2022 (4) TMI 1168 - HC - Customs

Seeking direction to release of the balance items of two lots of the delivery order - whether the respondent authority can refuse to release the goods to the successful bidder on the ground that BIS certificate is necessary or that the items are liable for destruction? - HELD THAT - Section 48 of the Customs Act, 1962 deals with the uncleared cargo. Central Board of Indirect Taxes and Customs, Department of Revenue published the Manual containing several circulars wherein procedure for storage and disposal of goods that are seized/ confiscated/unclaimed/uncleared and covered by time expired bonds have been prescribed. Chapter 5 of the said Manual contains the special provisions for unclaimed/ uncleared cargo, mishandled baggage and time expired bonded goods. The procedure for disposal of unclaimed/ uncleared cargo lying with the custodians is laid down in Circular no. 49/ 2018 Customs dated 03.12.2018. From the procedures laid down in the said circular it is evident that in case of shipments which do not require any regulatory clearances or do not need any chemical analysis they can be straight away be taken up for auction. In cases where regulatory clearances from various agencies are necessary, No Objection Certificate for such consignments are issued only after receipt of the required clearances/ result of chemical analysis. The goods can be put to auction sale only after issuance of No Objection Certificate from the customs. Thus, once the consignments are taken up for auction it shall be deemed that such consignments either do not require any regulatory clearances /chemical analysis test or such regulatory clearances/ report of chemical analysis have been obtained. In the case on hand, after closure of e-auction the petitioner deposited the amounts as directed by the authorities and the delivery order was also issued in favour of the petitioner. Thus, the sale can be said to be concluded for all practical purposes as the petitioner duly complied with all the formalities on his part after closure of the auction. From the procedures laid down in the Circular issued by the customs it is evident that after holding auction, it is now too late for the authorities to contend that such items require either BIS certificate or are liable for destruction. Thus, this Court is of the considered view that objections raised as a ground for withholding release of the goods are frivolous and flimsy and thus, liable to be set aside and quashed. No other objection has been raised by the respondent authorities for withholding the release of the goods. Since the petitioner has complied with all formalities, the respondent authorities are obliged to release the goods in question to the petitioner - this court holds that the authorities are obliged to release/ deliver the balance items of lot no. 2 and 5 of the first delivery order dated June 11, 2021 - the respondents are directed to release the balance items of lot no. 2 and 5 of the first delivery order dated June 11, 2021 to the petitioner positively within a period of two weeks after an approach is made by the petitioner - petition allowed.

Summary

Issues:
1. Whether the respondent authority can refuse to release goods to the successful bidder due to the requirement of a BIS certificate or the goods being liable for destruction.
2. Whether the authorities can withhold the release of goods after an auction sale has been concluded.
3. Whether the respondent authorities are obligated to release the goods in question to the petitioner.

Analysis:

Issue 1:
The petitioner sought a writ of mandamus for the release of balance items from two lots of a delivery order. The petitioner participated in an e-tender cum e-auction, winning three lots, including lot no. 2 and lot no. 5. The authorities requested a security deposit, which the petitioner paid, and issued a delivery order. Subsequently, issues arose regarding the need for a BIS certificate for certain items and the potential destruction of cosmetic items. The petitioner argued that the goods were auctioned and could not be withheld based on BIS certificate requirements or destruction orders. The respondent cited a letter directing the disposal of uncleared cosmetics. The court analyzed the Customs Act, Circulars, and procedures for auctioned goods, concluding that objections for withholding goods were baseless.

Issue 2:
After the e-auction concluded, the petitioner fulfilled all formalities, and delivery orders were issued. The court held that once an auction sale is finalized, authorities cannot claim items require a BIS certificate or are subject to destruction. Referring to a previous judgment, the court emphasized that goods put up for auction cannot be withdrawn post-sale. As no other valid objections were raised, the respondent authorities were mandated to release the goods to the petitioner.

Issue 3:
The court set aside objections raised by the authorities and directed the release of the balance items from the delivery order to the petitioner within two weeks. The judgment emphasized the obligation of the respondent authorities to release the goods, highlighting the completion of formalities by the petitioner as grounds for release. The court allowed the writ petition, with no costs imposed.

In a subsequent mention, a representative for respondent Nos. 2 and 3 appeared after previous non-appearances. A request for a stay of the court order was rejected, citing reasons provided in the judgment. The judgment, delivered by Justice Hiranmay Bhattacharyya, concluded the matter by directing the release of goods and rejecting the stay request.