Customs authority's demand for bank guarantee struck down for provisional release of goods under Section 110A

The Bombay HC set aside the customs authority's demand for bank guarantee/cash security of Rs.68,65,140.60 for provisional release of goods back to town. The court found no legal basis for imposing security when goods were not seized under Section 110A of the Customs Act, distinguishing this from seizure cases. The HC directed release of goods within two weeks upon petitioner submitting a prescribed bond, bank solvency certificate, and director's undertaking to appear when summoned with five days' notice. The petition was disposed of favorably.

---

---

Issues:
1. Petition seeking Writ of Certiorari to quash two letters issued by Respondent No.5.
2. Petitioner's challenge regarding the conditions imposed for the release of goods.
3. Interpretation of Section 110A of the Customs Act, 1962 in relation to the seizure of goods.
4. Respondent's reliance on Board Circular No.01 of 2011 for provisional release conditions.
5. Validity of the conditions imposed by Respondent No.3 without any seizure of goods.

Analysis:

1. The petition sought the issuance of a Writ of Certiorari to quash two letters issued by Respondent No.5, challenging the legality and validity of the communications. The petitioner contended that the conditions imposed for the release of goods were not justified as there was no seizure of goods under the Customs Act, 1962.

2. The petitioner approached the court due to the conditions set by Respondent No.5 for the provisional release of goods, which included submitting a bond for 100% FOB value and a cash security/bank guarantee. The petitioner argued that such conditions could only be imposed in case of a seizure of goods under Section 110 of the Act, which was not the case here.

3. The court analyzed Section 110A of the Customs Act, 1962, which allows the release of goods to the owner upon fulfilling conditions set by the adjudicating authority in case of seized goods. Since there was no actual seizure of goods in this case, the conditions imposed by Respondent No.5 were deemed unjustified and not in accordance with the law.

4. Respondent No.3 relied on Board Circular No.01 of 2011 to justify the conditions for provisional release. However, the court found discrepancies in the application of the circular and highlighted that the circular could not override the provisions of Section 110A of the Customs Act, 1962.

5. The court quashed the impugned communication dated 18th June 2024 and directed Respondent No.3 to release the goods 'back to town' within two weeks upon the petitioner fulfilling specific requirements. The court emphasized the lack of seizure of goods and the invalidity of the conditions imposed, ensuring the release of goods without undue delays.

This judgment clarifies the legal principles surrounding the release of goods under the Customs Act and emphasizes the importance of adhering to statutory provisions while imposing conditions for the release of goods.

---