Transit declaration defects do not automatically justify seizure; release conditions must be proportionate and based on surrounding facts.

In transit movement of goods, a missing or incorrectly filled transit declaration form created only a rebuttable presumption and did not, by itself, justify seizure of the goods or detention of the vehicle where the surrounding facts showed a bona fide explanation. The authority's discretion to release goods pending proceedings had to be exercised judiciously and proportionately; on these facts, insisting on cash security was considered unduly harsh, while bank guarantee was treated as sufficient protection. Revenue authorities could still pursue penalty proceedings.

---

---

Issues: (i) Whether the absence or incorrect filling of a transit declaration form justified seizure of the goods and detention of the vehicle; (ii) whether the insistence on cash security of Rs. 10 lakhs for release of the goods was justified in the facts of the case.

Issue (i): Whether the absence or incorrect filling of a transit declaration form justified seizure of the goods and detention of the vehicle.

Analysis: The goods were being moved from Uttarakhand to Chhattisgarh, the consignor and consignee were registered dealers, and the commodity was a specialised pump not ordinarily meant for sale in Uttar Pradesh. The factual matrix showed that the vehicle had to re-enter Uttar Pradesh during transit and the incorrect particulars in the transit declaration form were explained as a bona fide mistake of the driver, who was unfamiliar with the route. The governing approach treated absence of the transit declaration form as giving rise only to a rebuttable presumption and possible penal action, not automatic seizure of the goods. The surrounding circumstances were required to be considered before invoking seizure powers.

Conclusion: Mere absence or defect in the transit declaration form did not justify seizure of the goods or detention of the vehicle on the facts found.

Issue (ii): Whether the insistence on cash security of Rs. 10 lakhs for release of the goods was justified in the facts of the case.

Analysis: The proviso to section 48(7) vested discretion in the authority to release goods without security, on lesser security, or on appropriate security depending on the circumstances. That discretion had to be exercised judiciously and not mechanically. The authority and the Tribunal failed to consider the nature of the goods, the route-related explanation, and the absence of material showing intended local sale. Cash security was therefore found to be unduly harsh, though the authorities were left free to pursue penalty proceedings and the substitution of a bank guarantee was considered sufficient protection of revenue interests.

Conclusion: The demand for cash security was not sustainable, and bank guarantee was a sufficient condition for release.

Final Conclusion: The revision was allowed to the extent that the seizure-based cash security direction was set aside and replaced by a direction for release of the goods on furnishing bank guarantee, while leaving the revenue authorities free to initiate penalty proceedings.

Ratio Decidendi: Absence or defect in a transit declaration form, by itself, does not warrant seizure of goods where the surrounding circumstances show a plausible bona fide explanation; the statutory discretion for release pending proceedings must be exercised judiciously and proportionately.

---