2026-VIL-1296-CESTAT-CHD-CU
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CUSTOMS CESTAT Cases

Customs - Provisional Release of Restricted Goods – Tariff Classification and Import Policy Restriction – Appellant imported silver jewelry with synthetic cubic zirconia and synthetic ruby stones, classified under Customs Tariff Item 71131145, from Thailand – Department opined goods were misclassified and correctly classifiable under CTI 71131149 which was restricted under DGFT Notification No. 34/2025-26 and seized the goods – Lower authority and Appellate Authority rejected application for provisional release on ground that goods were restricted under DGFT policy – Whether provisionally released goods deemed as prohibited or restricted can be released pending adjudication and whether revenue can deny provisional release on basis of policy restriction – HELD – Section 110A of Customs Act 1962 grants statutory discretion to adjudicating authority to provisionally release any goods, documents or things seized including those alleged to be prohibited or restricted – The expressions goods, documents and things seized are of general import without any qualifying words and do not impose any limitation on provisional release – CBIC Circular No. 35/2017 which sought to curtail discretion of adjudicating authority by prohibiting release of restricted goods was struck down as ultra vires by High Court and affirmed by Supreme Court – Provisional release is strictly an interim measure designed to protect commercial value of goods pending adjudication and is not a pre-determined adjudication. Revenue cannot deny provisional release on mere allegation that goods are prohibited or restricted – Allowing re-export of goods achieves the purpose of DGFT restriction by preventing entry of restricted goods into domestic market without causing unnecessary financial loss to importer through detention and demurrage charges - Even though classification remains disputed and final adjudication is pending, goods can be released for re-export purposes – Appeal is partly allowed and goods are permitted to be released for re-export subject to execution of bond equal to value of goods – Ordered accordingly
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