Provisional release of imported goods: verified certificate of origin can justify reduction of onerous bank guarantee conditions.

Provisional release of imported areca nuts was discussed in the context of disputed Sri Lankan origin and the security conditions imposed on the importer. Where the importer produced certificates of origin and a verification certificate from the Department of Commerce, Sri Lanka confirming issuance of those certificates, the doubt over origin was treated as prima facie unsustainable. In that setting, a bank guarantee equal to 100% of duty was regarded as excessively harsh and was reduced to 20% of the duty amount, while the bond for 100% of goods value was retained.

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Issues: Whether the condition of furnishing bank guarantee equal to 100% of the duty amount for provisional release of imported areca nuts was justified when the importer produced origin documents and a verification certificate from the Department of Commerce, Government of Sri Lanka.

Analysis: The goods were detained on suspicion that they were not of Sri Lankan origin. The importer produced the certificate of origin, other supporting documents, and a later verification certificate issued by the Department of Commerce, Government of Sri Lanka confirming issuance of the certificates of origin for the shipments. In view of this verification, the doubt regarding country of origin was found to be prima facie unsustainable. The reliance placed on the earlier Tribunal order in a similar matter was distinguished on facts because, in that case, the doubt regarding origin had not been removed.

Conclusion: The condition of bank guarantee equal to 100% of the duty amount was held to be excessively harsh and was reduced to 20% of the duty amount, while the bond for 100% value of the goods was maintained. The provisional release was directed on the modified conditions, in favour of the assessee.

Final Conclusion: The appeal resulted in partial relief by substantially reducing the security condition for provisional release of the imported goods.

Ratio Decidendi: Where the importer produces reliable verification from the exporting country confirming the certificates of origin, a speculative doubt as to country of origin cannot justify an unduly onerous bank guarantee condition for provisional release.

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