2011 (12) TMI 208 - HC - Customs

Whether continued detention of goods can be justified - petitioner imported Silk Fabric in November 2010 goods held under the custody of the Department since then - interim directions issued for provisional release of goods subject to furnishing of bank guarantee failure to furnish bank guarantee Held that - It is clear that without passing an order at assessment it is not open to the respondent to keep the goods detained. In the case on hand goods are held in custody since November 2010. Till date the respondents have not issued any notice of assessment either provisional or final. U/s 110 (2) the respondents are obliged to release the goods within 6 months of seizure if no notice is issued in terms of Section 124(a). This period of 6 months can be enlarged by the Commissioner of Customs by a further period of 6 months by virtue of the proviso to Section 110 (2). Therefore the respondents had time till 25/26.5.2011 which could have been extended upto 25/26.11.2011. But we are in December 2011. Till date no notice u/s 124 (a) has been issued. In view of the above the writ Petition is allowed and the respondents are directed to issue a notice and accordingly frame an order of assessment after having replies from petitioner. In the meantime the respondents are directed to release the goods within a week of receipt a copy of this order upon the petitioner executing personal bonds of all the partners. See Amit Enterprises vs. Union of India (2011 - TMI - 206680 - Punjab & Haryana High Court). Decided in favor of petitioner

Summary

Issues Involved:
1. Assessment of imported goods.
2. Detention of goods by the respondents.
3. Requirement of bank guarantee for provisional release.
4. Compliance with Section 110(2) of the Customs Act.
5. Legal authority to detain goods beyond the statutory period.

Issue-wise Detailed Analysis:

1. Assessment of Imported Goods:
The petitioner sought a Mandamus directing the second respondent to assess the goods covered by Bill of Entry Nos. 2363919, 2366129, and 2367779 dated 25.11.2010 and 26.11.2010. The petitioner had imported three consignments of Silk Fabric in 440 cartons from a Malaysian company, valued at US$ 431,695.86. The assessment of these goods was pending, and the petitioner's office was searched by the Department of Revenue Intelligence (DRI) on 8.11.2010. Despite the petitioner's compliance with the inquiry by DRI, the goods remained unassessed and under the respondents' custody.

2. Detention of Goods by the Respondents:
The petitioner argued that since the goods were neither prohibited nor banned, their detention was unlawful. The petitioner relied on CBEC Circular No.22/2004-Cus., which stipulates that consignments should not be held up unless their import or clearance is totally prohibited or banned. The respondents contended that the goods were of Chinese origin, routed through Malaysia to avoid Anti-Dumping Duty, and hence, they were detained.

3. Requirement of Bank Guarantee for Provisional Release:
Initially, the court directed the provisional release of goods upon the petitioner furnishing a bank guarantee of Rs.1,79,00,000/-. However, the petitioner failed to secure the bank guarantee and sought modification of the order, which was dismissed. The petitioner argued that the respondents had lost the legal authority to detain the goods due to the efflux of time prescribed by the statute.

4. Compliance with Section 110(2) of the Customs Act:
Section 110(2) mandates that if no notice under Section 124(a) is given within six months of the seizure, the goods must be returned. The respondents failed to issue such a notice within the prescribed period, nor extended it. The court noted that the goods had been detained beyond the statutory period without issuing the necessary notice, thereby obligating the respondents to release the goods.

5. Legal Authority to Detain Goods Beyond the Statutory Period:
The court referred to various judgments, including Om Udyog vs. Union of India and Amit Enterprises vs. Union of India, emphasizing that the detention of goods without issuing a notice under Section 124(a) within six months is unlawful. The court concluded that the respondents' failure to issue the notice or extend the period rendered the detention illegal.

Conclusion:
The court allowed the writ petition, directing the respondents to issue a notice within two weeks and complete the assessment within four weeks thereafter. The goods were to be released upon the petitioner executing personal bonds of all partners. The court emphasized that the respondents' excuse for not issuing the notice was unjustified and that they should have proceeded with the assessment based on available records. The connected miscellaneous petition was closed with no order as to costs.