The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that onerous conditions imposed for the provisional release of seized imported goods should not amount to a virtual denial of relief.
The bench of S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) set aside the requirement of furnishing bank guarantees running into more than ₹15 crore and directed that the imported consignments be released upon execution of bonds, noting that the importer had already deposited nearly ₹3 crore—an amount exceeding 30% of the differential duty.
The dispute arose after Ventura Global Inc. imported consignments of white refined sugar under Duty-Free Import Authorisation (DFIA) licences and filed Bills of Entry at ICD CONCOR, Ludhiana. Acting on intelligence inputs, the Directorate of Revenue Intelligence (DRI) initiated an investigation on suspicion that the importer had actually imported beet sugar while declaring the goods as white sugar, thereby allegedly misusing the DFIA licences. Consequently, the consignments were seized between March 30 and April 2, 2026.
Buy Now: INCOME TAX E-COMPILATION – JUNE 2026
During the investigation, Customs authorities estimated substantial differential duty liabilities and, while agreeing to provisional release of the seized consignments, imposed stringent conditions requiring bank guarantees of ₹9.71 crore and ₹5.35 crore, purportedly to secure future liabilities towards duty, redemption fine and penalties.
The importer argued that the conditions were arbitrary and excessive because the investigation had not yet established that the goods were in fact beet sugar. It submitted that no conclusive chemical examination had been completed and, therefore, the allegation of misdeclaration remained unsubstantiated.
The appellant further pointed out that it had already deposited ₹2.5 crore in March 2026 and an additional ₹50 lakh in April 2026, together constituting more than 30% of the differential duty. It also relied on judicial precedents, including the Delhi High Court’s decision in Its My Name Pvt. Ltd., which had struck down portions of CBIC Circular No. 35/2017 governing provisional release conditions, and various decisions holding that bank guarantees should ordinarily be restricted to about 30% of the differential duty.
The Customs Department contended that the alleged offence involved serious misuse of DFIA licences and justified stringent safeguards to protect government revenue. It argued that the Commissioner had exercised discretion under Section 110A of the Customs Act, 1962, and that the bank guarantees had been computed keeping in view the estimated differential duty, possible redemption fine and penalties.
The Department also maintained that the Delhi High Court’s rulings relied upon by the importer were distinguishable on facts and that only part of the relevant CBIC Circular had been invalidated.
After considering the rival submissions, the Tribunal observed that the investigation had not yet produced any conclusive laboratory report establishing that the imported consignments were beet sugar rather than cane sugar.
The Bench held that serious allegations such as misdeclaration cannot rest merely on suspicion without supporting scientific evidence. It emphasised that until such evidence is available, imposing extremely burdensome conditions for provisional release would be unjustified.
The Tribunal also noted that the goods were not prohibited goods, the importer was a regular business operator with an established import history, and there was no definitive finding at that stage establishing licence misuse.
Reiterating settled judicial principles, the Tribunal observed that authorities certainly possess the power to impose conditions while granting provisional release, but such conditions must remain reasonable and practical rather than effectively preventing release.
The Bench relied upon several precedents, including the Supreme Court’s decision in Navshakti Industries Pvt. Ltd., as well as recent Tribunal and High Court rulings, which consistently held that requiring security beyond approximately 30% of the differential duty would ordinarily be excessive in provisional release matters.
The Tribunal also referred to its earlier decisions and noted that courts have repeatedly discouraged conditions that effectively paralyse an importer’s business before adjudication is completed.
A significant factor influencing the Tribunal’s decision was that Ventura Global Inc. had already deposited nearly ₹3 crore, which exceeded 30% of the estimated differential duty.
In these circumstances, the Bench held that insisting upon additional bank guarantees exceeding ₹15 crore was neither fair nor justified, particularly when the investigation itself had not conclusively established any misdeclaration.
Allowing the appeals in part, the CESTAT modified the Commissioner’s provisional release orders and directed that the requirement of furnishing any bank guarantee or additional security stands be set aside. The importer shall furnish the bond stipulated under the impugned orders. Upon execution of the bond, the seized consignments shall be provisionally released within one week.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
