Customs clearance on bond preserves classification dispute while preventing warehousing burden on imported Lactulose consignments.

Imported Lactulose consignments were directed to be assessed and cleared on the claimed exemption basis upon furnishing of a bond, because the immediate dispute concerned clearance rather than final classification. The Court treated the broader question whether the goods fell under the concessional entry for drugs and medicines or the bulk-drug entry as open for later adjudication. It considered prior favourable treatment of substantially identical consignments and the need to avoid warehousing and demurrage, while protecting revenue by preserving the Customs Department's right to issue a show cause notice and proceed in accordance with law.

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Issues: Whether the imported Lactulose consignments should be cleared with the benefit of the claimed customs exemption, subject to furnishing of a bond, while leaving the classification controversy open for adjudication.

Analysis: The disputed consignments had earlier been the subject of favourable orders in the petitioner's own case, and a later consignment had also been cleared. The Court noted that the immediate controversy was limited to clearance of the present consignments and that the broader question whether the goods fell under the concessional entry for drugs and medicines or the entry for bulk drugs was not to be decided at that stage. Since the standard rate remained the same and the only additional requirement for the bulk-drug entry was compliance with the concessional import rules, the Court found it appropriate to permit clearance to avoid continued warehousing and demurrage. It also ensured that the revenue's position remained protected by requiring a bond in the format demanded by customs and preserving liberty to issue a show cause notice and adjudicate the matter in accordance with law.

Conclusion: The petition was allowed, and the goods were directed to be assessed and cleared on the claimed exemption basis upon furnishing of the required bond, with the classification issue expressly kept open.

Final Conclusion: Immediate clearance was ordered in the interests of fairness and to prevent avoidable warehousing burden, while safeguarding the Customs Department's right to proceed against the petitioner in future proceedings.

Ratio Decidendi: Where a classification dispute is still open but the assessee has prior favourable treatment on substantially identical goods, interim clearance may be directed on furnishing of a protective bond, without deciding the merits of classification.

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