Case Note & Summary
The petitioner, Bhavik K. Shah, filed a writ petition under Article 226 of the Constitution seeking a declaration that the detention of certain goods after the expiry of six months from seizure was illegal under Section 110 of the Customs Act, 1962. During the hearing, the petitioner restricted his submission in light of the Division Bench judgment in Jayant Hansraj Shah v. Union of India, which held that Section 110(2) applies only if no provisional order has been passed and no notice under Section 124(a) has been issued. Since the Commissioner had already passed an order on 24 May 2011 allowing provisional release of goods against a bond and a bank guarantee of Rs.1,81,69,875/-, the only issue was the quantum of the bank guarantee. The petitioner argued that the bank guarantee should be modified as per the instructions of the Central Board of Excise and Customs (CBEC), which stipulate that the bank guarantee shall not exceed twice the amount of duty. The court agreed, noting that the CBEC instructions are binding and that the bank guarantee of Rs.1,81,69,875/- appeared to be based on the full value of the goods. The court directed the Commissioner to recompute the bank guarantee so that it does not exceed twice the duty amount, and to release the goods upon the petitioner furnishing the recomputed bank guarantee and a bond. The petition was disposed of accordingly.
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, the bank guarantee shall not exceed twice the amount of duty. The Commissioner was directed to recompute the bank guarantee accordingly. (Paras 3-4)
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 bank guarantee shall not exceed twice the amount of duty.
Final Decision
The court directed the Commissioner of Central Excise and Customs, Surat I to recompute the bank guarantee so that it does not exceed twice the amount of duty, and to release the goods upon the petitioner furnishing the recomputed bank guarantee and a bond. The petition was disposed of.
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 duty amount
