Court eases conditions for release of seized goods under Customs Act, 1962, modifies requirements.

The court addressed the legality of seizure memos and the provisional release of seized goods under Section 110A of the Customs Act, 1962. It found the conditions imposed for release to be onerous and modified them, requiring the petitioners to furnish a bond equal to the FOB value, a bank guarantee of 20% of the FOB value, an undertaking to cooperate in investigations, and to refrain from claiming duty drawbacks until the case's resolution. The court ordered the provisional release of goods within seven days and set the next hearing for 22nd March 2021.

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Issues Involved:
1. Legality and validity of seizure memos dated 31st October 2020 and 2nd November 2020.
2. Provisional release of seized goods under Section 110A of the Customs Act, 1962.
3. Compliance with High Court orders regarding provisional release.
4. Conditions imposed for provisional release of goods.

Detailed Analysis:

1. Legality and Validity of Seizure Memos:
The petitioners were aggrieved by the seizure memos dated 31st October 2020 and 2nd November 2020, whereby declared quantities of cut and polished diamonds sought to be exported were seized by customs authorities. The respondents justified the seizure in their reply affidavit.

2. Provisional Release of Seized Goods Under Section 110A of the Customs Act, 1962:
The court initially directed the Commissioner of Customs to act under Section 110A of the Customs Act, 1962, for the provisional release of the exportable goods. Section 110A allows for the provisional release of seized goods pending adjudication upon taking a bond with such security and conditions as required by the adjudicating authority.

3. Compliance with High Court Orders Regarding Provisional Release:
On 21st January 2021, the court directed the Commissioner of Customs to pass orders for provisional release within seven days. However, on 1st February 2021, it was noted that the Principal Commissioner of Customs passed orders on 29th January 2021, stating no request for provisional release had been made, which was in contravention of the court's direction. The court expressed shock and surprise at this non-compliance and deferred the matter to 3rd February 2021. On 3rd February 2021, fresh provisional release orders dated 2nd February 2021 were submitted, and the previous orders were withdrawn.

4. Conditions Imposed for Provisional Release of Goods:
The provisional release orders dated 2nd February 2021 imposed conditions such as furnishing a bond equal to the FOB value of the goods, a security in the form of a bank guarantee or revenue deposit equal to the declared FOB value, and the release of goods only to the actual owner. The petitioners argued that these conditions were onerous and indirectly aimed to prevent the release of goods. The court found condition (c) unjustified as the definition of "exporter" under the Customs Act is broad and includes owners, beneficial owners, or agents. Condition (b) was deemed harsh and oppressive, as it presupposed the imposition of redemption fine and penalty by the adjudicating authority.

Modified Conditions for Provisional Release:
The court modified the conditions imposed by the Principal Commissioner of Customs as follows:
(a) Petitioners to furnish a bond equal to the FOB value of the goods.
(b) Petitioners to furnish a bank guarantee to the extent of 20% of the FOB value.
(c) Petitioners to furnish an undertaking to cooperate in the investigation and discharge any liability found due.
(d) Petitioners not to claim any duty drawback or other benefits related to the exports until the writ petitions are disposed of.

The court ordered the provisional release of the seized goods within seven days from the receipt of the order and scheduled the next hearing for 22nd March 2021.

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