Provisional release of seized gold under customs law was allowed where the search record did not support adverse inferences against the importer.

Provisional release of seized gold under Section 110A of the Customs Act was considered where the importer claimed the goods were imported under Advance Authorisation and cleared by customs on the same day a DRI search was continuing at the declared premises. The record did not support the inference that the importer intended to bypass the import policy, and the panchanama recorded jewellery-making machines at the premises. An adverse inference based on the alleged absence of a fully mechanised facility was therefore unsustainable, and provisional release was allowed.

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Issues: Whether the rejection of the importer's request for provisional release of the seized gold was justified.

Analysis: The gold was imported under an Advance Authorisation and was cleared by customs on the same day, while the DRI search at the declared premises was continuing. The earlier High Court order had recorded prima facie merit in the importer's case that the gold could not be found at the premises at the relevant time because the search was underway, and had permitted an application for provisional release under Section 110A of the Customs Act, 1962. The Commissioner's conclusion that the gold was not found during the search and that the importer intended to bypass the import policy was not supported by the record, particularly when the panchanama itself recorded jewellery-making machines at the premises. The adverse inference regarding absence of a fully mechanised facility was therefore unsustainable.

Conclusion: The rejection of provisional release was set aside and provisional release of the seized gold was allowed in favour of the assessee.

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