Provisional release security can be enhanced when the original guarantee rests on a mistaken customs duty estimate.

Where provisional release of goods had been ordered on a bank guarantee based on an incorrect 6% duty estimate, the HC held that the security could be revised once the correct 20% duty liability emerged under Notification No. 04/2025-Customs. The earlier guarantee did not bar modification of the interim order, because it had been founded on a material mistaken premise. The court therefore allowed enhancement of the security to protect customs revenue and granted time to furnish the additional or consolidated guarantee while provisional release continued on compliance.

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Issues: Whether the earlier direction for provisional release of goods on furnishing a bank guarantee of Rs. 50 lakhs required modification by enhancing the security to Rs. 1.73 crores in view of the correct duty liability.

Analysis: The enhanced duty liability was shown to be 20% of the value of the goods under Notification No. 04/2025-Customs dated 1 February 2025, whereas the earlier order had proceeded on the basis of a 6% duty estimate. The lower security amount had been fixed on the strength of that mistaken representation. Once the correct position emerged, the basis of the original quantum no longer survived. The fact that the goods had already been provisionally released on the earlier guarantee did not prevent correction of the order, and a short period was granted for furnishing the additional or consolidated guarantee.

Conclusion: The modification was allowed and the security condition was enhanced to Rs. 1.73 crores, with time granted to comply.

Final Conclusion: The earlier release condition was corrected to reflect the proper duty basis, thereby ensuring adequate security for the customs dues while preserving provisional release on compliance.

Ratio Decidendi: An interim order fixing security for provisional release may be modified where it was founded on a material mistaken premise as to the duty liability, and the corrected security can be directed to safeguard the revenue.

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