2022 (10) TMI 18 - HC - Customs

Onus and power of custodian - validity of auction of goods - seized goods - LED bulbs - cosmetic items - failure to provide the BIS certificate - goods not fit for Human consumption - HELD THAT - The Principal Commissioner/Commissioner may withdraw any lot from auction or tender at any time or cancel the same at any stage, prior to the delivery of the goods. Furthermore, Permission/NOC is required to be taken by the buyer from the concerned authorities, as specific for respective items. The respondent No.1 or the custodian in the present case were unable to furnish the required documents for the delivery of the disputed items. Though the custodian can discharge/clear the uncleared items, it shall be permitted only by acquiring the permission of a proper authority - In the present case, despite not obtaining the BIS certificate and NOC from the Assistant Drug Controller declaring the goods fit for Human consumption and not hazardous for human health, the custodian moved ahead by auctioning the goods that were prohibited for sale making the entire process in contravention to The Customs Act, 1962. Appeal allowed - decided in favor of appellant revenue.

Summary

Issues:
1. Appeal against judgment dated 21.04.2022 regarding the release of unclaimed cargo.
2. Compliance with auction procedures and customs regulations.
3. Authority to withhold consignment after full payment made by the bidder.
4. Requirement of clearance certificate from customs authorities for delivery of goods.

Analysis:
1. The appellant, Deputy Commissioner of Customs, challenged the judgment due to the release of unclaimed cargo. The custodian submitted Bill of Entry for clearance of cargo, which was auctioned by MSTC Ltd. The respondent bidder made full payment but faced issues with delivery due to missing documents like BIS certificate and NOC from Assistant Drug Controller.

2. The appellant argued that the auction was conducted without customs conformity and violated the Disposal Manual 2019. The custodian auctioned goods without mandatory BIS certificate and NOC, breaching rules for compulsory registration and drug import standards. The custodian failed to obtain necessary permissions before auctioning the goods.

3. The respondent argued that once the highest bid is accepted, and full payment is made, authorities cannot withhold the consignment. The custodian's refusal to deliver certain items after full compliance with auction formalities was against the Manual's procedures and lacked consistency in communication.

4. The court found that the custodian's actions contravened The Customs Act, 1962, by auctioning goods without required certificates and permissions. The custodian's failure to provide necessary documents for delivery justified withholding the consignment. The judgment dated 21.04.2022 was set aside, allowing the appeal and disposing of pending applications accordingly.