Madras High Court

M/S Mtop Overseas Private vs The Principal Commissioner Of on 10 October, 2025

Author: N.Anand Venkatesh

Bench: N. Anand Venkatesh

                                                                                  WP No. 38622 of 2025



                            IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                         DATED: 10-10-2025

                                                    CORAM

                   THE HONOURABLE MR JUSTICE N. ANAND VENKATESH

                                       WP No. 38622 of 2025
                                               AND
                                  WMP Nos.43187 and 43190 OF 2025

                1. M/s MTOP Overseas Private
                Limited
                Rep., By Its Director
                Mr. Neeraj Sharma,
                Ground Floor, 1/9093, Gali No.3,
                West Rohtas Nagar, Shahadra,
                East Delhi- 110 032.

                                                                                  Petitioner(s)

                                                         Vs

                1. The Principal Commissioner Of
                Customs (Preventive)
                Custom House, No.60, Rajaji
                Salai, Chennai- 600 001.

                2.The Additional Commissioner
                Of Customs (NDR- FTWZ)
                O/o. The Principal Commissioner
                Of Customs, Preventive
                Commissionerate, Custom House,
                No.60, Rajaji Salai,
                Chennai- 600 001.

                                                                                  Respondent(s)

                PRAYER
                Writ petition filed under 226 of Constitution of India for the issuance

                of writ of Certiorarified Mandamus to Call for the records in F.


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                                                                                        WP No. 38622 of 2025


                No.GEN/ ADJ/ Misc/ 392/ 2025, dated 14.08.2025, passed by the 2nd

                respondent herein in petitioners Bill of Entry NO.7599210, dated

                03.01.2025 and quash the same as illegal, arbitrary, unfair, UN-

                reasonable, violation of principles of natural justice and perverse in

                sofar as condition No.1 and                   3 of the Impugned                      Order dated

                14.08.2025 and direct the 2nd respondent herein to release the goods

                Viz., 735 cartons totally including 340 cartons viz., 24610 SQM., of

                PVC Fabrics imported vide Bill                          of Entry No.7599210, dated

                03.01.2025, totally valued at USD 5,828.30 for 735 cartons without

                insisting for payment           of Duty On the re- determined value and

                without insisting for furnishing Bank Guarantee for Rs.8,50,000 /-

                and pass orders.


                                  For Petitioner(s): Mr.A.K. Jayaraj
                                  For Respondent: Mr.M.Siddarth
                                                     Standing Counsel
                                                     Assisted by
                                                     Mr.M.Prarthana

                                                          ORDER

This writ petition has been filed, challenging the

provisional release order dated 14.08.2025 passed by the second

respondent and for a consequential direction to the second

respondent to release the goods without insisting for payment of duty

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on the re-determined value and without insisting furnishing of Bank

Guarantee for a sum of Rs.8,50,000/-. (Rupees Eight lakhs fifty

thousand only).

2. Heard Mr.A.K.Jayaraj, learned counsel for the petitioner and

Mr.M.Siddarth, learned Standing Counsel for the respondents.

3. The petitioner had placed order with a supplier in China for

supply of PVC coated fabrics and one of the consignment reached the

Chennai Port and the same was also taken to the SEZ Ware House in

Nandiampakkam, Chennai. The petitioner had imported 340 cartons

24610 SQM of PVC Coated Fabrics from China, valued at USD

5828.30. The goods were shipped under invoice dated 07.12.2024 and

the Bill of Entry was filed dated 03.01.2025 and the petitioner claim

for clearance of the goods for Home Consumption.

4. The petitioner had submitted all the necessary documents

and also filed the Bill of Entry for Home Consumption and sought for

the clearance of the goods by declaring the value of the goods. The

petitioner requested further release of the goods.

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5. An investigation was done and summon was issued to the

petitioner to appear before the Investigating officer at New Delhi and

the petitioner attended the enquiry and statement was also recorded

from him.

