Madras High Court
M/S.Kani International vs The Principal Commissioner Of Customs ... on 31 October, 2025
Author: N.Anand Venkatesh
Bench: N. Anand Venkatesh
1/14 WP No. 41331 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 31-10-2025
CORAM
THE HONOURABLE MR JUSTICE N. ANAND VENKATESH
WP No. 41331 of 2025
and WMP Nos. 46275 & 46277 of 2025
M/s.Kani International
Rep., By Its Proprietrix
Mrs. Karuvelan Kani,
H No.19/22, 5th Street, B.V.Nagar,
3rd Main Road, Palavanthangal,
Chennai-600 114.
Petitioner(s)
Vs
1. The Principal Commissioner of Customs (Chennai-III) (Preventive)
Custom House, No.60, Rajaji Salai,
Chennai- 600001.
2.The Intelligence Officer, DRI (Hqrs.)
Directorate of Revenue Intelligence,
7th Floor, Drum Shaped Building,
I.P. Bhavan, I.P.Estate, New Delhi.
3.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)
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2/14 WP No. 41331 of 2025
PRAYER Writ Petition filed under Article 226 of the Constitution of India for
issuance of a Writ of Certiorarified Mandamus, calling for the records in
F.No.DRI/CI/ENQ/69/2025-CI-O/o DG-DRI-HQ-DELHI/2119, dated
27.06.2025, passed by the 2nd respondent herein in petitioner's Bill of Entry
NO.8621551, dated 28.02.2025 and quash the same as illegal, arbitrary, unfair,
un- reasonable, violation of Principles of natural justice and perverse in sofar as
intimating Provisional Release of the goods in adhering to the provisions
provided under Section 110A of the Customs Act read with guidelines issued
under Board Circular No.35/2017-Customs, dated 16.08.2017 which has been
held as void and unenforceable at law by Honble Division Bench of Delhi
High Court and direct the 1st respondent herein to release the goods viz, 79199
SQM, of PU Coated Fabric and 35356.6 SQM of PA coated Fabric imported
vide Bill of Entry No., 8621551 dated 28.02.2025, totally valued at USD
15839.80 for 79199 SQM, and totally valued at USD 4242.79 for 35356.6
SQM on execution of Simple Bond for the Differential Duty on the re-
determined value and also on execution of Simple Bond towards the
Adjudication levies if any.
For Petitioner(s): Mr.A.K. Jayaraj
For Respondent(s): Mr.R.P.Pragadish
Senior Standing Counsel and
Mr.J.Harikrishna
Junior Panel Counsel for R1 to R3
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3/14 WP No. 41331 of 2025
ORDER
This writ petition has been filed challenging the Seizure Memo dated
27.06.2025 passed by the second respondent and for a consequential direction to
the respondents to release the goods on execution of Simple Bond for the
Differential Duty on the re-determined value and also on execution of Simple
Bond towards the adjudication levies, if any.
2. Heard Mr.A.K.Jayaraj, learned counsel for the petitioner and
Mr.R.P.Pragadish, learned Senior Standing Counsel and Mr.J.Harikrishna Junior
Panel Counsel appearing of 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 79199 SQM., of PVC Coated Fabrics from China,
valued at total USD 15839.80. The goods were shipped under invoice dated
05.01.2025 and the Bill of Entry was filed dated 28.02.2025 and the petitioner
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claim for clearance of the goods.
4. The petitioner had submitted all the necessary documents and also filed
the Bill of Entry and sought for the clearance of the goods by declaring the
value of the goods. The petitioner requested further release of the goods.
5. The petitioner would submit that on an earlier occasion they had
imported similar goods and got necessary clearance from the office of the
second respondent and on that pretext, she requested for release of the goods.
Thereafter, the authorities had de-stuffed the goods and conducted examination
of the goods. Subsequently, the samples were sent for testing. The authorities
had informed the petitioner that the release of the goods would be subject to the
test result of the sample.
