Transit detention of goods may be met with limited tax deposit and personal bond where understated value is found.

Goods detained in transit may be released where the declaration understates value, if revenue is protected by a limited tax deposit on the understated value and a personal bond for the balance. The text notes that the declaration was found prima facie incorrect, but also records that the goods had been imported and an exemption certificate had been issued. It further states that any local tax liability was confined to 5% under the relevant Tamil Nadu VAT entry, not the higher rate in the notice. The operative effect is conditional release on deposit at 5% of the understated value and on furnishing a personal bond, with all merits left open.

---

---

Issues: Whether the goods detained during transit could be directed to be released on payment of tax computed only on the understated value and on furnishing a personal bond, while leaving the merits open for adjudication.

Analysis: One consignment was found to have been understated in the declaration form, so the respondent was justified in treating the value as incorrectly declared. At the same time, the record prima facie showed that the goods had been imported and that an exemption certificate had been issued by the Union Ministry. The Court also noted that, if any local tax liability arose, the goods in question were taxable only at 5% under the relevant entry in the First Schedule read with the charging provision of the Tamil Nadu Value Added Tax Act, 2006, and not at the higher rate applied in the impugned notice. In these circumstances, the revenue's interest could be secured by directing release on a limited tax deposit calculated on the understated amount and by insisting on a personal bond for the balance.

Conclusion: The goods were directed to be released on deposit of tax at 5% of the understated value of Rs. 10,00,000/- and on furnishing a personal bond for the balance, with all merits left open.

---