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2022 (1) TMI 114 - AT - CustomsRejection of request for provisional release of the seized goods - high end wrist watches - prohibited goods or not - Section 110A of the Customs Act - HELD THAT - Discretion is cast upon the adjudicating authority under section 110A of the Customs Act while deciding an application filed for provisional release of the goods and in P. PANDITHURAI VERSUS THE JOINT COMMISSIONER OF CUSTOMS (ADJUDICATION) , O/O. THE COMMISSIONER OF CUSTOMS, TRICHY s 2020 (3) TMI 859 - MADRAS HIGH COURT , the Madras High Court observed that such discretion must be exercised in a manner known to law and that an opportunity of being heard is also required to be given. In the present case, a search had been carried out at the residential premises of the employees of M/s. Johnson Watch Co. Pvt. Ltd. on 29.10.2012 and also at its various showrooms and the residence of its Directors on 29.10.2012 and 30.10.2012. Details of the high-end wrist watches recovered from the residence of Pushpak Lakhani, Shikha Pahwa, Pankaj Lakhani, Purushottam Jajodia and the Directors and showrooms of M/s. Johnson Watch Co. Pvt. Ltd., have been mentioned in paragraphs 5 and 6 of this order. It is seen that while 95 high-end wrist watches were recovered from the appellant, about 6233 high-end wrist watches were recovered from M/s. Johnson Watch Co. Pvt. Ltd., 5 high-end wrist watches were recovered from Purushottam Jajodia and 16 high-end wrist watches were recovered from Pankaj Lakhani. The Principal Commissioner also committed an error in rejecting the application filed by the appellant for provisional release of the goods by holding that the seized goods were prohibited goods liable for confiscation under section 110(d) of the Customs Act. As noticed above, the watches of all other co-noticee were released by the Department and this issue has been raised by the Department only in the case of the appellant. Even while adjudicating the show cause notice issued to M/s. Johnson Watch Co. Pvt. Ltd., by order dated 27.05.2020, only a fine has been imposed under section 125(1) of the Customs Act and the goods have not been confiscated. The Delhi High Court had also in Its My Name held that both prohibited and non-prohibited goods can be released under section 110A of the Customs Act. The view taken by the Principal Commissioner for rejecting the application filed by the appellant for provisional release of the goods for the reason that a discretion is vested in the authority and since the subsequent show cause notice dated 27.10.2017, was adjudicated upon and the appellant was held liable to penalty, also suffers from an error - In the present case, the appellant had not only deposited a substantial amount of duty proposed in the show cause notice but had also made an offer to deposit the remaining amount under protest so that the goods could be released provisionally. It has also been found as the fact that the 6233 high- end wrist watches recovered from M/s. Johnson Watch Co. Pvt. Ltd. were released merely on the basis of an undertaking given by the Directors in 2012 without even moving any application for provisional release of the goods. Not only that, 5 high-end wrist watches recovered from Purushottam Jajodia and 16 high-end wrist watches recovered from Pankaj Lakhani were also released pursuant to the orders passed by the Supreme Court and it is only in the matter of the appellant that relates to 95 high-end wrist watches and ₹ 61 Lakhs in cash that the application for provisional release of the goods has been rejected. It would be appropriate to direct that, subject to the appellant depositing the remaining balance amount of duty proposed in the show cause notice within a period of 30 days from the date of this order, the goods and the cash seized from the appellant should be released within the next 30 days - Appeal allowed.
Issues Involved:
1. Rejection of provisional release of seized goods. 2. Discretionary power of adjudicating authority under Section 110A of the Customs Act. 3. Comparison with other cases of provisional release of similar goods. 4. Classification of seized goods as "prohibited goods." 5. Impact of judicial precedents and previous court orders on the case. Detailed Analysis: 1. Rejection of Provisional Release of Seized Goods: The appellant challenged the Principal Commissioner's order dated 11.09.2020, which denied the provisional release of seized high-end wristwatches and cash. The appellant argued that the order was predetermined and mechanical, ignoring the facts of the case. The appellant had deposited a substantial amount of the duty demanded and was willing to deposit the remaining amount under protest. The Principal Commissioner, however, rejected the application, citing various reasons, including the discretionary nature of Section 110A of the Customs Act and the classification of the goods as "prohibited." 2. Discretionary Power of Adjudicating Authority under Section 110A of the Customs Act: Section 110A of the Customs Act allows the provisional release of seized goods pending adjudication. The adjudicating authority has discretionary power to decide on such applications, considering the facts and circumstances of each case. The Madras High Court in P. Pandithurai vs. Joint Commissioner of Customs emphasized that this discretion must be exercised in a manner known to law, and an opportunity of being heard should be provided. The Delhi High Court in Mala Petrochemical & Polymers vs. The Additional Director General, DRI highlighted that each case must be judged on its peculiar facts. 3. Comparison with Other Cases of Provisional Release of Similar Goods: The appellant pointed out that high-end wristwatches seized from other parties, including M/s. Johnson Watch Co. Pvt. Ltd., Purushottam Jajodia, and Pankaj Lakhani, were released either on the basis of undertakings or court orders. The Principal Commissioner did not consider this aspect, leading to a discriminatory approach. The Tribunal in Gauri Enterprises vs. Commissioner of Customs held that the adjudicator cannot be selective in its approach to similar goods, emphasizing the need for consistent treatment. 4. Classification of Seized Goods as "Prohibited Goods": The Principal Commissioner classified the seized goods as "prohibited goods" liable for confiscation under Section 111(d) of the Customs Act. However, the Tribunal found that this classification was inconsistent with the treatment of similar goods seized from other parties. The Delhi High Court in Its My Name Pvt. Ltd. case clarified that both prohibited and non-prohibited goods could be released under Section 110A, and the mere possibility of future confiscation should not bar provisional release. 5. Impact of Judicial Precedents and Previous Court Orders on the Case: The Principal Commissioner relied on the stay order granted by the Supreme Court in the case of Purushottam Jajodia to reject the appellant's application. However, this stay order was later modified to allow the release of goods. The Delhi High Court in Its My Name Pvt. Ltd. emphasized that provisional release does not interfere with the adjudication process and that reliance on allegations in the show cause notice to deny provisional release is improper. Conclusion: The Tribunal concluded that the Principal Commissioner's order was not sustainable due to the discriminatory approach and improper classification of the goods. The Tribunal directed that the goods and cash be released, subject to the appellant depositing the remaining balance of the duty proposed in the show cause notice within 30 days. The appeal was allowed, and the impugned order dated 11.09.2020 was set aside.
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