Provisional release on security allowed while origin verification proceeds; importers must furnish bonds or guarantees to secure differential duty.

The petition considers whether provisional release of imported goods claimed under preferential duty may be allowed where origin scrutiny is directed under Section 28DA. The court applied the statutory scheme including Sections 18, 28DA and 47, CAROTAR and relevant tariff rules, noting Section 28DA(5) permits release on security for any differential duty. Finding no adjudicatory show-cause notices had been issued and importers offered bonds and bank guarantees while suppliers cooperated on origin documentation, the court directed provisional release on security, limited by completion of provisional assessment and preservation of the department's rights to verify origin and recover duty if the claim is disallowed.

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Issues: (i) Whether provisional release of imported goods claimed to be eligible for preferential duty may be granted to importers who furnish security for any differential duty, despite an administrative consultation directing scrutiny of origin documents under Section 28DA of the Customs Act, 1962.

Analysis: The legal framework includes Section 18, Section 28DA and Section 47 of the Customs Act, 1962, Notification No. 46/2011-Cus (preferential duty claim), the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR), and Annexure-III of the Customs Tariff Rules, 2009 governing origin verification, retroactive checks and verification visits. Section 28DA(5) permits the proper officer, where preferential rate is suspended, to release goods upon importer request on furnishing security equal to the difference between provisional duty under Section 18 and the preferential duty claimed. The consultation letters and departmental communications raised concerns about origin documentation relating to a common foreign exporter and asked for written submissions; however no adjudicatory proceedings (show cause notices) had been issued to the importers and the suppliers had offered cooperation and origin-related documentation. The importers uniformly offered to furnish bonds and bank guarantees securing any differential duty. Considerations of prejudice from continued detention, incurring demurrage, and the availability of statutory security for provisional release weigh in favour of provisional relief while preserving the department's right to pursue substantive verification and recovery if the preferential claim is ultimately disallowed.

Conclusion: Provisional release of the imported goods is granted upon the importers furnishing bonds and bank guarantees securing the differential duty; provisional assessment under Section 18 shall be completed and goods released in accordance with the timelines directed. The order leaves open the department's rights to initiate and pursue proceedings under Section 28DA or other applicable provisions and does not express any opinion on merits.

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