CESTAT Chandigarh Allows Provisional Release of Allegedly Prohibited Goods

Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 14.04.2026

CESTAT Chandigarh Allows Provisional Release of Allegedly Prohibited Goods

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The case of M/s Global Copier System vs. Commissioner of Customs, Ludhiana, heard by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chandigarh, revolves around the seizure and classification of imported second-hand multifunctional printing machines. This legal dispute highlights the complexities of Indian customs and trade laws, particularly concerning import restrictions, compliance requirements, and the provisional release of seized goods.

Background of the Case

M/s Global Copier System, the appellant-importer, filed an appeal against the order passed by the Commissioner of Customs (Appeals), Ludhiana, which upheld the rejection of their request for the provisional release of 230 second-hand Highly Specialized Equipment (HSE) Digital Multi-Function Print and Copying Machines. These machines were valued at Rs. 40,17,969 and classified under CTE 84333100.

The appellant had filed a Bill of Entry for the clearance of these goods on July 29, 2025. However, during the examination, it was found that the appellant lacked the necessary import authorization from the Directorate General of Foreign Trade (DGFT) and registration with the Bureau of Indian Standards (BIS). A Chartered Engineer’s report concluded that the imported goods were multifunctional devices and not HSE, leading to their seizure on August 14, 2025, under the belief that they were liable for confiscation.

Key Arguments by the Appellant

The appellant, represented by legal counsel, presented the following arguments:

1. Exemption from BIS Registration: The appellant argued that the CRO 2012 exempts HSE from BIS registration requirements, and the imported goods should qualify for this exemption.
2. Freely Importable Goods: According to the ITC HS classification, the imported goods are categorized as “freely importable,” and no notification explicitly prohibits their import.
3. Foreign Chartered Engineer’s Certification: The foreign Chartered Engineer had classified and valued the goods at the time of export, and the local Chartered Engineer did not provide sufficient reasons to refute this classification.
4. Precedents Supporting Provisional Release: The appellant cited multiple cases where courts had allowed provisional release of goods under similar circumstances, emphasizing that provisional release is permissible even for goods deemed prohibited.
5. Legal Provisions: Section 110A of the Customs Act allows for the provisional release of seized goods, and the impugned order failed to provide evidence of fraud or concealment by the appellant.

Key Arguments by the Respondent

The Commissioner of Customs, Ludhiana, represented by the Authorized Representative, countered the appellant’s claims with the following points:

1. Non-Compliance with Import Regulations: The appellant failed to obtain the required DGFT authorization and BIS registration, rendering the goods prohibited under Section 2(33) of the Customs Act.
2. Exemption Not Applicable: The exemption under S.O. 2844 (E) applies only to HSE, and the local Chartered Engineer’s report confirmed that the imported goods were multifunctional devices, not HSE.
3. Legal Precedents: The respondent argued that the cases cited by the appellant were not applicable due to differences in facts and circumstances.

CESTAT’s Observations and Final Order

After hearing both sides, the tribunal made the following observations:

1. Provisional Release Under Section 110A: The tribunal emphasized that Section 110A of the Customs Act allows for the provisional release of seized goods, irrespective of whether they are deemed prohibited.
2. Adjudication Required for Prohibition: The tribunal noted that the categorization of goods as prohibited is subject to adjudication, and the mere act of seizure does not establish the goods as prohibited.
3. Precedents Supporting Provisional Release: The tribunal referred to various judgments, including those by the High Courts of Delhi, Madras, and Telangana, which upheld the right to provisional release under similar circumstances.
4. Conditions for Provisional Release: The tribunal concluded that the impugned goods could be released provisionally, subject to the following conditions:
   • Payment of applicable duty on the imported goods.
   • Submission of a bond equivalent to the value of the imported goods.
   • Submission of a bank guarantee equivalent to 30% of the applicable duty.

Conclusion

The case of M/s Global Copier System vs. Commissioner of Customs, Ludhiana, underscores the importance of adhering to import regulations while also highlighting the legal provisions for provisional release of seized goods.

The tribunal’s decision to allow provisional release, subject to specific conditions, reflects a balanced approach that considers both compliance with trade laws and the rights of importers. This case serves as a significant precedent for similar disputes in the future, emphasizing the need for clear adjudication before categorizing goods as prohibited.

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Source: CESTAT Chandigarh

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