Provisional customs clearance on bond follows prior exemption-based release, with exemption dispute left for notice and adjudication.

Where imported consignments had earlier been cleared as exempt, the customs authorities were required to permit provisional clearance rather than immediately deny release on a sudden objection. Clearance was to be allowed on payment of basic and countervailing duty at 20% ad valorem each, against a bond for the differential amount, while the Department retained liberty to issue a reasoned show cause notice within eight weeks and proceed in accordance with law. The operative point is that an exemption dispute should be pursued through notice and adjudication, not by withholding clearance where the existing material did not justify immediate refusal.

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Issues: Whether the imported consignments were entitled to clearance on the footing that the exemption notifications applied, pending any show cause notice by the Department.

Analysis: The earlier consignments had been cleared by the Customs authorities on the basis that the goods were Polyphenylene Oxide and within the exemption notifications. In the circumstances, the Department's sudden objection could not, on the material before the Court, justify immediate denial of clearance. The proper course was to permit clearance on payment of duty calculated at 20% ad valorem each, while preserving the Department's right to proceed further by serving a show cause notice setting out the material relied upon. The petitioners were also required to furnish a bond for the differential amount pending such notice and adjudication.

Conclusion: The petitioners were entitled to immediate clearance of the goods on payment of basic and countervailing duty at 20% ad valorem each, with the Department retaining liberty to issue a show cause notice within eight weeks and proceed in accordance with law.

Final Conclusion: The relief granted secured provisional clearance of the goods in favour of the petitioners while leaving the Department free to adjudicate the exemption dispute after due notice.

Ratio Decidendi: Where imported goods had previously been cleared as exempt, the customs authorities could be required to allow provisional clearance against bond and thereafter proceed by a reasoned show cause notice before denying the exemption.

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