6. Thereafter, the petitioner was repeatedly sending

communication through E-mails, seeking for the return of the goods.

In the meantime, the petitioner received a letter dated 14.08.2025,

extending the time period for issuance of show cause notice in terms

of Section 110 of the Customs Act from the Deputy Director. At this

juncture, the petitioner received the impugned provisional release

order dated 14.08.2025 from the second respondent, informing that

the Additional Commissioner of Customs has approved the

provisional release of the goods covered under the Bill of Entry dated

03.01.2025 in terms of Section 110 of the Customs Act, after paying

the re-determined duty as mentioned in the seizure memo and the

petitioner executing a bond for a sum of Rs.27,00,000/- and the

petitioner also furnishing Bank Guarantee for a sum of Rs.8,50,000/-.

It was also informed to the petitioner that they must also give an

undertaking to fully comply with the adjudication out come and pay

any Additional Duty, Fine or Penalty that may be imposed in the

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said proceedings.

7. The petitioner aggrieved by the impugned provisional

release order dated 14.08.2025, issued by the second respondent, has

approached this Court.

8. The learned counsel for the petitioner submitted that the

provisional release order was issued by placing reliance upon the

guidelines issued under CBIC Circular No.35/2017-Customs, dated

16.08.2017 and that this circular already became a subject matter of

challenge before the Delhi High Court and it was struck down as

contrary to Section 110A of the Customs Act and was held to be void

and unenforceable in law. To substantiate this submission, the

learned counsel relied upon the Division Bench judgment of the Delhi

High Court in the case of Additional Director General

(Adjudication) Vs. Its My Name Pvt., Ltd., reported in 2021 (375)

E.L.T. 545 (Del.). The learned counsel further brought to the notice

of this Court that the Apex Court confirmed the judgment of the

Delhi High Court by dismissing the S.L.P by order dated 01.10.2020.

9. The learned counsel therefore submitted that there was

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absolutely no justification on the part of the second respondent to

impose onerous conditions as a condition precedent for the release of

the goods and accordingly contended that the provisional release

order is liable to be interfered by this Court.

10. Per contra, the learned Standing Counsel appearing on

behalf of the respondents submitted that the Apex Court did not go

into the validity or otherwise of the judgment of the Delhi High

Court, since the particular case, which went on an appeal before the

Hon'ble Supreme Court, the Apex Court merely took into

consideration the submission made by the learned Senior Counsel

appearing on behalf of the assessee reporting no objection for the

enhancement of the quantum of the Bank Guarantee and

accordingly, the Apex Court merely modified the order of the High

Court with respect to the quantum of Bank Guarantee and disposed

of the S.L.P. The learned Standing Counsel further submitted that

the adjudication is yet to take place and at that point of time, if any

additional duty, fine or penalty is imposed against the petitioner,

there must be some security available with the Department for

recovering the same and therefore, the petitioner has to necessarily

execute the Bank Guarantee as was directed in the provisional

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release order dated 14.08.2025. Hence, it was contended that there is

absolutely no reason for interfering with the provisional release

order.

11. This Court has carefully considered the submissions made

on either side and the materials available on record.

12. This Court is not dealing with the merits of the case since

what has been put to challenge is the provisional release order and

that too questioning some of the onerous conditions. While

undertaking this exercise, it will suffice to take note of some of the

earlier orders passed by this Court. One such order was passed in the

case of Green Line Vs. Commissioner of Customs, Chennai -IV,

reported in 2016 (340) E.L.T 140 (Mad). That was also a case,

which involved differential duty of non prohibited goods. Similar

conditions were imposed and the said writ petition was disposed of by

this Court in the following terms:

“8. In the light of the above discussions, the Writ Petition is disposed of with the following directions:

(i) The petitioner is directed to remit the entire duty as assessed by them;

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(ii) The petitioner is directed to pay 50% of the differential duty which has been arrived at by the Department as Rs. 22.72 lakhs;

(iii) The petitioner is directed to execute a bond for the remaining amount to the satisfaction of the respondents.

