2013 (3) TMI 641 - HC - Customs

Establish the linkage between the monies which have been held in the bank account with the modus operandi of illegally obtaining the benefit of a drawback by showing an inflated FOB value of exported goods where only a partial amount of the sale proceeds has been repatriated to India. the power has to be exercised in a fair manner that the monies which were held in the bank account which is the subject matter of action should be relevant to proceedings under the Act.

Summary

Issues:
Challenge to communications from Deputy Commissioner of Customs, non-application of mind, justification for restraint on bank account, procedure under Rule 16A.

Analysis:
1. The petitioner challenged two communications: a letter seeking bank documents and a communication demanding duty drawback repayment. The petitioner argued no adjudication occurred, officer didn't apply mind, and time for notice under Section 110(2) elapsed, justifying bank account operation.

2. The Deputy Commissioner stated the petitioner inflated garment prices for duty drawback, involving multiple firms in dubious exports. Pradeep Mehta's involvement was alleged, denying any connection to exports. The petitioner claimed ignorance and Pradeep Mehta's control over transactions.

3. Section 110 empowers seizure of goods liable for confiscation, including currency. The Customs Rules allow drawback recovery if export proceeds aren't realized. The power under Section 110 must be exercised reasonably and fairly.

4. Precedents emphasize fair exercise of power under Section 110. The court noted evidence linking bank account funds to illegal activities. The petitioner's limited role and doubts about involvement were highlighted, pending adjudication post-investigation.

5. The court declined to lift the bank account restraint, considering doubts about the petitioner's credibility. Emphasizing the rule of law, a show cause notice was directed to be issued promptly for adjudication. The petition was dismissed without costs.