M/S Delwara Steel Industries ... vs Union Of India
2021 Latest Caselaw 730 Tri

                      HIGH COURT OF TRIPURA
                             AGARTALA
                       Review Petn.17 of 2021
M/s Delwara Steel Industries Private Limited,
registered office at Netaji Subhash Road,
near RCC, Agartala-799001,
represented by Shri Subham Acharjee,
son of Shri Manik Acharjee,
Village-Patunnagar, P.O. Durjoynagar,
P.S. Airport, Agartala-799009,
District : West Tripura,
Director of M/s. Delwara Steel Industries Private Limited

                                                            ---- Petitioner(s)

                                 VERSUS

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

2. The Assistant Commissioner,
Agartala Customs Division,
Bardowali, Agartala, Tripura-799003

3. The Superintendent of Customs,
Agartala Land Customs Station,
Agartala, Tripura-799003
                                                       ---- Respondent(s)

For Petitioner(s)          :      Mr. N. Dasgupta, Adv.

For Respondent(s)          :      Mr. Biswanath Majumder, CGC.
                                  Mr. P. Datta, Adv.

Date of Hearing            :      16.07.2021

Date of delivery of
Judgment & Order           :      19.07.2021

Whether fit for
reporting                  :      NO



                      HON‟BLE MR. JUSTICE S. TALAPATRA

                                   Judgment & Order

Seeking review of the judgment and order dated 26.04.2021

delivered in WP(C)No.110 of 2021, the writ petitioner, hereafter, referred to as

the review petitioner, has filed this petition in tune with Order 47, Rule 1 of the

CPC. It has been asserted that for the averments made in the reply by the

respondents No.2 and 3, some factual aspects relating to the previous

consignment being Bill of Entry dated 29.09.2020 have messed with the fact

relating to Bill of Entry dated 17.12.2020 [Annexure-1 to the review petition].

Intriguing construction of the reply and in their communication dated

20.12.2020 [Annexure-D to the objection filed by the respondents No.2 and 3,

which is, however, Annexure-B to their reply in the said writ petition].

2. This Court in the said judgment observed that it has been found

by the Customs that he [the petitioner] has made some inaccurate statement in

respect of minimum value addition in Bangladesh. That apart, some components

contributing to the price could not be figured out. Thus, the verification on

deficiency is prima facie justified. Within a short while, the reason for

warehousing has been disclosed to the petitioner. The petitioner was apprised

of his right of exercising option for the provisional assessment of the duty

subject to final decision. The petitioner therefore might get the imported goods

released on furnishing the Bank Guarantee (BG) for an amount of

Rs.12,74,031/-, but the petitioner has not done so in terms of the

communication dated 17.10.2020 [Annexure-E to the reply]. In the facts and

circumstances as surfaced, this court is not inclined to interfere in the manner,

as asked for. The petitioner may take release of the imported goods covered by

Bill of Entry No.659629/IMP/AGT-LCS/2020-2021 dated 29.09.2020 without

prejudice to his claim. But he has to furnish security (bank guarantee or cash)

for such release.

3. The review petitioner has categorically stated that the said

observation as reproduced above has been made in the context of the previous

Bill of Entry dated 29.09.2020 and that is not relevant for the Bill of Entry dated

17.12.2020. According to the review petitioner, it is for the intriguing way of

placing their averments in respect of the Bill of Entry dated 29.09.2020, the fact

relevant for the Bill of Entry dated 17.12.2020 got meshed. The review petitioner

has emphatically stated that no verification has been initiated in respect of the

Bill of Entry dated 17.12.2020. No record has been produced by the respondents

No.2 and 3 in that regard. Even though, the following observation in the said

judgment dated 26.04.2021 has been made in the context of the Bill of Entry

dated 29.09.2020 :

"it has been found by the customs that he has made some inaccurate statement in respect of minimum value addition in Bangladesh. That apart, some components contributing to the price could not be figured out. Thus, the verification on deficiency is prima facie justified."

4. The review petitioner has stated in the review petition that no

particular deficiency in the Bill of Entry dated 17.12.2020 finds mention in the

records nor any verification under Rule 6 of the CAROTAR, 2020 was initiated.

