Provisional release of imported coriander seeds challenged for actual user breach; tribunal reduces excessive bank guarantee requirement.

Provisional release of imported coriander seeds under the Customs Act was contested due to alleged breach of the actual user condition under the Advance Authorisation scheme; the commentary notes reliance on a Supreme Court precedent that required furnishing a bank guarantee equal to a percentage of differential duty for release. The tribunal found the impugned demand for an excessive bank guarantee inconsistent with that precedent and modified the provisional release conditions accordingly, resulting in partial allowance of the appeal and reduction of the bank guarantee required for release.

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Issues: Whether the conditions imposed for provisional release under Section 110A of the Customs Act, 1962 specifically the requirement of furnishing a bond for full value of goods and a bank guarantee as per Para 2.2 of Circular No. 35/2017-Customs are sustainable and, if not, what modification of the bank guarantee condition is warranted.

Analysis: The issue concerns provisional release of seized imported inputs under Section 110A and the scope of conditions that may be lawfully imposed for such release. The Tribunal examined the legal framework of provisional release under Section 110A and relied on precedents where the Supreme Court and High Court have modified provisional release conditions notably Commissioner of Customs, ICD v. Navshakti Industries (Supreme Court) and Printwell Offset (Gujarat High Court) directing modification of bank guarantee requirement to 30% of the differential duty while upholding bond for full value. The Tribunal compared the impugned order's demand for a bank guarantee approximating 70% of the goods' value (as per Para 2.2 of Circular No. 35/2017-Customs) with the binding precedent which limits the bank guarantee for provisional release to 30% of the differential duty, and found the impugned condition inconsistent with those authorities. The Tribunal also noted that the claim regarding actual user condition and alleged diversion raises substantive adjudicatory issues not finally determined in the provisional release order.

Conclusion: The Tribunal modified the impugned provisional release order by sustaining the requirement of furnishing a bond for the full value of the goods and reducing the bank guarantee requirement to 30% of the differential duty in line with the Supreme Court and High Court decisions; the appeal is partly allowed to that extent.

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