Retention of Goods Not Required Pending Adjudication; Madras HC Permits Re-Export of Seized Consignment Subject to Bond and Bank Guarantee [Read Order]
While allowing the writ petition, the Madras High Court permitted the petitioner to re-export the seized consignment back to the Chinese supplier, subject to strict conditions aimed at safeguarding the interests of the Revenue.
Retention of Goods - Pending Adjudication - Madras HC - Re-Export - Seized Consignment - Bank Guarantee - taxscan
Retention of Goods - Pending Adjudication - Madras HC - Re-Export - Seized Consignment - Bank Guarantee - taxscan
The Madras High Court has held that retention of seized goods during the pendency of adjudication proceedings is not always necessary, especially when the eventual outcome may only involve levy of fine, penalty, or differential duty.
The Court permitted the petitioner to re-export its consignment of textile fabric coated with plastics, subject to execution of a bond and furnishing of a bank guarantee.
The petitioner, M/s Aashi Creations, an importer of textile fabrics coated with plastics, had brought in a consignment from China in January 2025. The goods were detained by the Directorate of Revenue Intelligence (DRI) on the grounds of misclassification under the Customs Tariff Heading.
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Following laboratory testing by the Central Revenues Control Laboratory (CRCL), the authorities alleged that the goods had been wrongly classified and undervalued. On this basis, the consignment was seized under Section 110 of the Customs Act, 1962.
Even after repeated representations, the petitioner was not granted provisional release of the goods. The importer requested permission to re-export the consignment back to the Chinese supplier, who had agreed to take it back. However, the Customs Department and DRI refused to permit re-export on the ground that adjudication proceedings were still pending.
The petitioner argued that even if misclassification was established, the maximum consequence would be confiscation under Section 111 of the Customs Act, with an option to redeem the goods on payment of fine under Section 125. In such a scenario, there was no necessity for the authorities to retain the goods indefinitely.
Justice N. Anand Venkatesh observed that retention of the goods pending adjudication was unnecessary since the outcome of adjudication would ultimately result in demand of duty, fine, or penalty, which could be secured by imposing appropriate conditions.
The Court pointed out that a balance had to be struck between protecting the interests of the Revenue and preventing undue hardship to the importer whose goods had been lying idle for several months.
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While allowing the writ petition, the Madras High Court permitted the petitioner to re-export the seized consignment back to the Chinese supplier, subject to strict conditions aimed at safeguarding the interests of the Revenue.
The Court directed the importer to execute a bond for the entire value of the differential duty payable and to furnish a bank guarantee equivalent to 20% of the re-determined value of the goods. After the compliance of the conditions the Customs authorities have been mandated to permit the re-export within twelve days from the date of such compliance.
Mr.A.K.Jayaraj appeared for the petitioner and Mr.Rajnish Pathiyil, SPC appeared for the respondent.
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