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of <h1>Provisional release of seized walnuts allowed if claimant furnishes bank guarantee for 100% differential duty; attachments lifted</h1> HC upheld provisional release of seized walnuts on condition that the claimant may furnish a bank guarantee for 100% of the differential duty; the court ... Provisional release of seized walnuts - reliance placed upon Circular No. 54 of 2020 issued by the Ministry of Finance, Government of India, concerning special measures to facilitate MSMEs for AEO T1 and T2 accreditation - HELD THAT:- Prima facie, the Master Circular dated 22 July 2016 provides that the benefit of exemption from bank guarantee would not apply in cases of provisional release of seized goods. Here, we are concerned with the provisional release of seized goods. This is not a matter in which we should deviate from the practice of exhausting alternative remedies. Since the Petitioner has an alternative remedy and the argument now made is highly contentious, it is left open to the Petitioner to avail themselves of the alternative remedy if they so choose - Otherwise, the competent authority has already ordered provisional release of the seized walnuts, subject to the Petitioner providing a bank guarantee corresponding to 100% of the differential duty amount. It is always open to the Petitioner to provide such a bank guarantee without prejudice and then to appeal the order of provisional release or the conditions imposed therein. As of now, the attachment orders are not operational. The relief regarding the attachment of the bank accounts therefore stands worked out, given this statement made. The banks, i.e., the Respondents 3, 4 and 5, should take cognisance of this position and not continue the attachment of the Petitioner’s bank accounts, which are the subject matter of these Petitions. The impugned attachment orders are clarified as being inoperative, and a direction is issued to the Banks to act accordingly. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the relaxation in bank guarantee requirements for MSME AEO T1/T2 under the Ministry of Finance Circular No. 54 of 2020 applies to provisional release of seized goods. 2. Whether the Court should direct provisional release of seized goods subject to a reduced bank guarantee (25% of estimated differential duty) claimed under Circular No. 54 of 2020, in light of the Master Circular No. 33 of 2016-CUS. 3. Whether the petitioners are entitled to immediate return of seized electronic devices (computers, mobile phones) pending adjudication, in view of allegations of possible tampering and the respondents' forensic audit. 4. Whether attachment orders against the petitioners' bank accounts remain operative and whether banks should continue compliance with such attachments. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Applicability of Circular No. 54 of 2020 (MSME AEO T1/T2 relaxations) to provisional release of seized goods Legal framework: Circular No. 54 of 2020 provides special measures to facilitate MSMEs for AEO T1 and T2 accreditation, including relaxation in furnishing of bank guarantees (reduction to 25% from 50%, and 10% from 25% for exporter-importer MSME AEO T1/T2 in Clause 3(vii)). Master Circular No. 33 of 2016-CUS (Master Circular dated 22 July 2016) sets out that exemptions or relaxations in bank guarantees do not apply where the competent authority orders furnishing of a bank guarantee for provisional release of seized goods (Clause 1.5.1(v)). Precedent treatment: The Court read Circular No. 54 of 2020 in conjunction with the Master Circular No. 33 of 2016-CUS and treated the Master Circular as limiting the application of the relaxation for provisional releases. Interpretation and reasoning: The Master Circular expressly excludes provisional-release-ordered bank-guarantee exemptions from general relaxations. Because the present controversy concerns provisional release of seized goods, the Master Circular prima facie precludes application of the lowered bank guarantee percentages provided by Circular No. 54 of 2020 for that specific context. The Court declined to decide definitively on any novel interpretative contention raised across the bar, preferring that contentious argument be pursued in the alternate statutory remedy. Ratio vs. Obiter: Ratio - the Master Circular's exclusion is controlling in cases of provisional release, and thus the relaxation in Circular No. 54 of 2020 is prima facie inapplicable to provisional release. Obiter - the Court left open the possibility of contrary arguments without adjudicating them on the merits. Conclusion: The reduced bank guarantee percentages under Circular No. 54 of 2020 do not, on a prima facie reading, apply to provisional releases of seized goods because Master Circular No. 33 of 2016-CUS excludes such applicability; petitioners may pursue the issue by exhausting alternative remedies. Issue 2 - Whether Court should order provisional release on