110A Predeposit 

Disputed or confiscated imported goods are usually released for home consumption provisionally under Section 110A of the Customs Act, 1962. Most of these provisional release orders require a Provisional Duty Bond and/or bank guarantees covering upto full value of impugned goods and duties chargeable thereon. It is quite common to see amounts of PD Bond and bank guarantees exceeding the value of goods and duties thereon. 

To reduce them one is required to go into first and/or second level appeal which requires predeposit of 7.5% or 10% of duties demanded. The normal practice at Commissioner Appeals and/or CESTAT is to apply predeposit to the bank guarantee imposed in the provisional release order.

Now predeposit under Section 129E of the Customs Act, 1962 is a function of the duty demanded on the impugned order appealed against. A provisional order under Section 110A demands no duty. So how do you decide the predeposit payment? Well the accepting clerk said so or someone else said so and you paid up.

We didn't. We simply argued predeposit is not applicable as duty demanded is not available. The Hon'ble Bench accepted our arguments. So the next time your CA or your Solicitor tries to pay predeposit on an appeal against a provisional release order under Section 110A of the Customs Act, 1962; call us. Or at least remember what you read above.