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2025 (7) TMI 89 - AT - CustomsSeeking to challenge the Provisional Release Order - detention and seizure of goods - imported betel nuts - Section 110A of the Customs Act 1962 - HELD THAT - The present case is a case of seizure which comes under Section 110A of the Customs Act. Also it is an admitted and undisputed fact that the SCN dated 28.05.2025 having been issued after filing of the present appeal is still pending for adjudication. In such an event it cannot be said that the stage of confiscation has arrived in the present case. There are force in the argument of the learned Counsel for the Appellant that Section 110A mandates provisional release of seized goods pending adjudication. Therefore the subject seized goods are liable for provisional release to the Appellant. As regards the arbitrary condition for furnishing Bank Guarantees as ordered in the impugned order it is observed that this condition has been struck down by the Hon ble Delhi High Court in the case of Its My Name Pvt. Ltd 2020 (6) TMI 72 - DELHI HIGH COURT and Shanu Impex case 2023 (12) TMI 597 - DELHI HIGH COURT . It is also found that the Appellant admittedly and undisputed is 1 Star Export House and for the goods meant to be exported by such Star Export House irrespective of the category (i) (ii) (iii) (iv) or (v) for Star Houses the condition for furnishing Bank Guarantees has been relaxed by the specific Circular No. 32/2009-Cus dated 25.11.2009. Further the Hon ble Delhi High Court in the cases cited supra have been pleased to struck down the condition of furnishing Bank Guarantees as required by Circular No. 35/2017-Cus dated 16.08.2017. It is also found that the DRI itself has in its letter dated 25.09.2024 given its no objection for provisionally releasing the subject seized goods of both the categories. The DRI in its said letter has stated that the request may be considered for provisional release and dealt with in terms of Para 2.2 of the Board Circular No. 35/2017-Cus dated 16.08.2017 Thus it is clear that the only condition in accordance with law which is sustainable is furnishing of PD Bond of the value of the imported goods and goods meant to be exported. Reliance placed by the learned Counsel on Circular 32/2009-Cus dated 25.11.2009 is justified inasmuch as this does not require furnishing of bank Guarantee for any category for Star Export Houses. Circular No. 01/2011-Cus dated 04.01.2011 being general in nature has been wrongly applied in the present case inasmuch as the present case is governed by Circular No. 32/2009-Cus dated 25.11.2009 where there is no requirement of furnishing of Bank Guarantee. The Commissioner has not given its independent findings and analysis on the relevant provisions and relevant circulars pertaining to the issues in the present case except to rely upon the averments made by the Department in Panchanama and seizure memo thereby evidencing total non-application of mind while passing the impugned order. The impunged order is liable to be quashed and set aside to the extent it orders for furnishing of Bank Guarantees for provisionally releasing the seized imported goods as well as seized goods meant to be exported. The Appellant is directed to furnish the PD bond for value of the goods in respect of imported goods as well as goods meant to be exported. Upon furnishing PD bond to the above effect the learned Commissioner is directed to provisionally release both the category of seized goods forthwith - appeal allowed.
