2025 (12) TMI 255 - HC - Customs

Provisional release of seized goods ordered under Section 110A Customs Act where full bank guarantee and bonds furnished

M.J. International Versus The Union of India & Ors.

HC held that the petitioner was entitled to provisional release of seized goods under Section 110A of the Customs Act, 1962, as sufficient security had ... Direction to respondents to forthwith provisionally release the goods of the petitioner under Section 110A of the Customs Act, 1962 without insisting for any further security or payment - HELD THAT:- It is also not in dispute that the petitioner had already given unconditional bank guarantee of 100% of differential value of duty and given personal bond of 100% of the value of the goods. The petitioner is also ready and willing to give additional 25% personal bond of the value of the goods over and above 100% and he is also ready and willing to give an undertaking to the extent. The provisional release of goods allowed subject to fulfilment of conditions imposed - petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether, in exercise of jurisdiction under Article 226 of the Constitution of India, the Court should direct provisional release of seized imported goods under Section 110A of the Customs Act, 1962. 1.2 Whether, in the facts of the case, the insistence of the customs authority on continued detention of the goods despite personal bond and bank guarantee already furnished was legally sustainable. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Direction for provisional release of seized imported goods under Section 110A of the Customs Act, 1962 Legal framework (as discussed) 2.1 The petition was filed under Article 226 of the Constitution of India seeking a direction to the customs authorities to provisionally release seized goods under Section 110A of the Customs Act, 1962 without insisting on any further security or payment. 2.2 The respondents relied on Section 110 of the Customs Act, 1962 to justify seizure and contended that provisional release is within the absolute discretion of the customs authority. Interpretation and reasoning 2.3 The Court noted that the fact of seizure of goods under the Customs Act was not in dispute. 2.4 The Court confined itself to the prayer for provisional release, since the other substantive relief earlier sought was not pressed. 2.5 It was undisputed that the petitioner had already furnished: (i) an unconditional bank guarantee of 100% of the alleged differential duty liability, and (ii) a personal bond of 100% of the value of the goods. 2.6 The petitioner also expressed readiness and willingness to furnish an additional 25% personal bond over and above the 100% already furnished, and to give an undertaking regarding possible redemption fine and penalty in case of failure in adjudication. 2.7 The Court took into account an earlier decision of a Co-ordinate Bench in a set of matters involving an identical issue of provisional release, wherein provisional release was ordered on furnishing: (i) a personal bond of 125% of the value of the goods, and (ii) a bank guarantee of 35% of the differential duty. 2.8 Having regard to the safeguards already in place (bank guarantee and personal bond) and the additional security offered by the petitioner, the Court considered that adequate protection of the revenue and interests of the department would be achieved by imposing further conditions rather than continuing detention of the goods. 2.9 The contention of the respondents that it was within their absolute discretion to detain the goods and that provisional release would be detrimental to their interests was not accepted as sufficient to deny provisional release when adequate financial safeguards were available and comparable terms had been approved in the earlier precedent. Conclusions 2.10 The Court held that the goods should be provisionally released subject to additional security conditions, balancing the interests of the importer and the revenue. 2.11 The Court directed that: (a) The petitioner shall furnish an additional personal bond of 25% of the value of the goods over and above the 100% personal bond already furnished. (b) Upon furnishing the aforesaid additional personal bond of 25% of the value of the goods, the respondents shall release the goods provisionally. (c) The petitioner shall also file an undertaking to the satisfaction of the customs authority. 2.12 The writ petition was disposed of in these terms, with rule made absolute to the extent of the directions for provisional release, and with no order as to costs.