2026 (3) TMI 451 - HC - Customs

Provisional release on security: boat may be released upon cash deposit and bond while ISFTA classification remains pending.

Petitioner entitled to provisional release of an imported boat subject to provision of adequate security pending final determination of tariff ... Entitlement to provisional release of the imported boat on furnishing specified cash security and a bond for the balance differential duty pending final determination of classification - applicability of Indo Sri Lanka Free Trade Agreement (ISFTA) benefits - sufficiency of security for differential duty - referral of classification and treaty-benefit questions to designated officer. Provisional release on security and bond - sufficiency of security for differential duty - HELD THAT: - The Court found that the petitioner had already deposited a portion of duty and had expressed willingness to deposit an additional sum in cash and to furnish a bond for the remaining differential duty. The Court held that, on the facts, the differential duty amount was sufficiently secured by the cash deposit together with the proposed bond and that any additional liability ultimately determined would be recoverable under the statute. The petitioner's request for provisional release was therefore accepted on the condition that the petitioner deposit the specified cash amount and execute a bond securing the balance. [Paras 7, 8, 9, 10] Upon deposit of the cash amount and furnishing of a bond for the balance, the petitioner is entitled to provisional release of the boat. Referral of classification and treaty-benefit questions to designated officer - HELD THAT: - The Court expressly left open the contentions regarding classification and entitlement under the free trade agreement, noting that those questions are under consideration by the competent/designated authority and must be finally decided by that designated officer. No substantive determination on classification or treaty entitlement was made by the Court. [Paras 7, 11] All contentions on classification and applicability of the treaty benefit are left open for decision by the designated officer. Final Conclusion: The petition succeeds insofar as provisional release is granted on the petitioner depositing the specified cash security and furnishing a bond for the balance; questions of classification and entitlement under the Free Trade Agreement are left to be decided by the designated officer. No costs. Issues: (i) Whether the petitioner was entitled to provisional release of the imported boat on furnishing specified cash security and a bond for the balance differential duty pending final determination of classification and applicability of Indo Sri Lanka Free Trade Agreement (ISFTA) benefits.Analysis: The Court noted that the substantive question regarding classification and applicability of ISFTA benefits was pending consideration by the designated authority and that if proper classification entitled the petitioner to ISFTA benefits, exemption and refund could follow. In the interim, the Court examined whether adequate security had been furnished for the differential duty computed by the authorities. The petitioner had already deposited Rs. 8,04,303 and expressed willingness to deposit Rs. 75,00,000 in cash and to furnish a bond undertaking payment of any remaining liability. The Court treated such deposits and the proposed bond as sufficient security for the differential duty pending final adjudication, and recognised the recoverability of any additional liability in accordance with the relevant statutory scheme.Conclusion: The petitioner is entitled to provisional release of the boat on deposit of Rs. 75,00,000 in cash (in addition to the Rs. 8,04,303 already deposited) and on furnishing a bond for the balance differential duty; all contentions on classification and ISFTA applicability are kept open for decision by the designated officer.