Classification Dispute No Ground to Deny Provisional Release for Re-Export: CESTAT Chandigarh

Tushar Jewellers Vs Commissioner of Customs (CESTAT Chandigarh)

The appeal challenged the order dated 08.05.2026 of the Commissioner (Appeals), which upheld the lower authority’s order dated 15.03.2026 rejecting the appellant’s request for provisional release of imported goods. The appellant had imported consignments of 92.5% silver jewellery studded with synthetic stones from Thailand under Bills of Entry Nos. 6042250 and 6042246, both dated 02.12.2025. The Department alleged that the goods were correctly classifiable under Customs Tariff Item (CTI) 71131149 instead of the declared CTI 71131145 and were therefore restricted under DGFT Notification No. 34/2025-26 dated 24.09.2025. Goods weighing 12,22,860 grams and valued at ₹25,16,49,066 were seized on 07.01.2026, and the request for provisional release was rejected by both the original and appellate authorities.

The appellant contended that the dispute was only one of classification and had been incorrectly treated as involving prohibited or restricted goods. It submitted that there was no allegation of concealment, misdeclaration of quantity or value, substitution, forged documents or hazardous goods. The appellant asserted that the goods were declared as silver jewellery with synthetic stones and that laboratory testing confirmed the presence of synthetic cubic zirconia and synthetic ruby. It further submitted that the test reports had not been supplied before rejection of the provisional release application, that Chapter Note 9 to Chapter 71 expressly included jewellery set with synthetic or reconstructed precious or semi-precious stones, that restricted goods were not automatically absolutely prohibited, and that provisional release should not be denied merely on the basis of an alleged policy violation. The appellant also relied on the provisional release granted in the case of another importer and expressed willingness to furnish bond or security. It further submitted that denial of release had resulted in blockage of funds and mounting demurrage, detention and storage charges.

The Revenue submitted that intelligence gathered by the Directorate of Revenue Intelligence indicated that the appellant had earlier classified identical goods under CTI 71131149 but changed the classification to CTI 71131145 after issuance of the DGFT notification. It relied on examination under panchnama and laboratory reports confirming that the stones were synthetic cubic zirconia and synthetic ruby. According to the Revenue, the goods were liable to confiscation for violation of Section 11 of the Customs Act, 1962 read with Section 3 of the Foreign Trade (Development and Regulation) Act, 1992. The Revenue further argued that CTI 71131145 covered jewellery studded with natural precious or semi-precious stones, whereas jewellery studded with synthetic stones fell under the residual CTI 71131149. It also submitted that provisional release of prohibited goods was not a matter of right and relied on Raj Grow Impex.

The Tribunal observed that both parties had advanced elaborate submissions on classification but held that the classification dispute was yet to be finally adjudicated. It stated that the issue before it was confined to whether the seized goods could be provisionally released and, if so, on what conditions. Referring to Section 110A of the Customs Act, 1962 and the judicial decisions interpreting that provision, the Tribunal observed that the statutory discretion for provisional release must be exercised fairly and reasonably and that courts had held there could not be a blanket denial of provisional release merely on the allegation that goods were prohibited or restricted. It also noted judicial decisions holding that provisional release is an interim measure and that final adjudication would determine confiscation, penalties or other consequences.

The Tribunal further observed that the original authority had recorded that the Directorate of Revenue Intelligence had no objection to considering re-export of the goods. It found that there should be no objection to releasing the goods for re-export, observing that such a course addressed the purpose behind the import restriction and that the Revenue would not gain anything by refusing re-export.

Accordingly, the Tribunal partly allowed the appeal. It directed that the goods imported under Bills of Entry Nos. 6042250 and 6042246, valued at ₹25,16,49,066, be released solely for the purpose of re-export upon execution of a bond equal to the value of the goods. It further directed that the order be complied with within seven days.

