Saturday, February 13, 2021

BANK GUARATNEE UNDER CAROTAR – Much awaited order for importers who avail FTA benefits !!!

Post introduction of CAROTAR 2020, most of the importers who avail FTA benefits are frequently facing an issue of demand of 100% Bank Guarantee by Customs due to pending COO verification / enquiry pending etc.

Here is a good news to them that Hon’ble Tripura High Court ordered to accept Indemnity Bond and release the goods against provisional assessment.

It is apparent that when the verification is initiated, no record was available with the customs nor any communication was made to the importer 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).

The Importers are 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.

The court has noted that the importer has not challenged the process of the verification  but the importer has made serious allegation that without affording any opportunity to him in respect of meeting any deficiency, the importer 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.

Hon’ble Tripura High Court  held that “ the assessing officer and the other 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 till the said duty is deposited”

“ The provisional assessment in respect of the goods covered under the Bill of Entry dated 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”

SHRI PIJUSH BANIK VERSUS UNION OF INDIA, THE ASSISTANT COMMISSIONER, DIVISION-1, CGST & SERVICE TAX, THE SUPERINTENDENT OF CUSTOMS, TRIPURA HIGH COURT decided on 08.02.2021

Very Important : In above case the importer has met all criteria of the CAROTAR, 2020 and possessed all information regarding the country of Origin of Goods as per Rule 4 and have furnished all requisite information to customs.

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