2013 (6) TMI 655 - HC - Customs

Attachment - power to attach bank accounts - Section 110 of the Customs Act, 1962 - held that - the statutory provision does not expressly enable an Investigating Officer to attach a bank account. - While it is true that the enabling power for seizure of any documents or things which, in our opinion, will be useful for, or relevant to, any proceeding under this Act is available under sub-section (3) of Section 110 of the Act prima facie it should be shown to be so. In the judgment of Delhi Court VIKAS GUMBER Versus UNION OF INDIA 2008 (7) TMI 414 - HIGH COURT OF DELHI the proceedings initiated was after lapse of 4 years and therefore the Delhi High Court characterised it as not bona fide attachment and therefore directed lifting of attachment of all bank accounts. Only difference in the present case is that the bank accounts are under attachment for about two years, but without issue of a show cause notice under Section 124 of the Act. Even the condition imposed on the appellant by the learned Single Judge to furnish bank guarantee or security is not sustainable and the fact that even after passing of the order by the learned Single Judge on 15-9-2010 the respondents have not issued any show cause notice till now is a circumstance which clearly goes against the respondents. Revenue directed to raise the attachment of bank account forthwith.

Summary

Issues:
Challenge to the attachment of bank accounts by the Director of Revenue Intelligence, justification of attachment in law, impact on business due to attachment, authority of Customs officials to attach bank accounts, time limits for issuing show cause notice, interpretation of Section 110 of the Customs Act, legality of bank account attachment, fairness in exercising statutory power, necessity of show cause notice for duty liability determination, justification for keeping bank account frozen, sustainability of conditions imposed by the Single Judge, failure to issue show cause notice, direction to raise attachment of bank account.

Analysis:

1. Challenge to Bank Account Attachment:
The appellants contested a common order regarding the attachment of their bank accounts by the Director of Revenue Intelligence. The Single Judge found the attachment unjustified in law but directed the appellants to furnish a bank guarantee of Rs. 2 crores collectively for the bank accounts. The appellants argued that the attachment was not supported by law and adversely affected their business for about two years, emphasizing the unreasonable exercise of power by the authorities.

2. Authority of Customs Officials:
The appellants contended that Customs officials do not have the power to attach bank accounts unless the subject matter is liable for confiscation. They cited various legal precedents to support their argument that the attachment was unlawful, especially due to the absence of a show cause notice issued within a reasonable time frame after the attachment.

3. Interpretation of Customs Act:
The debate centered on the interpretation of Section 110 of the Customs Act, particularly whether the proceeds in a bank account could be confiscated under the Act. While the Act does not explicitly mention bank account attachment, the respondents argued that a bank account could be considered under the seizure of documents or things relevant to proceedings under the Act.

4. Failure to Issue Show Cause Notice:
The Court noted that despite the initial justification for the seizure, the failure to issue a show cause notice under Section 124 of the Act rendered the continued attachment of the bank accounts unjustified. The delay in taking action and determining any duty liability or penalty without due process was deemed unreasonable and unfair to the appellants.

5. Direction to Raise Attachment:
Ultimately, the Court allowed the appeals and directed the respondents to lift the attachment of the bank accounts immediately. The Court emphasized the lack of a show cause notice and the unfairness in keeping the accounts frozen without proper legal basis. The conditions imposed by the Single Judge were deemed unsustainable, and the failure to issue a show cause notice was considered a significant factor against the respondents.

This detailed analysis of the legal judgment showcases the key issues, arguments presented, legal interpretations, and the final decision of the Court regarding the attachment of bank accounts under the Customs Act.