2014 (5) TMI 86 - HC - Customs

Provisional release of the goods - Absence of issuance of valid show cause notice Bar of Limitation - Seizure of imported Fabrics - Refund of Pre-deposit - Interpretation of Sections 110(2) and 124 of Customs Act - Return of two containers and goods seized Held that - The object of enacting Section 110(2) is that the officer of Customs department may not deprive the right to property for indefinite period to the person from whose possession the goods are seized u/s 110(1) - Relying upon The Hon ble Apex Court in Chaganlal Gainmull v. Collector of Central Excise 1989 (11) TMI 59 - SUPREME COURT OF INDIA - If no action by way of issue of a show cause notice is initiated u/s 124(a) within the period of six months, stipulated u/s 110(2) the effect would be that the person from whom the goods were seized would become entitled to their return. A combined reading of Sections 110(2), 124 and 110A spells out that any order for provisional release shall not take away the right of assessee u/s 110(2) r/w Section 124 - However, where no action is initiated by way of issuance of show cause notice u/s 124(a) within six months or extended period stipulated u/s 110(2) the person from whose possession the goods were seized becomes entitled to their return - The remedy of provisional release is independent of remedy of claiming unconditional release in the absence of issuance of any valid show cause notice during the period of limitation or extended limitation prescribed u/s 110(2) The counsel for the petitioner had not pressed for release of Rs. 2 crores as noticed thus, while partially accepting the prayer of the petitioner for release of the goods belonging to the petitioner unconditionally, it is directed that the amount of Rs. 2 crores shall be adjusted against liability that might be determined while adjudicating the matter - Decided in partly in favour of assessee.

Summary

Issues Involved:
1. De-sealing of two godowns at New Delhi and Ludhiana.
2. Legality of seizure and release of two consignments detained at ICD Ballabhgarh.
3. Refund of Rs. 2 crores deposited by the petitioner.

Issue-wise Detailed Analysis:

1. De-sealing of two godowns at New Delhi and Ludhiana:
The petitioner argued for the de-sealing of their godowns in New Delhi and Ludhiana, which were sealed by the Directorate of Revenue Intelligence (DRI) on 3-2-2011. The petitioner contended that no show cause notice was issued within the extended period of six months from the date of seizure, thus entitling them to the unconditional release of the goods under Sections 110(2) and 124 of the Customs Act, 1962. The court noted that the object of Section 110(2) is to prevent indefinite deprivation of property without due process, mandating the return of seized goods if no notice is issued within six months or an extended period. The court agreed with the petitioner, emphasizing that the absence of a show cause notice within the stipulated period entitles the petitioner to the return of the goods.

2. Legality of seizure and release of two consignments detained at ICD Ballabhgarh:
The petitioner also sought the release of two consignments detained at ICD Ballabhgarh. The respondent argued that the petitioner had applied for provisional release under Section 110A of the Act, and an order was passed accordingly. They cited the Bombay High Court judgment in Jayant Hansraj Singh v. Union of India, asserting that once provisional release is ordered, the petitioner cannot claim unconditional release under Sections 110(2) and 124. However, the court distinguished this case from the Bombay High Court ruling, stating that the right to provisional release does not negate the right to unconditional release if no show cause notice is issued within the prescribed period. Thus, the court held that the petitioner is entitled to the unconditional release of the goods.

3. Refund of Rs. 2 crores deposited by the petitioner:
The petitioner sought a refund of Rs. 2 crores deposited under alleged coercion. The respondents contended that the amount was voluntarily deposited and raised concerns about the petitioner's claim, pointing out that the deposit was made on behalf of two companies, while the petition was filed by only one. The petitioner later suggested that the amount be adjusted against any liability determined during the adjudication process. The court, noting the petitioner's revised stance, directed the respondents to conclude the proceedings expeditiously, preferably within one year, and to adjust the Rs. 2 crores against any determined liability. Any excess amount was ordered to be refunded to the petitioner in accordance with the law.

Conclusion:
The court partially accepted the petitioner's plea, directing the unconditional release of the goods and the adjustment of the Rs. 2 crores deposit against any determined liability, with any excess to be refunded. The court emphasized the importance of adhering to the statutory timelines for issuing show cause notices to prevent indefinite deprivation of property.