• Dated 11^th March, 2026

Seized Imported Goods to be Released Without Additional Bank Guarantee When Revenue Interest is Adequately Protected: CESTAT

BRIEF FACTS:

The appellants, and M/s Miraya Vinyls Pvt. Ltd., had imported wrap-knitted fabric for use in further manufacturing activities. During the course of investigation into alleged short-payment of customs duty on such imports, the goods lying at the appellants' premises were seized under Section 110 of the Customs Act, 1962.

Subsequently, the Appellants filed applications seeking provisional release of the seized goods under Section 110A of the Act. The jurisdictional authority permitted provisional release subject to execution of full-value bonds coupled with furnishing of substantial bank guarantees. Aggrieved by the onerous nature of such conditions, the appellants challenged the same before the Tribunal.

ASSESSEE'S CONTENTION:

The Appellants contended that the imported goods were purely commercial in nature and were neither prohibited nor subject to any conditional restriction on import. It was further submitted that the alleged differential duty liability already stood sufficiently secured by way of cash deposit along with execution of full-value bonds and bank guarantees covering duty and interest. Therefore, the insistence on furnishing additional financial safeguards as a condition for provisional release was excessive, arbitrary and disproportionate to the alleged liability. The appellants also argued that the seizure of goods and the onerous conditions imposed for their release had adversely impacted their normal manufacturing and business operations.

DEPARTMENT'S CONTENTION:

The Department contended that the conditions prescribed for provisional release of the seized goods were imposed in exercise of the statutory discretion vested in the competent authority under the provisions of the Customs Act, 1962. It was argued that such safeguards were necessary to adequately protect the interests of the revenue during the pendency of investigation into the alleged short-payment of customs duty. The department further maintained that the requirement of furnishing bank guarantees along with execution of bonds was justified and reasonable in order to secure the possible recovery of duty, interest or penalty that may be determined upon completion of adjudication proceedings.

DECISION:

The Tribunal observed that the seized goods were admittedly commercial goods intended for further manufacture and were not prohibited imports. It was further noted that the differential duty liability in respect of both appellants already stood sufficiently secured by way of cash deposit and bank guarantee covering duty and interest. In such circumstances, insistence on additional bank guarantees was held to be unreasonable and disproportionate. The Tribunal accordingly directed that the goods be released on execution of full-value bond, holding that the interest of the revenue was adequately protected. The appeals were thus disposed of in favour of the appellants.

BTA's COMMENT:

This ruling reinforces the principle that conditions imposed for provisional release of seized goods must be reasonable and proportionate to the potential revenue risk. Once adequate security towards duty liability is available, authorities cannot impose unduly burdensome financial conditions. The decision provides important guidance on balancing investigative powers of the department with the legitimate business interests of importers.

Case Reference- Canadian Speciality Vinyls Vs. Commissioner of Customs, Noida [Final Order Nos. 70031–70032/2026 in Appeal Nos. C/70836-70837/2025, decided on 27-1-2026]

Author- Madhurima Bose