Provisional release of seized imported camouflaged goods subject to bond and 30% bank guarantee, release on compliance within two weeks

Article addresses provisional release of seized imported goods camouflaged with TPU laminated fabric, alleged misuse of Authorized Economic Operator status, and disputes over classification, transaction value and sampling/testing methodology. It notes deficiencies in investigation, absence of Textile Committee testing, and contested valuation per square metre versus market realizable value. The proposed operative measure recommended is provisional release subject to a bond for the full value of the goods and a bank guarantee covering 30% of the estimated duty, with other release conditions maintained and release directed within two weeks upon compliance.

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Issues: Whether the conditions imposed for provisional release of seized imported goods specifically requirement of a bond for full assessed value and a bank guarantee/security to cover alleged liabilities were justified on the facts and required modification.

Analysis: Provisional release being an interim measure, the inquiry into classification, valuation and alleged mis-declaration remained incomplete and investigations were ongoing. Authorities had relied on sampling, CRCL test reports and a chartered engineer's valuation to estimate assessable value and duty, and had invoked Section 110A as the statutory basis for securing revenue. Judicial precedents establish that conditions for provisional release must protect revenue interest without being so harsh as to destroy the importer's business; high courts and tribunals have frequently required moderation of bank guarantee conditions (commonly directing bond for full value and a BG approximating 25-30% of differential duty). Relevant factual considerations included: ongoing investigation, disputes over sampling and completeness of tests, the importers long-standing trading history and AEO status, absence of Textile Committee opinion in the present proceedings, and the particulars of how valuation was arrived at. Balancing protection of revenue with proportionality of interim conditions, the security quantification was adjusted in light of jurisprudence and case-specific factors.

Conclusion: The provisional release conditions are modified by requiring a bond for the full assessed value of the goods and a bank guarantee equal to 30% of the estimated differential duty; other conditions for provisional release remain undisturbed. Appeal is partly allowed in favour of the assessee.

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