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of <h1>Benefit of doubt leads to provisional release of second-hand multifunction devices under Customs Act, subject to conditions and final adjudication</h1> HC allowed petition challenging forfeiture of second-hand multifunction devices and directed provisional release of the equipment within four weeks, ... Seeking provisional release of various models of Second hand highly specialised equipments, namely, the Digital Multifunction Print, Copying and Scanning machines - Section 110A of the Customs Act - respondents proceeded to forfeit these goods in spite of the report of the approved Chartered Engineer - HELD THAT:- The issue involved in the present writ petition is squarely covered by the earlier order passed by this Court in a batch of writ Petitions in WP No.29418 of 2024 etc dated 10.07.2025 [2025 (7) TMI 1350 - MADRAS HIGH COURT] where it was held that 'Though the respondents may contend that MFDs are not freely importable and are restricted items or have been prohibited items, the same cannot be conclusively established with the available materials at the stage of granting provisional release. Further, the goods in question are not contraband items or items which affects security of India, like, explosives, etc. Therefore, by applying the benefit of doubt principle as well, this Court will have to give the benefit of doubt to the importer at this stage, as the respondents (customs department) do have the power to reverse the provisional release order at a later date through its final adjudication order. Therefore, in the interest of justice, provisional release will have to be granted as prayed for in these writ petitions.' The Customs Department, Chennai, is directed to pass orders for provisional release of the goods, which is the subject matter of the dispute in this writ petition, by imposing conditions, as they deem fit, as per the provisions of the Customs Act, 1962, within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether goods consisting of used/second-hand Digital Multifunction Devices (MFDs) qualify for provisional release under Section 110A of the Customs Act pending adjudication. 2. Whether the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 ('HOW Rules') prohibit import of such MFDs or require prior permission from the Ministry of Environment, Forest and Climate Change for provisional release. 3. Whether the principle of benefit of doubt applies to an importer's declaration regarding classification of the imported MFDs as Highly Specialised Equipment (HSE) and exempts them from restrictions under subsequent notifications. 4. What conditions and temporal directions the Customs authority may impose when ordering provisional release under Section 110A, and whether such provisional release can be reversed in final adjudication. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Provisional release under Section 110A of the Customs Act Legal framework: Section 110A of the Customs Act permits provisional release of seized goods pending investigation or adjudication, subject to such conditions as the authority deems fit. Precedent Treatment: The Court expressly follows an earlier order of the same High Court in a batch of writ petitions that granted provisional release of MFDs on similar facts. Interpretation and reasoning: On the material presented (including reports/certificates from DGFT-approved Chartered Engineer), a prima facie case exists to justify provisional release. The Court recognizes that provisional relief preserves the importer's possession while the statutory adjudication process remains available to the Customs authorities to determine final liability. Ratio vs. Obiter: Ratio - Provisional release under Section 110A is appropriate where prima facie material supports the importer's classification and the goods are not manifestly contraband or security threats; such release may be conditioned and is subject to reversal in final adjudication. Conclusion: Provisional release was ordered, subject to conditions to be imposed by the Customs authority within stipulated timelines. Issue 2 - Applicability of the HOW Rules, 2016 to MFD imports and need for prior environmental permission Legal framework: HOW Rules define 'other wastes' and prescribe regulatory steps for import/export. Rule 13(2) exempts importers from requiring Ministry permission for items listed in Part D of Schedule III provided documents enumerated in Schedule VIII are filed. Precedent Treatment: The Court relies on its earlier reasoning that, on prima facie consideration of the HOW Rules, there is no absolute prohibition on import of MFDs and the Rules do not preclude provisional release where procedural documentary requirements are met. Interpretation and reasoning: The Court examines Rule 3(23) and Rule 13(2) and concludes that import of items listed in Part D does not mandatorily require prior Ministry permission; instead, the importer must furnish specified documents to Customs. Where such documents are presented or can be verified as a condition of provisional release, the HOW Rules do not bar provisional release. Ratio vs. Obiter: Ratio - Application of HOW Rules does not automatically preclude provisional release if documentary conditions under Schedule VIII are satisfied; compliance may be made a condition of provisional release. Conclusion: The HOW Rules, on prima facie view, do not prohibit provisional release of the MFDs; Customs may require production/verification of Schedule VIII documents as a release condition. Issue 3 - Benefit of doubt principle in customs classification disputes Legal framework: Under customs law, where an importer's declaration is in issue, authorities must produce sufficient evidence to displace the declaration; absent such evidence, the importer may be entitled to the benefit of doubt. Precedent Treatment: The Court references previous High Court decisions and a Telangana High Court decision upheld by the Supreme Court that have permitted provisional release of MFDs and treated them as HSEs for import purposes. Interpretation and reasoning: Given the supporting engineer's report, earlier favorable judicial decisions, and the absence of materials conclusively establishing prohibition or restriction at the provisional stage, the Court applies the benefit of doubt to the importer to justify provisional release. The Court emphasizes that the benefit of doubt at the provisional stage does not preclude adverse findings in final adjudication if Customs adduces contrary evidence. Ratio vs. Obiter: Ratio - Where the record does not conclusively disprove the importer's classification and the goods are not contraband or security risks, the benefit of doubt favors provisional release pending final adjudication. Conclusion: The benefit of doubt principle supports granting provisional release of MFDs at the present stage. Issue 4 - Conditions, timelines for provisional release and reversibility in final adjudication Legal framework: Section 110A and related provisions empower Customs to impose conditions on provisional release; final adjudication can reverse provisional release and impose confiscation, duties or penalties. Precedent Treatment: The Court adopts prior directions setting specific timelines for Customs to pass conditional provisional release orders and to effect release upon fulfillment of conditions. Interpretation and reasoning: To balance the importer's interest and the State's enforcement powers, the Court directs Customs to (a) pass a provisional release order imposing such conditions as it deems fit within a four-week period, and (b) release the goods within two weeks of fulfillment of conditions. The Court reiterates that provisional release is without prejudice to the Customs' power to reverse the release in the final adjudication and to pass consequential orders as per law. Ratio vs. Obiter: Ratio - Provisional release may be subject to reasonable, case-specific conditions and fixed timelines; such release does not preclude reversal in final adjudication. Conclusion: The Court issued mandatory directions imposing a timetable for conditional provisional release and confirmed the reversibility of such release in the final adjudication. Cross-references and consolidation The Court's conclusions on Issues 1-4 are interdependent: provisional release under Section 110A is warranted (Issue 1) because the HOW Rules do not prima facie bar import if Schedule VIII requirements are met (Issue 2), and because the benefit of doubt favors the importer in the absence of conclusive contradictory evidence (Issue 3); accordingly, provisional release is directed subject to conditions and timelines and remains subject to reversal at final adjudication (Issue 4).
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