Bombay High Court
SHANTAM HOLDINGS INDIA PVT LTDversusTHE UNION OF INDIA THROU. THE SEC. DEPT OF REVENUE MINISTRY OF FINANCE AND ORS
- Decided
- Disposal
- Disposed Off
Holding
The Court held that, subject to correct classification, the petitioner is entitled to ISFTA benefits and may be provisionally released upon payment of the differential duty and furnishing a bond.
Summary
The petitioner, Shantam Holdings India Pvt. Ltd., imported an excursion boat from Sri Lanka claiming a 100% duty exemption under the Indo‑Sri Lanka Free Trade Agreement (ISFTA). The Customs authorities held the boat, re‑examined it, and eventually seized it on the ground of mis‑classification, issuing a show‑cause notice for payment of differential duty without ISFTA benefit. The petitioner sought various writs under Article 226, including a direction to provisionally release the boat upon payment of the differential duty and furnishing a bank guarantee. The Court examined whether the ISFTA benefits applied and held that, if the classification is correct, the petitioner is entitled to the exemption and any duty already paid should be refunded. It further directed that the petitioner may be provisionally released upon depositing Rs 75 lakhs in cash and furnishing a bond for the balance, with the classification and ISFTA applicability to be decided by the designated officer. The petition was disposed in favour of the petitioner with no costs awarded.
Issues considered
- Whether the imported boat qualifies for duty exemption under the Indo‑Sri Lanka Free Trade Agreement.
- Whether the differential duty should be calculated with the benefit of ISFTA.
- Whether the condition of a bank guarantee imposed for provisional release is valid.
- Whether the show‑cause notice seeking differential duty without ISFTA benefit can be restrained.
Subjects
- ISFTA
- customs duty
- differential duty
- provisional release
- bank guarantee
- show cause notice
- customs classification
- Article 226
- Writ of Certiorari
- Writ of Mandamus
- Writ of Prohibition
Judgment
14 WP2643-26.DOC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
LAXMI
SUBHASH
SONTAKKE
Digitally signed
WRIT PETITION NO. 2643 OF 2026
by LAXMI
SUBHASH
SONTAKKE
Date: 2026.03.09
14:40:09 +0530
Shantam Holdings India Pvt. Ltd. ...Petitioner
Versus
The Union of India & Ors. ...Respondents
_______
Mr. Prakash Shah, Senior Advocate a/w Shamik Gupte, Mihir Deshmukh i/b.
Shardul Amarchand Mangaldas & Co. for Petitioner.
Ms. Ruju Thakker for the Respondents.
_______
CORAM: G. S. KULKARNI &
AARTI SATHE, JJ.
DATE: 4TH MARCH 2026
P.C.
1. This Petition under Article 226 of the Constitution of India is filed
praying for the following substantive reliefs:-
“(a) this Hon’ble Court be pleased to issue a Writ of Certiorari or a
writ in the nature of Certiorari or any other writ, order or direction
under Article 226 of the Constitution of India calling for the records
pertaining to the Petitioners' case and after going into the validity and
legality thereof, to quash and set aside condition of Bank Guarantee
imposed by the Respondent No. 4 in its Order for provisional release
of goods dated 12.01.2026 (Exhibit "A");
(b) this Hon'ble Court be pleased to issue a Writ of Mandamus or a
writ in the nature of Mandamus or any other appropriate writ, order
or direction the Respondents by themselves, their subordinate,
servants and agents under Article 226 of the Constitution of India
ordering and directing the Respondents to provisionally release the
impugned boat by accepting the payment of differential AIDC
amounting to Rs. 12,06,453.92/-and IGST amounting to Rs.
61,12,699.49/-, under protest;
(c) this Hon'ble Court be pleased to issue a Writ of Prohibition or a
writ in the nature of Prohibition or any other appropriate writ, order
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14 WP2643-26.DOC
or direction under Article 226 of the Constitution of India prohibiting
the Respondents by themselves, their subordinate, servants and agents
from taking any steps in furtherance of Show Cause Notice No.
