CESTAT Says Customs Must Consider Discharging Rumi Petrochem’s ₹1.01-Crore Bank Guarantee Upon End-Use Certificate and Bond

In brief

The question

Whether the requirement to furnish and maintain a bank guarantee as a condition of provisional release should be set aside in light of decisions concerning similar imported goods.

The court held

The appeal was allowed subject to the Appellant producing an end-use certificate and executing a bond.

It also directed

Discharge of the bank guarantee is to be considered upon fulfilment of those conditions.

01Facts

The Appellant imported 2,491.475 MT of Distillate Marine Oil, declared under CTH 2710 19 61 for industrial use.

¶ 1

CRCL reported that the sample was akin to High Flash High Speed Diesel (HFHSD), but its flash point was 52°C—below the HFHSD minimum of 66°C—and it did not meet the relevant cloud-point specification for Distillate Marine Fuel.

¶ 1, 1.3

The goods were seized under Section 110 of the Customs Act, 1962, on suspicion of misclassification and restricted import.

¶ 1, 1.3

By an order dated 09.11.2025, the Commissioner permitted provisional release under Section 110A subject to, among other conditions, an end-use undertaking, batch-wise records, a bond for 100% of the assessable value, and a bank guarantee for 10%.

¶ 1.5, 2.1, 3.13

The Appellant furnished the bank guarantee and obtained provisional release, but appealed for modification of the conditions and return of the guarantee.

¶ 2, 3.15

02Issues

i.Whether the requirement to furnish and maintain a bank guarantee as a condition of provisional release should be set aside in light of decisions concerning similar imported goods.

¶ 2, 5

ii.Whether discharge of the bank guarantee could be made conditional on production of an end-use certificate and execution of a bond.

¶ 6–7

03Law Applied

Section 110A of the Customs Act, 1962 empowers the competent authority to permit provisional release of seized goods subject to conditions.

The Tribunal relied on the Gujarat High Court decisions in Aparajita Energy Pvt. Ltd. v. Union of India and Noya Infrastructure LLP v. Union of India, and its decision in Prajakt Agro Industries Pvt. Ltd. v. Commissioner of Customs, Kandla.

¶ 5

As applied in the cited cases, where laboratory findings do not definitively establish that distillate oil is restricted HFHSD, cloud-point deviation alone is not determinative of classification or seizure; end-use safeguards may address the Department’s concerns, and a bank guarantee may be dispensed with in the circumstances.

¶ 5, quoting paras. 17–17.2

Provisions in the judgment · 2 · Linked ones open on LawLens

Customs Act,1962 Section 110 Section 111

04Reasoning

The Tribunal considered the present goods and the laboratory findings alongside the cited decisions concerning similar distillate oil.

¶ 5

It noted that those decisions treated the test results as inconclusive as to whether the goods were restricted HFHSD and recognised end-use certification as a safeguard.

¶ 5

In those circumstances, the bank-guarantee condition was inconsistent with the approach taken in the cited High Court and Tribunal decisions.

¶ 5

The Tribunal nevertheless preserved an end-use safeguard: the Appellant had to produce an end-use certificate and execute a bond before the guarantee could be discharged.

¶ 5–6