Prima facie invalid export confiscation justified conditional release of goods against bank guarantee, while hardship-based stay modification was refused.

CESTAT, Mumbai declined modification of the stay order on alleged financial hardship because the hardship plea had not been raised in the stay application and no sufficient basis was shown. On the confiscation issue, it held that the goods were, on a prima facie view, neither prohibited for export nor liable to export duty, so invocation of Section 113(d) and 113(l) of the Customs Act did not appear justified. Conditional permission to export the goods against security was therefore granted, subject to execution of a bank guarantee.

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Issues: (i) Whether the stay order should be modified on the ground of financial hardship arising from closure of the factory; (ii) Whether the confiscated goods could be permitted to be exported without payment of redemption fine, having regard to the nature of confiscation under Section 113(d) and Section 113(l) of the Customs Act.

Issue (i): Whether the stay order should be modified on the ground of financial hardship arising from closure of the factory.

Analysis: Financial hardship had not been pleaded when the stay application was heard and was not referred to in the application. No sufficient basis was shown to modify the earlier order on that ground.

Conclusion: The request for modification on the ground of financial hardship was rejected.

Issue (ii): Whether the confiscated goods could be permitted to be exported without payment of redemption fine, having regard to the nature of confiscation under Section 113(d) and Section 113(l) of the Customs Act.

Analysis: The confiscation was founded on an alleged discrepancy in weight. On a prima facie view, the goods were neither prohibited for export nor liable to export duty, and the invocation of clauses (d) and (l) of Section 113 did not appear justified. In these circumstances, permission to export the goods against security was considered appropriate.

Conclusion: The applicant was permitted to export the goods on execution of a bank guarantee for Rs. 15 lakhs.

Final Conclusion: The application was only partly accepted: relief was granted to enable export of the goods against bank guarantee, while the plea for modification on financial hardship was declined.

Ratio Decidendi: Where confiscation does not, on a prima facie view, attract the statutory clauses invoked, conditional permission for export may be granted against security even if a separate plea for modification on hardship is not made out.

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