For that error, This Court, according to the review petitioner, observed that the

petitioner might get the imported goods released on furnishing the Bank

Guarantee (BG) for an amount of Rs.12,74,031/-, but the petitioner has not

done so in terms of the communication dated 17.10.2020 [Annexure-E to the

reply]. According to the review petitioner, the error is apparent on the face of

the record as the said communication dated 17.12.2020 cannot be related to Bill

of Entry dated 17.12.2020.

5. Mr. N. Dasgupta, learned counsel appearing for the review

petitioner has submitted that the errors as entered in the judgment dated

08.02.2021 is apparent on the face of the records. Mr. Dasgupta, learned

counsel has further contended that in the similar circumstances in Gautam Ray

versus Union of India [judgment dated 26.04.2021 delivered in WP(C)No.109 of

2021], this court had occasion to observe as follows :

15. Having appreciated the submissions made by the counsel for the parties and the averments made in the writ petition and in the reply, the pertinent question which emerges and is falls for consideration whether the verification is random verification falling under Rule 6(1)(c) of the CAROTAR, 2020 or the verification falls under the category leveled by Rule 6(1)(b) of the CAROTAR, 2020. The petitioner has brought categorical allegation against the respondents that he has furnished all requisite documents and information for clearance but the imported goods have been warehoused without any reason being disclosed to the petitioner whether those goods were held up for any verification regarding the Certificate of Origin produced by the petitioner for availing the concessional rate of the customs duty or for any other reason. This allegation has been levelled in para-7 of the writ petition and in reply thereof, the respondents have evaded any specific reply. They have simply stated that "assessment/clearance of goods has not been stopped. Only preferential treatment of customs duty has been denied till the doubt on the Country of Origin certificate is resolved. " The said reply does not conform to any verification under Rule 6(1)(b) of the CAROTAR, 2020 which is structured on the failure to provide the requisite information, as no such information was asked Page 11 of 12 from the petitioner. The said verification cannot be treated as prima facie verification under Rule 6(1)(b) of the CAROTAR, 2020, rather it would prima facie come under Rule 6(1)(C) of the CAROTAR, 2020. Thus, Rule 5(b) of CBEC‟s circular No.38/2016-customs dated 22.08.2016 will apply in the present case. After thorough verification, if some defects is located, such verification will take a different character. In the present case, the respondents have stated that the petitioner has furnished the subsequent statement which conforms to the nature of container.

16. Hence, the respondents are directed to release the imported goods under the Bill of Entry No.659390/INP/AGT-LCS/2020- 21 dated 26.12.2020 on obtaining an indemnity bond to be submitted by the petitioner binding himself to deposit the duty

meaning the difference between the duty that would be assessed by the competent authority on verification and the preferential duty which has been paid by the petitioner. It is made absolutely clear that in the event of failure to deposit the assessed duty on completion of verification within seven days from the date of such assessment, such duty shall carry interest @ 15 p.a. from 26.09.2020 till the said duty is deposited. The imported goods, as ware-housed be released within twenty four hours from the time when the petitioner shall file such indemnity bond as stated above. It is made clear that the petitioner will be at liberty to exercise his right to question the decision in respect of the assessment as per law."

6. The respondents No.2 and 3 has filed their objection against the

review petition and stated that there is nothing to be reviewed except a bonafide

mistake that has crept in the order dated 26.04.2021 which is merely a bonafide

typographical error. They have categorically asserted that the reply they filed in

response to the averments in the writ petition is completely based on the

records. Thus, the allegation of the petitioner of presenting the fact wrongly is

completely baseless. However, those respondents have admitted that the

verification that has been initiated has nothing to do with the Bill of Entry dated

29.09.2020. Those respondents have further asserted that if Rule 6(6) of

CAROTAR, 2020 is read properly, it would clearly transpire that proper officer

shall conclude the verification within 45 days of receipt of information from

verification authority which is Bangladesh in the case in hand. Those

respondents have further stated that no information have been received from

Bangladesh, the Country of Origin and hence, the period of 45 days has not

even started. The respondents have categorically stated in para-4(i) of the

objection as under:

"4.(i) Petitioner is repeatedly stating that respondents do not have any record with regard to verification for the present Bill of Entry No.659298/IMP/AGT-LC/2020-21, dated 17-12-2020 and past Bill of Entry dated 29-09-2020, which is completely false. Department initiated verification against the Bill of Entry dated 17-12-2020 under Rule 6(1)(b) of CAROTAR, 2020 vice Letters C.

