Customs Cannot Withhold Provisional Release of Used Highly Specialised Equipment in Absence of Centralised Monitoring: CESTAT [Read Order]

TheKolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal(CESTAT) ruled that Customs authorities cannot withhold provisional release of used highly specialised equipment merely due to the absence of a centralised monitoring mechanism for enforcing model-wise import limits, and directed release of the detained goods against bond and bank guarantee.

Atul Automation Pvt. Ltd., Ace Office Solutions, Teqnozo Ceramics Pvt. Ltd., and Mech and Tech, the appellants, imported used digital multifunction print and copying machines classified as highly specialised equipment through Kolkata Port during February and March 2025. Bills of Entry were filed by each importer, and the consignments were subjected to 100% examination in the presence of a government-approved Chartered Engineer and customs officers.

The examination confirmed that the goods were old and used as declared and that the description, make, model, and quantity matched the declarations. Despite this, the goods were seized under Section 110 of the Customs Act, 1962 on the ground that they were restricted items. As adjudication was likely to take time and demurrage was accruing, the appellants requested provisional release of the goods against bond and bank guarantee.

Customs authorities allowed provisional release only in part and withheld release of 63 machines on the ground that, under the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order, 2021, import of highly specialised equipment was limited to 100 units per model per calendar year. Customs applied this limit by counting imports of the same model collectively through Kolkata Port.

Aggrieved by the partial withholding of provisional release, the appellants approached the Tribunal.

The appellants’ counsel argued that the interpretation adopted by Customs was arbitrary and discriminatory, as no centralised mechanism existed to monitor model-wise imports across all ports. It was argued that different ports were following different practices and that similar consignments were being released elsewhere without imposing such restrictions.

The appellants relied on clarifications issued by the Ministry of Electronics and Information Technology stating that the limit of 100 units per model per year applies collectively across all ports and importers, and argued that selective enforcement at one port was unjustified. The appellants also pointed out that they had already furnished bond and bank guarantee covering the entire value of the consignments.

The revenue argued in support of the provisional release orders and submitted that the goods were restricted items and that Customs was justified in withholding release of machines exceeding the prescribed limit.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) examined the records and submissions. The Tribunal observed that the goods were admittedly used highly specialised equipment and that the Ministry’s clarification stated that the 100-unit limit applies collectively across ports and importers.

The Tribunal observed that no centralised monitoring mechanism had been put in place by Customs even after several years, resulting in inconsistent practices across ports. It also observed that earlier orders of the Calcutta High Court, affirmed by the Supreme Court, had directed provisional release of similar goods against bond and bank guarantee without imposing quantity restrictions.

The Tribunal pointed out that the appellants had already executed bond and furnished bank guarantee covering the entire consignments and found no valid reason to withhold provisional release of the remaining 63 machines.

The Tribunal directed provisional release of the withheld machines on execution of bond and bank guarantee in terms of the conditions laid down by the High Court, and disposed of the appeals accordingly.

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