2023 (10) TMI 763 - HC - Customs

Extension of period of seizure - Actual date of Seizure of imported goods - Flashforge WaxJet 400 3D Prototypeing Machine, Purple Wax, White Wax and Machine Accessories - HELD THAT - Although the panchanama in the present case was held on 26 July 2022, the actual seizure of the goods under seizure memo in question had taken place on 8 August 2022. The date of the seizure would have relevance in the context of what Section 110 subsection (2) would provide. Admittedly the first six months from the date of the seizure memo expired on 8 February 2023. If in such situation, the department if nonetheless intends to issue a show cause notice under Section 124 of the Customs Act, necessarily recourse to the proviso below sub-section (2) of Section 110 is required to be taken to extend the period for a period of further six months - the proviso, confers powers on the Principal Commissioner of Customs or a Commissioner of Customs for reasons to be recorded in writing, to extend such period if further period has exceeding six months and inform the person from whom such goods were seized before the expiry of the periods so specified. In the present case, the initial period of six months to release the consignment expired on 8 February, 2023, considering the date of seizure to be 8 August, 2022. The Deputy Commissioner however invoked the proviso by issuing a communication dated 7 February, 2023 to the petitioner at the first instance extending the time period merely by three months - Such extended period of three months by the first extension expired on 7 May 2023. Thus, the balance period which could be extended by further invocation of the proviso below sub-section (2) of Section 110 was a period of three months upto 11 August, 2023 so as to complete the period of six months under the said proviso - The second extension of two months expired on 11 July 2023. As noted, if the extended period of six months under the proviso to sub-section (2) if was to be invoked, it would have expired on 11 August 2023. Thus, by operation of law, that is, by application of the provisions of sub-section (2) of Section 110, read with the proviso the seizure of petitioners goods has ceased to operate and has became invalid, which would entitle the petitioner for the release of the goods. Petition disposed off.

Summary

Issues Involved:
1. Legality of the seizure memo dated 8 August 2022.
2. Validity of the extension orders for the seizure period.
3. Entitlement of the petitioner to the release of the seized goods.
4. Compensation for detention and demurrages charges.
5. Compensation for loss due to deterioration in the value of goods.
6. Validity of the Show Cause Notice dated 7 August 2023.

Summary:

1. Legality of the Seizure Memo:
The petitioner challenged the seizure memo dated 8 August 2022 issued by respondent No. 2, which seized the consignment of "Flashforge WaxJet 400 3D Prototyping Machine, Purple Wax, White Wax, and Machine Accessories" imported by the petitioner.

2. Validity of the Extension Orders:
The petitioner contended that the seizure had become illegal as the period for issuing a show-cause notice had expired. The initial six months from the seizure date expired on 8 February 2023. Extensions were granted: the first for three months on 7 February 2023, and the second for two months on 11 May 2023, expiring on 11 July 2023. However, the third extension purportedly granted on 12 July 2023 was not communicated to the petitioner, violating the proviso to sub-section (2) of Section 110 of the Customs Act.

3. Entitlement to Release of Goods:
The Court observed that the seizure ceased to operate by law as the required communication for the third extension was not made. Thus, the goods were liable to be released to the petitioner.

4. Compensation for Detention and Demurrages Charges:
The petitioner sought a writ of mandamus directing the respondents to pay detention and demurrages charges incurred due to the non-release of the consignment.

5. Compensation for Loss Due to Deterioration in Value:
The petitioner also sought compensation for the loss caused due to the deterioration in the value of goods due to illegal seizure and non-release on a provisional basis.

6. Validity of the Show Cause Notice:
The petitioner challenged the show-cause notice dated 7 August 2023, arguing it was issued after the allowable period had lapsed.

Judgment:
The Court ruled that by operation of law, the seizure of the petitioner's goods had ceased to operate and became invalid. The petitioner was entitled to the release of the goods. The rule was made absolute in terms of prayer clauses (a) and (c), permitting the release of the goods. The Court did not express an opinion on other prayers, leaving them for consideration by the department or any other forum as the law may provide. The petition was disposed of with no costs.