2015 (12) TMI 4 - AT - Customs

Detention of assets - violation of principles of natural justice and fair play. - Allegation of Smuggling of consignment seized including Luxury Car, Luxury Wrist Watches, Assorted jewellery, pieces of fur of wild animals and cash - whether the impugned order extending the time limit under Section 110(2) is legal and proper and whether the officers of DRI had sufficient time and opportunity for investigating into the details of the assets detained vide Panchanama dated 6.12.2013, and further investigation only a few days before the issue of show-cause notice for extension of further time for issue of show-cause notice, vide notice dated 2.6.2014. Held that - Competent officers of Customs, or in any area adjoining the land frontier or the coast of India, has reason to believe that any goods are liable to confiscation, or any documents or things, which in his opinion will be useful or relevant to any proceedings under this Act, are secreted in any place, he may himself or through other officers search for such documents, goods or things. The provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to searches shall, so far as may be, apply to searches under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word Magistrate, wherever it occurs, the words Commissioner of Customs were substituted. - It is evident from perusal of the panchanama dated 6.12.2013 that no condition precedent as required under Section 110 of the Act, is recorded at the time of detaining the goods/assets found to the effect that subject goods are liable for confiscation under the provisions of the Customs Act. Further no satisfaction have been recorded as required under sub-section 3 of the Section 110 to the effect that the documents or things detained will be useful or relevant to any proceeding for detaining seized assets under the Customs Act. Revenue had sufficient time for conducting inquiry and or issue of show-cause notice under Section 124 within a period of six months from the date of detention of the goods. It is evident on the face of record that the investigation officers have done practically very little or nothing in spite of the appellant being available for the purpose of inquiry right from 7.12.2013 till 10.2.2014 being the period of judicial custody. Further, during the said custody, the DRI have never sought permission to interrogate the appellant. Even after the release from the judicial custody, the appellant was attending the office of the DRI every week particularly on Monday and such other days as he may have been advised. Further, the appellant and his family members had approached the Revenue authority for release of the goods by filing a detailed representation as to the nature and their source on 24.2.2014, but no inquiry seems to be made in the matter and the investigating authority chose about two weeks prior to the end of time limit of six months, have ventured to make further inquiry about the detained assets by recording statement and asking for further details like Bank statement and other documents. Detention of the goods/assets in question is bad under the provisions of Section 110 as the goods/assets have only been detained and not seized as required under the scheme of the Act. We further take notice of this fact that so far the two cars in question is concerned, major part of the purchase price have been funded through Banking finance and further the other payments made by the appellant and/or his company are through the Banking channel. - order for provisional release of the cars asking for 100% Bank Guarantee of the invoice value is also bad in law and on the facts. Thus, in the facts and circumstances, we hold that impugned order is bad in law and in facts and accordingly, the same is set aside. We further direct the learned Commissioner and/or the DRI to release the detained goods of the appellant and their family members after obtaining PD Bond and/or Indemnity Bond, that the appellant and other persons will not alienate the assets returned to them and/or any way deal with them without prior permission of the Commissioner of Customs. The goods are to be returned forthwith, within a maximum period of 20 days from receipt of a copy of this order. As the appellant is a noticee in the show-cause notice dated 13.1.2014 in the case of alleged smuggling of Red Sanders, we permit the Revenue to retain the cash seized on 6.12.2013 from the residence/premises of the appellant and his relatives, which shall be liable to appropriation upon adjudication of the said notice dated 13.1.2014. We further direct the Revenue to keep the said amount detained in a separate Bank account/PD account bearing interest pending adjudication. - Decided partly in favour of appellant.

Summary

Issues Involved:
1. Legality of extending the time limit under Section 110(2) of the Customs Act.
2. Validity of the detention of assets under Section 110 of the Customs Act.
3. Allegations of non-cooperation by the appellant during the investigation.
4. Provisional release of detained assets.
5. Adequacy of the investigation and issuance of the show-cause notice.

Issue-wise Detailed Analysis:

1. Legality of Extending the Time Limit under Section 110(2) of the Customs Act:
The Tribunal examined whether the impugned order extending the time limit under Section 110(2) is legal and proper. The appellant contended that the extension was a colorable exercise of power and amounted to harassment. The Tribunal noted that the Revenue had sufficient time to conduct the inquiry and issue a show-cause notice within six months from the date of detention but failed to do so. The investigating officers did very little or nothing despite the appellant being available for inquiry. The Tribunal found that the Commissioner of Customs ignored the facts and failed to show sufficient reason for the extension. Consequently, the Tribunal held that the impugned order extending the time limit was bad in law and set it aside.

2. Validity of the Detention of Assets under Section 110 of the Customs Act:
The Tribunal scrutinized the detention of assets under Section 110. It was observed that the Panchanama dated 6.12.2013 did not record any condition precedent as required under Section 110, indicating that the goods were liable for confiscation. The Tribunal found that the detention of goods/assets was bad under the provisions of Section 110 as they were only detained and not seized. The Tribunal directed the Commissioner and DRI to release the detained goods after obtaining a PD Bond or Indemnity Bond from the appellant and his family members.

3. Allegations of Non-cooperation by the Appellant During the Investigation:
The appellant argued that they had cooperated fully with the investigation, providing necessary documents and attending the DRI office regularly. The Tribunal noted that the appellant and his family had approached the Revenue authority for the release of goods by filing detailed representations. Despite this, the investigating authority chose to make further inquiries only two weeks before the end of the six-month period. The Tribunal found no evidence of non-cooperation by the appellant and held that the extension of time was not justified.

4. Provisional Release of Detained Assets:
The Tribunal addressed the issue of provisional release of the detained cars. The Commissioner of Customs had asked for a 100% Bank Guarantee of the invoice value for the provisional release, which the Tribunal found to be bad in law and on the facts. The Tribunal directed the release of the detained goods forthwith, within a maximum period of 20 days from the receipt of a copy of the order, after obtaining a PD Bond or Indemnity Bond.

5. Adequacy of the Investigation and Issuance of the Show-cause Notice:
The Tribunal examined whether the officers of DRI had sufficient time and opportunity to investigate the details of the assets detained. It was noted that the investigation officers had done very little despite the appellant being available for inquiry. The Tribunal found that the show-cause notice for confiscation of the detained goods was issued only on 2.12.2014, which indicated a lack of diligent investigation. The Tribunal held that the detention of goods was bad under Section 110 and directed the release of the detained goods.

Conclusion:
The appeal was allowed in part. The Tribunal set aside the impugned order extending the time limit under Section 110(2) and directed the release of the detained goods after obtaining a PD Bond or Indemnity Bond. The Tribunal permitted the Revenue to retain the cash seized from the appellant's residence, which shall be liable to appropriation upon adjudication of the show-cause notice dated 13.1.2014. The appeal was allowed with directions for the return of the detained goods within 20 days.