2026 (3) TMI 936 - HC - Customs

Certificate of origin verification prevents arbitrary imposition of additional bank guarantee; goods must be released on provisional bond.

Where a fully examined imported consignment had its certificate of origin verified and defaced and the importer furnished a provisional duty bond after ... Validity of withholding of Walnut Kernels - imposition of additional bank guarantee despite provisional duty bond - certificate of origin has been defaced by the Customs Authority after verification. Validity of withholding clearance of the imported Walnut Kernels and directing a fresh bank guarantee after provisional assessment and furnishing of a provisional duty bond - HELD THAT: - The Court held that after 100% physical examination and documentary verification were completed and the Bill of Entry was provisionally assessed with a condition for a provisional duty bond which the petitioner furnished, the Respondent Department acted arbitrarily in demanding an additional bank guarantee for release. The Court noted that the Customs officers had already defaced the certificates of origin after verification and there was no material placed on record contradicting the origin from the SAFTA contracting state. A mistake in the Import General Manifest by the vessel's master did not justify withholding the goods when the statutory documentary checks had been completed and the provisional bond accepted. [Paras 9, 10, 11, 12] Clearance could not be withheld and the consignment was to be released on acceptance of the provisional duty bond without insisting on a further bank guarantee. Final Conclusion: The petition was allowed: on the facts the respondents were directed to clear the imported Walnut Kernels by accepting the provisional duty bond furnished by the petitioner and without insisting on a fresh bank guarantee; the order was passed in the peculiar facts and not to be treated as a precedent. Issues: Whether the withholding of the imported consignment of Walnut Kernels and the imposition of an additional bank guarantee for release, after provisional assessment and furnishing of a provisional duty bond and after defacement/verification of the certificate of origin, was lawful.Analysis: The factual matrix shows that the consignment was examined (100% physical examination), documents including certificates of origin were verified and defaced by the Customs officers, and the Bill of Entry was provisionally assessed with a condition for furnishing a provisional duty bond which was furnished by the Petitioner. The Respondent Department later imposed an additional condition of furnishing a bank guarantee without assigning reasons or producing material contradicting the verified origin or the earlier provisional assessment. The impugned demand for a bank guarantee rested on the asserted uncertainty arising from vessel IGM details, but the administrative record contains verification steps taken by Customs and Plant Protection authorities and no material was produced to show the consignment did not originate from a contracting state under SAFTA.Conclusion: The imposition of an additional bank guarantee and continued withholding of the consignment despite provisional assessment, production of the provisional duty bond and verification/defacement of the certificate of origin was arbitrary and not sustainable; relief in favour of the Petitioner is granted and the Respondent Department is directed to release the consignment on acceptance of the provisional duty bond.Ratio Decidendi: Where a consignment has been fully examined, the certificate of origin verified and defaced by authorities, and the importer has furnished the provisional duty bond following provisional assessment, a further unilateral requirement of a bank guarantee for release cannot be imposed arbitrarily in the absence of specific contrary material.