Provisional release of export goods may be conditioned on bond and bank guarantee to safeguard revenue in misdeclaration cases.

Provisional release of export goods suspected of misdeclaration or overvaluation may be made subject to a bond and appropriate security to protect revenue interests. The customs circulars allow release on execution of a bond for the value of the goods together with security covering redemption fine and penalty, and the court treated a bank guarantee as a reasonable safeguard on the facts. The challenge to the additional bank guarantee condition therefore failed, while the merits of the alleged misclassification, overvaluation, and higher refund claim were left for adjudication. The request to substitute immovable property security was left open for consideration by the authority.

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Issues: Whether the condition requiring furnishing of a bank guarantee, in addition to a bond, for provisional release of export goods allegedly misdeclared and overvalued was onerous or unjustifiable.

Analysis: The dispute was limited to the propriety of the conditions imposed for provisional release, since the merits of the alleged misclassification, overvaluation, and possible higher IGST refund claim were left for adjudication. The applicable customs circulars permit provisional release of detained or seized export goods suspected of misdeclaration on execution of a bond equivalent to the value of the goods together with appropriate security to cover redemption fine and penalty. On the facts, the goods were intercepted on intelligence, and the revenue's apprehension was that the exporter may seek a higher refund and that the goods may be liable to confiscation. In that setting, insistence on a bank guarantee was held to be a reasonable measure to protect revenue interests. The alternative request to furnish immovable property security in place of the bank guarantee was also left open for consideration by the authority.

Conclusion: The condition requiring a bank guarantee was upheld and was not found to be arbitrary or unreasonable.

Ratio Decidendi: Where export goods are provisionally released during investigation into alleged misdeclaration or overvaluation, the customs authorities may insist on bond and appropriate security, including a bank guarantee, to safeguard the revenue.

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