1986 (10) TMI 46 - HC - Customs

Summary

Issues Involved:
1. Jurisdiction of the Metropolitan Magistrate.
2. Validity of the Customs Department's actions.
3. Requirement of furnishing a bank guarantee.
4. Legality of the re-seizure of goods.
5. Timeliness and legality of the show cause notice.

Detailed Analysis:

1. Jurisdiction of the Metropolitan Magistrate:
The petitioners contended that the Magistrate acted without jurisdiction by imposing a condition that the goods could be released only upon furnishing a bank guarantee of Rs. 2.5 lakhs. They argued that the Adjudicating Authority under the Customs Act is the Collector of Customs, and the final authority is the Appellate Tribunal. Since the Collector's order dated 3-1-1984 was affirmed by the Tribunal, the title in the goods passed to the petitioners once customs duties and the redemption fine were paid. Therefore, the Magistrate had no control over the imported goods and could not impose such a condition.

2. Validity of the Customs Department's Actions:
The Customs Department re-seized the goods from the petitioners after they had been released following the payment of duties and redemption fine. The Department claimed that the goods were sold to a party in Delhi in violation of the import licence and that forgery was detected. The petitioners admitted taking delivery of the goods but denied selling them, stating that they were consigned to a company for manufacturing jeans. The legality of the re-seizure was not challenged in the petition, and thus, the court could not adjudicate on this matter.

3. Requirement of Furnishing a Bank Guarantee:
The Metropolitan Magistrate required the petitioners to furnish a bank guarantee of Rs. 2.5 lakhs to take away the goods, citing Section 451 of the Criminal Procedure Code. The petitioners argued that this condition was onerous and unjustified, especially since the goods had already been cleared by the Customs Department. The court found no error in the Magistrate's order, noting that the petitioners were at liberty to take the goods upon providing the bank guarantee.

4. Legality of the Re-Seizure of Goods:
The re-seizure of the goods by the Customs Department was based on allegations of forgery and violation of the import licence terms. The petitioners did not challenge this action in the current petition, and the court emphasized that it could not interfere with the orders of the Metropolitan Magistrate since the complaint, including charges of forgery, was pending. The court suggested that a comprehensive petition challenging all subsequent actions might have stood at a different level.

5. Timeliness and Legality of the Show Cause Notice:
The petitioners argued that the show cause notice issued on 22-9-1986 was illegal and beyond the limitation period prescribed under the Customs Act. They contended that the notice was an afterthought, issued after the court directed the Collector to file an affidavit. The court did not adjudicate on the legality of the show cause notice, as this issue was not part of the current petition.

Conclusion:
The court dismissed the petition, finding no error in the Magistrate's orders requiring a bank guarantee for the release of the goods. The court extended the time for furnishing the bank guarantee until 5-12-1986. The petitioners were granted a stay on the impugned orders for six weeks to allow them to prefer a Special Leave Petition to the Supreme Court. The rule was discharged, and there was no order as to costs.