Court quashes bank guarantee, mandates personal bond for seized goods release.

The Court quashed the requirement for a bank guarantee of 10% of the declared FOB value, imposed on the petitioner. Instead, the Court directed the petitioner to furnish a personal/surety bond equal to the declared value, allowing for the release of seized goods. The Court emphasized that the petitioner's readiness to provide the bond, coupled with no evidence questioning their ability to meet obligations, led to the decision. The Court clarified the adjustment of the deposited amount against liabilities and the potential refund if no liabilities were identified, while ordering the release of goods within two weeks.

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Issues:
- Quashing the condition of furnishing a bank guarantee of 10% of the declared FOB value.
- Justifiability of the condition imposed by the respondents.
- Applicability of legal precedents regarding the demand for a bank guarantee.
- Consideration of the petitioner's readiness to furnish a personal/surety bond.

Analysis:

The petitioner sought to quash the condition (b) of a provisional release letter requiring a bank guarantee of Rs. 6,95,000. The petitioner had deposited Rs. 10,00,000 and requested the release of seized goods without a bank guarantee. Subsequently, another container was seized, and a bank guarantee of 10% of the declared FOB value was demanded. The petitioner argued that the bank guarantee condition was unreasonable and illegal, offering to provide a personal/surety bond for 100% of the declared value.

The Court considered the submissions and referred to legal precedents. In the case of 'Om Udyog v/s Joint Commissioner of Customs,' it was observed that demanding a bank guarantee for a dispute on classification or valuation is unjustified. Similarly, in 'Kuber Casting (P) Ltd. v/s Union of India,' it was held that imposing a bank guarantee should not be a tool to pressure the assessee, as it could harm their business.

After evaluating the facts, the Court found that the petitioner had already paid Rs. 5,00,000 and was willing to provide a personal/surety bond equal to the declared value. The respondents failed to show any circumstance raising doubts about the petitioner's ability to fulfill their obligations. Consequently, the Court quashed the bank guarantee condition and directed the petitioner to furnish a personal/surety bond, ensuring the discharge of any assessed amounts without protest, while retaining the right to appeal.

Furthermore, the Court clarified that the petitioner could not claim duty drawback and that the deposited amount of Rs. 5,00,000 would be adjusted against any liabilities. If no liabilities were found, the amount would be refunded, minus any outstanding dues. The Court ordered the release of goods to the petitioner within two weeks of the order, emphasizing that the decision did not express an opinion on the underlying dispute's merits.

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