2023 (6) TMI 21 - HC - Customs

Validity of restraint order - imposition of conditions for provisional release of the seized goods - reasons to believe - only grievance of the petitioner is that the petitioner has already paid a substantial amount towards the differential duty and hence it is unfair to impose such conditions - HELD THAT - A reading of Section 111 shows that it applies to goods brought from outside India. Since seizure under Section 110 relates to articles liable for confiscation, necessarily articles procured locally fall out of the ambit to Sections 110 and 111. It is evident that there is a factual dispute regarding the payment of Rs. 78 lakhs and it is this demand which is stated as a reason for reconsidering the direction to furnish bank guarantee. In the light of the specific appellate remedy available to the petitioner and the factual dispute which would go to the root of the order which is impugned, it is not proper for this Court to consider the said issue on merits in a proceeding under Article 226 of the Constitution. The writ petition is hence disposed of directing the competent authority to examine whether any of the articles seized are articles that were procured locally. If the competent authority finds that any of the seized articles are articles procured locally, steps shall be taken to release such articles.

Summary

Issues involved:
The judgment involves issues related to the seizure of goods under Section 110 of the Customs Act, 1962, the imposition of conditions for provisional release of seized goods, the legality of invoking Section 110 for goods procured locally, the availability of alternate remedies under the Act, and the jurisdiction of the High Court under Article 226 of the Constitution.

Seizure of Goods under Section 110:
The petitioner, a trader of various goods, challenged the restraint order issued by the 3rd respondent under Section 110 of the Customs Act, 1962, seizing goods including face veneer, conveyor belt, plywood, imported machinery, and spare parts. The petitioner contended that the seizure of locally procured goods like conveyor belt and plywood is not justified under Section 110, which applies to imported goods liable for confiscation under Section 111. The petitioner had already paid a substantial amount towards the differential duty on the seized goods, questioning the requirement of executing a bond for the full value of the goods and providing a bank guarantee for provisional release.

Availability of Alternate Remedies:
The respondents argued that the petitioner has the remedy of appeal under Section 128 of the Act and therefore cannot maintain the writ petition. The petitioner justified the writ petition by stating that the appeal process would be time-consuming, leaving non-liable goods with the Department. The petitioner relied on legal precedents to support the argument that the Court should not interfere when an alternate remedy of appeal is available.

Jurisdiction of High Court under Article 226:
The Court considered the petitioner's prayer to quash the restraint order and the conditions for provisional release. It emphasized that the seizure of goods under Section 110 is authorized if the proper officer believes the goods are liable for confiscation, with the decision subject to appropriate statutory proceedings. The Court noted that the petitioner's payment of differential duty does not preclude the requirement of a bank guarantee for provisional release, as provided under Section 110A. The Court directed the competent authority to examine if any seized articles were procured locally and ordered the release of such articles if found to be local goods.

Conclusion:
The Court disposed of the writ petition, directing the competent authority to determine if any seized articles were procured locally and take steps for their release within six weeks. It clarified that the rejection of the prayer to set aside the conditions for provisional release in this proceeding does not affect the petitioner's right to appeal against the impugned orders. The Court highlighted the availability of the appellate remedy and emphasized that factual disputes should be addressed through the statutory appeal process rather than in a writ petition under Article 226.