2017 (10) TMI 620 - HC - Customs

Freezing of petitioner s Bank Account - duty drawback benefit - Held that - Learned counsel for the Petitioner points out that nowhere in the said SCN is any reference made to the fact that the Petitioner s bank account was frozen - with the investigation having been completed and the SCN having been issued, the justification for continuing with the freezing of the bank account of the Petitioner does not survive. Non-issuance of scrips to the Petitioner - shipping bills of Petitioner placed on an alert list - Held that - it is stated that This is a pre-emptive measure taken to safeguard the Government revenue. Significantly, there is no mention of any provision of law by the Customs Department justifying the freezing of the Petitioner s bank account. The Court directs that the Petitioner s Bank Account shall stand de-frozen - petition allowed.

Issues:
1. Delay in filing counter affidavit.
2. Freezing of bank account and availing duty drawback benefit.
3. DGFT stopping issuance of "scrips" to the Petitioner.
4. Justification for freezing bank account.
5. Completion of investigation and issuance of show cause notice.
6. De-freezing of bank account and operational instructions.

Analysis:

1. Delay in filing counter affidavit:
The High Court condoned the delay of 23 days in filing the counter affidavit and disposed of the application.

2. Freezing of bank account and availing duty drawback benefit:
The petitioner, AKS Apparels, filed a writ petition against the Commissioner of Customs and the Director General of Foreign Trade (DGFT) regarding the freezing of their bank account and the restraint from availing the duty drawback benefit. The Customs Department justified its actions as a pre-emptive measure to stop fraud. However, with the completion of the investigation and issuance of a show cause notice, the court directed the Customs Department to de-freeze the bank account and issue operational instructions to the bank.

3. DGFT stopping issuance of "scrips" to the Petitioner:
The DGFT had stopped issuing "scrips" to the petitioner, but during the pendency of the petition, it resumed issuing them. Therefore, this grievance was considered resolved.

4. Justification for freezing bank account:
The Customs Department justified the freezing of the bank account as a measure to safeguard government revenue. However, the court noted that there was no mention of any specific provision of law justifying this action. With the completion of the investigation and issuance of the show cause notice, the justification for continuing the freezing of the bank account was deemed invalid.

5. Completion of investigation and issuance of show cause notice:
The investigation was completed, and a show cause notice was issued to the petitioner. The notice did not mention the freezing of the bank account, indicating that there was no legal basis for continuing the freeze.

6. De-freezing of bank account and operational instructions:
The High Court directed the immediate de-freezing of the petitioner's bank account and instructed the Customs Department to issue appropriate instructions to the bank. If the instructions were not issued by a specified date, the bank was directed to allow the petitioner to operate the account based on the court order.

This judgment addressed the grievances raised by the petitioner regarding the freezing of their bank account and the restraint on availing duty drawback benefits. The court emphasized the importance of legal justifications for such actions and ordered the immediate de-freezing of the bank account with operational instructions to be provided by the Customs Department.

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