The Supreme Court has dismissed as infructuous the Union Government’s special leave petition against a Bombay High Court judgment that criticised the Directorate of Revenue Intelligence’s action in bringing back an already cleared consignment of approximately 56 tonnes of dry dates through telephone calls to customs brokers and transporters.
A Bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva recorded the government counsel’s statement that a show-cause notice had subsequently been issued on July 22, 2026, followed by an Order-in-Original dated September 18, 2026.
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The underlying judgment, delivered by Justice M.S. Sonak and Justice Advait M. Sethna of the Bombay High Court examined whether customs officials could compel the return of goods cleared under Section 47 of the Customs Act, 1962, without demonstrating lawful authority, following prescribed procedures or maintaining contemporaneous records supporting their action.
The respondent/assessee had imported approximately 56 tonnes of dry dates under a Bill of Entry dated July 19, 2025. Customs issued an Out-of-Charge order on July 24, 2025, after examination of the consignment.
The High Court recorded that the consignment had received a release order from the Ministry of Agriculture and Farmers Welfare and a no-objection certificate from the Food Safety and Standards Authority of India. The importer paid assessed customs duty of approximately ₹6.30 lakh, obtained a gate pass and moved the goods out of the Container Freight Station.
The importer alleged that DRI officials thereafter contacted the customs broker and transporter and compelled them to return the containers to the freight station. It contended that the action disregarded the completed clearance process and caused commercial losses, including cancellation of a supply contract.
The authorities maintained that specific intelligence received after clearance indicated that the goods had originated in Karachi, Pakistan, and had merely been routed through Dubai.
According to the DRI officer’s affidavit, the country of origin had been misdeclared to circumvent the prohibition imposed through DGFT Notification No. 06/2025-26 dated May 2, 2025.
The officer denied using coercion and stated that the containers were brought back after coordination with the freight station, customs broker and transporter. He relied on Sections 47 and 106 of the Customs Act to defend the action.
The High Court did not finally determine whether the officer had acted with mala fides or for extraneous considerations. It nevertheless found prima facie substance in the importer’s grievance and questioned the explanation that the cleared goods had been returned merely on a request.
The High Court emphasised that the Out-of-Charge order was a statutory clearance under Section 47. An official seeking to take further action concerning those goods had to act through legally recognised powers and procedures.
The Court accepted that clearance under Section 47 does not prevent customs authorities from issuing a show-cause notice for confiscation where clearance was obtained through fraud. However, that principle did not justify the manner in which the goods had been brought back in this case.
At the relevant stage, no show-cause notice had been issued. Nor had the officer demonstrated an order or recorded satisfaction authorising the action taken.
The Court held that dispossessing the importer or its agents of goods lawfully released by customs required legal backing and observance of fairness. An assertion of bona fide intentions could not substitute for compliance with the law.
The authorities relied on Section 106, which concerns the power to stop and search conveyances where the proper officer has reason to believe that they are connected with smuggling or carriage of smuggled goods.
The High Court held that the conduct before it did not fall within that provision. The goods had already been cleared by customs, the clearance order had not been displaced through lawful procedures, and the officer had secured their return through calls to intermediaries.
Even assuming Section 106 applied, the Court said its statutory conditions had to be satisfied. The existence of a reason to believe could not simply be presumed because intelligence was said to have been received.
Such a belief needed to be reflected in an order or contemporaneous file record capable of judicial scrutiny.
The High Court examined whether the authorities had maintained any contemporaneous record supporting the action.
It noted that counsel initially suggested that a relevant note existed. The explanation subsequently changed, and the notation ultimately shown to the Court did not concern the exercise of powers under Section 106.
An email seeking permission to bring the containers back into the freight station was also found insufficient to establish the statutory reason to believe.
The Court rejected the proposition that receipt of intelligence, by itself, allowed the necessary statutory satisfaction to be presumed regardless of whether any relevant record existed.
The High Court also noted that the original examination instructions expressly required verification that the goods were not of Pakistani origin.
Consequently, the possibility of a Pakistani connection was already before the customs officer who subsequently permitted clearance. This was not a case where that concern had necessarily arisen for the first time after the Out-of-Charge order.
The importer relied on documents including a certificate of origin issued by the Dubai Chamber of Commerce, a fumigation certificate and a phytosanitary certificate issued by UAE authorities.
The revenue, in turn, referred to a UAE customs document containing an endorsement suggesting that the goods originated in Karachi and were destined for India through Dubai.
The High Court declined to resolve these competing factual claims in writ proceedings. It left customs authorities free to investigate the origin of the goods through the prescribed legal process.
The Court expressed concern over the continued detention of perishable goods without a definite timetable for investigation and adjudication.
The consignment was stated to be worth approximately ₹22–25 lakh. The importer sought release against a bank guarantee, arguing that prolonged detention could render the dry dates worthless.
The High Court did not order immediate release, considering the intelligence concerning possible Pakistani origin. It nevertheless rejected the suggestion that the possibility of a later damages suit adequately answered the risk of allowing the consignment to perish.
The authorities were entitled to enforce import restrictions, the Court said, but that enforcement had to follow lawful procedures and could not involve unreasonable delay.
Balancing the competing interests, the High Court directed the authorities to issue a show-cause notice within four weeks of its October 8, 2025 judgment and decide it within six weeks of receiving the importer’s response.
The importer had to receive an opportunity of hearing. Any adverse material proposed to be relied upon was required to accompany the notice so that an effective response could be filed.
If the notice was not issued, or the proceedings were not completed within the stipulated period, the Court directed release of the dry dates. Such release could be made conditional upon payment of a redemption fine or furnishing a bank guarantee securing it.
The Court clarified that release of prohibited goods against redemption fine is discretionary. That discretion, however, must be exercised judicially rather than arbitrarily.
The question whether the consignment constituted prohibited goods was expressly left open for determination by the proper officer. The writ petition was partly allowed without costs.
When the government’s challenge came before the Supreme Court, counsel stated that the subsequent notice and adjudication order had rendered the matter infructuous.
The Supreme Court dismissed SLP (Civil) while preserving the importer’s right to pursue available legal remedies.
The Supreme Court’s order does not disclose the findings, financial consequences or operative directions contained in the September 18, 2026 Order-in-Original. It also does not decide the country of origin of the goods.
The importer was represented by Dr. Sujay Kantawala, Aishwarya Kantawala before Supreme Court and Bombay High Court.
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