HC Directs Customs to Decide Bank Guarantee Release in Export Dispute Over Conflicting CRCL Reports

The petitioner, M/s Truespices India Inc., is an exporter of tobacco-related products such as Pan Masala and mouth fresheners, holding valid GST, Tobacco Board, and FSSAI registrations. In October 2024, the petitioner filed shipping bills for the export of certain consignments. Though the goods were exported, an alert resulted in their provisional release subject to furnishing bank guarantees.

Samples drawn from the consignments were tested by the Central Revenues Control Laboratory (CRCL), which issued test reports dated 24 December 2024 and 27 December 2024. These reports did not raise any objection to classifying the goods as prohibited. Relying on these reports, the petitioner sought finalisation of shipping bills and release of bank guarantees.

Thereafter, without drawing fresh samples, a second CRCL report dated 10 November 2025 was issued by way of “clarification,” stating that the samples contained betel nut, nicotine, and other ingredients and possessed the characteristics of gutka. Based on this clarification, the Customs Department wrote to the GST authorities requesting that IGST refunds to the petitioner not be processed. Aggrieved, the petitioner approached the High Court.

Main Issue: Whether customs authorities could rely on a thereafter CRCL “clarification” issued without fresh sampling to withhold bank guarantees and block GST refunds, without issuing any show cause notice.

HC’s Ruling: The Delhi High Court held that the matter required holistic consideration by the Commissioner of Customs. The Court noted that the circumstances leading to the issuance of the second CRCL report were unclear, particularly as no fresh samples had been drawn and the report merely referred to an internal email. The Court also observed that despite repeated representations by the petitioner, no decision had been taken on the release of bank guarantees, and no show-cause notice had yet been issued.

The Court directed the Commissioner of Customs to decide all pending representations regarding the release of bank guarantees by 28 February 2026. It further directed that if the Department proposed to issue any show cause notice, the same must be issued by 10 January 2026 and adjudicated simultaneously.

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