2021 (7) TMI 425 - HC - Customs

Provisional release of the seized goods - Cut and polished diamonds - Will pendency of proceedings under section 124 of Customs Act, preclude the consideration of an application for provisional release of goods under section 110A - HELD THAT - In default of issuance of notice under section 124 of the Act within six months of seizure, the person from whose possession the goods are seized can claim, as a matter of right, return of the seized goods; and in such a case, in view of the second proviso to sub-section (2) of section 110, the specified period of six months to issue a notice would not apply, meaning thereby that a notice could follow even thereafter. The words pending the order of the adjudicating authority are important for the purpose of deciding the question formulated above. We are inclined to the view that notwithstanding the pendency of proceedings initiated by issuance of a show-cause notice under clause (a) of section 124 of the Act, the adjudicating authority may, in its discretion, allow a provisional release on such conditions as he may require fit to impose - the legislative intent in section 110A, introduced by way of an amendment, is clear that even during pendency of proceedings before the adjudicating authority, such authority is conferred the discretionary power to allow provisional release. The writ petitions are disposed off granting liberty to the adjudicating authority to carry forward the proceedings initiated under section 124 of the Act in accordance with law.

Summary

Issues:
1. Consideration of application for provisional release during the pendency of proceedings under section 124 of the Customs Act, 1962.

Analysis:
The judgment by the High Court of Bombay involved multiple writ petitions concerning the seizure of cut and polished diamonds intended for export. The petitioners sought provisional release of the seized goods, but instead received show-cause notices under section 124 of the Customs Act, 1962. The petitioners' replies to these notices were disputed, leading to further representations for provisional release under section 110A of the Act. The central issue before the court was whether an application for provisional release could be considered during the pendency of proceedings under section 124 of the Act.

The court examined the relevant statutory provisions, particularly sections 110 and 110A of the Customs Act. Section 110 empowers the seizure of goods liable for confiscation, with a provision for return if no notice under section 124 is issued within six months. The second proviso to sub-section (2) of section 110 allows for provisional release, overriding the six-month period. Section 110A, introduced in 2006, permits provisional release pending adjudication, emphasizing the discretion of the adjudicating authority in imposing conditions.

The court concluded that the adjudicating authority retains the discretion to allow provisional release even during proceedings initiated under section 124 of the Act. This interpretation aligns with the legislative intent behind section 110A, granting the authority the power to decide on provisional release conditions. The judgment disposed of the writ petitions, granting liberty to the adjudicating authority to continue proceedings under section 124 while directing consideration of the petitions for provisional release. The court instructed a timely decision on these representations within three weeks of the order, keeping all contentions on the merits open and making no order for costs.

In summary, the High Court of Bombay clarified that the pendency of proceedings under section 124 does not bar the consideration of applications for provisional release under section 110A. The judgment emphasized the discretionary power of the adjudicating authority in allowing provisional release and directed timely decisions on the petitioners' representations for release of the seized goods.