The Bombay High Court last week directed the customs authorities to provisionally release a consignment of imported walnuts which was seized for alleged undervaluation and duty evasion, after observing that there was no incriminating evidence against the importer Santa Monica Farm Produce Private Limited (SMFPPL).
Directing the customs authorities to release the consignment comprising around 8,000 kilograms of in-shell walnuts within three days, a division bench of justices GS Kulkarni and Aarti Sathe observed, “…it cannot be a general rule that merely because some importers having alleged to have committed irregularities, every importer dealing in similar goods would be required to be painted with the same brush and their goods subjected to detention and seizure.”
While the India-US trade deal is being widely talked about, the judges said in their order dated February 5: “Such approach is not only counterproductive to trade and commerce, but also adversely affects the valuable rights of Indian importers and their legitimate business interests, resulting in losses to the importers, such as the petitioner (SMFPPL).”
The judges said that there is no law for any blanket imposition of coercive conditions in the absence of tangible material. “Such actions would be in the realm of arbitrariness and an unwarranted clog on undertaking smooth business activities,” they said.
SMFPPL moved the High Court on December 23, 2025, after its consignment of walnuts imported from Diamond Foods LLC, shipped from Oakland, United States to the Jawaharlal Nehru Port Authority (JNPA) in Navi Mumbai, was put on hold by customs authorities.
SMFPPL contended that after the shipment arrived at JNPA on December 8, 2025, its bills of entry were assessed and customs duty was paid in full by the importer. Yet, on December 17, 2025, the consignment was put on hold by customs authorities without any written order. Three days later, wrote to the customs authorities, seeking the immediate release of the duty-paid, perishable agricultural produce.
The customs, however, issued a seizure memo on December 24, 2025. The memo stated that the consignment value of $1.54 per kilo was “substantially lower than the contemporary actual prices found during investigation.”
The seizure memo also referred to intelligence developed by the DRI (Directorate of Revenue Intelligence), Delhi Zonal Unit that certain importers were importing “in-shell walnuts of US origin” with invoices being raised from the US and countries like the United Arab Emirates, Canada and Indonesia and evading customs duty by undervaluation.
The central government’s lawyer informed the court that in a provisional release order dated January 23, 2026, the Deputy Commissioner of Customs NS-I had reiterated similar reasons as recorded in the seizure memo. The order alleged undervaluation of the imported walnuts, estimated the differential duty at ₹92.94 lakh, and stated that provisional release would be effected on execution of a bond ₹1.97 crore and a bank guarantee of ₹60 lakh.
The question before the court was whether the imposition of such a bank guarantee was justified in this case.
The judges said the case before them was peculiar as “there is no incriminating material whatsoever placed on record or even brought to the notice of the petitioner (SMFPPL) by the concerned customs officer qua the imports in question”.
The court said that the allegations of evasion of customs duty by undervaluation would not be applicable to SMFPPL’s case, as in the case before the Delhi authorities cited in the seizure memo.
The court ordered the customs to release the consignment only against the payment of a bond, and kept its contentions about further investigation open. It also asked the customs to issue a certificate for waiver of demurrage (fee for keeping goods at a port longer than agreed upon) to the importer.