Cases Discussed

• JB Jewels and Metals LLP (Punjab and Haryana High Court), 113 CWP-17539-2026
• M/s. S.K. Enterprises (Madras High Court), W.P. No. 38156 of 2025
• Shreehari Ananta Overseas Pvt Ltd (Delhi High Court), 2025 (34) Centax 89 (Del.)
• Shreehari Ananta Overseas Pvt Ltd (Delhi High Court), 2025 (32) Centax 300 (Del.)
• M/s. Nageswara Trade (Delhi High Court), 2025 (8) TMI 1014 – Delhi HC
• Tasha Gold Pvt Ltd (CESTAT Delhi), 2024 (15) Centax 335 (Tri.-Del.)
• Shanus Impex (Delhi High Court), 2024 (388) ELT 78 (Del.)
• Shanus Impex (Delhi High Court), 2024 (15) Centax 129 (Del.)
• Union of India vs. Raj Grow Impex LLP (SC), 2021 (377) E.L.T. 145 (S.C.)
• Modern Insecticides Limited (Punjab and Haryana High Court), 2021-SCC-ONLINE-P&H-1604 (P & H)
• Additional Director General (Adjudication) v. M/s Its My Name Pvt Ltd. (Delhi High Court), 2021 (375) E.L.T. 545 (Del.)
• Its My Name Pvt Ltd. (SC), 2020 (10) TMI 237 – SC Order
• Its My Name Pvt Ltd. (Delhi High Court), 2020 (6) TMI 72 – Delhi HC
• Atul Automations Pvt. Ltd. (SC), 2019 (365) ELT 465 (S.C.)
• Mala Petrochemicals & Polymers (Delhi High Court), 2017 (353) E.L.T. 446 (Del.)
• Wood Craft Products Ltd. (SC), 1995 (77) ELT 23 (SC.)
• Dunlop India Ltd., 1983 (13) ELT 1566 (SC.)

FULL TEXT OF THE CESTAT CHANDIGARH ORDER

M/s Tushar Jewelers, the appellants challenge the order, dated 08.05.2026, passed by Commissioner (Appeals) upholding the order, dated 15.03.2026, passed by the lower authority denying provisional release of imported goods.

2. Brief facts of the case are that the appellants imported Silver Jewelry with Synthetic Stone 92.5%, from Thailand and filed bills of entry No. 6042250 dated 02.12.2025 No. 6042246 dated 02.12.2025. Department was of the opinion that the impugned goods are correctly classifiable under CTI 71131149 instead of the declared CTI 71131145 and therefore are restricted in terms of DGFT Notification No. 34/2025-26 dated 24.09.2025. The imported goods, having a total net weight of 12,22,860 gm and totally valued at Rs 25,16,49,066, were seized on 07.01.2026. Lower authority rejected the application filed by the appellants for provisional release and the appellate authority vide impugned order upheld the order of the lower authority.

3. Shri Saurabh Kapoor, Learned Counsel, assisted by Shri Vivek Sharma, submits that the case involves is only a classification dispute and the department converted the same in to a case of import of “prohibited/restricted goods; there is no allegation of concealment, mis-declaration of quantity or value, substitution, forgery of documents, involvement of hazardous etc; the impugned goods were declared as silver jewelry with synthetic stones and the test report also confirms that the goods are studded with synthetic cubic zirconia/ synthetic ruby. He submits that the test reports were not supplied to the Appellant; the impugned order itself records that the Appellant’s request for copy of test report was still awaited; denial of provisional release on the basis of a document not supplied is bad in law.

4. Learned Counsel submits further that even on classification, the Appellant has a strong prima facie case; chapter Note 9 to Chapter 71, expressly includes jewellery set with synthetic or reconstructed precious/ semi-precious stones; department has wrongly read the word “natural” Into CTI 71131145, though the tariff does not impose such limitation. He submits that classification must follow HSN/Chapter Notes; goods falling under a specific entry cannot be forced into a residuary entry; restricted goods are not automatically absolutely prohibited; release/redemption is permissible; alleged policy/import-condition violation cannot mechanically defeat provisional release. He relies on the following cases.

• Wood Craft Products Ltd., 1995 (77) ELT 23 (SC.)
• Dunlop India Ltd 1983 (13) ELT 1566 (SC.)
• Atul Automations Pvt. Ltd., 2019 (365) ELT 465 (S.C)

5. Learned Counsel submits also that revenue granted provisional release of similarly placed consignments of M/s Achintya Impex Pvt Ltd; once another importer in the same class of goods/dispute has been granted release, denial to the Appellant is arbitrary, discriminatory and commercially destructive. He submits that the impugned orders wrongly consider that the proposed classification is final; at the stage of provisional release, the only question to be considered is whether interest of revenue can be secured while goods are released provisionally; the Appellant is ready to furnish bond/security as directed by this Hon’ble Tribunal. He submits that Revenue suffers no prejudice; on the contrary the appellant’s interest are jeopardized as huge money remains blocked and demurrage, detention and storage charges are mounting.

6. Shri Anurag Kumar , learned authorised representative, for the revenue reiterates the findings of the impugned order and submits that intelligence developed by DRI, Ahmedabad revealed that the appellant had earlier classified identical goods under CTI 71131149, but post the DGFT restriction, changed classification to CTI 71131145 to circumvent the policy restriction; examination under Panchnama dated 09.12.2025 and laboratory testing by Indian Diamond Institute, Surat confirmed that the stones were synthetic cubic zirconia and synthetic ruby – not natural precious or semi-precious stones; goods being misclassified and imported in violation of Section 11 of Customs Act, 1962 read with Section 3 of FTDR Act, 1992 are liable for confiscation and benefit of imports under AIFTA is not available.

7. learned authorised representative submits that classification under CTI 71131145 is incorrect as it covers jewellery studded with natural precious or semi-precious stones; synthetic stones (cubic zirconia, synthetic ruby) are distinct and fall under CTH 7104, and accordingly, jewellery with such stones is correctly classifiable under residual entry CTI 71131149. He submits that prohibited goods do not warrant provisional release especially where goods are prohibited; DRI, Ahmedabad clearly opined, vide letter dated 02.03.2026, that goods imported in contravention of policy restrictions ought not to be released into the domestic market.

8. Learned authorised representative counters each of the contentions raised in grounds appeal filed and submits that as the Appellant was given personal hearing on 24.04.2026 and as test reports were part of seizure documents, no prejudice was caused to the appellants; panchnama records physical verification and mis-declaration is in classification and not in description; test report confirmed the presence of synthetic stones, which counters the claim of natural stones; copy of Test report dated 23.12.2025 was forwarded to importer along with Show Cause Notice dated 14.05 2026; Provisional release for prohibited goods is not a matter of right; impugned order correctly relied on Raj Grow Impex 2021 (377) ELT 145 (SC) where in it was held that goods imported in violation of policy should not enter domestic market.

9. Learned authorised representative submits elaborately on the classification, the gist of which is as follows.

• chapter Note 1(a) to Section XIV excludes synthetic stones from “precious/semi-precious” unless specifically provided; synthetic stones are classified under CTH 7104, not as natural stones; General Rules of Interpretation require classification by heading and notes; Heading 7113 read with Chapter Notes excludes synthetic stones;
• chapter Note 9 to Chapter 71 merely defines “articles of jewellery” for the purpose of heading 7113; it does not prescribe the classification of such articles at the 8-digit subheading level;
• CTI 71131145 has historically been interpreted (through trade practice, departmental circulars, and common understanding) to cover jewellery set with natural precious or semi-precious stones, not synthetic stones; CTI 71131149 is the residual entry covering “other” jewellery including jewellery set with synthetic stones.
• the issue is not whether or not synthetic stones belong to Chapter 71; they do; the issue is which specific 8-digit code applies to silver jewellery studded with synthetic cubic zirconia; identical goods were previously classified under 71131149 before the DGFT restriction.
• US ruling is not binding on Indian courts; even if the U.S. ruling treated cubic zirconia as a semi-precious stone for classification under heading 7113, it does not resolve the 8-digit subheading dispute in India; Appellant’s own classification earlier contradicts their current stance.

10. Heard both sides and perused the records of the case. The appellants have imported two consignments of “92.5% Silver Jewellery with synthetic stone” under CTI (Customs Tariff Item) 71131145 from Thailand and filed Bills of Entry as follows:

11. Revenue is of the opinion that the impugned goods are classifiable under CTI 7113 1149. The appellants submit that Chapter 71 explicitly contemplates articles set with “precious or semi-precious stones (natural, synthetic or reconstructed)”, and does not restrict the scope of jewellery to only natural stones; once cubic zirconia is recognized as a semi-precious stone, any article of jewellery incorporating such a stone becomes classifiable as an article containing semi-precious stones, and cannot be excluded from such classification merely on the ground that the stone is synthetic; primary reasoning adopted by the department that the goods are liable to confiscation on account of alleged misclassification under Chapter 71, is wholly unsustainable and submitted that Classification is, by its very nature, a matter of interpretation of tariff entries read with Chapter Notes and the General Rules for Interpretation, and cannot be treated as a concluded finding at the stage of seizure. The appellants further contend that:

