Provisional customs release and seizure limits: valuation disputes alone do not prove smuggled goods or justify restraint on sale proceeds.

Interim customs relief was granted for imported PU coated fabric by permitting provisional release on the declared thickness and valuation of US$ 1.90 per meter, supported by prior clearances and the cited customs circular, with security required to protect revenue pending adjudication. The court also held that seizure of Indian currency and restraint on a bank balance could not be sustained merely on a valuation dispute or alleged under-invoicing, because the record showed sale proceeds of goods imported and cleared in the ordinary course, not proceeds of smuggled goods. An undertaking was required to safeguard restitution if the final adjudication went against the petitioner.

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Issues: (i) Whether the imported PU coated fabric should be released provisionally on valuation at US$ 1.90 per meter pending adjudication. (ii) Whether the seized Indian currency and the bank-account balance restraint could be sustained as proceeds of smuggled goods.

Issue (i): Whether the imported PU coated fabric should be released provisionally on valuation at US$ 1.90 per meter pending adjudication.

Analysis: The goods had been lying without a determined thickness for several months, and the material on record, including earlier clearances of similar fabric and the customs circular cited, supported the petitioner's declared thickness and a value of US$ 1.90 per meter. In these circumstances, the court treated the declared thickness as governing for interim purposes and permitted release on a provisional basis, with security to protect the revenue interest pending adjudication.

Conclusion: The issue was decided in favour of the petitioner, and provisional release of the goods at US$ 1.90 per meter was directed.

Issue (ii): Whether the seized Indian currency and the bank-account balance restraint could be sustained as proceeds of smuggled goods.

Analysis: The recorded basis for seizure showed sale proceeds of goods imported and cleared in the ordinary course, not smuggled goods. A valuation dispute or possible under-invoicing did not convert the imported goods into smuggled goods, and therefore did not justify seizure of currency on that footing. The restraint on the bank balance was also set aside on the same reasoning, while an undertaking was required to safeguard restitution if adjudication ultimately went against the petitioner.

Conclusion: The issue was decided in favour of the petitioner, and the seized currency and bank-account restraint were ordered to be released/removed.

Final Conclusion: The proceeding was disposed of by granting interim relief on both prayers, subject to protective security and an undertaking to secure the revenue if the adjudication outcome were adverse to the petitioner.

Ratio Decidendi: A valuation dispute or alleged under-invoicing does not by itself establish that imported goods are smuggled goods, and currency representing sale proceeds of lawfully imported and cleared goods cannot be seized on the footing of smuggled proceeds without a proper legal basis.

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