2026 (2) TMI 407 - HC - Customs

Provisional release of seized imported goods: detention overturned where Customs relied on generalized allegations, not tangible evidence.

Provisional release of imported in-shell walnuts was ordered because detention lacked tangible material connecting the consignments to alleged ... Provisional release of seized goods - imported ‘in-shell walnuts’ from the United States of America (USA) - Discretion u/s 110A of the Customs Act - Bond versus bank guarantee as condition for provisional release - Arbitrary detention and want of tangible material - Writ jurisdiction under Article 226 - Article 14 and Article 300-A - equality and property rights - HELD THAT:- In the present case no search was conducted at the petitioner’s premises. A sweeping/general statement is foisted in the seizure order and the provisional release order, in regard to some actions taken within the jurisdiction of the DRI Delhi Zone unit on consignments of other importers of similar goods, who/which has nothing to do with the petitioner, and in no manner concerning the petitioner. There is no material to show that, similar to what had happened in the case of other importers before the Delhi Authorities, namely that in the petitioner’s case, during any search, sales contracts or parallel invoices belonging to various importers being at all recovered from the petitioner or any other similar material was elicited. In the absence of such material, either being pointed out to the petitioner in the manner known to law or placed before us, we are unable to accept a presumptive/general action being taken against the petitioner’s goods. This more particularly when in the facts of the present case, the entire statutory procedure in respect of assessment of the Bills of Entry was undertaken, statutory declarations were made, and as far back as December 2025, the Bills of Entry were duly assessed by the Customs Officer, pursuant to which full customs duty was paid. As on date, there is no incriminating material whatsoever available, which would justify the impugned action of seizure/detention, more particularly after full payment of duty. Thus, the entire action of detention of the goods appeared to be arbitrary and without basis, which has eminently resulted into an order of provisional release, being already passed. It would have been a completely different case, if there was substantial material to show any illegality in regard to the import in question. It is not unknown that several importers deal in similar products which may be imported from different origins. However, it cannot be a general rule that merely because some importers having alleged to have committed irregularities, every importer dealing in similar goods would be required to be painted with the same brush and their goods subjected to detention and seizure. Such approach is not only counterproductive to trade and commerce, but also adversely affects the valuable rights of Indian importers and their legitimate business interests, resulting in losses to the importers, such as the petitioner. Therefore, any such actions of the Customs officers are required to be on the basis of tangible material and for the reasons which are legitimate and lawful. There is no rule of law that there can be any blanket imposition of coercive conditions in the absence of any tangible materials. Such actions would be in the realm of arbitrariness and an unwarranted clog on undertaking smooth business activities. In the present case, there is not an iota of any material whatsoever, so as to label the goods to be in any manner tainted as in the case before the Delhi Authorities as referred in the seizure memo which are the only reasons as set out in the seizure memo. There is no dispute with the proposition that an alternate remedy would be available to the petitioner to assail the order of provisional release of the goods insofar as the conditions imposed by the said order. However, when the facts on record concern not only statutory rights under the Customs Act but also of constitutional rights, particularly under Article 14 read with Article 300-A of the Constitution, the Court is certainly empowered to exercise jurisdiction under Article 226. As a result of the aforesaid discussion, the petition deserves to be disposed of in terms. Issues: Whether, in the facts of the case, the adjudicating authority was justified in imposing a bank guarantee of Rs. 60,00,000/- as a condition for provisional release of seized imported goods under Section 110A of the Customs Act, 1962, or whether the goods should be provisionally released on furnishing a bond only.Analysis: The Court examined the statutory provision permitting provisional release under Section 110A, which confers discretionary power on the adjudicating authority to impose security and conditions in view of facts of each case. The factual matrix was considered: the Bills of Entry had been assessed and full customs duty paid; no search or incriminating material specific to the petitioner was produced; the seizure and provisional release orders relied on broad/general findings relating to other importers and investigative activity in another jurisdiction. The Court held that imposition of coercive conditions such as a bank guarantee requires tangible material establishing the necessity to secure the revenue; a blanket application of conditions based on unrelated investigations into other importers was not justified. The Court noted authority and alternate remedies but proceeded under Article 226 because constitutional rights (Article 14 and Article 300-A) and absence of material on record warranted exercise of writ jurisdiction.Conclusion: The Court concluded that the bank guarantee of Rs. 60,00,000/- was not justified by the material on record and the petitioner was entitled to provisional release of the goods on furnishing the bond directed in the provisional release order; the respondents were directed to release the goods within three days and to issue a certificate waiving demurrage.