No.IMP/MISC/4/2020-LCS/AGTL-COMMI-SHILL dated 30-12- 2020 and C.No.IMP/MISC/4/2020-LCSAGTL-COMMI-SHILL/980, dated 1`2-01-2021 which was duly intimated to the petitioner vide Letter F.No. IMP/MISC/4/2020-LCS/AGTL-COMMI-SHILL dated 20-12-2020 and duly received by Shri Sankar Roy, Authorized signatory of the petitioner.

Copy of letter under C.No.IMP/MISC/4/2020-LCS/AGTL-COMMI- SHILL, dated 30-12-2020 is enclosed as Annexure-B, copy of letter C.No.IMP/MISC/4/2020-LCS/AGTL-COMMI-SHILL/980, dated 12-01-2021 in enclosed as Annexure-C and copy of letter F.No. C.No.IMP/MISC/4/2020-LCS/AGTL-COMMI-SHILL, dated 20-12-2020 is enclosed as Annexure-D and copy of the letter No. C.No.IMP/MISC/4/2020-LCS/AGTL-COMMI-SHILL/822, dated 13-10-2020 is enclosed as Annexure-E.

(ii) The observation of the Hon‟ble Court is equally applicable to the present Bill of Entry No. 659298/IMP/AGT-LC/2020-21, dated 17-12-2020. The Affidavit-in-Opposition submitted by the Respondents is completely true and the Respondents have never tried to mislead the Hon‟ble Court as claimed by the Petitioner. The claim of the Petitioner that no verification has been initiated is factually wrong. A verification has been initiated under Rule 6(1)(b) of the CAROTAR, 2020 which was duly intimated to the Petitioner vide letter F.No. IMP/MISC/4/2020-LCS/AGTL- COMMI-SHILL, dated 20-12-2020 and the same was duly received by Shri Sankar Roy, Authorized signatory of the Petitioner.

(iii) Matter of fact. However, the mistake occurred on part of the Hon‟ble Court which appears to be a mere typographical error.

(iv) It may be mentioned here that the verification initiated in this case is a fresh verification and has nothing to do with that initiated for the Bill of Entry dated 29-09-2020."

7. It may appear from the above reproduction that the respondents

No.2 and 3 have initiated verification under Rule 6(1)(b) of the CAROTAR, 2020

and the petitioner was intimated duly about the said verification by the letter

F.No. IMP/MISC/4/2020-LCS/AGTL-COMMI-SHILL, dated 20-12-2020. The said

letter was duly received by the authorized signatory of the petitioner. For

purpose of reference, Rule 6(1)(b) of the CAROTAR, 2020 is reproduced

hereunder :

"6(1)(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;

Provided that a verification request in terms of clause (b) may be made only where the importer fails to provide the requisite information sought under rule 5 by the prescribed due date or the information provided by importer is found to be insufficient. Such a request shall seek specific information from the

Verification Authority as may be necessary to determine the origin of goods."

8. Those respondents also have asserted that the petitioner was

asked to submit requisite information in terms of Rule 5 of CAROTAR, 2020 and

the same was submitted by the letter dated 17.12.2020. They have further

asserted in their objection that the cost break-up submitted vide the

aforementioned letter was incomplete or insufficient, as the indicated materials

as the "other", is shown as locally produced and the "the other" was not

explained anywhere in the aforementioned letter submitted in terms of Rule 5 of

CAROTAR, 2020. In sequel, in the objection, the respondents No.2 and 3 have

asserted further as follows :

"Now, as per „Note‟ of Part B of section-III of Formal-I of CAROTAR, 2020, if origin of any of the components used in manufacturing of the final goods cannot be ascertained, same should be treated as non-originating. Therefore, „other‟ in the indirect materials is liable to be treated as non-originating. Further, in the cost break up the cost of Branding ink/printing ink has been added twice. No satisfactory reply was received from the petitioner against this issue.

