Provisional release of detained goods under the Customs Act is justified when prior rulings support the import classification, enabling access to avoid hardship during pending investigations.

ORDER :

ABDUL QUDDHOSE, J.

The issue that arises for consideration in these writ petitions is about the categorisation of second-hand digital Multi-function Devices (MFDs), which have been imported by the respective petitioners and detained by the Customs Department for non-production of (a) Bureau of Indian Standards Certificate (BIS Certificate) and (b) authorisation from the Director General of Foreign Trade (DGFT). The respective petitioners are seeking for provisional release of MFDs through these writ petitions.

2. In Import/Export Regulations, items are categorised as prohibited, restricted or freely importable. Prohibited items are completely banned, restricted items require specific authorisation or licenses, while freely importable items have no restrictions.

3. In the case on hand, the petitioners claim that MFDs are freely importable items, whereas the Customs Department claims that they are restricted items which require certification from Bureau of Indian Standards (BIS) and prior authorisation from DGFT, before importing them. The Ministry of Electronics and Information Technology (MEITY), which has been impleaded in these writ petitions as a party respondent, claims that second-hand MFDs imported by the respective petitioners are prohibited items and therefore, provisional release under Section 110A of the CUSTOMS ACT , 1962 (in short “the Act”), pending final adjudication, cannot be granted by the Customs Department.

4. The primary objective of provisional release of the imported goods as per the provisions of Section 110A of the Act is to allow release of the seized goods to their owner, while the goods are under investigation or pending adjudication. This aims to prevent hardship to the importer due to the detention of goods, especially when there are disputes regarding assessment, duty or other related matters. Provisional release allows importers to access their goods, while the customs authorities investigate potential issues like duty discrepancies or other violations. This prevents unnecessary delays and financial losses to the importer due to demurrage or surcharge charges. Instead of keeping goods in detention for the extended period during the investigation, provisional release allows for the goods to be released upon the owners' request, subject to certain conditions. Generally, the importer is required to execute a bond for full value of the goods or provide a bank guarantee or security deposit to cover the potential duty, fines and penalties, that may be imposed later. A decision to grant provisional release including imposing specific conditions is the discretion vested with the adjudicating authority (customs officer concerned). By allowing the provisional release, the customs authorities can focus on the investigation and the importer can resume their business operation. While facilitating trade, the conditions for provisional release (bond and bank guarantee) ensure that goods are not misused and that the revenue is protected.

5. Mr.Vijay Narayanan, learned Senior counsel appearing for some of the writ petitioners, drew the attention of this Court to the following authorities:-

a) The order passed by a learned Single Judge of this Court in W.P.No.29673 of 2023 etc. (batch), dated 23.11.2023;

b) The order passed by a Division Bench of the Telangana High Court in W.P.No.2014 of 2024, dated 08.02.2024;

c) The order passed by a learned Single Judge of the Madras High Court dated 24.05.2024 in W.P.No.11950 of 2024 batch; and

d) The order passed by the Honourable Supreme Court dated 28.11.2024 in SLP (C) No.13560 of 2024 batch.

6. Relying upon the aforesaid authorities, Mr.Vijay Narayanan, learned Senior counsel, would submit that in all the aforesaid authorities, MFDs, which are also the goods involved in these writ petitions, were held to be “freely importable”. However, according to him, in respect of the petitioners' goods alone, provisional release has not been granted by the Customs Department on the gr