Interim release of detained goods may be conditioned on security where transport documents create prima facie tax doubt.

Detained goods accompanied by conflicting transport and import documents may justify insistence on security pending adjudication, because such discrepancies can create a prima facie doubt about the nature of the transaction and the consignee's identity. Where release without security would expose the Revenue to risk, interim relief may be conditioned to protect tax interests until the statutory authority decides the matter on merits. The interim arrangement was modified to permit release only against a bank guarantee for half of the amount demanded as security, rather than unconditional release.

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Issues: Whether the unconditional interim release of the detained goods was justified and whether security could be insisted upon pending adjudication of the original petition.

Analysis: The detention notice was issued on the basis of conflicting documents accompanying the transport, including the delivery challan, lorry receipt, letter of the consignor, and bill of entry, which created a prima facie doubt about the nature of the transaction and the identity of the consignee. Since the materials suggested the possibility of an inter-State movement of goods and the matter required a statutory determination in the first instance, the authorities had justification to insist on security. At the same time, releasing the goods without any security would expose the Revenue to risk, and the earlier interim direction granting unconditional release did not adequately address that aspect. The Court therefore modified the interim arrangement by directing release only against a bank guarantee for fifty per cent of the amount demanded as security.

Conclusion: The unconditional release was not justified. The Revenue's interest was protected by requiring security, and the interim order was set aside and modified in favour of conditional release.

Final Conclusion: The appeal succeeded to the extent that unconditional interim release was denied, while the goods were directed to be released only on furnishing a reduced bank guarantee, leaving the statutory authority to decide the merits independently.

Ratio Decidendi: Where the documents accompanying detained goods create a prima facie doubt affecting tax liability, interim release may be conditioned on adequate security to safeguard the Revenue pending final adjudication.

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