2026 (1) TMI 963 - HC - Customs

Provisional release of imported goods: Court reduces 100% bank guarantee requirement to 50%, directing provisional release upon security.

Challenge to conditions for provisional release of imported goods focused on requirement to furnish bank guarantee equal to 100% of estimated differential ... Seeking provisional release of goods - Inshell Walnuts - condition imposed are onerous in nature or not - condition of Security Deposit/Bank Guarantee for the 100% estimated differential duty along with the requisite redemption fine under Section 125(1), and penalty u/s 112(a)/114A of the Customs Act, 1962 - requirement to furnish a Bank Guarantee even to secure the anticipated fine and anticipated penalties, in the absence of SCN issued to petitioner - HELD THAT:- Considering the peculiar facts of the present case, the conditions imposed by the Principal Commissioner of Customs to furnish a Bank Guarantee equal to 100% of the estimated differential duty and anticipated fine and penalties, would amount to inconsistency and therefore is required to be modified. This is because it is an admitted fact that the Respondents themselves have provisionally assessed the subsequent imports and allowed clearance of the goods for home consumption on the Petitioner’s providing a bond for the value of the goods and a Bank Guarantee of 50% of the estimated differential duty. The condition of furnishing of the Bank Guarantee of Rs. 4,44,45,033/- is modified, and it is directed that the Petitioner’s goods seized vide Seizure Memo dated 22.12.2025, be released provisionally subject to the Petitioner furnishing a Bank Guarantee for 50% of the estimated differential duty. The rest of the conditions imposed by the Principal Commissioner of Customs shall remain unchanged and shall be complied with by the Petitioner - The Provisional Duty Bond as well as the Bank Guarantee shall be furnished by the Petitioner to Respondent No. 2 within a period of 1 week from today. On the aforesaid Bond and Bank Guarantee being furnished, the Customs Department shall provisionally release the said goods of the Petitioner covered by the six Bills of Entry [referred to paragraph 1 of this order] within a period of 1 week thereafter. The matter placed on board for reporting compliance on 09.02.2026. Issues: (i) Whether the condition imposed for provisional release of seized goods requiring the petitioner to furnish a Bank Guarantee equal to 100% of the estimated differential duty together with estimated redemption fine and penalties is justified, or whether it should be modified to require a Bank Guarantee equal to 50% of the estimated differential duty.Analysis: The provisional release order required full security to cover estimated differential duty and anticipated fines and penalties pursuant to CBIC Circular No. 35/2017-Customs and Sections 110A, 112(a), 114A and 125(1) of the Customs Act, 1962. The petitioner demonstrated that identical goods imported subsequently were provisionally assessed and cleared on a bond for value and a Bank Guarantee equal to 50% of estimated differential duty under the Faceless Assessment regime and applicable AEO benefits reflected in Circulars Nos. 33/2016 and 38/2016. The distinction in Bank Guarantee quantum for provisional release under Section 110A versus provisional assessment was examined in light of consistency and parity of treatment; while AEO concessions provide reduced BG where applicable, the benefit is not ordinarily extended to provisional release orders unless consistent with administrative practice. Given the admitted factual parity between the seized consignment and the subsequently cleared consignment, imposing a higher quantum for the seized goods resulted in inconsistent treatment absent distinguishing considerations.Conclusion: The condition requiring a Bank Guarantee equal to 100% of the estimated differential duty and anticipated fines and penalties is modified. The seized goods shall be provisionally released upon furnishing a Bank Guarantee for 50% of the estimated differential duty, with all other conditions of provisional release remaining unchanged, which is favourable to the petitioner.