Moreover, treating „other‟ in the indirect materials and one of the two branding inks/printing inks as the non-originating materials, the DVA came at 24.95% which is below the requisite criteria i.e. 30% under „B‟ category SAFTA. Therefore, there were reasons to believe that the country of origin criterion stated in the certificate of origin was not met as per Rule 6(1)(B) of CAROTAR, 2020. Hence this is not a random verification under Rule 6(1)(c) as is being claimed by the petitioner."

[Emphasis added]

9. For understanding the purpose of those averments of the

respondents No.2 and 3, this Court is persuaded to extract the whole text of the

communication dated 13.10.2020 [Annexure-E to the objection] which is the

part of verification relating to the Bill of Entry dated 29.09.2020:

GOVERNMENT OF INDIA OFFICE OF THE ASSISTANT COMMISSIONER (ICP) LAND CUSTOMS STATION, AGARTALA-799001 (TRIPURA) PHONE : 0381-232 9037::: e-mail : [email protected]

C.No.IMP/MISC/4/2020-LCS-AGTL-COMM-SHILL/822 Dated : 13.10.2020 To The Commissioner of Customs Office of the Commissioner of Customs(P),NER 110, Customs House, M.G. Road, Shillong-793001

Sir, Sub : M/s Delwara Steel Industries Pvt. Ltd. submitted the declaration under Rule 5(1) of CAROTAR, 2020 in Form-I-Reg.

M/s Delwara Steel Industries Pvt. Ltd. submitted B/E no.659629 dated 29.10.2020 for import the Galvanized Steel Sheets in coil under Notification [no.75/2006 cus.(NT) dated 30.06.2006] benefit. In response to the this office letter dated 01.10.2020 they submitted a reply on 08.10.2020 with declaration under Rule 5(1) of CAROTAR, 2020 in Form-I and some relevant documents for concessional benefit under Rule-8 of Notification no.75/2006 dated 30.06.2002. on scrutiny, it is noticed that the importer has claimed (SAFTA) the origin Criterion "B" 59.95% (DVA- 40.25%) under Rule 8 of the contract of agreement (South Asian Free Trade Area). As per their submission, the importer has to fulfill all the conditions of Rule 8 of Notification no.75/2006 dated 30.06.2006. However, some doubts to be noticed which are :

1. The percentage of local value content declaration do not match each other with their submission i.e. 1) in Form-I of CAROTAR, 2020: 40.00%, 2) in cost break up: 41% and 3) in the country of origin certificate (SAFTA) : origin Criterion "B" 59.95% (DVA-40.25%).

2. a) Declaration of the local price content in the „Cost break up‟ dated 02.07.2020 they show indirect material others (not specified) at $ USD 141.10. It should be deducted as per „note‟ of Part B of section-III of Form-I of CAROTAR, 2020, if origin of any of the components used in manufacture of final good cannot be ascertained, same should be treated as non-originating. Thus, the others components (not specified) should be deducted from the Percentage of local value content.

In the cost break up dated 02.07.2020 (enclosed) they shown the total costing $ 971.99 [less others-sl.B] of cost break up -$ 141.10] and non-origin material should be $711.64(569.99 + 141.10). It appears the DVA may be [(971.99 - 711.64) x 100/971.99]=26.79% and value of non-originating material is 73.21%.

b) Declaration of the local value content in the Form-I section-III Part-B para-2 Table sl.no. d. they show: The composition which consider value adding: Percentage of local value content: 40.00% (15.8% + 24.2.%) and components which constitute value addition as :

i) Cromic Acid. ii) Hydrochloric Acid, iii) Finishing Chemical led. Iv)Branding Ink, v) Printing Ink, vi) Grease Ep2 & Gear Oil, Inhebitor and other indirect materials is i) Direct Labour, ii) Gas, iii) Electricity, iv) Generated Bank Charge, v) Interest, profit, C & F Charge, vi) material loss, vii) Salary & allow Bonus.

As per certificate of origin (SAFTA) the C & F (Cost and freight) charge may not be considered local value adding. It appears that material loss and Printing Ink may not be considered in qualifying operation. Thus, after deducting the C & F charge, material loss and print ink "percentage of local value content" may be drop below 40%.

