2016 (3) TMI 941 - HC - Customs

Entitlement for provisional release of goods pending adjudication - Holder of Importer-Exporter Code Number (IEC) issued under the Foreign Trade (Development and Regulation) Act, 1992 imported certain goods - After investigation Customs authority took stand that petitioner is not the owner of the goods and therefore, the goods cannot be released to him on a provisional release - Held that - as far as the Customs Authority is concerned and in terms of the Customs Act, bringing the goods of others using IEC cannot be treated as a violation. It is a matter for the Directorate General of Foreign Trade to enter a finding whether there is any violation or not. To saddle with any liability on the petitioner under the Customs Act, one need not be the owner of the goods imported. If such stand of the Customs Authority is accepted, any importer of the goods can escape from the liability from the clutches of the Customs Act, by shifting the onus to the owner of the goods. If the petitioner has misused his IEC, it is the matter for that Authority to consider the issue. The Customs Authority may bring it to the notice of that Authority about such misuse but that cannot be a reason to withhold the release ordered under Section 110A referred to the judgment of Hon ble Supreme Court in Union of India v. Sampat Raj Dugar and Another 1992 (1) TMI 103 - SUPREME COURT OF INDIA . Therefore, Customs Authority is directed to release the goods to the petitioner under Section 110A of the Customs Act without any delay. - Decided in favour of petitioner

Summary

Issues:
1. Entitlement to provisional release of goods pending adjudication when not the owner of the imported goods.

Analysis:
The judgment dealt with the issue of whether a petitioner, not the owner of imported goods but holding an Importer-Exporter Code Number (IEC), is entitled to provisional release of goods pending adjudication. The Customs Authority initially refused to release the goods to the petitioner, citing that he was not the owner. The court examined Section 110-A of the Customs Act, which allows provisional release to the owner of the goods. However, Section 125 of the Customs Act, amended in 1985, permits release to the person from whose possession the goods were seized, not just the owner. The court emphasized that Section 110-A should be read in conjunction with Section 125 to determine the scope of release, emphasizing that ownership or possession is crucial for release under the Customs Act.

Furthermore, the court highlighted that the Customs Authority's stance that the petitioner was not the owner of the goods, based on the use of the IEC issued by the Directorate General of Foreign Trade, did not absolve the petitioner of liability under the Customs Act. The court referenced a Supreme Court judgment emphasizing the responsibility of licensees for imported goods until clearance through Customs, regardless of legal ownership. The court directed the release of goods to the petitioner under Section 110-A without delay, emphasizing that any misuse of the IEC was a matter for the Directorate General of Foreign Trade to address separately.