• the Department has erroneously interpreted Chapter Note 9 to Chapter 71 of the Customs Tariff Act by reading into it a requirement that only “natural precious or semi-precious stones under the relevant tariff entry” whereas the heading “includes both natural and synthetic stones”.
• the Panchnama goes on to assume the status of an adjudication order elaborately explaining as to how the classification was arrived by the Revenue. Revenue has not supplied the copy of the test reports in violation of Circular No.30/2017 dated 18.07.2017.
• the appellant’s representations dated 14.01.2026 and 21.01.2026, for provisional release, have been rejected.
• the adjudicating authority as well as the appellate authority have not applied their mind; instead of giving independent findings, have heavily relied on a communication, dated 02.03.2026, by DRI, Ahmedabad asking the authorities not to release the impugned goods.

12. On the other hand, the learned Commissioner finds that the classification declared by the appellants under CTI 7113 1145 is incorrect and was done with an intent to circumvent the provisions of Foreign Trade Policy which restricts the import of silver jewellery falling under CTI 7113 1149; the appellants have been historically classifying the impugned goods under CTI 7113 1149. We find that learned Commissioner finds as follows:

5.5 I find that there is no dispute on the fact that the imported goods consist of silver jewellery studded with synthetic storm cubic zirconia and synthetic ruby. The test results done by the laboratory also establish/confirm the same I also find that the investigations conducted so far further revealed that the Appellant prior to the issuance of DGFT Notification, 34/2025-26 dated 24.09.2025, imported identical or similar silver Jewellery studded with synthetic stones from the same overseas supplier, but had declared the goods under CT1 71131149 whereas post notification the Appellant had changed the classification to CT1 71131144/71131145 without any change in the product characteristics. I also find that the said position has also been admitted by the authorized representative, Sh. Manohar Dokania in his statement dated 29.12.2025 during the ongoing course of investigation by DRI, Ahmedabad. Hence, I find that it is clearly established that Appellant has historically declared identical goods under CTI 71131149 and there is a abrupt shift to CT1 71131145 immediately following the DGFT restriction appears to be a masked attempt to bypass the Law of the Land. The shift from CT1 71131149 to 71131145 post- notification proves mens rea. I find that this is not a technical error but a deliberate fraud attempt on the statute. It is a settled legal principle that fraud vitiates everything.

13. On going through the records of the case, the rival submissions, the impugned order and the statutory provisions as they relate to the impugned goods, we find that both the appellants and the Revenue have given elaborate submissions harping on the correctness of the classification arrived by them. However, we find that the issue of classification is not of concern at this juncture as the proceedings in the case regarding classification are yet to be finalised. The impunged order refuses to entertain the request of the appellants for provisional release of the goods imported by the appellant for the reason that they are restricted. Therefore, the issue that needs to be decided in the instant case is not about the classification of the goods but is about whether the impugned goods, which are restricted as per revenue can be provisionally released or not. In case they are held to be released what should be the conditions, under which they can be provisionally released, keeping in mind the facts of the case, judicial pronouncements and the prejudice that may be caused to the either side.

14. Section 110A of the Customs Act, 1962 provides for provisional release of seized goods. The jurisprudence evolved on this Section appears to fundamentally accept that the authorities have power to exercise statutory discretion. However, Courts have held that the scope of this statutory power requires that discretion must be exercised rightly, fairly, and reasonably, and it must not be based on irrelevant materials. Hon’ble Delhi High Court, in the case of Mala Petrochemicals & Polymers 2017 (353) E.L.T. 446 (Del.), makes a distinction between seizure of imported goods on various counts such as undervaluation, mis-declaration etc. and held that the failure to draw such a distinction and treat all types of wrongful imports on an equal footing might result in miscarriage of justice. That is why Section 110A has been worded in the way it has, leaving some margin to the Customs in the exercise of their discretion subject, of course, to the recognized legal limits.

15. We find that despite the statutory discretion granted by Section 110A, the Revenue frequently relied on CBIC Circular No. 35/2017-Cus to issue blanket denials for the provisional release of goods alleged to be prohibited or restricted. The circular sought to curtail the said discretion as it sets out the conditions in which provisional release of the goods may be granted and further also sets out the security required to be insisted upon by the adjudicating authority for such provisional release.

