Release of Perishable Goods Against Surety Bond: Analysis of Punjab and Haryana High Court’s Interim Order in Nakshatra Overseas Vs Central Board of Indirect Taxes

The Punjab and Haryana High Court, in the matter of Nakshatra Overseas Vs Central Board of Indirect Taxes, granted interim relief to the petitioner by ordering release of allegedly perishable goods on furnishing surety bonds equal to their value. The order was passed in CWP-1355-2024 by a Division Bench comprising Justice Sanjeev Prakash Sharma and Justice Sude epti Sharma on 12 February 2024.

This order is significant for importers and assessees dealing with perishable consignments held by customs authorities. It demonstrates how constitutional courts may balance revenue protection with prevention of deterioration or loss of perishable goods when disputes are pending.

Background of the Writ Petition

The proceedings arose from a writ petition registered as CWP-1355-2024, titled Nakshatra Overseas Vs Central Board of Indirect Taxes, before the Punjab and Haryana High Court.

According to the material placed before the Court:

  • The petitioner, M/s Nakshatra Overseas, approached the High Court seeking relief relating to release of imported goods.
  • The goods in question were submitted to be of a perishable character, which meant that continued detention could lead to loss of commercial value or physical deterioration.
  • It was submitted that full customs/excise duty pertaining to the goods had already been discharged by the petitioner.

The petitioner therefore requested that the goods be released urgently, emphasizing their perishable nature and asserting that no revenue loss would arise because the customs/excise duty liability had already been met.

Core Directions Issued by the High Court

The Division Bench, after hearing learned counsel for the petitioner and examining the circumstances, issued a set of interim directions aimed at:

  • safeguarding the claimed perishable goods from further damage, and
  • ensuring that the interests of the revenue are simultaneously protected.

Direction for Release of Perishable Goods

The High Court recorded the submission that the goods were perishable and that the petitioner had already paid the full customs/excise duty. Taking note of these facts, the Court ordered:

  • The goods shall be released to the petitioner;
  • Such release will be conditional upon the petitioner furnishing surety bonds;
  • The surety bonds must be for an amount equivalent to the value of the goods; and
  • Once those surety bonds are submitted, the authorities are required to release the goods forthwith.

This interim relief provides immediate protection to the petitioner’s commercial interests in the goods, while simultaneously enabling the authorities to secure their potential claims through surety bonds equal to the value of the consignment.

Requirement of Surety Bonds Equal to Value of Goods

The Court specifically held that the condition for release is the furnishing of surety bonds “equivalent to the value of the goods”. This has two clear implications: