Legal principle

Where a preferential duty claim is disputed pending origin verification, the goods should be provisionally assessed under Section 18 and released on bonds and bank guarantees securing the differential duty — as contemplated by Section 28DA(5) — rather than indefinitely detained on mere apprehension, absent any initiated verification or show cause proceedings.

Court decision

The court disposed of all the writ petitions in favour of the petitioners, directing provisional release of the goods upon furnishing bonds and bank guarantees securing the differential duty: provisional assessment under Section 18 within 10 days, bonds/bank guarantees within 7 days thereafter, and release of the goods within 7 days of that furnishing. All contentions, including the department's right to initiate and pursue Section 28DA proceedings, were expressly kept open, and the order was confined to provisional release without expressing any opinion on the merits. The court did not quash the consultation letter in terms.

Facts

Multiple importer petitioners, led by M/s Jayesh Metal Corporation, imported 'Prime Cold Rolled Stainless Steel Coils' (Grades 304L and 316L) from a common Malaysian supplier, M/s Bahru Stainless Steel SDN. BHD., claiming preferential duty under Notification No. 46/2011-Cus under the ASEAN-India Trade in Goods Agreement. Bills of Entry filed on 9 January 2026 were assessed and duty was discharged on 13 January 2026, but the proper officer refused 'Out of Charge' clearance under Section 47, detaining the goods and incurring demurrage. The department relied on a Consultation Letter dated 28.01.2026 and internal instructions concerning the supplier, materials dating back to 2018, but issued no order seeking information or initiating verification proceedings under Section 28DA against the importers. No show cause notice or adjudicatory proceedings had been initiated against any petitioner as of the hearing.

Key provisions

• Section 28DA, Customs Act, 1962 — Procedure regarding claim of preferential rate of duty
• Section 18, Customs Act, 1962 — Provisional assessment of duty
• Section 47, Customs Act, 1962 — Clearance of goods for home consumption