Provisional release of seized drone parts cannot be denied on assumed CKD/SKD character or a circular-based embargo.

Provisional release of seized drone components could not be refused on an assumed CKD/SKD character where the record did not clearly establish that the multiple consignments, sourced from different entities, constituted complete prohibited drones. The evidence also indicated domestic procurement of some components, weakening the case for treating the goods as ready-to-assemble complete units. National security was not accepted, on these facts, as a standalone basis to deny release. A CBIC circular could not override the statutory power under Section 110A of the Customs Act, 1962, and the circular-based embargo was not controlling. The refusal of provisional release was set aside and provisional release ordered on bond conditions.

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Issues: Whether the seized drone components were liable to be withheld from provisional release on the footing that they constituted complete drones imported in CKD/SKD condition, and whether the grounds of national security and the departmental circular justified refusal of provisional release.

Analysis: The order of refusal rested on the premise that the imported items, when taken together, had the essential character of complete drones and were hit by the import restriction on drones, but the record did not establish a one-to-one correlation showing that the seized goods, as imported in multiple consignments and from different entities, were complete drones in knocked-down condition. The material also showed that some components were domestically procured and that the import pattern did not clearly demonstrate import of a ready-to-assemble complete unit. The plea based on national security was not accepted as a valid basis to deny provisional release in the facts of the case, particularly when the appellants were shown to be recognised drone manufacturers supplying to Government and defence establishments. The restriction in the CBIC circular could not override the statutory power under Section 110A of the Customs Act, 1962, and the circular-based bar on provisional release was not treated as controlling.

Conclusion: The refusal to grant provisional release was unsustainable, and provisional release was required to be ordered.

Final Conclusion: The order declining provisional release was set aside and the seized goods were directed to be released provisionally on execution of an indemnity bond and surety bond of equivalent value.

Ratio Decidendi: Provisional release under Section 110A of the Customs Act, 1962 cannot be denied merely on an assumed CKD/SKD character or on a circular-based embargo where the record does not clearly establish that the seized consignments constitute complete prohibited goods and the statutory discretion must prevail on the facts of the case.

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