Provisional release must be granted on 30% bank guarantee and 70% personal bond for differential duty.

The petitioner imported goods declared as SS Mop Sticks under CTH 73239990 and Sponge under CTH 39262091, covered by Warehouse (Z-type) Bill of Entry No.9611201 dated 01.06.2026.

Based on intelligence alleging misdeclaration and misclassification, the consignment was detained on 07.06.2026 and samples were sent to the Central Revenue Control Laboratory (CRCL), Chennai.

The CRCL initially reported on 01.07.2026 that the goods conformed to the declaration.

Following a departmental request for clarification, CRCL issued a further communication dated 31.07.2026 describing the samples as “welded stainless steel pipes and tubes”.

The petitioner sought provisional release by representation dated 06.08.2026, but the representation was not considered.

The petitioner approached the High Court seeking provisional release under Sections 18 and 110A of the Customs Act, 1962.

1. Whether the petitioner was entitled to provisional release of the detained imported goods under Section 110A read with Section 18 of the Customs Act, 1962, pending investigation and adjudication?

2. Whether provisional release could be directed subject to payment of duty on the declared value, a bank guarantee for 30% of the differential duty, and a personal bond for the remaining 70%, instead of the higher security allegedly contemplated by the Department’s circular?

3. Whether the petitioner’s request for issuance of a detention certificate was required to be considered under Regulation 6(1) of the Handling of Cargo in Customs Areas Regulations, 2009?

Section 110A of the Customs Act, 1962 empowers the competent authority to release seized goods provisionally upon execution of a bond with such security and conditions as may be prescribed; Section 18 concerns provisional assessment of customs duty.

The Court relied on the principle that continued detention during investigation is not justified where the interests of the Revenue can be protected through reasonable conditions for provisional release.

It followed Navashakti Industries Pvt. Ltd. v. Commissioner of Customs, ICD, TKD, New Delhi, as modified by the Supreme Court in Civil Appeal No.3940 of 2011, where release was made subject to a bank guarantee for 30% of the differential duty.

It also followed the Division Bench decision in Commissioner of Customs, Tuticorin v. Empire Exports, 2013 (287) E.L.T. 41 (Mad.), which directed release upon payment of declared duty, furnishing security for 30% of the differential duty, and execution of a personal bond for the balance 70%.

The Department’s reliance on Circular No.35/2017-Cus. and W.A. No.1374 of 2019 was not treated as requiring continued detention or disproportionate security in the circumstances of the case.

The Court noted that the goods had remained detained following the Department’s allegation of misdeclaration and misclassification, although the CRCL reports were inconsistent: the initial report supported the petitioner’s declaration, while the subsequent communication described the goods differently.

Since the investigation and adjudication could continue notwithstanding provisional release, the Court held that the Revenue’s interests could be adequately safeguarded through financial conditions rather than continued detention.

The petitioner agreed to pay the applicable duty on the declared value and to furnish a bank guarantee for 30% of the differential duty, with a personal bond for the remaining 70%, precisely in accordance with the Supreme Court’s approach in Navashakti Industries and the Division Bench ruling in Empire Exports.

The Court therefore found no justification for retaining the goods until completion of adjudication and directed provisional release without prejudice to the Department’s power to complete the investigation and adjudication in accordance with law.

The respondents were directed to provisionally release the goods subject to the petitioner: (i) paying the applicable duty on the declared value, if not already paid; (ii) furnishing a bank guarantee for 30% of the differential duty and executing a personal bond for the remaining 70%, as determined in adjudication; and (iii) accepting that release would be without prejudice to the Department’s continuing investigation and adjudication.

The respondents were also directed to consider the petitioner’s request for a detention certificate under Regulation 6(1) of the Handling of Cargo in Customs Areas Regulations, 2009, on its own merits and in accordance with law.

The exercise was to be completed within two weeks from receipt of the order.

The connected miscellaneous petition was closed, with no order as to costs.