Misclassified Textile Imports Seized: Madras HC Directs Customs to Permit Re‑Export on Execution of Bond for Differential Customs Duty [Read Order]

The Madras High Court has permitted Jai Enterprises to re‑export seized textile imports from China, subject to execution of a bond covering the differential customs duty and furnishing a 20% bank guarantee of the re‑determined value.

Jai Enterprises imported 202,700 square meters of fusible interlining textile-coated fabrics from China in January 2025, declaring them under Customs Tariff Heading (CTH) 59039090. Samples were tested by the Central Revenue Control Laboratory (CRCL), New Delhi, which reported misclassification.

Based on the test report, the Directorate of Revenue Intelligence (DRI) seized the goods on 26 May 2025, alleging undervaluation and misclassification, making them liable for confiscation under the Customs Act, 1962.

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The petitioner sought permission to re‑export the goods to the supplier, citing prolonged detention and the supplier’s willingness to take them back. Customs authorities had not taken a decision, prompting the writ petition.

Justice N Anand Venkatesh noted that the issue had already been addressed in W.P.No.33723 of 2025 (Sept 2025), where the Court held that retaining goods in India was unnecessary if conditions were imposed to secure revenue.

In the cited case, the petitioner contended that Misclassification, even if established, would at best attract confiscation under Section 111(m). Also, Section 125 allows the release of goods on payment of a fine instead of confiscation.

It was further argued that retaining goods in India serves no purpose if the supplier agrees to take them back. Reliance was placed on Siemens Ltd. v. Collector of Customs [1999 ], Sankar Pandi v. Union of India [2002], and AC of Customs v. Mahadev Enterprises [2023], where courts permitted re‑export subject to bond or fine.

In the said case the court observed as follows:

“The logical end to the adjudication proceedings will result in directing the petitioner to pay the fine/penalty and differential duty. For this purpose, it is not necessary to retain the goods in India. Therefore, to strike a balance, considering the fact that the goods are lying in India from January 2025, certain conditions can be imposed on the petitioner and on fulfilment of the conditions so imposed, the petitioner can be permitted to re-export the goods.”

On view of the above cited case the writ petition was disposed of with the following directions that the Petitioner to execute a bond for the total value of the differential customs duty payable and Petitioner to furnish a bank guarantee equivalent to 20% of the re‑determined value. On compliance, Customs to permit re‑export within 12 days.

No costs were awarded, and connected miscellaneous petitions were closed.

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