Provisional release of seized excisable goods may be secured by bank guarantee where cash security is unduly onerous.

Pending investigation, provisional release of seized excisable goods may be made subject to security conditions, including under supplementary instructions issued under Rule 31 of the Central Excise Rules, 2002. Where the assessee has cooperated and the cash security requirement is shown to be unduly onerous, the condition may be modified to protect revenue while reducing hardship. In the stated circumstances, the cash security requirement was substituted with a bank guarantee, and the remaining release conditions were left unchanged.

---

---

Issues: Whether, pending investigation and prior to issue of show cause notice, the conditions imposed for provisional release of seized excisable goods were arbitrary or required modification by substituting cash security with bank guarantee.

Analysis: The investigation was still pending, and the petitioner had furnished explanations and co-operated with the authorities. The Court noted that provisional release could be ordered subject to security conditions under the supplementary instructions issued under Rule 31 of the Central Excise Rules, 2002. Considering the hardship pleaded in respect of cash security and the need to protect revenue, the Court found it appropriate, as an interim measure, to direct substitution of the cash security requirement by a bank guarantee while leaving the other conditions undisturbed.

Conclusion: The demand for cash security was modified, and provisional release was directed on furnishing a bank guarantee instead of cash security, subject to the other stipulated conditions.

Ratio Decidendi: In proceedings for provisional release of seized goods, the Court may substitute cash security with a bank guarantee where revenue interests remain protected and the original condition appears unduly onerous in the circumstances.

---