Ethyl Alcohol Absolute gets provisional release despite CTH 22.07 vs 98.02 classification dispute during import investigation

Bombay HC allowed provisional release of Ethyl Alcohol Absolute imported by petitioner under Bill of Entry No. 7568895. Court held that classification dispute between CTH 22.07 and CTH 98.02 should be determined at time of import, not based on end use by buyers. Petitioner was regular importer with established classification history under CTH 98.02 accepted by respondents previously. Court found no justification for refusing provisional release during investigation, ordering release upon execution of bond to secure differential duty and consequential amounts, following precedent from similar cases.

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Issues Involved:
1. Legality and validity of the seizure memo.
2. Classification of Ethyl Alcohol Absolute under the Customs Tariff.
3. Entitlement for provisional release of the seized goods.

Summary:

Legality and Validity of the Seizure Memo:
The Petitioner, a sole proprietor of M/s. Hemant Trading Company, filed a Petition under Article 226 of the Constitution of India, challenging the seizure memo dated 28th September 2023 issued by Respondent No. 4. The Petitioner argued that the Ethyl Alcohol Absolute imported under Bill of Entry No. 7568895 dated 28th August 2023 was misclassified despite being ordered out of charge by the proper customs officer.

Classification of Ethyl Alcohol Absolute:
The Petitioner has been importing Ethyl Alcohol Absolute for over twenty years, classified under Customs Tariff Heading (CTH) 98.02 as "Laboratory Chemical." The goods were packed in 500 ml bottles and marked for laboratory use, satisfying Note 3 of Chapter 98. The Petitioner contended that the classification under CTH 98.02 was appropriate and had been accepted by the Respondents for years. However, Respondent No. 4 seized the goods, believing they were classifiable under CTH 22.07, which the Petitioner argued was erroneous and without basis.

Entitlement for Provisional Release:
The Court noted that the Petitioner had been importing Ethyl Alcohol Absolute regularly and the classification under CTH 98.02 had been accepted by the Respondents except for the current Bill of Entry. The Court found the Respondents' refusal to provisionally release the goods unjustified, especially since the classification dispute had been ongoing for years without issue. The Court referenced similar cases where provisional release was granted upon execution of a bond.

Orders:
a) The Petitioner is entitled to provisional release of the Ethyl Alcohol Absolute under Bill of Entry No. 7568895 dated 28th August 2023 on execution of a bond to secure the differential duty and consequential amount, if any.
b) The Respondents are directed to release the goods within two weeks from the execution of such a bond.
c) All contentions regarding classification are kept open for appropriate proceedings.
d) Rule is made absolute in the aforesaid terms.
e) The Writ Petition is disposed of.
f) No order as to costs.

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