2011 (2) TMI 417 - HC - Customs

Detention of goods - Even if there were a formal order of detention under Section 110, the goods could have been detained for a period of six months and then a further period not exceeding six months if the Commissioner of Customs extended the time, on sufficient cause being shown - The consignments shall, however, immediately be released if no show cause notice under Section 124 (a) is issued within six months from the date of detention of the consignments and if six months expire and/or have already expired, within such time not exceeding further six months as the Commissioner might allow, or if the Commissioner of Customs does not extend the time and needless to mention that it will be open to the petitioners to claim damages for wrongful detention in accordance with law - Appeal is disposed of

Summary

Issues: Detention of trucks carrying consignments for export to Bangladesh without a valid order under Section 110 of the Customs Act, 1962.

In this case, the petitioner, engaged in the business of import and export of fabrics and garments, exported goods to a foreign buyer in Bangladesh. The trucks carrying the consignments were detained by the Directorate of Revenue Intelligence without a formal detention order under Section 110 of the Customs Act, 1962, raising concerns about the legality of the detention. The petitioner argued that without a detention order, they could have applied for provisional release under Section 110A. The petitioner highlighted a judgment from the High Court of Punjab and Haryana emphasizing that goods cannot be detained indefinitely without lawful authority.

The respondent authorities justified the detention based on suspicions of mis-declaration and illegal export practices to evade government revenue. They pointed out that the consignments entered the customs area without the required export documents, violating regulations. The authorities contended that the detention was necessary for investigation due to specific intelligence reports regarding potential illegal export activities under the Duty Exempted Pass Book (DEPB) Scheme. Allegations were made against the petitioner regarding discrepancies in pricing and manipulation of documents to defraud revenue.

The court acknowledged the seriousness of the allegations but emphasized that goods cannot be detained indefinitely without a valid order under Section 110. The court clarified that while there is no specific time limit for issuing a detention order, goods cannot be held without lawful authority. The court also addressed the issuance of a notice purportedly under Section 110(2) for extending the detention period, highlighting that such actions must be in accordance with the law. The judgment emphasized the importance of preventing unnecessary and prolonged detention of goods and outlined the conditions under which the consignments should be released if no show cause notice is issued within the prescribed time frame.

Ultimately, the court disposed of the writ application, directing the immediate release of the consignments if no show cause notice under Section 124(a) is issued within the specified period. The judgment underscored the need for adherence to legal procedures and timelines in detaining goods for investigation, while also allowing for appropriate actions in case of violations.