Introduction
In Vimpro Tech v. Commissioner of Customs (Gr.2), Chennai, decided on 5 August 2026 [(2026) 45 Centax 206 (Mad.)], the Madras High Court examined whether the statutory power to grant provisional release of detained goods under Section 110A of the Customs Act, 1962 can be curtailed by an executive circular of the CBIC. The Hon’ble Court held that a circular, being subordinate executive instruction, cannot override or restrict a specific statutory power, and that pendency of investigation cannot, by itself, be a ground to deny provisional release.
Reaffirming settled principles on the hierarchy between statute and executive circulars, the Hon’ble Court directed provisional release of the detained goods on suitably protective terms, while leaving the underlying questions of classification, misdeclaration and import policy violation open for determination in adjudication.
Factual Matrix
The petitioner, a manufacturer, had imported a consignment of plastic spare parts through Chennai Seaport under Bill of Entry No. 4355530 dated 07.09.2025. The goods were detained by the Customs authorities on the allegation that they had been mis-declared. According to the department, the goods were, in substance, plastic spares/parts for lighters classifiable under Chapter 96 of the Customs Tariff Act attracting Basic Customs Duty at 10%, whereas the petitioner had claimed classification under Chapter 13 and paid duty at 5%.
The petitioner sought provisional release of the goods, but the request was rejected by the third respondent by order dated 17.04.2026. The rejection order was issued on virtue of CBIC Circular No. 35/2017-Customs dated 16.08.2017, which contemplates that provisional release may not be appropriate where goods are prohibited or restricted, where there is non-compliance with statutory requirements, or where release may affect investigation or public interest. The department also cited possible violation of DGFT Notification Nos. 15/2023 and 36/2024-25, alleged misdeclaration, and the pendency of investigation as grounds for refusal.
Aggrieved, the petitioner approached the Hon’ble Madras High Court by way of a writ petition, producing an official memorandum dated 26.06.2025, issued by the Under Secretary to the Government, authorising import of goods described as “Employ Plastic Shell and Spare Parts for manufacturing of Gas Lighter with Plastic Holder Tray” – a description the petitioner contended corresponded to the goods actually imported.
Issues Before the Court
The controversy essentially turned on the following questions:
- Whether CBIC Circular curtail or restrict the statutory discretion to grant provisional release conferred under Section 110A of the Customs Act, 1962?
- Whether mere pendency of investigation, by itself, justify refusal of provisional release?
- On what terms and conditions should provisional release be granted so as to protect the interest of Revenue, pending adjudication on classification, misdeclaration and alleged import policy violations?
Held by Court
The Hon’ble Madras High Court held that Section 110A of the Customs Act, 1962 specifically provides for provisional release of seized goods on such terms and conditions as may be imposed by the competent authority. Relying on the Delhi High Court’s decision in Additional Director General (Adjudication) v. Its My Name Pvt. Ltd. [2021 (375) E.L.T. 545 (Del.)], the Hon’ble Court reiterated that executive instructions may supplement a statute but cannot override or replace a statutory provision. CBIC Circular No. 35/2017-Customs could not, therefore, curtail the discretion vested under Section 110A.
The Hon’ble Court found that whether the imported goods were covered by the petitioner’s import authorisation, and whether there was any misdeclaration or violation of import policy, were matters to be determined in adjudication proceedings, and not at the stage of considering provisional release. Similarly, the question of correct classification and the resultant differential duty liability was left open for the competent authority to decide. The pendency of investigation could not, by itself, defeat the statutory power to grant provisional release, since the interest of Revenue could adequately be safeguarded through appropriate conditions.
Drawing on Navashakti Industries Pvt. Ltd. v. Commissioner of Customs, ICD, TKD, New Delhi [2011 (267) E.L.T. 483 (Del.)], as modified by the Supreme Court in Civil Appeal No. 3940 of 2011, and on the Division Bench decision in Commissioner of Customs, Tuticorin v. Empire Exports [2013 (287) E.L.T. 41 (Mad.)], the Hon’ble Court directed provisional release of the goods on the following terms: (i) payment of duty at 10% on the declared value, with credit for duty already paid; (ii) execution of a personal bond for the balance differential duty as may be determined in adjudication; and (iii) release without prejudice to the department’s right to continue investigation and complete adjudication. The Hon’ble Court also directed consideration of the petitioner’s request for a detention certificate under Regulation 6(1) of the Handling of Cargo in Customs Areas Regulations, 2009, and clarified that its observations were confined to the issue of provisional release and would not affect the merits of the adjudication.
AMLEGALS Remarks
The decision in Vimpro Tech reaffirms a settled but frequently contested principle in customs practice – that a departmental circular, however well-intentioned, cannot be used to whittle down a statutory power expressly conferred by Parliament. Section 110A is a substantive safeguard against prolonged, unexplained detention of goods pending investigation, and its exercise cannot be made contingent upon satisfaction of conditions that the statute itself does not prescribe.
The ruling is also significant for its clear separation of the provisional release inquiry from the merits of adjudication. By declining to pre-judge issues of classification, misdeclaration and import policy compliance, and confining itself to crafting revenue-protective conditions for release, the Hon’ble Court has offered a template that balances an importer’s commercial interest in the timely release of goods against the Revenue’s legitimate interest in securing its dues pending investigation.
For importers facing detention on classification or misdeclaration disputes, this judgment reinforces that provisional release is a statutory entitlement, not a discretionary concession contingent on the department’s Circular-based comfort, and that conditions such as payment of the higher rate of duty claimed by the department together with a bond for the balance can adequately protect Revenue without indefinitely stalling legitimate trade.
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