In view of the above, if approved, (a) the Certificate of origin (SAFTA) may be verified in terms Rule 6 of notification no.81/2020 cus. (NT) dated 21.08.2020 or (b) the higher authority may be decided as per Rule 5(5) of he said notification.

Yours faithfully illegible (P K Joardar) Asst. Commissioner

Enclosed : as above

10. Those respondents have referred another letter dated 20.12.2020

[Annexure-D to the objection] claiming that the information relating to

verification under Rule 6(1)(B) of the CAROTAR, 2020 was given to the

petitioner and the said letter was received by one Sankar Ray who has been

stated to be the authorized signatory of the petitioner. For purpose of better

reference, the said communication dated 20.12.2020 which was Annexure-B to

the reply filed by the respondents No.2 and 3 in WP(C)No.110 of 2021 is

reproduced hereunder :

GOVERNMENT OF INDIA OFFICE OF THE ASSISTANT COMMISSIONER(ICP) LAND CUSTOMS STATION, AGARTALA-799001(TRIPURA) PHONE : 0381-232 9037 :::: E-mail: 1cs agt @ yahoo.co.in

F.No.IMP/MISC/4/2020-LCS/AGTL-COMMI-SHILL Dated : 20.12.2020

To,

M/s Delwara Steel Industries Private Limited, Netaji Subhash Road, Municipal Ward No.4, Near RCC, Agartala,-799001, Tripura, India.

Subject : Requesting Provisional Assessment of the goods imported vide BOEs 659298 & 659297/IMP-AGT-LCS/20-21 both dated 17.12.2020 to prevent any financial loss regarding.

Dear Sir, Please refer to the subject matter mentioned above and also find enclosed a letter C.No.VIII(48)10/CUS/TECH/2020/P-1/10891 dated 09th December 2020.

In this regard, it is to be mentioned that you have imported Galvanized Steel Sheets and Pre-painted Galvanized Steel Sheets vide BOEs 659298 & 659297/IMP-AGT-LCS/20-21 both dated 17.12.2020. Further, the documents submitted by you, under Rule 5(1) of CAROTAR, 2020, were scrutinized and some of the issues are still being verified.

Moreover, it is also to inform you that previously some doubts had been raised by Assistant Commissioner on scrutiny of the Cost Break-up submitted by you vide BOE 659629/IMP/AGT-LCS/20-21 dated 29.09.2020 and the matter was forwarded to the Commissioner of Customs (P) NER, Shillong, as per Rule 5(5) of Notification No.81/2020 Cus (NT) dated 21.08.2020, in order to verify the Certificate of Origion (CoO) in terms of Rule 6 of the said notification. The same has been forwarded to The Director (International Customs Division) CBIC, New Delhi vide letter dated VIII(48)10/CUS/TECH/2020/Pt-1/10891 dated 9th Dec.2020. The reply to the same is awaited by this office till date. As such, it would not be possible, at the moment to accept the CoO submitted by you vide BOEs 659298 & 659297/IMP- AGT-LCS/20-21 both dated 17.12.2020.

In view of the above scenario, in order to prevent any kind of financial loss/constraints, you may exercise the option of securing Customs Clearance of the goods, lying in the go-down, by Provisional Assessment under Section 18 of the Customs Act, 1962, till the issue is finalized.

Illegible (Neetisha Verma) Assistant Commissioner

11. Mr. P. Datta, learned counsel appearing for the respondents No.2

and 3 has submitted that except a typographical mistake which appeared in

para-11 where this Court had observed that the petitioner may take release of

the imported goods covered by Bill of Entry No.659, 629/IMP/AGT-LCS/2020-

2021 dated 29.09.2020 without prejudice to his claim. But he has to furnish

security (bank guarantee or cash) for such release. There is nothing to be

reviewed.

That was a pure oversight inasmuch as in para-1 of the judgment dated

26.04.2021 the Bill of Entry has been accurately referred to. It has been stated

in the said para as follows :

"The petitioner had imported Galvanized Steel Sheets in coil weighing 14.890 matric tons from Bangladesh by the Bill of Entry No.659298/INP/AGT-LC/2020-21 dated 17.12.2020 through the Agartala Land Customs Station."

