Madras HC Allows Reply for Provisional Release of Imported Goods by Customs

Satheesh T R Vs Additional Commissioner of Customs (Madras High Court)

Conclusion: Where there exist conflicting test reports regarding conformity of imported goods to standards, the proper course was to allow the importer to respond to the show cause notice with all supporting documents, and for the authority to decide after affording a hearing whether provisional release under Section 110A could be granted.

Held: Assessee had initially challenged a show cause notice issued by the Additional Commissioner of Customs, Chennai, on grounds that the goods in question covered under Bills of Entry dated 26.06.2024 were compliant with Indian standards and eligible for provisional release. At the same time, assessee requested a directive to issue certificates of detention and demurrage waiver. According to assessee, this new test report confirmed that the imported goods met Indian quality standards. Department submitted that earlier test report had given detailed analysis as to why the goods in question were not as per the Indian Standards. However, assessee contended that as per the subsequent test report, goods in question can be released provisionally under Section 110A of the Act. It was held that the issue was highly debatable and held that assessee should be allowed to submit a reply including this new evidence and that the customs authorities must consider this reply in a fair and timely manner. Assessee submitted a reply to the show cause notice within one week. Subsequently, the Additional Commissioner of Customs was required to pass a final order within three weeks, post-hearing. In addition, it was directed that if the decision was favorable to assessee, the court granted him the liberty to file a fresh representation for provisional release of the goods under Section 110A, which allowed conditional release of goods pending adjudication. The court also directed the customs authorities to consider issuance of a detention and demurrage waiver certificate, subject to the outcome of the proceedings. Conversely, if the goods were ultimately deemed to be prohibited items, assessee would not be eligible for provisional release, added the court. The court also clarified that it had not expressed any opinion on the merits of the competing claims and directed both parties to proceed strictly in accordance with law.