Case Note & Summary
The petitioner, Bhavik K. Shah, filed a writ petition under Article 226 of the Constitution before the Bombay High Court seeking a declaration that the detention of certain goods after the expiry of the statutory period of six months from seizure was illegal under Section 110 of the Customs Act, 1962. During the hearing, counsel for the petitioner, relying on the Division Bench judgment in Jayant Hansraj Shah v. Union of India (2008 (229) E.L.T. 339 (Bom.)), restricted the submission to a modification of the condition for provisional release. It was an admitted fact that the Commissioner of Central Excise and Customs, Surat had passed an order on 24 May 2011 allowing provisional release of the goods against a bond and a bank guarantee of Rs.1,81,69,875. The only submission urged was that the condition of furnishing a bank guarantee of Rs.1.81 crores should be modified in view of the instructions of the Central Board of Excise and Customs (CBEC). The CBEC Manual stipulates that in dispute cases, provisional clearance should be allowed by furnishing a bond for full value of goods supported by adequate bank guarantee, and the value of bank guarantee shall not exceed twice the amount of duty. The court considered this instruction and held that the bank guarantee condition must be modified accordingly. The court directed that the bank guarantee be reduced to twice the amount of duty, and the goods be released provisionally upon the petitioner furnishing a bond for the full value of the goods and a bank guarantee for twice the duty amount. The petition was disposed of with this modification.
Headnote
A) Customs Law - Provisional Release of Seized Goods - Section 110, Customs Act, 1962 - Instructions of CBEC - The petitioner sought modification of the condition of bank guarantee imposed for provisional release of goods. The court held that in view of the CBEC instructions that the value of bank guarantee shall not exceed twice the amount of duty, the condition must be modified accordingly. (Paras 3-4) B) Customs Law - Detention of Goods - Section 110(2), Customs Act, 1962 - Limitation Period - The court noted that the Division Bench in Jayant Hansraj Shah v. Union of India held that Section 110(2) is attracted only if no provisional order has been passed and no notice under Section 124(a) has been issued. In the present case, a provisional release order had been passed, so the main challenge was not pressed. (Paras 2-3)
Issue of Consideration
Whether the condition of furnishing a bank guarantee of Rs.1,81,69,875 for provisional release of goods should be modified in view of the instructions of the Central Board of Excise and Customs that the value of bank guarantee shall not exceed twice the amount of duty.
Final Decision
The court directed that the bank guarantee be reduced to twice the amount of duty, and the goods be released provisionally upon the petitioner furnishing a bond for the full value of the goods and a bank guarantee for twice the duty amount. The petition was disposed of accordingly.
Law Points
- Provisional release of seized goods
- Section 110 of Customs Act
- 1962
- Section 124(a) of Customs Act
- Instructions of Central Board of Excise and Customs
- Bank guarantee not to exceed twice the amount of duty
