2022 (3) TMI 1229 - HC - Customs

Seizure of imported consignment - mis-declaration of goods - Ownership of goods - BOE is in different name - Electrolytic Tough Pitch copper wire rods - prohibited goods or not - whether Rekhatex undisputedly is the owner of the goods and in the event of a dispute as to the title of the goods? - HELD THAT - This is not a case where the application for amendment to the IGM or the BOLs in favour of Sagun Copper is made prior to the search or seizure. The invoices drawn by Rekhatex in favour of Shine Metal, the BOEs indicating the name of Shine Metal as importer , the application made by Sagun Copper for substitution of their name for filing fresh BOEs in place of Shine Metal, for clearing the goods for home consumption, indicates that Shine Metal is the importer. The record reveals that Shine Metal filed the BOEs for home consumption. In the facts of this case, it is not possible for us to conclude that Rekhatex has title over the goods only because it is in possession of the original BOLs. Dehors the materials on record and the manner in which the transactions have taken place pursuant to the seizure, leaves us with no manner of doubt that the claim of Rekhatex of ownership of the goods on the basis of the documents of title, BOLs, cannot be said to be undisputed. We cannot turn a blind eye to the attending circumstances which necessitate an in-depth inquiry before rendering a factual finding regarding ownership of the consignment which may not be possible for us to do so in this writ petition under Article 226 of the Constitution of India. The stand of the Department that the documents viz. BOEs, BOLs and invoices in the name of Shine Metal are sufficient indicator to suggest that there exists a dispute of title cannot be brushed aside. The stand of the Department, of there being a failed business contract between Rekhatex and Shine Metal upon seizure of the goods, cannot be ruled out altogether. From the materials on record, it is obvious that Rekhatex took steps to effect changes in the documents only after seizure of the goods - Except for the oral submissions made by learned counsel for Rekhatex, there is nothing on record to indicate that the process for sale of the consignment commenced before the seizure. On one hand, Rekhatex has taken a plea that Shine Metal abandoned the goods after submitting the BOEs, whereas on the other hand, it relies upon the NOC issued by Shine Metal for sale of the goods much later in distance of time from the date of seizure, which is self-contradictory. The present writ petition involves a disputed question of fact regarding ownership of Rekhatex over the goods, it is not open for us to assess the evidence ourselves - petition dismissed.

Summary

Issues Involved:
1. Legality of the seizure of goods.
2. Ownership of the consignment.
3. Amendment of Import General Manifest (IGM) and Bills of Lading (BOLs).
4. Provisional release of the seized goods.
5. Compliance with the Customs Act, 1962.
6. Allegations of fraudulent activity and mis-declaration.

Detailed Analysis:

1. Legality of the Seizure of Goods:
The petitioner argued that the goods were freely importable and not prohibited under the Customs Act, 1962. The Department of Revenue Intelligence (DRI) seized the goods on January 9, 2020, suspecting that Shine Metal was importing the consignment at concessional rates and selling it in the open market in violation of the 1999 Notification. The petitioner claimed that the seizure was illegal as no notice under Section 124 of the Customs Act was issued within one year of the seizure. The court noted that the seizure was conducted under Section 110 of the Customs Act and that the proper officer had the authority to seize the goods.

2. Ownership of the Consignment:
The petitioner, Rekhatex, claimed ownership of the consignment based on possession of the original Bills of Lading (BOLs). Rekhatex argued that Shine Metal, the named importer, had failed to "retire" the BOLs and other documents from the bank, thus abandoning the goods. The Department disputed this claim, stating that Shine Metal was the original owner and had submitted the Bills of Entry (BOEs) for home consumption. The court concluded that the issue of ownership was a disputed question of fact and could not be resolved in a writ petition under Article 226 of the Constitution. The court referenced the Supreme Court's decision in Union of India vs. J.P. Electronics Pvt. Ltd., which held that issues of title should be left to the Department to consider.

3. Amendment of Import General Manifest (IGM) and Bills of Lading (BOLs):
Rekhatex requested amendments to the IGM and BOLs to substitute the name of Sagun Copper as the importer in place of Shine Metal. The court noted that these amendments were requested after the seizure of the goods, raising doubts about the bona fides of the petitioner's claim. The court found that the process for effecting the sale of the consignment to Sagun Copper commenced only after the seizure, indicating a possible attempt to circumvent the legal process.

4. Provisional Release of the Seized Goods:
Rekhatex did not apply for the provisional release of the goods under Section 110-A of the Customs Act, which allows for the provisional release of seized goods pending adjudication. The court noted that Rekhatex could have sought provisional release but chose not to do so.

5. Compliance with the Customs Act, 1962:
The court examined the provisions of the Customs Act, including Sections 110 (seizure of goods), 110-A (provisional release), and 124 (issuance of notice). The court found that the seizure was conducted in accordance with the Customs Act and that the DRI officers had the authority to seize the goods. The court also noted that the goods were seized from Shine Metal, not Rekhatex, and that Shine Metal had submitted the BOEs for home consumption.

6. Allegations of Fraudulent Activity and Mis-declaration:
The Department alleged that Shine Metal was involved in fraudulent activity by importing goods at concessional rates and selling them in the open market without manufacturing lead wire for electronic parts as required under the 1999 Notification. The court noted that the affidavit-in-reply filed by Shine Metal supported the Department's allegations, stating that Shine Metal was a dummy proprietor controlled by Jayant Mirani and Mukesh Jain, who were involved in the fraudulent importation and diversion of the goods.

Conclusion:
The court dismissed the writ petition, finding that the issue of ownership was a disputed question of fact that could not be resolved in a writ petition. The court left it to the Department to adjudicate the issue of title and noted that Rekhatex could seek other legal remedies. The court's observations were limited to determining whether there was a dispute of title and did not form any opinion on the merits of the contentions.