Facts of the Case

  • The Petitioner: M/s. Meenakshi Auto Machines, represented by its Proprietor Mr. Hem Chand Dubey, imported a consignment consisting of 101 units of second-hand Multi-Functional Devices (MFDs) (printing and copying machines).
  • The Bill of Entry: The imported goods were declared under Bill of Entry No. 9178940 dated May 11, 2026.
  • The Seizure Action: On May 21, 2026, the 4th Respondent (Superintendent of Customs, Inland Container Depot, Sanathnagar, Hyderabad) issued a Seizure Memo, effectively confiscating the entire shipment of 101 MFD units.
  • Grounds for Confiscation: The Customs authorities intercepted and seized the cargo solely on the ground that the petitioner failed to furnish the mandatory Directorate General of Foreign Trade (DGFT) authorization or import license required for restricted second-hand goods.
  • Legal Recourse: Aggrieved by the absolute detention and seizure of the cargo, which threatened severe financial distress and irreparable business hardship, the petitioner approached the High Court for the State of Telangana under Article 226 of the Constitution of India to quash the Seizure Memo and seek immediate provisional release.

Issues Involved

  1. Whether the absolute seizure and withholding of the imported second-hand Multi-Functional Devices (MFDs) by the Customs Authorities, based on the non-production of a DGFT import license, was legally sustainable or overly arbitrary under the Foreign Trade Policy 2023.
  2. Whether the petitioner was entitled to the provisional release of the restricted second-hand capital goods pending final adjudication by the Customs Department, subject to safeguarding the revenue's interest.
  3. Whether the facts and legal propositions of the present dispute were squarely covered by the prior judicial precedent established by the Division Bench of the Telangana High Court in Writ Petition No. 7637 of 2026.

Petitioner’s Arguments

  • Arbitrary Seizure: The learned counsel for the petitioner, Sri Akkapeddi Srinivas, argued that the absolute confiscation of the 101 units of MFDs via the Seizure Memo dated May 21, 2026, was arbitrary, disproportionate, and lacking valid jurisdiction.
  • Irreparable Loss: It was strongly contended that the prolonged detention of the machinery at the Inland Container Depot (ICD) caused escalating demurrage charges, which would lead to the total economic ruin of the enterprise if interim provisional relief was not granted.
  • Judicial Precedent: The petitioner firmly asserted that the legal issue regarding the provisional release of restricted second-hand MFDs was no longer res integra. They argued that the matter was squarely covered by the specific ratio and conditional release framework laid down by the coordinate Division Bench of the same High Court in its judgment dated March 12, 2026, in W.P. No. 7637 of 2026. A prayer was made to extend identical relief to maintain judicial consistency.

Respondent’s Arguments

  • Violation of Import Policy: The respondents, represented by Sri N. Bhujanga Rao (learned Deputy Solicitor General of India) and Sri Dominic Fernandes (Standing Counsel for Customs), initially defended the department's position by highlighting that second-hand electronics and multi-functional digital copying machines are highly regulated and restricted items under the Foreign Trade Policy. Importing them without valid DGFT licenses violates the law, thereby justifying the initial seizure.
  • Concession on Precedent: Upon examining the records and the judicial history brought forth by the petitioner, the learned Deputy Solicitor General could not dispute or deny the factual and legal symmetry between the present case and the earlier decision. The revenue acknowledged that the operational matrix was identical to the case decided in W.P. No. 7637 of 2026.

Court Order / Findings

The Division Bench comprising Hon’ble Sri Justice Nagesh Bheemapaka and Hon’ble Sri Justice Vakiti Ramakrishna Reddy reviewed the submissions and allowed the Writ Petition by applying the precedent of W.P. No. 7637 of 2026. The Court ordered the provisional release of the 101 MFD units under the following strictly binding conditions:

  • Quantification and Payment of Enhanced Duty: The Customs authorities were directed to calculate the enhanced differential duty applicable to the imported goods within one (01) week from receiving the order copy. The petitioner must deposit/pay this quantified enhanced duty immediately upon receipt.
  • Timeline for Release: Upon verification of the enhanced duty payment by the petitioner, the respondents must release the seized consignment within an outer limit of four (04) weeks.
  • Bank Guarantee: In addition to the enhanced duty, the petitioner must furnish a Bank Guarantee equivalent to 10% of the total declared/assessed value of the imported goods to secure the revenue.
  • Transaction Tracking: If the petitioner sells or supplies these provisionally released goods to end-customers, they must maintain meticulous records of the transaction details, buyer identities, and sale prices. These logs must be made available to the Customs authorities upon request.
  • Uninfluenced Final Adjudication: The High Court explicitly clarified that this provisional arrangement would not prejudice or influence the statutory adjudicating authority, who remains completely free to complete regular assessment and adjudication proceedings independently.

Important Clarification

  • Demurrage Waiver Consideration: The High Court provided a crucial operational clarification regarding the accumulated demurrage and detention charges. The Court directed that if the petitioner submits a formal application seeking a waiver of the accrued demurrage charges, the respondent authorities must evaluate, process, and decide upon such an application objectively on its merits.
  • Adjudication Independent of Interim Relief: The provisional clearance does not amount to a final legalization of the import. The Customs Department retains full authority to proceed with statutory show-cause notices and penalty adjudications in accordance with the law.

Section Involved

  • Section 110A of the Customs Act, 1962 (Provisional release of goods, documents, and things seized pending adjudication).
  • Article 226 of the Constitution of India (Power of High Courts to issue certain writs, specifically a Writ of Mandamus).
  • Foreign Trade Policy 2023 (Regulations governing the import restrictions and licensing of second-hand goods/electronics).
  • Section 151 of the Code of Civil Procedure (CPC), 1908 (Inherent powers of the Court invoked for interim relief).

Link to download the order - https://mytaxexpert.co.in/uploads/1783069720_468compressed.pdf

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