2025 (7) TMI 165 - HC - Customs

Seeking provisional release of imported goods - Dry Dates - reliability of Circular No. 35 of 2017- Customs dated 16 August 2017 containing Guidelines for provisional release of seized imported goods pending adjudication under Section 110A of the Customs Act 1962 - HELD THAT - Permitting the perishable goods dry dates to decay would not benefit the Respondents and would cause severe prejudice to the Petitioner. If following the proposed investigations and adjudication no fault is found with the imports the goods would most likely have perished. Therefore a balanced approach was necessary to ensure that neither party s interests or concerns suffered disproportionately. The circular dated August 16 2017 is a step in that direction. It is not intended to address the issue of waiver of Detention-cum-Demurrage charges at this stage. However if the Petitioner submits a request for waiver it is directed that it be disposed of in accordance with the law within three months of receipt. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the seized imported goods (Dry Dates) under the specified Bills of Entry can be provisionally released pending adjudication under Section 110A of the Customs Act, 1962.

- The applicability and interpretation of Circular No. 35 of 2017 (Customs) dated 16 August 2017, which provides guidelines for provisional release of seized imported goods.

- The quantum and nature of security (Bond and Bank Guarantee/Security Deposit) required to be furnished by the Petitioner for provisional release.

- The procedural safeguards and timelines regarding provisional release, including the handling of perishable goods to prevent decay.

- Whether the issue of waiver of Detention-cum-Demurrage charges can be addressed at this stage.

- The procedural course post-provisional release, including ongoing investigations and adjudication rights of the Petitioner.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Provisional Release of Seized Imported Goods under Section 110A of the Customs Act, 1962

Relevant Legal Framework and Precedents: The Court primarily relied on Circular No. 35 of 2017 issued by Customs authorities, which provides detailed guidelines for provisional release of seized goods pending adjudication under Section 110A of the Customs Act, 1962. This section empowers the Customs authorities to release seized goods provisionally subject to certain conditions and safeguards.

Court's Interpretation and Reasoning: The Court accepted the submission that the Circular provides a balanced mechanism to protect the interests of both the Customs Department and the owner of the seized goods. It emphasized the need for provisional release especially in cases involving perishable goods like dry dates, where delay could lead to decay and consequent prejudice to the importer. The Court underscored that the provisional release is a procedural relief and does not affect the substantive adjudication or investigation process.

Key Evidence and Findings: The Petitioner sought provisional release of 36 containers of dry dates imported under specific Bills of Entry. The Petitioner relied on the Circular to argue entitlement to provisional release on furnishing requisite security. The Respondents did not oppose provisional release provided the Petitioner complied with the Circular's conditions, including furnishing Bond and Bank Guarantee.

Application of Law to Facts: The Court directed provisional release upon compliance with the Circular's requirements, recognizing the perishable nature of the goods and the need to prevent their deterioration while investigations and adjudication proceed.

Treatment of Competing Arguments: The Respondents contended that the differential duty amount was substantial and insisted on adequate security to protect revenue interests. The Petitioner argued for provisional release to avoid loss of goods. The Court balanced these competing interests by mandating security but allowing provisional release.

Conclusions: Provisional release was ordered subject to furnishing of Bond and Bank Guarantee as per Circular No. 35 of 2017, recognizing the procedural nature of such release and the perishable nature of goods.

Issue 2: Quantum and Nature of Security (Bond and Bank Guarantee) to be Furnished

Relevant Legal Framework and Precedents: Clause 2.1 and 2.2 of Circular No. 35 of 2017 specify that provisional release requires execution of a Bond for the full or estimated value of seized goods, along with a Bank Guarantee or Security Deposit covering the differential duty, potential fines under Section 125 of the Customs Act, and penalties that may be levied.

Court's Interpretation and Reasoning: The Court noted the Respondents' submission that the differential duty amount, even on the Petitioner's declared value, was approximately Rs. 7.8 Crores, and that the security must cover this amount. The Court accepted the Respondents' position to ensure adequate protection of revenue while allowing provisional release.

Key Evidence and Findings: The Petitioner agreed to furnish the Bond and Bank Guarantee from IDFC Bank within two weeks. The Respondents committed to releasing the goods within seven days of receipt of such security.

Application of Law to Facts: The Court directed the Petitioner to furnish the Bond and Bank Guarantee as per the Circular's stipulations and ordered the Respondents to release the goods provisionally within seven days thereafter.

Treatment of Competing Arguments: While the Petitioner sought provisional release without undue delay, the Respondents emphasized the need for substantial security given the high differential duty involved. The Court struck a balance by mandating security but facilitating timely release.

Conclusions: The Petitioner must furnish a Bond and Bank Guarantee covering the differential duty of Rs. 7.8 Crores as per Circular No. 35 of 2017, upon which provisional release will be effected.

Issue 3: Handling of Perishable Goods and Prevention of Prejudice

Relevant Legal Framework and Precedents: The Court referred to the perishable nature of dry dates and the potential for decay if goods remain detained during prolonged investigations and adjudication.

Court's Interpretation and Reasoning: The Court emphasized that permitting the perishable goods to decay would cause severe prejudice to the Petitioner and would not benefit the Respondents. It recognized the Circular's intent to provide a balanced approach ensuring neither party's interests suffer disproportionately.

Key Evidence and Findings: The Petitioner highlighted the risk of loss due to perishability. The Respondents did not dispute this but insisted on security to protect revenue.

Application of Law to Facts: The Court's directions for provisional release subject to security were aimed at preserving the goods' value while safeguarding revenue interests.

Treatment of Competing Arguments: The Court balanced the Petitioner's interest in preserving perishable goods against the Respondents' interest in securing revenue through adequate guarantees.

Conclusions: Provisional release with security was ordered to prevent decay and prejudice, reflecting a balanced approach consistent with the Circular.

Issue 4: Waiver of Detention-cum-Demurrage Charges

Relevant Legal Framework and Precedents: The Court did not address this issue substantively at this stage but acknowledged its potential relevance.

Court's Interpretation and Reasoning: The Court declined to decide on waiver of charges at this juncture but directed that any request by the Petitioner for waiver be disposed of in accordance with law within three months.

Key Evidence and Findings: No substantive submissions were made on this issue at present.

Application of Law to Facts: The Court left the matter open for consideration by the appropriate authority.

Treatment of Competing Arguments: Not applicable at this stage.

Conclusions: The issue of waiver of Detention-cum-Demurrage charges is deferred for separate consideration and decision within a stipulated timeframe.

Issue 5: Procedural Course Post-Provisional Release

Relevant Legal Framework and Precedents: Investigations and adjudication under the Customs Act are ongoing, with procedural safeguards including issuance of show-cause notices and opportunity to defend.

Court's Interpretation and Reasoning: The Court recorded that investigations are underway and that the Petitioner will have full opportunity to defend itself upon issuance of any show-cause notice post-investigation.

Key Evidence and Findings: The parties agreed that substantive adjudication and investigation will continue independent