The Punjab and Haryana High Court recently directed Customs authorities to release consignments of areca nuts imported by an Indian company in 2024, observing that the goods could not be kept in a Customs warehouse for years based only on their physical appearance.

The dispute arose after the importer declared the goods as roasted areca nuts, while Customs authorities classified them as dried nuts, which attract a different rate of duty. Because of the disagreement, the consignments had remained in a Customs warehouse since November 2024.

A Bench comprising Acting Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor, in an order passed on August 17, directed the authorities to release the goods on the furnishing of a personal bond.

The Court clarified that the release would remain subject to the ongoing proceedings concerning the correct classification of the goods and the customs duty payable. The importer also agreed to respond to the show-cause notice issued by the authorities within four weeks.

The importer had challenged the continued detention of the consignments, arguing that the test report relied upon by Customs was based only on the physical appearance of the nuts and did not consider any other scientific parameters.

It was also submitted that the authorities were required to provide the test sample reports within five days but supplied them nearly a month later.

The importer further pointed out that four similar consignments had already been released on personal bond since there was no dispute regarding their country of origin or the nature of the goods.

The High Court noted that the moisture content of those consignments was below 7 percent, which was a relevant factor in determining their nature. The Court also took note of private laboratory reports which described the goods as roasted areca nuts.

The Bench, however, made it clear that it was not expressing any final opinion on whether the imported goods should legally be classified as roasted or dried nuts, as that issue would be decided in the ongoing proceedings.

At the same time, the Court held that the goods should not remain detained indefinitely, particularly when the Central Revenue Control Laboratory's report was based only on their physical appearance.

“In such circumstances... it would not be appropriate to allow the respondents to withhold the release of goods for years together, or call upon the petitioner to release such goods only on furnishing of bank guarantee,” the Court observed.

The Court therefore directed the authorities to ensure physical delivery of the goods declared fit for consumption within two weeks.

It also ordered the release of two consignments which had already been found by the authorities themselves to be roasted areca nuts but had nevertheless remained withheld for around eight months.

The petitions were accordingly allowed, subject to the outcome of the proceedings concerning the classification and customs duty payable on the consignments.