2025 (12) TMI 1158 - HC - Customs

Customs release of bank guarantees for alleged 'gutka' imports questioned over second lab report without fresh samples; review ordered.

The dominant issue was whether customs authorities could withhold release of bank guarantees and finalize the shipping bill by relying on a second ... Finalization of shipping bill on the basis of the first test report - seeking to release the bank guarantee - products were Gutka or not - no fresh samples of the goods were drawn and no reasoning has been given as to why such a finding has been arrived at - HELD THAT:- In the opinion of this Court, for the release of the bank guarantees, the Petitioner has made several representations to the Commissioner of Customs. These representations have neither been replied to nor decided till date. Moreover, the circumstances which warranted the issuance of the second CRCL report are completely unknown and it does not specify as to why the same were issued. The second CRCL report refers to an email of the Customs Department dated 07th November, 2025 - The matter deserves to be considered by the Commissioner of Customs in a holistic manner and the representations for release of the bank guarantees deserve to be decided on an early date. All the representations of the Petitioner shall now be considered and the decision on the release of bank guarantees shall be taken by 28th February, 2026 by the Commissioner of Customs - If any SCN is to be issued, the same shall be issued by 10th January, 2026 and the same shall also be decided simultaneously with the representations of the Petitioner. Petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED (a) Whether, in the absence of any decision on the exporter's pending representations, the customs authority should be directed to take a time-bound decision on release of bank guarantees furnished for provisional release of exported goods. (b) Whether, given that no show cause notice had been issued, the customs authority should be directed to take an expeditious call on issuance of a show cause notice so that the matter is not kept in an indeterminate state affecting further shipments. 2. ISSUE-WISE DETAILED ANALYSIS (a) Time-bound decision on representations seeking release of bank guarantees Legal framework: The Court proceeded under its writ jurisdiction under Article 226 of the Constitution of India, focusing on ensuring administrative decision-making on pending representations. Interpretation and reasoning: The Court noted that bank guarantees had been furnished at the stage of provisional release and that the exporter had made several representations to the competent customs authority seeking release of such bank guarantees. The Court found that these representations had neither been replied to nor decided. It further observed that the circumstances leading to issuance of a subsequent 'clarification' test report were 'completely unknown' on the record, and that the matter therefore required holistic consideration by the Commissioner of Customs, including the pending request for release of bank guarantees. Conclusions: The Court directed that all representations be considered and a decision on release of the bank guarantees be taken by a fixed outer date (28 February 2026) by the Commissioner of Customs. (b) Expeditious issuance (if any) of show cause notice and simultaneous decision Legal framework: The Court limited itself to ensuring timely initiation (if contemplated) and coordinated adjudicatory action by the customs authority, without adjudicating the substantive classification/testing dispute. Interpretation and reasoning: The Court recorded that no show cause notice had been issued. It held that if any show cause notice was to be issued, it ought to be done expeditiously so that further shipments are not 'unnecessarily put on hold'. To avoid parallel or delayed action, the Court also required that any such show cause notice, if issued, be decided simultaneously with the decision on the representations relating to bank guarantees. Conclusions: The Court directed that if a show cause notice is to be issued, it shall be issued by 10 January 2026 and shall be decided simultaneously with the representations. Scope limitation expressly applied by the Court The Court expressly declined to examine the merits of the dispute and left all rights, remedies, and contentions of the parties open, disposing of the petition solely with the above administrative timelines and directions.