Provisional release applications require a personal hearing in compliance with natural justice.

The appellant imported goods declared as “Interlining Textile Fabrics” in 17 containers through an SEZ unit located in an FTWZ at Chennai.

The goods were seized by the Directorate of Revenue Intelligence under Section 110(1) of the Customs Act, 1962, on the allegation that they were correctly classifiable under CTH 54076900 instead of the declared CTH 59039090, based on CRCL test reports.

The Principal Commissioner subsequently passed a provisional release order dated 24.07.2025 under Section 110A, requiring the appellant to execute a bond and furnish a bank guarantee of ₹2.31 crores.

The appellant challenged these conditions as onerous, contending that its request for re-testing remained pending and that it had not been granted an opportunity of personal hearing before the conditions were imposed.

The Revenue defended the conditions as reasonable.

1. Whether the provisional release order passed under Section 110A of the Customs Act, 1962, without granting the appellant an opportunity of personal hearing, violated the principles of natural justice?

2. Whether the conditions imposed for provisional release, including the requirement of a ₹2.31 crore bank guarantee, required reconsideration in light of the appellant’s pending request for re-testing and its contention that the conditions rendered provisional release illusory?

3. Whether the matter was required to be remanded for a fresh, reasoned order on provisional release in accordance with the applicable Board circulars and judicial principles?

The Tribunal applied Section 110A of the Customs Act, 1962, which empowers the competent authority to grant provisional release of seized goods subject to appropriate conditions.

It relied on Board’s Circular No. 35/2017-Cus dated 16.08.2017, which prescribes guidelines for provisional release, including consideration of the importer’s request and formulation of appropriate conditions.

It also referred to Board’s Circular No. 30/2017-Cus dated 18.07.2017, governing the procedure for re-testing of samples.

The Tribunal held that the right to seek re-testing is material where the test result bears upon classification and adjudication, and that failure to consider such a request may offend natural justice.

Relying on Mohini Jewellers v. Joint Commissioner, Customs Preventive Commissionerate, (2023) 11 Centax 230 (Ker.), it held that deciding an application for provisional release is an adjudicatory act, not a ministerial one; therefore, the authority must consider the applicant’s contentions and provide an opportunity of hearing in accordance with the principles of natural justice.

The Tribunal found that the impugned order did not demonstrate that the appellant had been heard before the provisional release conditions were imposed, nor did it refer to the appellant’s request for provisional release or its pending request for re-testing.

Since the outcome of the re-test could affect the classification dispute and the eventual adjudication, that request was relevant to the determination of appropriate release conditions.

The absence of consideration of these matters, coupled with the failure to provide a hearing, meant that the authority had not properly exercised its adjudicatory jurisdiction under Section 110A.

The appellant was entitled to explain why the bank guarantee and other conditions were excessive and made the provisional release facility illusory.

Without expressing any view on the merits of classification or the validity of the seizure, the Tribunal held that the order required reconsideration in a procedurally fair manner.

The provisional release order dated 24.07.2025 was set aside.

The concerned Customs authority was directed to grant the appellant a personal hearing within 30 days of receiving the Tribunal’s order, permit the appellant to produce supporting evidence, and thereafter pass a reasoned order on provisional release in accordance with the prevailing instructions and judicial precedents.

The appellant was directed to cooperate and avoid delay.

If the appellant accepted the conditions imposed in the fresh order and fulfilled them, the seized goods were to be released within one week of such fulfilment.