reduced bank guarantee or require full (100%) bank guarantee Legal framework: Competent authority's provisional release order may specify conditions including bank guarantees; statutory/regulatory scheme allows provisional release subject to such securities. Alternative remedy of appeal exists against provisional release orders and their conditions. Precedent treatment: The Court adhered to the principle of not bypassing alternative efficacious statutory remedies where available, especially when the legal issue is contentious. Interpretation and reasoning: The competent authority had already ordered provisional release of specified goods subject to a bank guarantee corresponding to 100% of the differential duty. Given the Master Circular's prima facie exclusion and the existence of an alternate remedy (appeal against the provisional release and its conditions), the Court declined to direct deviation from the competent authority's 100% requirement. The Court noted parties' rights to provide the bank guarantee without prejudice and then challenge the conditions by appeal. Ratio vs. Obiter: Ratio - where an alternative adjudicatory remedy exists and the legal question is contentious, the Court will not ordinarily grant interlocutory relief that circumvents that remedy; petitioners may provide the security and litigate the conditions by appeal. Obiter - the Court did not rule out judicial relief in every possible factual matrix; it reserved liberty to consider arguments if alternative remedies are exhausted. Conclusion: The Court will not order provisional release on the reduced (25%) bank guarantee; petitioners may either furnish the 100% bank guarantee and appeal the conditions, or pursue the alternate remedy instead of seeking immediate judicial modification of the provisional-release conditions. Issue 3 - Return of seized electronic devices (computers, mobile phones) Legal framework: Provisional return of seized property may be ordered subject to protection against tampering and preservation of material relevant to adjudication; forensic examination is a recognized investigatory step. Precedent treatment: The Court did not have to invoke or distinguish prior case law; instead it relied on the parties' positions and the procedural posture. Interpretation and reasoning: The petitioner, on instructions, elected not to press for return of devices to preserve a right to contest potential tampering during adjudication. The respondent asserted that a forensic audit had been conducted and data furnished to the petitioner and denied tampering. Because the issue was contentious and the petitioner chose not to press the relief, the Court refrained from adjudicating the merits of return or retention of devices at this stage. Ratio vs. Obiter: Obiter - the Court declined to determine the substantive question because the petitioner waived pressing the relief; no precedent establishing entitlement to return was laid down. Conclusion: No direction was given for return of devices; the petitioner voluntarily did not seek that relief pending adjudication, and the Court did not resolve the merits of alleged tampering or retention. Issue 4 - Operability of bank-account attachment orders and direction to banks Legal framework: Attachment orders have specified durations and extensions; banks are obliged to follow operative attachment orders but must cease enforcement when attachments lapse or are not extended. Precedent treatment: The Court accepted the respondent's representation regarding the limited six-month duration and lack of extension orders. Interpretation and reasoning: The respondent stated that attachment was only for six months and that no extension orders were in force; on that basis, the Court treated the impugned attachments as inoperative. The Court directed banks (respondent financial institutions) to take cognizance of the inoperative status and not to continue the attachments affecting the petitioners' accounts. Ratio vs. Obiter: Ratio - where an attachment order has lapsed and no extension exists, banks must cease maintaining the attachment; courts can clarify operability and direct banks accordingly. Obiter - none. Conclusion: The Court declared the attachment orders inoperative insofar as no extension exists and directed the banks not to continue the attachments; this relief was granted without costs and on the basis of the respondent's representation. Procedural and remedial observations The Court emphasized adherence to the practice of exhausting available alternative remedies (specifically appellate remedies against provisional-release conditions) when legal contentions are novel or highly contentious. The Court left open the petitioners' right to pursue those remedies and to seek appropriate judicial relief thereafter. The petition was disposed of in the terms recorded, with liberty granted to act on an authenticated copy of the order and without any costs order.
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