6. At this juncture, the petitioner received the impugned seizure memo
dated 27.06.2025 from the second respondent stating that as per the CRCL Test
Report, the goods have to be re-classified and therefore, the seized goods were
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liable for confiscation and were placed under seizure in terms of Section 110(1)
of the Customs Act. The impugned seizure memo has also drawn reference to
the provisions of provisional release in terms of Section 110A of the Customs
Act read with guidelines issued under Board Circular No.35/2017-Customs,
dated 16.08.2017 .
7. The petitioner aggrieved by the impugned seizure memo dated
27.06.2025, issued by the second respondent, has approached this Court.
8. The petitioner would further submit that the subject goods were freely
importable goods and cheaper in price. He also added that identical goods were
already assessed and released by the Customs Officers, by accepting the value
declared in the Bill of Entry.
9. 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, became a subject
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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.
10. The learned counsel, therefore, submitted that there was absolutely no
justification on the part of the second respondent to impose onerous conditions
as a condition precedent for release of the goods and accordingly, contended
that the impugned order drawing reference to provisional release order is liable
to be interfered by this Court.
11. Per contra, the learned Standing Counsel appearing on behalf of the
respondents submitted that the Apex Court did not go into the validity or
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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. Hence, it was contended that there is absolutely no reason for interfering
with the provisional release order.
12. This Court has carefully considered the submissions made on either
side and the materials available on record.
13. This Court is not dealing with the merits of the case since what has
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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;
(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.”
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14. 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 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
(c) payment of duty of Rs. 9,43,411/-.
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,
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which shall be subject to the result of the adjudication of the show-
cause notice.”
15. In the case in hand, the goods that are involved are PVC Coated
Fabrics, 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 order has been
passed.
16. In the impugned order, the second respondent has stated as follows:
Whereas, the goods declared as "PU COATED FABRIC(CTH-
59032090)" and "PA COATED FABRIC(CTH-59039090)" imported by
M/s. Kani International (IEC: ESOPK1635P), 19/22 5th Street B V
Nagar, 3rd Main Road Chennai 600061 vide Bill of Entry No. 8621551
dated 28.02.2025 filed through SEZ Unit M/s Malj Lines Pvt. Ltd. (IEC:
AAMCM1178L) situated inside the FTWZ M/s. NDR Infrastructure
Private Limited, Nandiambakkam, Ponneri Taluk, Chennai-600120,
appear to be appropriately classifiable under CTH 59031090 (Type 1)
and 54076900 (Type 2) as against the declared CTH in the Bill of Entry
i.c. 59032090 and 59039090 respectively.
In view of the above, there is a reason to believe that the goods
imported vide the Bill of Entry No. 8621551 dated 28.02.2025 are liable
for confiscation in terms of section 111(m) of the Customs Act, 1962
Therefore, the subject goods are hereby placed under seizure under the
provisions of Section 110(1) ibid.
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Further, your attention is drawn to the provisions of provisional
release of the seized goods provided under section 110A of the Customs
Act, 1962 read with the guidelines issued through Board's Circular No.
35/2017- Customs, dated 16.08.2017.
17. 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:
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 is directed to execute a bond on re-
determined value arrived by the Department; and
d) The petitioner shall also execute a bond for value of goods
in respect of adjudication levies, if any. On compliance,
the goods shall be released by the respondent within a
period of seven (7) days from the date of compliance of
the conditions.
18. The above conditions will suffice to take care of the interest of the
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Department and at the same time, the petitioner will also be able to get the
goods released in its favour.
19. Subject to the compliance of the above conditions, goods 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.
20. In the result, the writ petition is disposed of in the above terms. No
costs. Consequently, connected miscellaneous petitions are closed.
31-10-2025
(1/2)
Index:Yes/No
Speaking/Non-speaking order
Internet:Yes
Neutral Citation:Yes/No
ssr
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To
1. The Principal Commissioner of Customs (Chennai-III) (Preventive)
Custom House, No.60, Rajaji Salai,
Chennai- 600001.
2.The Intelligence Officer, DRI (Hqrs.)
Directorate of Revenue Intelligence,
7th Floor, Drum Shaped Building,
I.P. Bhavan, I.P.Estate, New Delhi.
3.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.
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N.ANAND VENKATESH J.
ssr
31-10-2025
(1/2)
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