Legal principle

Under Section 110A of the Customs Act, 1962, goods seized under Section 110 must be provisionally released to the owner on a bond with such security and conditions as the Commissioner requires, and for non-prohibitory goods courts will order release on reasonable conditions—such as duty on the declared value plus a portion of differential duty with bond for the balance—without stalling investigation or adjudication.

Court decision

The writ petitions were disposed of in favour of the petitioners on conditional terms: the court ordered provisional release of the goods, requiring the petitioners to (i) deposit the duty payable on the value declared by them, (ii) deposit 50% of the differential duty in cash and furnish a personal bond for the balance 50% (following the Division Bench in W.A.No.582 of 2011), while clarifying that the order would not impede ongoing investigation or adjudication, with which the petitioners were to cooperate. No costs were awarded.

Facts

Three Chennai-based electronics traders imported Multi Media Speakers for Computers from M/s.Kaybee International Ltd., Hong Kong; some consignments were already assessed, cleared on enhanced values and Out-of-Charged under Section 47, while a live consignment under Bill of Entry No.2045972 dated 06.05.2013 remained uncleared. Acting on intelligence of mis-classification and mis-declaration, SIIB officers searched and sealed the petitioner's godown on 07.05.2013, drew representative samples, seized import documents under a mahazar, and served a Restraint Order dated 07.05.2013 under Section 110 of the Customs Act, 1962 over the stocked goods. By communication dated 26.08.2013, the department allowed provisional release under Section 110A subject to a bond of Rs.55 lakhs, a cash deposit of Rs.12 lakhs towards duty and a bank guarantee of Rs.6 lakhs towards adjudication levies. The petitioners challenged these conditions in writ petitions under Article 226 seeking release of the goods by quashing the said communications and lifting the restraint order.

Key provisions

• Section 110, Customs Act, 1962 — Seizure of goods, documents and things
• Section 110A, Customs Act, 1962 — Provisional release of goods, documents and things seized
• Section 111, Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 3(2), Customs Tariff Act, 1975 — Levy of additional duty equal to excise duty, sales tax, local taxes and other charges
• Section 47, Customs Act, 1962 — Clearance of goods for home consumption
• Rule 12, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Rejection of declared value
• Section 17, Customs Act, 1962 — Assessment of duty