Legal principle

A proper officer cannot mechanically impose a 100% PD Bond or Bank Guarantee pending certificate-of-origin verification; absent recorded grounds under Section 18(1) and compliance with the Section 28DA/CAROTAR threshold, such onerous conditions are unsustainable, offend Section 151A and exceed the 20% differential cap in Regulation 2(2) of the Customs (Provisional Duty Assessment) Regulations, 2011.

Court decision

The Delhi High Court allowed both writ petitions and quashed the impugned orders dated 31 July 2024, in favour of the petitioners; it directed the respondents to reconsider release of the imported articles with due expedition in light of its observations and cautioned the proper officer against imposing onerous conditions as explained in Bullion and Jewellers Association.

Facts

Two importers, Ausil Corporation (W.P.(C) 10943/2024) and M.D. Overseas (W.P.(C) 10944/2024), imported platinum alloy sheets classifiable under CTH 7110 1900 in July 2024, claiming a preferential duty rate of 5% under the India-UAE CEPA. After the Special Investigation and Intelligence Branch concluded an investigation, orders dated 31 July 2024 were issued for each Bill of Entry directing provisional assessment under a PD Bond of 100% of assessable value plus a Bank Guarantee of differential duty at 10.712% of assessable value, pending verification of the COO certificate regarding origin and value addition, along with a test bond for platinum content under Note 5(a) of Chapter 71. The importers challenged these orders by writ petitions before the Delhi High Court.

Key provisions

• Rule 6, Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 — Verification request
• Section 28DA, Customs Act, 1962 — Procedure regarding claim of preferential rate of duty
• Rule 3(2), Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 — Preferential tariff claim
• Rule 5, Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 — Requisition of information from the importer
• Rule 4, Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 — Origin related information to be possessed by importer
• Regulation 2(2), Customs (Provisional Duty Assessment) Regulations, 2011 — Conditions for allowing provisional assessment