16. Hon’ble Delhi High Court struck down this practice in a land mark judgement in the case of Its My Name Pvt Ltd 2020 (6) TMI 72 – Delhi HC, holding that Paragraph 2 of the Circular is ultra vires and void. The Court reasoned that executive instructions can supplement, but never supplant, statutory provisions. Because Section 110A explicitly permits the release of “any goods, documents or things,” the Circular cannot artificially curtail this statutory scope by excluding certain categories of goods from eligibility. This decision was subsequently affirmed by the Supreme Court [2020 (10) TMI 237 – SC Order] though the Hon’ble Apex Court enhanced the bank guarantee amount from X10 crores to X15 crores on mutual consent of the parties. The rationale of the case of Its My Name (supra) has since been followed by Hon’ble Delhi High Court subsequently in cases like Shanus Impex (2024) 15 Centax 129 (Del.) and M/s. Nageswara Trade 2025 (8) TMI 1014 – Delhi HC]. In these cases, the High Court reiterated that the Revenue cannot completely deny or prohibit the provisional release of goods by invoking the voided conditions of Circular 35/2017.

17. Hon’ble High Court of Delhi held in Shanus Impex 2024 (388) ELT 78 (Del) that

3. It is contended that the discretion granted by the statute to the adjudicating authority is curtailed by the impugned Circular. It is also contended that the said issue is covered by the decision of the Coordinate Bench of this Court in Additional Director General (Adjudication) v. M/s Its My Name Pvt Ltd.: Neutral Citation No. 2020: DHC:2014-DB = 2021 (375) E.L.T. 545 (Del.).

4. This petition was listed yesterday (that is, on 7-12-2023) and this Court had passed the following order:

1. The petitioner has filed the present petition, inter alia, praying as under: “

a. Issue the writ of certiorari or any other appropriate writ, order or direction in the nature of declaration, declaring that the impugned Circular No. 35/2017-Cus dated 16-8-2017 as ultra vires and violative of Section 151A of the Customs Act, 1962; and/or

b. Issue a writ order or direction in the nature of certiorari to set-aside the order bearing No. GEN/INV/OTH/360/2023-ICP-ATR-Cus-Prev-Amritsar dated 02-12 2023 (DIN No. 20231275NH000041944C) passed by the Learned Deputy Commissioner of Customs, Land Customs Station, ICP, Atta ri, Amritsar;

c. Grant the cost of the petition; and

d. Pass such and further order(s) as may deem fit and necessary in the facts and circumstances of the present case.

2. In particular, the petitioner challenges paragraph 2 of the Circular No. 35/2017-Cus dated 16-8-2017 (hereafter ‘impugned circular) on the ground that it curtails the discretion of the Adjudicating authority to impose such conditions as it may require. Section 110A of the Customs Act, 1962 (hereafter ‘the Act’) reads as under:

“110A. Provisional release of goods, documents and things seized or bank account provisionally attached pending adjudication.—Any goods, documents or things seized or bank account provisionally attached under section 110, may, pending the order of the adjudicating authority, be released to the owner or the bank account holder on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require.”

3. It is apparent from a plain reading of Section 110A of the Act that the Adjudicating authority has been granted the discretion to provisionally release the goods, on a bond in the proper form with such security and conditions as the adjudicating authority may require.

4. The impugned circular seeks to curtail the said discretion inasmuch as it now sets out the conditions in which provisional release of the goods may be granted and further also sets out the security required to be insisted upon by the adjudicating authority for such provisional release. Paragraph 2 of the impugned circular, which clearly indicates the above, is set out below

“2. While provisional release of seized imported goods under section 110A of the Customs Act, 1962 may normally be considered by the competent adjudicating authority upon a request made by the owner of the seized goods, provisional release shall not be allowed in the following cases:

i. Goods prohibited under the Customs Act, 1962 or any other Act for the time being in force;

ii. Goods that do not fulfill the statutory compliance requirements/obligations in terms of any Act, Rule, Regulation or any other law for the time being in force;

iii. Goods specified in or notified under section 123 of the Customs Act, 1962;

iv. Where the competent authority, for reasons to be recorded in writing believes that the provisional release may not be in the public interest.

2.1 Seized imported goods shall be released provisionally by the competent authority upon request of the owner of the seized goods, subject to executing a Bond for the full value/estimated value of the seized goods.