Mr. Datta, learned counsel has submitted that in the reply filed in

the writ petition, nothing has been stated to mislead this Court.

12. In response, Mr. Dasgupta, learned counsel appearing for the

petitioner has submitted that by filing the objection, the respondents have

introduced new materials, preceded by averments, relating to the Bill of Entry

dated 29.09.2020 again for purpose of taking an undue advantage by infusing

irrelevant statements.

13. The facts which are not disputed are that the petitioner imported

galvanized steel sheet (in coil) and pre-painted galvanized steel sheet from

Bangladesh [the Country of Origin] under Bills of Entry No.959298 and

659/297/INP/AGT-LC/2020-21 dated 17.12.2020 under SAFTA duty concession.

It has been stated by the Customs that pre-painted galvanized sheet imported

under Bill of Entry No.659/297/INP/AGT-LC/2020-21 dated 17.12.2020 has been

cleared by them on 02.02.2021. The Customs Act, 1962 allows for self

assessment of the duty under Section 17 read with Section 46 of the Customs

Act, 1962. The proper officer may verify the entries under Section 46 for

purpose of examining or testing any imported goods or any part thereof, as may

be necessary for purpose of verification. Under Section 17(2) of the Customs

Act, the proper officer may require the importer or the person authorized by the

importer to produce any document or information. Section 18 of the Customs

Act, 1962 provides for the provisional assessment of the duty where the

importer is unable to make self-assessment under Sub-section (1) of Section 17

and makes a request in writing to the proper officer for assessment. It has been

provided under Section 18 of the Customs Act where necessary documents have

not been produced or information has been furnished and the proper officer may

deem it necessary to make further inquiry, then the proper officer may assess

the duty leviable on such imported goods provisionally. In this regard, it may be

pointed out that Section 18(1)(b) of the Customs Act provides that the imported

goods may be subjected to any test for assessment of duty where proper officer

deems it essential to do. The expression „deems it necessary‟ means that proper

officer must have good reason to subject imported goods to other tests. In Tata

Chemicals Limited versus Commissioner of Customs reported in (2015)

11 SCC 628, the apex Court had occasion to observe that statutes often used

expressions such as "deems it necessary," "reason to believe" etc. These

expressions do not mean subjective satisfaction of officer concerned. Such

power as given is not an arbitrary power and has to be exercised with restraints

imposed by law. In this regard, reference may be made to Rule 6(1)(b) of the

CAROTAR, 2020 where it has been provided that if there is reason to believe

that the Country of Origin criterion stated in the Certificate of Origin has not

been met or the clam of preferential rate of duty made by the importer is invalid

or in the case when the importer fails to provide the requisite information sought

under Rule 5 of the CAROTAR, 2020 by the prescribed due date or the

information provided by the importer is found to be insufficient, the proper

officer shall seek specific information from the verification [verifying] authority

as may be necessary to determine the Origin of Goods.

14. The respondents No.1 and 2 have quite emphatically stated that

they had informed the petitioner of verification under Rule 6(1)(B) of CAROTAR,

2020. If the decision of the apex Court as referred above, is read with provisions

of Rules 6(1)(b) of CAROTAR any prudent person would suppose that in the

notice either seeking information or giving reason for verification, the proper

officer shall observe how the information given under Rule 5 of CAROTAR, 2020

is not sufficient information and what is the reason to believe that the Country of

Origin criterion stated in the Certificate of Origin has not been met and as a

result, the importer‟s claim of preferential rate of duty is invalid. Even though in

the objection, it has been stated that by a letter dated 17.12.2020 the petitioner

was asked to submit requisite information in terms of Rule 5 of CAROTAR, 2020

but the said letter has not been placed with the objection, even though, it has

been referred in the said letter as available as Annexure-E, but in Annexure-E

the letter which is available is dated 13.10.2020 relating to Bill of Entry dated

29.09.2020. The said Bill of Entry dated 29.09.2020 [Annexure-C to the reply

filed by the respondents No.1 and 2 in the writ petition] is also for importing

galvanized steel sheets in coil. On scrutiny, it had been noticed that the importer

has claimed the Origin criterion bill (SAFTA) 59.95%(DVA 40.05%) under Rule 8

of the agreement for South Asian Free Trade Area. The said letter dated

13.10.2020 [Annexure-E to the objection] is wholly irrelevant.

