2020 (12) TMI 650 - HC - Customs

Refund of sale proceeds of the confiscated goods which were later sold in public auction - betel nuts - goods sold in public auction - sale proceeds of the betel nuts is cannot be released - HELD THAT - It is palpably evident that the writ petitioner has failed to establish his ownership with regard to the seized goods (betel nuts). Merely because no one else came forward to claim ownership of the seized betel nuts does not ipso facto establish the writ petitioner's ownership or his right, title and interest over the betel nuts. This Court, under Article 226 of the Constitution of India, cannot go into the factual question of deciding ownership or whether the writ petitioner had absolute right, title and interest over the betel nuts. At every stage of the proceedings before the adjudicating authority as well as before the learned Tribunal, the writ petitioner could not establish his claim of ownership over the seized goods (betel nuts) with irrefutable evidence. This claim of the writ petitioner was clearly negated by the Commissioner of Customs (Preventive), North Eastern Region, Shillong, with the observation that such certificate/document only establishes that M/s Lapang Eco Products was engaged in supari/betel nuts business and this was not a conclusive proof of rightful ownership of the betel nuts under question. We are unable to grant such relief to the writ petitioner as prayed for. However, the writ petitioner is always at liberty to approach a competent civil forum in order to establish his claim of rightful ownership in respect of the seized betel nuts, which were later publicly auctioned - Petition disposed off.

Summary

Issues Involved:

1. Ownership of seized goods (betel nuts).
2. Entitlement to refund of auction sale proceeds.
3. Validity of the certificate and invoices provided by the petitioner.
4. Examination of the factual discrepancies in the petitioner’s claim.
5. Jurisdiction and authority of the High Court under Article 226 of the Constitution of India.

Detailed Analysis:

1. Ownership of Seized Goods (Betel Nuts):
The petitioner claimed ownership of betel nuts seized by Customs authorities and later auctioned. The Commissioner of Customs (Preventive) initially confiscated the goods and imposed a penalty. The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) did not make any observation on the ownership of the goods but directed the department to return the sale proceeds after identifying the owner. The Commissioner, upon re-examination, found several contradictions in the petitioner’s claim, including the lack of accompanying documents during the seizure, inconsistencies in the statements of involved parties, and the petitioner’s delayed claim of ownership.

2. Entitlement to Refund of Auction Sale Proceeds:
The petitioner sought a mandatory direction for the release of auction sale proceeds amounting to ?66,51,140 based on a refund application. The High Court noted that the petitioner failed to establish ownership of the seized goods at every stage before the adjudicating authority and the Tribunal. The Commissioner’s detailed examination revealed that the petitioner could not substantiate his claim with irrefutable evidence, leading to the rejection of the refund request.

3. Validity of the Certificate and Invoices Provided by the Petitioner:
The petitioner submitted a certificate from the Superintendent of Taxes, Meghalaya, and three invoices to support his ownership claim. The Commissioner found that the certificate only established that the petitioner’s firm was engaged in the betel nut business but did not conclusively prove ownership of the seized goods. The invoices were also found to be inconsistent with the facts of the case, as the transactions covered by the invoices were not reflected in the books of accounts, and no records were found to prove any sale to the mentioned traders.

4. Examination of the Factual Discrepancies in the Petitioner’s Claim:
The Commissioner highlighted several contradictions in the petitioner’s claim, such as the absence of documents during the seizure, conflicting statements about the destination of the goods, and the petitioner’s delayed claim of ownership. Additionally, the petitioner’s claim of renting a godown was contradicted by the actual lease agreement with another individual. These discrepancies led to the conclusion that the petitioner’s claim of ownership was not credible.

5. Jurisdiction and Authority of the High Court under Article 226 of the Constitution of India:
The High Court emphasized that it could not go into the factual question of deciding ownership under Article 226. The petitioner’s failure to establish ownership with irrefutable evidence at every stage of the proceedings precluded the Court from granting the requested relief. However, the Court noted that the petitioner could approach a competent civil forum to establish his claim of ownership and seek appropriate relief.

Conclusion:
The High Court concluded that the petitioner failed to establish ownership of the seized betel nuts and thus was not entitled to the refund of the auction sale proceeds. The Court dismissed the writ petition but allowed the petitioner the liberty to approach a competent civil forum to establish his claim of ownership. If successful, the petitioner could then approach the Customs authorities for the release of the sale proceeds in accordance with the law.