2.2 Further, in addition to the Bond mentioned at Para 2.1 above, the competent authority shall take a Bank Guarantee or Security Deposit to cover the following

i. The entire amount of duty/differential duty leviable on the seized goods being provisionally released;

ii. amount of fine that may be levied in lieu of confiscation under section 125 of the Customs Act, 1962 at the time of adjudication of the case. While securing the same, the competent authority shall take into account the nature of the seized goods, the duty and charges payable on the said goods, their market price and the estimated margin of profit;

iii. amount of penalties that may be levied under the Customs Act, 1962, as applicable, at the time of adjudication of the case

2.3 Depending on the specific nature of a case, the competent authority may, for reasons to be recorded in writing, increase or decrease the amount of security deposit as indicated above.

5. The question as to whether the provisions of paragraph 2 of the impugned circular are contrary to Section 110A of the Act, is no longer res integra.

18. We also find that while holding that Revenue cannot completely deny or prohibit the provisional release of goods, Courts have also actively intervened to ensure that the conditions put forth, for grant for provisional release, should not be so stringent that the conditions tantamount to a virtual denial. Hon’ble Delhi High Court in the case of Shreehari Ananta Overseas Pvt Ltd (2025) 34 Centax 89 (Del.), directed revenue to consider provisional release of restricted goods (roasted areca nuts which were not released even in the face of inconsistent CRCL laboratory reports) strictly for industrial purposes, following an undertaking by the importer that the goods would not be used for human consumption. It is worthwhile to note that when the Revenue subsequently allowed the provisional release imposing onerous conditions, of a personal bond of over X4.10 crores and a Bank Guarantee of X5.81 crores, the High Court interfered (2025) 32 Centax 300 (Del) and reduced the requirement to a bond of X4.10 crores and a Bank Guarantee of X50 lakhs.

19Further, Hon’ble Bombay High Court held in Sidharth Vijay Shah 2021 (375) ELT 53 (Bom.) held that the statutory framework of Section 110A imposes no limitation that bars the provisional release of goods categorized as “prohibited” under Section 2(33) of the Act; since the expressions “goods, documents and things seized” are of general import and carry no restrictive qualifications, the statute itself does not allow for a blanket denial of release merely because the goods are alleged to be prohibited. Hon’ble High Court held that

11. By the Taxation Laws (Amendment) Act, 2006, Section 110A was inserted in the Customs Act with effect from 13-7­2006. Since this provision is relevant, the same as it stands today is extracted hereunder:

“110A. Provisional release of goods, documents and things seized [or bank account provisionally attached] pending adjudication. – Any goods, documents or things seized [or bank account provisionally attached] under section 110, may, pending the order of the [adjudicating authority], be released to the owner [or the bank account holder] on taking a bond from him in the proper form with such security and conditions as the [adjudicating authority] may require.”

12. From a reading of Section 110A, as extracted above, it is evident that any goods, documents or things seized or bank account provisionally attached under Section 110 may, pending the order of adjudicating authority, be released to the owner or the bank account holder on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require. Thus, this provision confers a right on the owner to seek provisional release of seized goods etc., while at the same time a corresponding discretionary power is vested on the adjudicating authority who may release the seized goods etc. upon a bond with such security and conditions pending order of the adjudicating authority. Though much emphasis has been placed by the respondents on categorization of the imported vehicle as prohibited goods as defined under sub section (33) of Section 2, we do not find any limitation imposed in Section 110A that a goods which is categorized as prohibited goods under Section 2(33) cannot be subjected to provisional release under Section 110A. The words “goods, documents and things seized” are expressions of general import without any qualifications and/or are not accompanied by any qualifying words. Therefore, no restriction or restrictive meaning can be read into the said expressions which is not contemplated by the statute.

20. Principal Bench of the Tribunal held, in the case of Tasha Gold Pvt Ltd (2024) 15 Centax 335 (Tri. -Del), that Section 110A of the Customs Act does not place any fetter distinguishing between prohibited, restricted, or dutiable goods. Even if there is a remote possibility that the goods may be found prohibited at the time of final adjudication, they cannot be subjected to non-release under the provisions of Section 110A.

21. Hon’ble Madras High Court held, in the case of M/s. S.K. Enterprises (W.P.No.38156 of 2025), reiterated that the provisional release is strictly an interim measure designed to protect the commercial value of goods pending adjudication; provisional release order can be reversed in the final adjudication process; while seized goods may be released provisionally pending investigation or adjudication, a final decision in the case including any penalties or confiscation can supersede the provisional release order.

