The Gauhati High Court has held that Section 110A of the Customs Act, 1962, provides a statutory mechanism for the provisional release of goods seized under Section 110 while adjudication remains pending.
The bench of Justice Kaushik Goswami has directed the Commissioner of Customs (Preventive), North Eastern Region, Shillong, to expeditiously decide an application seeking the provisional release of 38,000 kilograms of seized areca nuts and the vehicle used for their transportation and said that the application should preferably be disposed of within two weeks after receipt of a certified copy of its order.
The Court further directed the Customs authority to determine the value of the seized goods strictly in accordance with law and pass a reasoned order addressing the rival claims concerning their valuation.
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The petitioner/assessee challenged the seizure recorded through an Inventory of Goods Seized dated August 7, 2025. The petitioner also sought the release of the seized consignment and the vehicle bearing registration number AS-01-TC-9600.
According to the petitioner, the consignment of areca nuts was being transported in the vehicle when Customs authorities detained and seized it on suspicion that the goods were of foreign origin. The seizure was purportedly effected by exercising powers under Section 110 of the Customs Act.
The petitioner maintained that the goods were duly accounted for and that he was a registered dealer under the Goods and Services Tax law engaged in the inter-State sale and transportation of goods. Despite the supporting commercial and GST documentation, the consignment was seized by the authorities.
During the hearing, the High Court noted that the Customs investigation had been completed and a show-cause notice dated August 3, 2026, had already been issued to the petitioner. The matter was consequently pending adjudication before the competent authority.
The record showed that the petitioner had already approached the Commissioner of Customs (Preventive), NER, Shillong, for the provisional release of 38,000 kilograms of areca nuts, having a gross weight of 39,500 kilograms, along with the connected vehicle.
The consignment was covered by Consignment Note No. 383 dated August 6, 2025, issued in relation to M/s Ankit Enterprises. According to the petitioner’s documents, the seized goods were valued at ₹49,87,500. The application seeking their provisional release was pending before the adjudicating authority.
Appearing for the petitioner, senior counsel Dr. Ashok Saraf submitted that the petitioner was ready to comply with any conditions imposed for provisional release. The petitioner also expressed willingness to furnish a bank guarantee equivalent to the stated value of the goods—₹49,87,500—as security for their release.
Customs, however, disputed the invoice relied upon by the petitioner. The Department pointed to the seizure inventory, under which the market value of the consignment had been assessed at ₹1,40,22,500, considerably higher than the invoice value claimed by the petitioner.
The High Court declined to adjudicate the disputed questions concerning the correctness of the invoice and the valuation of the seized goods at the writ stage. It held that these matters fell within the jurisdiction of the competent adjudicating authority.
“At this stage, this Court would not be justified in entering into or adjudicating upon the disputed questions relating to the valuation of the seized goods or the correctness of the invoice relied upon by the petitioner,” the Court observed.
The Court nevertheless took note of the petitioner’s serious objection to the Department’s valuation. It recorded that the basis for assessing the market value at ₹1,40,22,500 was disputed, particularly since the invoice produced by the petitioner reflected a substantially lower value.
Referring to Section 110A, the Court explained that goods, documents or other things seized under Section 110 may be released to their owner pending adjudication upon the furnishing of a bond in the prescribed form, together with such security and subject to such conditions as the Commissioner of Customs may require.
Considering that a substantial quantity of areca nuts continued to remain in Customs custody and that the statute expressly permitted provisional release, the Court found it appropriate to direct the adjudicating authority to decide the pending application.
Accordingly, the Commissioner of Customs (Preventive), NER, Shillong, was directed to consider the petitioner’s application for provisional release of the goods and vehicle in accordance with Section 110A. The authority was permitted to require an appropriate bond or security and impose suitable conditions based on the facts and circumstances of the case.
The Court specifically instructed the authority to determine the value of the consignment strictly in accordance with law. It also required a reasoned order dealing with the competing valuation claims raised by the petitioner and Customs.
The entire exercise must be completed expeditiously, preferably within two weeks from the receipt of a certified copy of the High Court’s order.
The Court clarified that it had expressed no opinion on the merits of the allegations contained in the show-cause notice, the alleged foreign origin of the areca nuts, the correctness of the invoice or the actual value of the seized consignment. All these questions were left open for determination by the adjudicating authority.
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