Provisional release of seized imported machinery requires proportionate security terms, and unsupported bond enhancement may be modified.

Provisional release of seized imported second-hand machinery under Section 110A of the Customs Act must be conditioned on terms that are proportionate and reasoned, with revenue interests balanced against the importer's right to release. Where the goods were assessed through the prescribed Chartered Engineer procedure and duty had already been paid, alleged undervaluation could not be finally examined in the provisional release proceedings without first challenging the assessment itself. The Tribunal found the enhanced bond requirement unsupported by reasons and modified the release terms as unduly harsh, directing release of the seized goods except the tyres against an indemnity bond of Rs. 4,00,00,000 and a bank guarantee of Rs. 50,00,000.

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Issues: Whether the conditions imposed for provisional release of seized imported used machinery were excessive and required modification under Section 110A of the Customs Act, 1962.

Analysis: The goods were second-hand machinery/capital goods assessed through the procedure prescribed by the Board circular applicable to such imports, including examination by a Chartered Engineer. In the provisional release proceedings, the question of alleged undervaluation could not be finally examined without challenging the assessment itself, and the issue before the Tribunal was limited to whether the security terms for release were proportionate. The Tribunal found that the enhancement of the bond amount was not supported by reasons and that the original terms were unduly harsh in light of the assessed duty already paid and the need to balance the interests of revenue and the importer.

Conclusion: The conditions for provisional release were modified, and the seized goods, except the tyres, were directed to be released against an indemnity bond of Rs. 4,00,00,000 and a bank guarantee of Rs. 50,00,000.

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