22. We find that Hon’ble high Court of Punjab, in the case of JB Jewels and Metals LLP (113 CWP-17539-2026), while dealing with case involving similar facts permitted release of similar goods which are otherwise deemed to have been prohibited, allowed the goods to be provisionally released. Hon’ble High Court held that

5. In the meanwhile, the goods of the petitioner, which are lying at Amritsar Airport, shall be released on his furnishing of security/surety bonds equivalent to the value of the goods, to the satisfaction of respondent No. 2.

22.1. In view of the above, it is clear that goods can be provisionally released in terms of Section 110A of the Customs Act,1962, even though the goods may be held to be prohibited or restricted on final adjudication. It is an interim measure to be taken during the investigation or adjudication to protect the commercial interest attached to the goods. At the stage of provisional release itself, it cannot be concluded that the goods are prohibited or restricted. Such a confirmation would indicate a pre-meditated mind of the authority well before the final adjudication and defeats the very purpose or process of adjudication. It is precisely in this context, legislature did not put any strings, under Section 110A, regarding provisional release of goods that may be later held to be prohibited or restricted. Provisional release allows the owner of the goods to deal with them commercially in the interim while the matter is being resolved. He may be penalized for the acts of commission or omission on passing the final order. The adjudication process determines the final outcome of the case including whether the goods are liable to be confiscated or whether any penalties or duties are owed.

23. We find that the unmissable outcome of the above discussion and the jurisprudence that evolved over a period of time indicates that the impugned goods, though deemed to have been prohibited, can be provisionally released subject to the conditions that may be fixed. However, the appellant submits, during the hearing held on 3-7­2025, for seeking a clarification in respect of certain annexures submitted by the appellants, that they may be permitted to re-export the goods as they are suffering huge financial losses in addition to mounting detention and demurrage charges that may be payable by them. Learned Authorised Representative, at this juncture submits that permitting re-export is the prerogative of the adjudicating authority.

24. However, we find that there should be no objection on the part of the Revenue to release the goods for re-export purposes. In fact, contrary to the stand taken by the Learned AR, the original authority finds, at Para 8 of OM dated 15.03.2026, that

8. With reference to the correspondence made by this office, a reply letter dated 02.03.2026 from the DRI, Ahmedabad wherein vide para 3 & 9 they have informed that they have no objection to consider the requests for re-export of the said goods, in terms of ratio laid down by the Hon’ble Supreme Court in Union of India vs. Raj Grow Impex LLP, 2021 (377) E.L.T. 145 (S.C.).

25. In view of the above, we find that the objection raised by learned AR is not acceptable. We find that by allowing re-export the purpose of restricting the impugned goods for the reasons either that the goods are being imported causing harm to native industry or for the reason that the scarce foreign exchange is squandered in the import of un-necessary items is solved. Revenue is not going to gain anything by denying re-export.

26. We find that Hon’ble Punjab and Haryana held, in the case of Modern Insecticides Limited 2021-SCC-ONLINE-P&H-1604 (P & H), that

8. On a consideration of the entire aspect, we find that it has been specifically noticed by the learned Commissioner (Appeals) in the order dated 09.06.2021 (Annexure P-30) that on an earlier occasion also, an identical issue had arisen and the goods of the petitioner were permitted to be cleared vide release order dated 20.06.2018 and further that the adjudicating authority vide the said order while granting provisional release of the goods had specifically held that no duty is leviable on the goods ordered to be cleared to an export oriented unit and that the said release order had been accepted by the Department. It has further been noticed that the goods in the instant case are in powder form and have limited shelf life and shall get deteriorated if exposed to extreme weather conditions and lose their utility as well as monetary value. Reliance in the order dated 9.06.2021 has also been placed on the judgment of the Supreme Court in the matter of CIVIL APPEAL NO(s). 2217­2218 of 2021 titled as Union of India v. Raj Grow Impex LLP, in which, even after holding that the goods were liable to absolute confiscation, an option was given to the Respondent therein to re-export the goods.

27. Accordingly, the appeal is partly allowed. The goods imported vide bills of entry No. 6042250 dated 02.12.2025 & No. 6042246 dated 02.12.2025, totally valued at Rs 25,16,49,066 are permitted to be released for the purpose of re-export subject to submission of a bond equal to the value of goods. It is also directed that this order shall be complied within 7days.

(order pronounced in the open court on 15/07/2026)