The core legal questions considered by the Tribunal in this appeal are:
1. Whether the appeal challenging the provisional release order of seized goods can be heard by a Single Member Bench, particularly in light of the value of goods and the stage of proceedings (detention/seizure versus confiscation). 2. Whether the condition imposed by the Commissioner of Customs requiring the furnishing of Bank Guarantees for provisional release of seized imported goods and goods meant for export is legally sustainable. 3. Whether the seizure of goods under the present facts was valid, including the sufficiency of material on which the seizure was based. 4. The applicability and precedence of specific Customs Circulars governing provisional release of goods and conditions thereof, especially in relation to Star Export Houses. Issue 1: Competency of Single Member Bench to Hear the Appeal The Tribunal examined the scope and application of Sections 110A, 111, and 129C(4) of the Customs Act. Section 110A mandates provisional release of seized goods pending adjudication, while Section 111 deals with confiscation of goods. The Departmental Representative relied on a High Court decision interpreting Section 129C(4), which permits a Single Member Bench to decide cases where confiscation without option to redeem involves goods valued up to Rs. 50 lakhs. The Tribunal distinguished the cited High Court decision on the ground that it pertained to confiscation orders without option to redeem, whereas the present appeal relates only to provisional release under seizure/detention stages, prior to adjudication or confiscation. The seizure memo and Panchanamas did not mention Section 111, indicating that confiscation proceedings had not commenced. The Tribunal referred to authoritative judicial interpretation of 'confiscation' emphasizing that confiscation is a final punitive act distinct from seizure, which is an initial possession by lawful authority. Thus, the Tribunal concluded that since the appeal concerns provisional release under Section 110A and not confiscation, the Single Member Bench is competent to hear the appeal. This conclusion was supported by the fact that adjudication and issuance of Show Cause Notice (SCN) were pending, confirming that confiscation had not occurred. Issue 2: Legality of Imposing Bank Guarantee Condition for Provisional Release The appellant challenged the condition imposed by the Commissioner requiring furnishing of Bank Guarantees alongside PD Bonds for provisional release of goods. The appellant contended that such condition is arbitrary and contrary to settled law, particularly for Star Export Houses. They relied on a specific circular (No. 32/2009-Cus dated 25.11.2009) which exempts Star Export Houses from furnishing Bank Guarantees for provisional release, and on judicial pronouncements where similar conditions were struck down. The Tribunal noted that the impugned order relied on a general circular (No. 01/2011-Cus dated 04.01.2011) which was inapplicable as a specific circular governs the present facts. The principle that specific provisions override general provisions was upheld, citing precedents from this Tribunal and High Courts emphasizing strict adherence to statutory and regulatory prescriptions. Further, the Tribunal observed that the Hon'ble Delhi High Court had struck down the Bank Guarantee condition imposed by Circular No. 35/2017-Cus dated 16.08.2017 in two recent decisions, reinforcing the appellant's submissions. The appellant's status as a Star Export House entitled it to the benefit of the specific circular which does not mandate Bank Guarantees for provisional release. In addition, the Directorate of Revenue Intelligence (DRI) had issued a no-objection letter for provisional release, further supporting the appellant's case. The Tribunal held that the only lawful condition is furnishing a PD Bond for the value of the goods. Issue 3: Validity of Seizure and Sufficiency of Material The appellant contended that the seizure was based on vague phrases such as 'reason to believe' and 'specific intelligence' without cogent or tangible material, rendering the seizure invalid. Reliance was placed on a High Court judgment which held that such expressions cannot be used in an omnibus manner to justify seizure. The Tribunal, while noting these submissions, primarily focused on the stage of proceedings and the conditions for provisional release rather than adjudicating the validity of the seizure itself, as adjudication was pending. However, the Tribunal implicitly recognized that seizure under Section 110 requires lawful authority and cogent material, and that refusal to release goods contrary to Section 110(2) is unlawful. Issue 4: Applicability of Customs Circulars and Precedence of Specific over General The Tribunal emphasized the settled legal principle that when a specific circular governs a particular category of goods or entities, it prevails over general circulars. Applying this principle, the Tribunal held that Circular No. 32/2009-Cus, which specifically addresses provisional release conditions for Star Export Houses, overrides Circular No. 01/2011-Cus relied upon by the Commissioner. The Tribunal also referred to prior decisions upholding this principle and underscored that compliance with statutory and regulatory provisions must be exact and cannot be circumvented by general or inconsistent conditions. Conclusions on Issues 1. The appeal challenging provisional release under Sections 110 and 110A of the Customs Act can be heard by a Single Member Bench since the matter does not involve confiscation under Section 111 or final adjudication. 2. The condition of furnishing Bank Guarantees for provisional release imposed by the Commissioner is unsustainable in law, particularly for a Star Export House, as it contradicts the specific Circular No. 32/2009-Cus and judicial precedents. 3. The seized goods are liable for provisional release upon furnishing a PD Bond equivalent to their value, without any requirement for Bank Guarantees. 4. The impugned order suffers from lack of independent analysis of material facts and relevant legal provisions, rendering it liable to be quashed to the extent it imposes the Bank Guarantee condition. Significant Holdings The Tribunal held: On Bank Guarantee condition: On precedence of specific circulars: On the nature of confiscation versus seizure:
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