(iv) The petitioner shall execute an indemnity bond stating that in the event of Shir.S. Ariya raising any claim over the goods or concerning the use of IEC code issued in favour of M/s. Green Line, the petitioner Mr. Mohamed Kalith alone would be fully responsible for the same and no liability can be fastened on the respondent Department and the indemnity bond should be furnished in the form approved by the respondents.”

13. This order of the learned Single Judge was subsequently

confirmed by the Hon'ble Division Bench of this Court in

W.A.No.1243 of 2016 dated 25.10.2016. It is also relevant to take

note of a Division Bench order of this Court in the case of

Commissioner of Customs and Others vs. Sri Venkateshwara

Paper Boards Rep.by its General Manager Mr. L. Barath

reported in 2022 (379) E.L.T 310 (Mad), which involved prohibited

goods and the writ petition was disposed of in the following terms:

“32. We have perused the order dated 29.12.2020 permitting provisional release of the cargo, subject to the

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following conditions:

(a) execution of a bond for Rs. 34,65,334/-,

(b) production of cash security/bank guarantee for Rs.

12,12,867/- towards redemption fine and penalty, and

33. We find nothing unreasonable about conditions

(a) and (c), however condition (b) is concerned directing the Importer to furnish Bank guarantee/cash security towards redemption fine and penalty would be harsh as the show- cause notice is yet to be adjudicated. Therefore, we modify the condition (b) alone by directing the Importer to execute the bond for Rs. 12,12,867/-.

34. On compliance of the execution of the bond for the amount mentioned in conditions (a) and (b) supra and payment of duty as mentioned in condition (c), the Revenue shall permit provisional release of the cargo within seven (7) days therefrom, which shall be subject to the result of the adjudication of the show-cause notice.”

14. In the case in hand, the goods that are involved are Viscose

Knitted Fabric, which according to the Department has been

misclassified and undervalued. Therefore, the Department is

proceeding further with the adjudication proceedings. Pending the

same, the impugned provisional release order has been passed.

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15. The conditions that have been imposed in the provisional

release order are as follows:

Specific Conditions:

1. The importer shall file the DTA Bill of Entry for

provisional release for the re-determined value and shall

pay re-determined duty as mentioned in seizure memo and

/ or NOC issued by the DRI, HQ, New Delhi. The Bill of

Entry shall be assessed in view of pending investigation.

2. The importer shall execute a Bond for

Rs.27,00,000/- (Rupees Twenty Seven lakhs only)

3. The importer shall furnish a Bank Guarantee(BG)

for Rs.8,50,000/- (Rupees Eight lakhs fifty thousand only)

16. Taking into consideration the facts and circumstances of the

case and considering the grounds raised in the writ petition and also

taking into consideration of the earlier orders passed by this Court,

this Court is inclined to modify the conditions imposed in the

provisional release order as follows:

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a) The petitioner is directed to remit the entire duty

as declared by them.

b) The petitioner is directed to pay 50% of the

differential duty for the total value arrived at by the

Department.

c) The petitioner shall execute a bond for a sum of

Rs.27,00,000/-(Rupees twenty seven lakhs only) and

d) The petitioner shall also execute a bond for a sum

of Rs.8,50,000/- (Rupees eight lakhs fifty thousand only)

instead of Bank Guarantee. On compliance, the goods shall

be released by the respondents within a period of seven

days from the date of compliance of the conditions.

17. This Court is inclined to interfere with the provisional

release order only insofar as the direction given to the petitioner to

furnish a Bank Guarantee for a sum of Rs.27,00,000/- The above

conditions will suffice to take care of the interest of the Department

and at the same time, the petitioner will also be able to get the goods

released in its favour.

18. Subject to the compliance of the above conditions, goods

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shall be released by the respondents. The Department is directed to

proceed further with the adjudication and the petitioner shall co-

operate during the adjudication proceedings to ensure that it is

completed as expeditiously as possible.