Order Date – 20 December 2022

Facts – 

• The Petitioner, Pernod Ricard India Private Limited, manufactures blends and sells Indian made foreign liquor. The Petitioner has been importing concentrates of alcoholic beverages from M/s.Chivas Brothers Limited, United Kingdom since 1994.
• During an investigation by SVB it was found the Petitioner is undervaluing its import from the related party and differential duty has been estimated at 67.49%. The Petitioner was asked to give consent and to submit for either assessing the bills of entry with recommended loading or for assessing the bills of entry provisionally on submission of bond and bank guarantee for the differential duty. Accordingly the petitioner submitted bank guarantees.

Issue – 

• Whether the direction issued demanding bank guarantee for differential duty on bills of entry for imports of concentrates of alcoholic beverages is in order?

Order – 

• The Tribunal observed that it cannot be disputed that under Section 18(1) of the Act, the authorities have the power to insist upon security in the form of a bank guarantee while clearing the goods on provisional assessment.
• The first part of Circular No.5/2016 regarding only personal bond, no EDD and, at the most, security deposit at the rate of 5% till three months, is clearly applicable till the investigation by SVB is complete. There is no indication that the same position would continue even after SVB submits its findings. Though in Clause-9 there is a reference to the finalization of assessment and in Clause-10 to change in the circumstances, the thrust of Circular No.5/2016 is to regulate the procedure of investigation by SVB.
• The Tribunal held that having received the findings from the SVB that the Petitioner is undervaluing its import from the related party and differential duty has been estimated at 67.49%, as per the provision of Section 18(1) of the Act read with Circular No.38/2016, bank guarantees to the tune of 100% were correctly insisted upon. There is no error, illegality or lack of power in the Respondents' action in insisting upon the bank guarantee with the loading of 67.49% of the invoice value relying on the investigative findings of SVB.
• Since there is neither error nor lack of jurisdiction for insisting on bank guarantees towards the differential duty, no direction can be issued to the Respondents to return the bank guarantee, which the Petitioner has submitted.