The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad Regional Bench, has held that a bank guarantee equivalent to around 80% of the value of imported goods was onerous for provisional release and reduced the requirement to 30% of the differential duty, while directing the importer to furnish a bond for the full value of the seized goods.
The bench of Somesh Arora (Judicial Member) has observed that the condition requiring security equivalent to approximately 80% of the value of the goods was onerous and had not been accepted by the importer.
The case arose after an importer filed a Bill of Entry for the import of printing machinery originating from China. According to the Customs Department, the imported machinery was covered by Anti-Dumping Notification No. 28/2024-Customs dated December 26, 2024, and was therefore potentially liable to Anti-Dumping Duty (ADD).
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The Department’s investigation into the applicability of Anti-Dumping Duty was still pending. Importantly, there had been no final adjudication determining the ultimate duty liability when the importer sought provisional release of the goods.
The request for provisional release was made under Section 110A of the Customs Act, 1962, which permits seized goods to be released provisionally subject to conditions designed to safeguard the interests of the Revenue pending completion of adjudication.
While allowing provisional release, the jurisdictional Commissioner of Customs imposed a condition requiring a bank guarantee of ₹75 lakh.
According to the Tribunal’s order, the bank guarantee worked out to approximately 80% of the value of the imported goods. The importer challenged this requirement on the ground that the condition was excessive and onerous, particularly when the investigation and adjudication on the substantive issue of Anti-Dumping Duty were still pending.
The central issue before the Tribunal was therefore not whether Anti-Dumping Duty was ultimately payable, but whether the security imposed for provisional release was disproportionate in the circumstances of the case.
The importer relied upon decisions concerning the quantum of bank guarantee to be furnished for provisional release of goods.
The appellant referred to the Gujarat High Court’s decision in Commissioner of Customs & Others v. Navshakti Industries Pvt. Ltd. & Another, as well as the decision reported in Printwell Offset v. Union of India & Others, where the requirement of security had been modified.
The Tribunal was also referred to the Supreme Court’s decision in the Navshakti Industries matter, under which a bank guarantee equivalent to 30% of the differential duty had been directed.
On that basis, the importer requested that the bank guarantee requirement be reduced to 30% of the differential duty involved.
The Department opposed the request for modification of the condition.
The department submitted that the matter concerning the merits of the Department’s Anti-Dumping Duty claim could not be decided at the provisional-release stage. According to the Revenue, the goods had already been provisionally released subject to the conditions imposed by the lower authority, and no finding on the substantive merits of the Department’s case was warranted at that stage.
The Department also argued that the percentage adopted by the Gujarat High Court or Supreme Court in another matter could not automatically be treated as a precedent applicable to every case, particularly where the factual circumstances might differ.
After considering the rival submissions, CESTAT disagreed with the quantum of security imposed by the Commissioner.
The Tribunal emphasised the underlying purpose of Section 110A of the Customs Act, 1962. According to the Tribunal, provisional release conditions are intended to safeguard the interests of the Revenue to an appropriate extent while adjudication is pending. At the same time, the statutory mechanism is intended to provide the importer an opportunity to deal with the goods in the market and realise their value rather than leaving the goods under seizure.
The Tribunal’s reasoning places emphasis on maintaining a balance between two competing considerations.
On one hand, Customs departments are entitled to secure the potential revenue exposure while an investigation or adjudication remains pending. On the other hand, provisional release should not be rendered commercially impractical by imposing security conditions that are disproportionate to the purpose of safeguarding the Revenue.
The Tribunal therefore considered that the security condition had to be calibrated so that the Revenue’s interests remained protected without unnecessarily preventing the importer from dealing with the goods.
Considering the facts and circumstances, CESTAT held that the ends of justice would be met by requiring a bank guarantee equivalent to 30% of the differential duty involved.
The Tribunal simultaneously directed the importer to furnish a bond for the full value of the seized goods.
Thus, the final security arrangement consisted of:
| Condition | Tribunal’s Direction |
| Bank Guarantee | 30% of differential duty involved |
| Bond | Full value of seized goods |
| Release | Goods to be released in a time-bound manner |
The Tribunal accordingly ordered modification of the provisional-release condition and directed that the goods be released in a time-bound manner.
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