Court Rules Amendment to Customs Notification Cannot Be Applied Retrospectively; Orders Customs Authorities to Process Provisional Release Requests for Imports Prior to Amendment Date
In a significant ruling on August 21, 2026, the Madras High Court, presided by Justice Hemant Chandangoudar, directed the Commissioner of Customs (Chennai II) Imports and other respondents to consider and allow the provisional release of imported secondhand highly specialized equipment under Section 110A of the Customs Act, 1962. The judgment came on a writ petition filed by M/s. Smart Impex Solutions, represented by its authorized signatory Mr. Jitender, challenging the denial of provisional release of goods imported prior to an amendment notification issued by the customs authorities.
The petitioner had imported two consignments of digital multifunction print and copying machines, detailed in Bills of Entry dated July 20, 2026, and covered by Bills of Lading dated May 19, 2026. These goods were subjected to clearance proceedings before the customs department. Despite the petitioner's compliance with conditions such as execution of a simple bond for 100% of the enhanced value of the goods and payment of applicable GST, the respondents refused provisional release relying on an amendment to a statutory notification effective June 15, 2026. This amendment introduced an exemption for Highly Specialized Equipment (HSE) manufactured or imported in quantities below 100 units per model per year, subject to a specific exemption by the Ministry of Electronics and Information Technology.
The petitioner contended that since the import documents (Bills of Lading) were dated before the amendment's effective date, the new exemption criteria should not apply retrospectively. The petitioner also cited a prior common order by the Madras High Court dated July 10, 2025, which directed consideration of provisional release requests for similar goods under Section 110A.
Senior Standing Counsel for the respondents argued that the amendment must be applied to the petitioner's case, relying on Section 15 of the Customs Act, which considers the date of the Bill of Lading for determining applicable rules.
Rejecting the respondents' contention, the Court held that statutory amendments to notifications cannot be applied retrospectively unless explicitly provided. Since the Bills of Lading were dated May 19, 2026, prior to the June 15, 2026 amendment, the respondents could not deny provisional release on the basis of the amendment. The Court emphasized the settled law that retrospective operation of statutory provisions requires express language, which was absent in the amendment notification.
The Court further noted that the issue of provisional release of similar goods had been settled in earlier proceedings, with no new distinguishing factors presented by the respondents. Accordingly, the writ petition was allowed with directions:
1. The Customs authorities were ordered to consider the petitioner's request for provisional release within four weeks from receipt of the judgment, and pass appropriate orders imposing necessary conditions.
2. Upon compliance by the petitioner with such conditions, provisional release of goods was to be effected within two weeks.
3. The provisional release was clarified to be subject to the final adjudication of the goods under the Customs Act, 1962, which the adjudicating authority must conduct independently and on merits, uninfluenced by the Court's observations.
The Court's decision underscores the principle of non-retrospectivity in statutory amendments and provides relief to importers awaiting provisional release of goods under customs law. It also reinforces judicial consistency by relying on prior orders on similar matters.
Bottom Line:
Customs Act, 1962 - Provisional release of imported goods - Amendment to statutory notification cannot have retrospective effect unless expressly provided - Respondents directed to consider the petitioner's request for provisional release of goods imported prior to the amendment's commencement.
Statutory provision(s):
Customs Act, 1962 Section 110A, Customs Act, 1962 Section 15
