Country-of-origin verification in FTA imports can justify full revenue security before provisional release of goods.

Pending verification of the declared country of origin in a free trade arrangement import, customs may require protective security to safeguard revenue before provisional release. Section 28DA and provisional assessment under Section 17 of the Customs Act, together with Rule 6(1)(b) of the 2020 Origin Rules and CBIC Circular No. 38/2016-Customs, were treated as permitting such security where origin criteria remain in doubt. The court stressed that judicial review should not prejudice the State if the certificate of origin is later found false. Verification was directed to be completed within three weeks, the goods to be released if the declared origin is confirmed, and 100% bank guarantee to be furnished if the origin is found incorrect or false.

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Issues: Whether, pending verification of the country of origin in an import covered by a free trade arrangement, the importer could be required to furnish 100% bank guarantee for provisional release of the goods and what consequential directions were warranted.

Analysis: The import was provisionally assessed because the certificate of origin required verification. Section 28DA of the Customs Act, 1962 permits the proper officer to call for further information where origin criteria are in doubt, and Section 17 of the Customs Act, 1962 governs provisional assessment. Rule 6(1)(b) of the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 and CBIC Circular No. 38/2016-Customs dated 22.08.2016 were treated as requiring protective security to safeguard revenue where origin verification is pending. The Court emphasised that revenue protection must be maintained in judicial review and that release of goods should not prejudice the State if the certificate of origin is later found to be false.

Conclusion: The importer was not granted unconditional release on lesser security. The authorities were directed to complete verification within three weeks, the goods were to be released if the declared origin was found correct, and if the origin was found incorrect or false, 100% bank guarantee was required for provisional release.

Final Conclusion: The appeal was disposed of with directions that preserved revenue protection while permitting release of the goods upon verification of origin.

Ratio Decidendi: Where the declared country of origin in an FTA import is under verification, the customs authorities may insist on full revenue security and provisional release must be conditioned by the outcome of such verification.

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