirely covered by the provisions of Article 15(a) of the said

Rules or protocol. The reasonable doubt can only be raised in respect of

authenticity of the document or the accuracy of the information regarding the

true origin of the products in question or of certain parts thereof. For purpose of

the latter part, on reasonable doubt or for inaccuracy of the information etc., the

proper officer should ask for the additional information or document from the

importer. In the case in hand, no such requisition has been made. Later on, the

doubt has been expressed on the value addition vide the letter dated 30.10.2020

but the same was never disclosed to the petitioner to afford him place the

additional information as provided under Rule 6(1)(b) of the CAROTAR. By the

letter dated 30.10.2020 [Annexure-A] the petitioner was requested to assess the

Bill of Entry dated 26.09.2020 provisionally as per provisions of Section 6(4)(c)

of the CAROTAR to avert undue financial loss.

23. Mr. Dasgupta, learned counsel has submitted that the content of

the letter dated 30.10.2020 [Annexure-C] were never placed to the importer

[the petitioner] and for the first time, the petitioner has come across such

ground when the respondent No.3 filed his reply on 11.01.2021. Therefore, the

verification as processed has to be treated as random, not by the latter part as

referred before. Thus, Mr. Dasgupta, learned counsel has submitted that the

respondents be directed to release the goods, as impounded, without bank

guarantee.

24. Mr. P. Datta, learned counsel appearing for the respondents has

submitted that the present case in hand is a case of "mis-declaration of origin"

which is covered by the said circular No.42/2020-Customs dated 29.09.2020

which has amended the guidelines for provisional assessment as referred before.

The said guidelines as made by the circular dated 22.08.2016 for provisional

assessment under Section 18 of the Customs Act, 1962 and the CAROTAR, 2020

provided that the cases related to determination of origin under FTAs based on

the reasonable belief and the matters involved mis-declaration of origin will

invite 100% bank guarantee in terms of Rule 5 or Rule 6(1)(b) of the CAROTAR,

2020. In the said circular dated 29.09.2020, it has been provided thus:

"With the above amendments, all class of importers, including Authorized Economics Operators (AEO) are required to furnish 100% of differential duty as a security if provisional assessment is requested by the importer when inquiry is initiated in terms of rule 5 or when verification is initiated in terms of rule 6(1)(a) or 6(1)(b) of CAROTAR, 2020."

25. Mr. Datta, learned counsel appearing for the respondents has

thus refuted by stating that the petitioner may opt for provisional assessment

and furnish the security amount equal to the difference between the duty

provisionally assessed under Section 18 of the Customs Act and the preferential

duty claimed.

26. Having appreciated the submissions and scrutinized the records

vis a vis the provisions of the relevant instrument and the statute, this court has

noted that the petitioner has not challenged the process of the verification, but

the petitioner has made serious allegation that without affording any opportunity

to the petitioner in respect of meeting any deficiency, the petitioner had been

asked to opt or request for provisional assessment for purpose of clearing the

goods on furnishing the security [100% bank guarantee] for the difference

between the duty provisionally assessed under Section 18 of the Act and the

preferential duty claimed.

It is apparent that when the verification was initiated, no record

was available with the respondents nor any communication was made to the

petitioner that the verification was being under Rule 6(1)(a) or Rule 6(1)(b) or

Rule 6 (4)(c) of the CAROTAR 2020 and hence, there was no reference to the

security (BG). However, from the records as produced [which are the posterior

records] such as the communication dated 30.10.2020 [Annexure-3 to the reply

filed by the respondent No.3] and the communication dated 24.11.2020

[Annexure-D to the reply filed by the respondent No.3] or the communication

dated 20.11.2020 [Annexure-E to the reply filed by the respondent No.3], it

appears to this court that verification is on „mis-declaration‟. The petitioner was

not afforded any opportunity to meet the purported deficiency for which the

clearance has been refused. No observation on the legality or regularity of the

process of verification on merit is called for at this stage, considering that the

verification is still inconclusive. But in the emerged circumstances, the assessing

officer and the other respondent-authorities are directed to provisionally assess

the duty and to release the goods on obtaining an indemnity bond, to be

submitted by the petitioner binding himself to deposit the duty or the difference

between the duty that would be assessed by the competent authority on

verification and the preferential duty within a period of 7(seven) days. In the

event of failure to deposit the assessed duty on completion of verification within

the said stipulated time, the payable duty shall carry interest at the rate of 15%

per annum from 26.09.2020 till the said duty is deposited. The provisional

assessment in respect of the goods covered under the Bill of Entry dated

26.09.2020 shall be completed within a period of two days from the date of

receipt of a copy of this order. After furnishing of the indemnity bond, those

goods be released within next 24 (twenty four) hours.

Having observed and directed thus, this writ petition stands

disposed of.

There shall be no order as to costs.

JUDGE

Sabyasachi B