Delhi High Court Criticizes Customs Department For Imposing ₹10 Crore Security On ₹1 Crore Goods

The Delhi High Court strongly criticized the Customs Department’s demand of ₹10 crore security for releasing goods valued at just ₹1 crore, calling it “extremely onerous.” The observation came while hearing a petition for the provisional release of roasted areca nuts imported from Indonesia, which were detained due to conflicting laboratory test reports.

The petitioner had imported five containers of roasted areca nuts, classified under the appropriate Customs Tariff Heading based on an Advance Ruling. Three Bills of Entry were filed at ICD Patparganj, Delhi. During inspection, the Customs Department sent samples to the CRCL, which gave inconsistent results—some samples were deemed fit for consumption, others unfit. A re-test produced similar discrepancies. Despite the goods being valued at ₹1 crore, Customs demanded a bond and bank guarantee totaling ₹10 crore for their provisional release. The petitioner challenged this as grossly disproportionate.

The bench of Justice Pratibha M. Singh and Justice Rajneesh Kumar Gupta stated, “The Court has considered the matter. The goods have been released only for industrial use. The impugned order requires a personal bond for more than Rs. 4.10 crores along with a Bank Guarantee for a sum of over Rs. 5.81 crores i.e., the overall security demanded is almost Rs. 10 crores. Even if the value as stated by the Department is taken into consideration, bearing in mind the value of goods itself, the conditions for provisional release are clearly onerous.”

The Court found the demanded security excessive and unreasonable. It directed the petitioner to furnish a personal bond of ₹4.10 crore and a reduced bank guarantee of ₹50 lakh within two weeks. Upon fulfilling these requirements, the authorities were ordered to provisionally release the goods.

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