Case Note & Summary
The petitioners, Apollo Cranes Pvt. Ltd. and another, imported nine cranes between 17 November 2005 and 6 April 2010, which were assessed and bills of entry lodged. On 10 November 2010, the cranes were seized by Customs authorities under Section 110 of the Customs Act, 1962. On 15 February 2011, the Commissioner of Customs (Import) passed an order for provisional release under Section 110A, subject to conditions including payment of differential duty of Rs.1,32,17,036 with interest of Rs.62,41,705, furnishing a bank guarantee for 20% of the CIF value (Rs.7,30,44,625), a bond for the same amount, and undertakings to produce the cranes for inspection and not dispose of them without intimation. The petitioners challenged these conditions under Article 226 of the Constitution. They argued that the pre-deposit of duty and interest was not required under Section 110A, which only contemplates security by bond or bank guarantee. The respondents contended that the conditions were necessary to protect revenue. The court held that Section 110A does not authorize the demand of pre-deposit of duty as a condition for provisional release; the proper officer may only require a bond and such other security as deemed fit. The court modified the conditions, directing that the petitioners need not pre-deposit the differential duty and interest, but must furnish a bank guarantee for 20% of the CIF value and a bond for the full CIF value, along with the undertakings. The writ petition was allowed in part.
Headnote
A) Customs Law - Provisional Release of Seized Goods - Section 110A of the Customs Act, 1962 - Conditions for Release - The court considered the legality of conditions imposed for provisional release of seized cranes, including pre-deposit of differential duty and interest, bank guarantee, and bond. The court held that the requirement of pre-deposit of duty and interest is not warranted under Section 110A, which only contemplates security by way of bond or bank guarantee. The court modified the conditions to require only a bank guarantee for 20% of the CIF value and a bond, without pre-deposit of duty. (Paras 1-5) B) Customs Law - Seizure and Provisional Release - Sections 110 and 110A of the Customs Act, 1962 - Interpretation - The court interpreted Section 110A to mean that the proper officer may release seized goods on the execution of a bond and such other security as deemed fit, but cannot demand pre-deposit of duty as a condition for provisional release. The court emphasized that the purpose of provisional release is to secure the revenue pending adjudication, not to collect duty in advance. (Paras 4-5)
Issue of Consideration
Whether the conditions imposed by the Commissioner of Customs for provisional release of seized goods under Section 110A of the Customs Act, 1962, particularly the requirement of pre-deposit of differential duty and interest, are legal and proper.
Final Decision
The writ petition is allowed in part. The condition requiring pre-deposit of differential duty and interest is set aside. The petitioners are directed to furnish a bank guarantee for 20% of the CIF value and a bond for the full CIF value, along with the undertakings as originally required. The respondents are directed to release the cranes upon compliance with these modified conditions.
Law Points
- Provisional release under Section 110A of Customs Act
- 1962
- Conditions for release
- Pre-deposit of duty
- Bank guarantee
- Bond
- Section 110 seizure
- Article 226 of Constitution