15. Except the letter dated 20.12.2020 [Annexure-D to the objection

filed by the respondents no.2 and 3 and Annexure-B to their reply filed in the

writ petition] no other document or communication has been produced before

the Court which can be treated as intimation in respect of the nature of

verification or verification, it simply says that the documents submitted by the

petitioner under Rule 5(1) of the CAROTAR, 2020 were scrutinized and some of

the issues are still being verified. It does not even express any reason to believe

that the Country of Origin criterion stated in the Certificate of Origin has not

been met or the claim of the preferential rate of duty made by the importer is

invalid. Thus, in view of the materials produced by the respondents No.1 and

after extricating the relevant fact, the said verification are fall under Rule 6(1)(c)

of CAROTAR, 2020. Rule 6(1)(c) of CAROTAR is reproduced hereunder for

purpose of reference :

"6(1)(c) verification is being undertaken on random basis, as a measure of due diligence to verify whether the goods meet the origin criteria as claimed."

16. This Court would express a note of serious annoyance at the way

the fact relating to verification of the Bill of Entry dated 29.09.2020 has been

incorporated in the reply filed in the writ petition as well as in the objection. It

has created serious confusion in marshalling the facts. Even, those respondents

have admitted that the bank guarantee can only be asked for, when the

verification is initiated under Rule 1(a) and Rule 6(b) of CAROTAR, 2020 after

provisional assessment under Section 18 of the Customs Act. They have

asserted that the petitioner in the case of the Bill of Entry dated 29.09.2020 has

exercised the option for provisional assessment with bond and bank guarantee,

but in the case of the Bill of Entry dated 17.12.2020 the petitioner has

approached this Court. In this regard, the petitioner has submitted that he was

compelled by the circumstances as his manufacturing unit was ideal for quite a

long time. Thus, in the case in hand the petitioner, in response to the letter

dated 20.12.2020 did not exercise the option for securing customs clearance of

the goods as stated before by provisional assessment under Section 18 of the

Customs Act till the issue is finalized.

17. While reading the facts of the Bill of Entry dated 29.09.2020, this

Court has committed error by juxtaposition of facts which ought not to have

done but the way the averments have been made, the error could creep in. Even

in the objection, filed in this petition, those respondents have made extensive

reference of the facts relating to the Bill of Entry dated 29.09.2020. In the

objection, those respondents have introduced new fact that the cost break-up

submitted by the letter dated 17.12.2020 was incomplete or insufficient. But no

such letter could be produced by the respondents. Even there observation,

having regard to the note of part-B of Section-III of Form-I of CAROTAR, 2020 is

a new revelation even though irrelevant inasmuch as those were never relevant

to the Bill of Entry dated 17.12.2020. Even the respondents No.2 and 3 did not

produce any record with their reply portraying initiative for verification of the

Certificate of Origin (SAFTA) in terms of Rule 6 of the notification No.81/2020

Customs(NT) dated 21.08.2020. How such action is taken, may be found from

the communication dated 13.10.2020 [Annexure-E to the objection filed by those

respondents], as reproduced. Even, there is no record relating to request for

verification of the Country of Origin certificate in respect of Bill of Entry dated

17.12.2020. How such request is made would be evident from the

communication dated 09.12.2020 [Annexure-F to the reply filed by the

respondents No.2 and 3 in the writ petition]. For purpose of illustration, the

nature of action taken by the customs, the nature of action taken by the

customs, the said communication dated 09.12.2020 is reproduced hereunder :

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 Ref :VIII(48)10/CUS/TECH/2020/Pt.I Dated : 9th Dec, 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]

Subject : Request for Verification of Country of Origin Certificate No.EPB(C) 25937 dated 28.09.2020 issued by Bangladesh under SAFTA-reg.

Sir,

Kindly refer to this office letter C.No.VIII(48)10/CUS/TECH/2020/Pt.I/9861 dated 20.11.2020 and your trailing email dated 07.12.2020 on the above subject. It is to informyou that M/s Delwara Steel Industries Pvt.Ltd. has filed Bills of Entry No.659629 dt.29.09.2020 for importe of galvanized steel sheet claiming perfrential 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.

