Part clearance of imported goods on duty paid under protest was allowed despite a pending classification and exemption dispute.

Refusal to allow part clearance of imported goods against payment of basic customs duty under protest was treated as arbitrary where classification and exemption disputes were still pending. The importer's offer to pay duty at the rate asserted by the department could not be rejected merely because the substantive classification challenge would continue in regular proceedings. Clearance was therefore permitted on payment of basic customs duty at 100% ad valorem under protest, without prejudice to the importer's exemption claim.

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Issues: Whether the refusal to permit clearance of the imported goods on payment of basic customs duty under protest was justified.

Analysis: The request for part clearance was made while the classification and exemption dispute remained pending adjudication. The payment offered under protest could not be rejected merely because the importer intended to contest the classification in the regular proceedings. The refusal to accept payment at the duty rate asserted by the department and to allow clearance to that extent was held to be arbitrary and irrational.

Conclusion: The refusal was unjustified and the petitioners were entitled to clear the goods on payment of basic customs duty at 100% ad valorem under protest, without prejudice to their substantive exemption claim.

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