Provisional customs assessment: bank guarantee cannot be insisted on without relevant material and independent discretion.

Section 18 of the Customs Act permits provisional assessment where further inquiry is needed, but the security required must be justified by relevant material and the assessing officer's own discretion. Rule 2 of the Provisional Duty Assessment Regulations sets the security framework and cash-deposit ceiling, but does not make a bank guarantee mandatory in every case. Mere quotations were insufficient to support an inference of under-invoicing, and prior clearance of similar consignments on bond alone weakened the insistence on additional security. The provisional clearance condition was therefore confined to execution of a bond, while inquiry could continue if supported by proper material.

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Issues: Whether the Customs authorities could insist on a bank guarantee as a condition for provisional assessment and release of the imported goods, and whether the demand was supported by material justifying an inference of under-invoicing.

Analysis: Section 18 of the Customs Act, 1962 permits provisional assessment where further inquiry is required, and Rule 2 of the Customs (Provisional Duty Assessment) Regulations, 1962 only prescribes the security framework and the outer limit for cash deposit. The provision does not make security of a particular nature mandatory in every case. The demand for a bank guarantee had to rest on relevant material and a proper exercise of discretion by the assessing officer. The only material relied upon consisted of quotations, which were insufficient by themselves to establish under-invoicing. The authorities had also previously cleared similar consignments on bond alone, and the record showed that the assessing officer had effectively surrendered his own discretion to a supposed uniform practice or verbal instruction from another Customs House.

Conclusion: The insistence on a bank guarantee was not justified on the material before the authorities, and the goods were directed to be released on execution of bond as required by the Customs authorities.

Final Conclusion: The writ petition succeeded, and the provisional clearance condition was confined to a bond while the authorities were left free to continue inquiry if supported by material.

Ratio Decidendi: A demand for security in provisional customs assessment must be based on relevant material and the assessing officer's own discretion; mere quotations or an externally dictated uniform practice do not by themselves justify insistence on a bank guarantee.

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