CBIC circular cannot override statutory power to provisionally release seized gold, Allahabad HC rules

On 20 August 2024, officers of the Directorate of Revenue Intelligence intercepted a Toyota Innova Crysta and recovered gold pieces and gold jewellery, which were seized under the Customs Act, 1962.

The respondent applied for provisional release under Section 110A of the Act on 30 December 2024; the application was rejected by the Additional Commissioner of Customs on 3 July 2025 and by the Commissioner (Appeals) on 2 September 2025.

During the pendency of the proceedings, the adjudicating authority passed an order dated 27 November 2025 confiscating the goods.

That order was challenged and was set aside by the Commissioner (Appeals) on 16 February 2026, with a remand to the adjudicating authority.

Thereafter, the CESTAT, by order dated 2 June 2026, directed provisional release of the seized gold and jewellery subject to conditions.

The Revenue challenged the CESTAT’s order under Section 130 of the Customs Act.

1. Whether the CESTAT could direct provisional release under Section 110A after an adjudication order had been passed in respect of the seized goods.

2. Whether provisional release of gold notified under Section 123 of the Customs Act could be directed despite the statutory presumption concerning its smuggled character, the respondent’s alleged failure to discharge the reverse burden, and CBIC Circular No. 35/2017-Cus. dated 16 August 2017.

3. Whether the CESTAT’s order was unsustainable because the respondent allegedly withheld material facts concerning the adjudication order and subsequent appellate proceedings.

Section 110A of the Customs Act, 1962 empowers the competent authority to release seized goods provisionally, subject to such conditions as it may impose.

Section 123 creates a statutory presumption regarding the smuggled character of specified goods and places the burden of proof in the prescribed circumstances on the person claiming lawful possession.

CBIC Circular No. 35/2017-Cus. dated 16 August 2017 stated that provisional release should not ordinarily be allowed for prohibited goods, goods not satisfying statutory requirements, goods specified or notified under Section 123, or goods whose release would not be in the public interest.

However, relying on Additional Director General (Adjudication) v. Its My Name Pvt. Ltd., 2021 (375) E.L.T. 545 (Del.), the Court held that the Circular cannot restrict the statutory power under Section 110A, since executive instructions may supplement but cannot supplant the parent statute.

The Supreme Court’s subsequent decision in the same matter permitted provisional release subject to enhancement of the bank guarantee.

The Court held that the Revenue’s challenge based on the existence of an adjudication order was factually untenable because the confiscation order dated 27 November 2025 had already been set aside by the Commissioner (Appeals) before the CESTAT passed its order.

Accordingly, the issue whether adjudication barred provisional release under Section 110A did not arise, and the alleged suppression of the adjudication and appellate proceedings had no material bearing on the CESTAT’s jurisdiction.

On the Section 123 and Circular-based objection, the Court followed Its My Name Pvt. Ltd. and distinguished between the eligibility of goods for consideration under Section 110A and the ultimate entitlement to release.

The Circular could not categorically exclude goods notified under Section 123 from the statutory facility of provisional release, although the authority could impose appropriate conditions while exercising its discretion.

Question (b) was answered in the affirmative and in favour of the respondent: CBIC Circular No. 35/2017-Cus. could not override or dilute Section 110A of the Customs Act.

The appeal was consequently dismissed, leaving in force the CESTAT’s direction for provisional release subject to the stipulated conditions.