2026 (1) TMI 585 - HC - Customs

Imported menthol-scented supari classification under CTH 21069030; seizure prima facie unjustified, release allowed on bond

Dominant issue - legality of seizure and classification: CAAR had ruled the imported menthol-scented supari fell under CTH 21069030 and that ruling was ... Challenged the legality and validity of the Seizure - mis-classification of imported goods - clearance of “Betel Nut product known as Supari (Menthol Scented Sweet Supari) (mouth freshener)” imported - seeking clearance thereof for home consumption on payment of duty applicable under the Chapter heading 21069030 of the Customs Tariff - examine the imported goods from the perspective of its human consumption - HELD THAT:- It is not in dispute that prior to the import of the goods in question, the Petitioner had made an application to CAAR regarding classification of the imported goods. Such ruling was rendered on 22.02.2023 holding that the goods be classified under CTH 21069030 of the Customs Tariff Act. The said decision of CAAR was binding upon the Respondents in terms of Section 28J of the Act. As noted, the FSSAI had rendered its opinion, on the basis of the samples which were drawn by the Department, that the imported goods conform to the standard laid down under Regulation 2.3.55 of FSSAI Regulations. It is thus clear that the FSSAI, following the statutory mandate under the said Regulations, had no objection to the imported goods being cleared for home consumption. This Court in almost identical circumstances had allowed the Writ Petition filed by the Petitioner, and CAAR by its ruling, having decided the issue of classification in favor of the Petitioner, and the Respondents have duly examined and tested the imported goods, in our opinion, prima facie, there was no justification on part of the Respondents in seizing the imported goods and not allowing clearance thereof alleging mis-classification of imported goods to avail country of origin benefit. Further, we are of the prima facie view that the goods imported by the Petitioner are Menthol Scented Sweet Supari and appears to be covered by the ruling of CAAR dated 24.02.2023 based on the test reports dated 12.09.2025 of CRCL. Thus, we are not inclined to accept the submission of the learned Counsel for the Respondents that the goods be allowed to be released against a bond and a bank guarantee for the differential duty amount. It would be open for the Respondents to adjudicate the said issue of alleged mis-classification of imported goods and pass appropriate orders in accordance with law, and no prejudice would be caused to the Respondents if the imported goods are permitted for clearance on Petitioner's furnishing a bond towards the duty demanded under the show cause notice. Issues: Whether the seizure of the imported Betel Nut product (Menthol Scented Sweet Supari) and refusal to permit its clearance was justified despite a prior CAAR ruling classifying the goods under CTH 21069030, this Court's earlier judgment permitting release under that classification, and favourable FSSAI and CRCL test reports.Analysis: The Court examined whether, in light of CAAR's ruling under Section 28H and the binding effect under Section 28J, the respondents were justified in seizing the goods and withholding clearance. The Court noted the prior dismissal of the Revenue's challenge and absence of any stay of this Court's earlier order permitting release under CTH 21069030. The FSSAI report (Regulation 2.3.55, FSSAI Regulations) and CRCL test report confirmed the goods' characteristics as menthol scented supari and fitness for human consumption. The Court observed that respondents retained the statutory right to adjudicate alleged mis-classification and had issued a show cause notice, but prima facie there was no justification for seizure or refusal to permit clearance in the face of the binding advance ruling and corroborative laboratory and FSSAI findings. The Court also considered the respondents' request for a bond and bank guarantee for differential duty and declined to make that a condition for release, while permitting adjudication of the show cause notice on merits following natural justice.Conclusion: The seizure and withholding of clearance were not justified; the petitioner is entitled to clearance of the consignment upon payment of duty/IGST, if any, under CTH 21069030 and furnishing a bond towards duty demanded in the show cause notice, with the respondents free to adjudicate the show cause notice in accordance with law.