2025 (10) TMI 188 - HC - Customs

Writ disposed at admission; provisional release of imported multifunctional devices allowed subject to conditions and adjudicating authority's rights

M/s. Kirti Enterprises Versus Union of India.

HC disposed the writ at the admission stage and allowed the petition seeking provisional release of the imported multifunctional devices. The court ... Challenge to seizure memo - request to forthwith release the imported consignment of the multifunctional devices - HELD THAT:- The instant writ petition can be disposed of at the admission stage itself. Reserving the right of the adjudicating authority to take appropriate decision in the proceedings after permitting the petitioner to represent before the adjudicating authority. It is ordered that let the respondent authorities pass an order on the application filed by the petitioners for provisional release of the goods subject to the fulfilment of conditions imposed - petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether a writ petition challenging a customs seizure memo seeking provisional release of imported goods can be disposed of at admission by directing conditional provisional release. 2. What conditions are appropriate and legally permissible for provisional release of seized imported goods pending adjudication (including payment/deposit of enhanced duty, time for quantification, bank guarantee, and record-keeping if goods are sold). 3. Whether an order for provisional release of goods affects the power of the adjudicating authority to continue and decide adjudication proceedings and whether such authority may be influenced by the release order. 4. Whether claims for waiver of demurrage arising from detention prior to provisional release must be separately considered by the customs authorities and the legal standard for such consideration. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Power to dispose of a writ at admission by directing conditional provisional release Legal framework: High Court writ jurisdiction to grant interim reliefs including direction for provisional release of seized goods, balanced against statutory adjudicatory processes under customs law. Precedent treatment: The Court follows its earlier bench decisions permitting conditional provisional release in identical fact-situations; such orders were not interfered with by the supreme appellate forum which refused to stay the release direction while permitting adjudication to proceed. Interpretation and reasoning: Where the factual matrix shows the dispute at the stage of seizure memo and the relief sought is limited to interim/provisional release, the Court may, at admission, direct provisional release subject to conditions which safeguard revenue and allow completion of statutory proceedings. Prior identical orders and their non-interference by the higher forum provide persuasive basis for similar relief in the instant matter. Ratio vs. Obiter: Ratio - The Court may dispose of a writ at admission by granting conditional provisional release of seized goods where the relief sought is confined to interim custody and adequate conditions are imposed to protect the revenue and permit adjudication to proceed. Obiter - None indicated beyond reliance on identical precedents. Conclusions: The petition seeking provisional release could be disposed of at the admission stage by ordering conditional release subject to enumerated safeguards. Issue 2 - Permissible conditions for provisional release: deposit/payment of enhanced duty and quantification timeline Legal framework: Courts granting interim release may require payment or deposit of duties to protect public revenue; customs authorities are tasked with quantification and adjudication within statutory competence. Precedent treatment: The present Court adopts the conditions previously applied by it: (a) prompt quantification by Customs within one week; (b) deposit/payment of the quantified enhanced duty as a condition precedent to release; (c) release within a specified outer limit after payment. Interpretation and reasoning: Requiring Customs to quantify duty within a short, specified period and mandating immediate payment by the petitioner protects revenue while facilitating commercial exigencies. Fixing an outer limit for release after payment provides procedural certainty. These conditions balance the interests of the State and of importers. Ratio vs. Obiter: Ratio - Conditional release contingent on quantification within a short timeframe and deposit/payment of the enhanced duty is an appropriate protective measure where provisional custody is granted. Conclusions: The Court will direct Customs to quantify duty within one week, petitioner to deposit/pay the enhanced duty immediately on quantification, and release the goods within four weeks of payment; such conditions are legally valid and proportionate. Issue 3 - Requirement of bank guarantee and post-release reporting/record-keeping if goods are sold Legal framework: Courts may require security to ensure compliance and future recovery; disclosure and record-keeping obligations help trace goods and revenue implications if sold post-release. Precedent treatment: The Court follows earlier practice by directing a bank guarantee of 10% of the total price of the imported goods and mandating maintenance and production of customer-wise sale details and transaction prices if goods are provisionally sold. Interpretation and reasoning: A modest bank guarantee (10%) provides a continuing security interest in favour of revenue administration without unduly impeding commercial activity. Requiring maintenance and disclosure of sale particulars ensures enforceability of any final adjudication and assists Customs in assessment or recovery, thereby protecting revenue and investigation integrity. Ratio vs. Obiter: Ratio - Courts may impose a bank guarantee and record-keeping obligations as conditions of provisional release to secure revenue and enable effective adjudication. Conclusions: Imposition of a 10% bank guarantee and obligation to maintain and furnish sales records upon provisional sale are appropriate and enforceable conditions for provisional release. Issue 4 - Non-preclusion of adjudicatory proceedings and influence of provisional release order on adjudication Legal framework: Judicial interim orders granting provisional relief must not oust or fetter statutory adjudicatory authorities; adjudication must proceed strictly in accordance with law and parties have the right to participate. Precedent treatment: The Court reiterates the legal principle upheld by the higher forum: provisional release does not bar adjudicating authority from proceeding; adjudication continues and the petitioner is entitled to participate; adjudicating authority must decide uninfluenced by the conditional release order. Interpretation and reasoning: The Court emphasizes separation of interim judicial relief and the statutory adjudicatory process, ensuring that conditional release safeguards are not a substitute for merits adjudication. The adjudicating authority must ignore the fact of provisional release in deciding substantive issues and base its decision on evidence and law. Ratio vs. Obiter: Ratio - An order for provisional release does not and must not preclude the customs adjudicating authority from proceeding with and deciding the adjudication; the adjudicating authority shall not be influenced by the provisional release. Conclusions: The conditional release order preserves the adjudicating authority's jurisdiction and duty to decide the matter on merits; the petitioner retains the right to participate in adjudication. Issue 5 - Consideration of demurrage waiver applications arising from detention prior to release Legal framework: Claims for waiver/relief from demurrage are administrative matters for Customs and must be decided objectively based on any application filed. Precedent treatment: The Court follows earlier direction that applications for waiver of demurrage shall be considered and decided by Customs authorities on their merits. Interpretation and reasoning: The Court declines to grant an automatic waiver; instead it directs objective consideration of any waiver application by Customs, thereby deferring to the administrative process while ensuring procedural fairness. Ratio vs. Obiter: Ratio - Demurrage waiver cannot be granted by the Court in the interim release order; such waiver must be sought and determined by the Customs authorities objectively. Conclusions: Any request for demurrage waiver shall be addressed by the Customs authorities on application; the interim release order does not itself grant or foreclose such relief.