2017 (10) TMI 95 - HC - Customs

Provisional release of goods - insistence to furnish Bank Guarantee - Held that - similar issue decided in the case of M/s. Sri G.P.R. Leathers, Proprietor Shri G. Prakash Reddy, M/s. Parveen Leather Exports Versus The Commissioner of Customs (Exports) , The Deputy Commissioner of Customs 2017 (7) TMI 834 - MADRAS HIGH COURT , where it was held that seeking security in the form of bank guarantee is uncalled for and in a sense, dilutes the very essence of the order - goods granted provisional release on fulfillment of conditions imposed by the Court - petition allowed.

Summary

Issues:
1. Challenge to order for provisional release of goods subject to compliance with conditions imposed by the Court.
2. Interpretation of Circular No.01/2011-Customs regarding provisional release of export goods.
3. Legality of imposing conditions for release of goods by requiring a bank guarantee.
4. Application of previous interim orders in subsequent cases.
5. Distinction between quashing an order and staying its operation.

Analysis:
1. The appeal challenged an order directing the provisional release of goods subject to compliance with conditions imposed by the Court. The Court considered the Circular No.01/2011-Customs, which deals with provisional release of export goods for investigation purposes. The department contended misdeclaration of goods, leading to seizure under the Customs Act, 1962.

2. The Circular specifies conditions for provisional release based on misdeclaration, prohibited goods, or suspected misdeclaration. It allows for the release of goods provisionally upon execution of a bond and furnishing appropriate security. The Court emphasized the importance of quick action and minimal detention of goods for tests or confirmatory actions.

3. The Court analyzed the legality of imposing conditions for release, including the requirement of a bank guarantee. It noted that the Circular empowers the department to insist on appropriate security for redemption, fine, and penalty. The Court upheld the department's discretion in requiring an indemnity bond and a bank guarantee for the value of goods.

4. The Court addressed the application of previous interim orders in subsequent cases. It emphasized that the department's directive for a bank guarantee did not contradict earlier orders and was within its powers under the Circular. The Court highlighted that interim orders are passed in aid of the main relief and are meant to preserve the status quo.

5. Lastly, the Court discussed the distinction between quashing an order and staying its operation. It clarified that the writ Court had stayed the order but did not quash it. The Court referred to legal precedents to explain the temporary nature of interim orders and the preservation of status quo. Ultimately, the Court set aside the impugned orders and allowed the appeals, emphasizing that interim orders do not conclusively decide issues.