2016 (11) TMI 617 - HC - Customs

Release of seized consignments - provisional order - restoration of IEC number - Held that - on deposit of ₹ 15,00,000/ in cash within fifteen days as suggested and on furnishing a bank guarantee in the sum of ₹ 15,00,000/ , both within two weeks from today, the seized goods shall be released. The seizure as also the release is without prejudice to the rights and contentions of all the parties. Merely because a direction is issued to release the Petitioner s goods, does not mean that the Revenue is restrained from issuing a show cause notice and passing an order of adjudication in furtherance thereof. The adjudication proceedings can be initiated and concluded on their own merits and in accordance with law, uninfluenced by any provisional release order. We expect that the Revenue would do that expeditiously for it has claimed to have unearthed a huge fraud perpetrated on public. Let the Petitioner comply with these statements and which we have accepted without prejudice to the rights and contentions of the parties and thereafter, the Additional Commissioner of Customs, Drawback Department, Nhava Sheva, Mumbai, shall take appropriate steps and unlock the IEC number as prayed in the Petitioner s application dated 4th March, 2016 - petition disposed off.

Summary

Issues:
Release of seized consignments, legality of provisional order, imposition of conditions for payment of duties, fraud allegations, legality of provisional assessment, release of seized goods, initiation of adjudication proceedings, compliance with conditions for release, unlocking of IEC number.

Release of Seized Consignments:
The petition sought the release of seized consignments, with a provisional order passed on 15th March, 2016. The petitioner argued that the provisional order effectively adjudicated the controversy, leaving nothing for the Competent Authority to determine. Allegations were made regarding unreasonable and excessive imposition of conditions for payment of duties, deemed illegal by the Investigating Agency. The petitioner contended that the conditions imposed enabled illegal recoveries, even when export duty was not legally chargeable.

Legality of Provisional Order:
The Respondent justified the exercise by alleging a fraud on the public, where certain individuals attempted to export carpets under confirmed export orders to evade duty. The Directorate of Revenue Intelligence's recommendations were highlighted, indicating a pattern of illegal activities. The Respondent argued that a conditional prima facie provisional assessment based on the seizure and Investigating Agency's version was reasonable and not arbitrary, contrary to the petitioner's claims.

Fraud Allegations:
The Respondent alleged a scheme involving individuals in Dubai who facilitated the import of goods into India under the Drawback scheme, followed by obtaining confirmed export orders to evade duty. Statements were recorded, revealing discrepancies in documents and the absence of supporting materials. The Respondent contended that some documents appeared fabricated and not genuine, indicating a fraudulent scheme.

Initiation of Adjudication Proceedings:
The Court directed the release of seized goods upon the petitioner's compliance with specified conditions. It was clarified that the release did not prevent the Revenue from issuing a show cause notice and conducting adjudication proceedings independently. The Court emphasized that the Revenue should initiate and conclude adjudication proceedings promptly, unaffected by the provisional release order, to address the alleged fraud expeditiously.

Unlocking of IEC Number:
Upon compliance with the specified conditions, the Additional Commissioner of Customs was instructed to take appropriate steps to unlock the IEC number as requested by the petitioner. The order was passed based on the petitioner's submissions and instructions, ensuring the release of seized goods while allowing for the continuation of adjudication proceedings by the Revenue.