2025 (9) TMI 1103 - HC - Customs

Appeals dismissed as moot after respondent provided required bank guarantees and personal bond for provisional release of imports

HC held the Tax Appeals, Special Civil Applications and related Civil Applications moot and disposed of as infructuous because the respondent seeking ... Seeking provisional release of the imported goods - Inshell Walnuts and Black Pepper - release of goods on execution of a Provisional Duty Bond/Surety, instead of release on execution of a bond with security/Bank Guarantee - HELD THAT:- The Tax Appeals, by which the questions were proposed, would not survive as the respondent-assessee has already furnished the bank guarantees as required by the Department in addition to the condition of personal bond imposed by the order of the Tribunal. The Special Civil Applications also would not survive as the grievance raised by the respondent-assessee/petitioners for compliance of the order of the Tribunal has become infructuous in view of the furnishing of the bank guarantees along with the personal bond for provisional release. Accordingly, the Tax Appeals, Special Civil Applications and the Civil Applications are hereby disposed of as having become infructuous. ISSUES PRESENTED AND CONSIDERED 1. Whether the Tribunal was correct in ordering release of seized imported goods on execution of a Provisional Duty Bond/Surety, instead of release on execution of a bond with security/Bank Guarantee, under Section 110A of the Customs Act, 1962, having regard to the facts of the case. 2. Whether the Tribunal was correct in allowing the appeal for provisional release of the seized goods. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Correctness of ordering release on Provisional Duty Bond / Surety versus bond with security / Bank Guarantee under Section 110A of the Customs Act, 1962 Legal framework: Section 110A of the Customs Act, 1962 governs provisional release of seized goods on execution of bond and such security as may be required; provisional release remains subject to final adjudication. Precedent Treatment: The judgment does not rely upon or cite any authority or precedential treatment on the point. Interpretation and reasoning: The Court observed that the Tribunal ordered provisional release on execution of a bond/surety. Subsequently, the party furnished bank guarantees (verified with issuing banks) in addition to a personal bond, and the Commissioner of Customs permitted provisional release subject to adjudication. The Court emphasised that a provisional release order is inherently temporary and subject to the outcome of final adjudication, and that compliance with the security conditions imposed by the authority (here, bank guarantees plus personal bond) addressed the Department's concerns. Ratio vs. Obiter: The Court's determination that provisional release is subject to final adjudication and that provision of adequate security (here, bank guarantees verified by the Department) satisfies conditions for provisional release constitutes ratio as applied to the factual matrix before it. Observations concerning the provisional character of such release and the Department's verification of guarantees are operative to the decision rather than gratuitous. Conclusions: In the facts of this matter, because bank guarantees were furnished and verified and a personal bond existed, the challenge to the Tribunal's direction (regarding security form) became academic. The adequacy of security as provided rendered the grievance on this issue infructuous. Issue 2 - Correctness of the Tribunal in allowing the appeal for provisional release Legal framework: The Tribunal may order provisional release of seized goods on appropriate conditions under the Customs Act, with such release remaining subject to final adjudication. Administrative verification of security instruments and compliance with imposed conditions are steps for effecting provisional release. Precedent Treatment: No prior decisions or conflicting authorities were engaged by the Court in addressing this specific question. Interpretation and reasoning: The Court noted that the Tribunal had allowed release on condition of bond/surety. Following the Tribunal's order and this Court's subsequent directions, the affected parties furnished bank guarantees (specific sums identified) and the Department verified issuance with the banks. The Commissioner then permitted provisional release on the satisfied conditions. Given these events, the substantive dispute over whether the Tribunal erred in allowing the appeal became moot because the relief ordered had, in practical effect, been complied with and implemented under departmental supervision. Ratio vs. Obiter: The operative conclusion - that the Tribunal's order need not be upset because the conditions for provisional release have been complied with and the matter is therefore infructuous - is ratio as applied to the disposition of the appeals before the Court. Broader commentary on Tribunal powers or correctness in other factual matrices would be obiter, and the Court did not opine beyond the present facts. Conclusions: The Court concluded that the challenge to the Tribunal's order is rendered infructuous by the subsequent furnishing and verification of bank guarantees and the Commissioner's grant of provisional release subject to final adjudication. Accordingly, the appeals and related proceedings were disposed of as having become infructuous and notices were discharged. Cross-References and Practical Outcomes - The conclusions on both issues are interlinked: compliance with security conditions (bank guarantees plus personal bond) addressed the Department's practical concern and caused the legal questions raised about the form of security and the Tribunal's allowance of the appeal to lapse. - The Court reiterated the principle that provisional release remains subject to the outcome of final adjudication, and that provisional orders operate until a final order is passed; this served as the basis for disposing the matters as infructuous once the conditions for provisional release were satisfied.