1757/2025-26/ADC/GR.VB/NS-V/CAC/JNCH dated 03.01.2026
issued by the Respondent No. 2 (Exhibit "L") including adjudication
thereof,
(d) this Hon'ble Court be pleased to issue a Writ of Mandamus or a
writ in the nature of Mandamus or any other appropriate writ, order
or direction the Respondents by themselves, their subordinate,
servants and agents under Article 226 of the Constitution of India
ordering and directing the Respondents to issue a Certificate for
waiver of demurrage and other charges in terms of Rule 6(1) of
Handling of Cargo in Customs Area Regulations 2009;
(e) this Hon'ble Court be pleased to issue a Writ of Mandamus or a
writ in the nature of Mandamus or any other appropriate writ, order
or direction the Respondents by themselves, their subordinate,
servants and agents under Article 226 of the Constitution of India
ordering and directing the Respondents to compensate the Petitioner
for detention and demurrage charges incurred by them on account of
the inaction on part of the Respondents;
f) that pending the hearing and final disposal of this petition, this
Hon'ble Court be pleased to direct the Respondents by themselves,
their officers, subordinates, servants and agents to (i) provisionally
release the imported boat and (ii) refrain from acting upon or taking
any further steps or proceedings in pursuance of and/or in furtherance
of the Show Cause Notice No. 1757/ 2025-26/ ADC/ GR.VB/NS-
V/CAC/JNCH dated 03.01.2026 issued by the Respondent No. 2
(Exhibit "L");”
2. On 17th November 2025, the Petitioner imported an excursion boat
from Sri-Lanka under CTH 8901 by claiming the benefit of 100% duty exemption
stated to be available under Indo-Sri Lanka Free Trade Agreement (ISFTA). On
27th November 2025, the boat imported by the Petitioner was placed on hold by
the Respondents for examination. It was thereafter examined by the Special
Intelligence and Investigation Branch (SIIB) officers wherein it was allegedly
observed that the boat was a yacht. It was again examined
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14 WP2643-26.DOC
by the board some time between 2 nd December 2025 to 11 th December 2025 by
the Chartered Engineer of Customs.
3. It is the Petitioner’s case that on 5 th December 2025, despite
examination, the hold on the boat was not released. Therefore the Petitioner
requested the Respondents to permit the warehousing of the boat. The impugned
boat was seized by the Respondents on 15 th December 2025 on the ground of mis-
classification. It is on such backdrop that on 22 nd December 2025, the Petitioner
requested the Respondents to provisionally release the impugned boat by accepting
the payment of differential IGST under protest. The Petitioner was issued show
cause notice dated 3rd January 2026 seeking differential duty without ISFTA
benefit. The Petitioner on such backdrop on 6 th January 2025, made an application
requesting the Respondents to provisionally release the impugned boat with bank
guarantee for differential duty with ISFTA benefit by taking all the benefits of
ISFTA. On such application, on 12th January 2026, the provisional release order
was passed by Respondent No.4 computing the differential duty without
considering benefit of ISFTA. It is in these circumstances, this Petition is filed.
4. Mr. Shah, learned Senior Counsel for the Petitioner has drawn our
attention to paragraph No. 30 wherein the calculation of the differential duty with
ISFTA benefit made as follows:-
Assessable value of the Boat 1,60,86,052.30 Duty (INR)
BCD Duty 0% 0
AIDC 7.50% 12,06,453.92
IGST 40% 69,17,002.49
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Total Duty 81,23,456,.41
Duty paid 8,04,303.00
Differential duty payable 73,19,153.41
5. He has drawn our attention to the orders granting provisional release
dated 12th January 2026 in which a differential duty has been calculated at Rs.
1,18,18,248/-. Mr. Shah has submitted that the Petitioner has paid Rs. 8,04,303/-
being a part of the duty and a part of differential duty payable of Rs. 73,19,153.41/-
is intended to be deposited by the Petitioner in cash. He submitted that insofar as
the balance duty is concerned, the Petitioner is ready and willing to furnish a bond
which needs to be executed in the peculiar facts and circumstances of the case.
6. On the other hand, learned Counsel for the Revenue has opposed this
Petition and would submit that the impugned order of provisional release infact is
appropriate and hence the Petition would require to be dismissed.
7. Having heard learned Counsel for the parties and having perused the
record, we are of the opinion that the issue as raised regarding the applicability of
the ISFTA is currently under consideration by the competent authority. However,
if the goods are properly classified, the petitioner would be entitled to the benefits
available under the ISFTA. In such event, the petitioner would also be entitled to
exemption from duty and a refund of the duty already paid.
8. In the aforesaid circumstances, in our opinion, the differential duty
amount has been sufficiently secured by the petitioner. Additionally, the Petitioner
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intends to deposit Rs. 75,00,000, apart from Rs. 8,04,303, which has already been
deposited. As the petitioner has expressed readiness and willingness to secure the
balance differential duty by furnishing a bond undertaking payment of such duty
hence in the event any additional liability is ultimately determined against the
petitioner, the amount shall be recoverable in accordance with the provisions of the
Act.
9. We are thus of the opinion that the request as made by the Petitioner in
the the facts of the case, needs to be accepted and the Petitioner needs to be
granted provisional release of the goods/boat under the order dated 12 th January
2026 (Exhibit-A to the Petition), by permitting the Petitioner to deposit in cash
the differential duty of Rs. 75 Lakhs and by furnishing a bond for the balance
amount.
10. Thus, upon deposit of duty of Rs. 75 Lakhs and furnishing of a bond
for the balance amount, the Petitioner shall be entitled to provisional release of the
boat in terms of the order dated 12 January 2026 ordered accordingly.
11. Insofar as the contentions of the classification as also the applicability of
the provisions of the ISFTA is concerned, all contentions of the parties in that
regard are expressly kept open to be decided by the designated officer of the
Respondent.
12. The Petition is accordingly disposed of in the aforesaid terms. No costs.
(AARTI SATHE, J.) (G. S. KULKARNI, J.)
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