The importers have submitted supporting documents and on scrutiny of the documents, it 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 for Country of Origin Certificate No.EPB(C) 25937 dated 28.09.2020 issued by Bangladesh under SAFTA 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 pre the prescribed Annex along with eligible copies of the Certificate of 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.

Yours faithfully, Illegible J.K.Simte Additional Commissioner Enclo : As above

18. Even in the letter dated 20.12.2020, this Court has strangely

come across the facts relating to the Bill of Entry dated 20.09.2020 by prefacing

the same by the observation that previously some doubt has been raised by the

Assistant Commissioner on scrutiny of the cost break-up submitted by the

petitioner. However they have stated that the reply from the Country of Origin is

still awaited in respect of Bill of Entry dated 29.09.2020. As such, it would not be

possible at that moment to accept the Certificate of Origin submitted by the

petitioner. This observation cannot be the basis for verification under Rule

6(1)(b) of CAROTAR, 2020. Thus, the verification as claimed to have initiated,

cannot fall under Rule 6(1)(a) or Rule 6(1)(b) of CAROTAR, 2020. Rather it

would fall under random verification covered by Rule 6(1)(c) of CAROTAR, 2020

and as such, no bank guarantee can be asked from the petitioner. Moreover,

there is no complaint about insufficiency of the information provided by the

petitioner under Rule 5 of CAROTAR, 2020. The CBEC‟s circular No.38/2016-

Customs dated 22.08.2016 and the circular No.42/2020 dated 29.09.2020

provide guidelines for provisional assessment under Section 18 of the Customs

Act. Those further provide that if the cases selected on random basis for

verification of the country of origin criterion, no security be asked for. In this

regard, this Court would observe that when certain action does not fall within

the category, the benefit usually would go in favour of the importer.

19. Since the errors in the judgment dated 26.04.2021 are apparent

on the face of records. The line "the petitioner may take release of the imported

goods covered by Bill of Entry No.659,629/IMP/AGT-LCS/2020-21 dated

29.09.2020 without prejudice to his claim" be deleted and substituted by the

following sentence :

"The petitioner may take release of the imported goods covered by Bills of Entry No.959298 IMP/AGT-LC/2020-21 dated 17.12.2020."

20. Having reviewed the judgment dated 26.04.2020 and by

extracting out he irrelevant facts those have messed with the fact relevant for

the Bill of Entry dated 17.12.2020, this Court is of the view that the purported

verification cannot be brought under Rule 6(1)(b) of the CAROTAR, 2020 as

there is no expression to the effect that there is reason to believe that the

Country of Origin criteria stated in the Certificate of Origin has not been met or

the claim of preferential rate of duty made by the importer, the petitioner, is

invalid. Even there is no document to show that specific information has been

sought from the verifying authority. It appears further to this Court, this can be

at best termed as measure of due diligence to verify whether the goods meet

the origin criteria as claimed and thus, the said verification shall fall within the

ambit of verification on random basis covered by Rule 6(1)(c) of CAROTAR,

2020.

21. Having observed thus and on review of the judgment dated

26.04.2021, this Court is persuaded to direct the Customs [the respondents No.2

and 3] to release ware-housed consignment of the petitioner as covered by the

Bills of Entry No.959298 and INP/AGT-LC/2020-21 dated 17.12.2020 on

obtaining an indemnity bond to the effect that on assessment of duty, after

verification, if any of the petitioner is found liable to pay more duty, he shall pay

such duty within a period of thirty days from the day when the order of

assessment will be communicated to the petitioner, else the customs will be at

liberty to take appropriate action in terms of law without further reference to the

petitioner. The consignment covered by the said Bill of Entry dated 17.12.2020

be released within 24(twenty four) hours from the time of receiving the said

indemnity bond by the petitioner in terms of the above.

As consequence of the review, as made, the writ petition stands

allowed to the extent as indicated above.

There shall be no order as to costs.

A copy of this order be furnished to the counsel for the parties in

the course of the day.

JUDGE

Sabyasachi B