2016 (7) TMI 1164 - HC - Customs

Provisional release of goods - undervaluation - declaration of goods evasion of duty - import of branded goods declared as unbranded - import of mobile accessories, parts, memory card adaptor, plastic watches, tempered glass and mobile phone LCD - Petitioner states that it kept requesting for a copy of the entire panchnama as well as for the release of the goods, but did not receive any response. Held that - The power of seizure under Section 110 of the Act has to obviously be exercised for valid reasons. The proper officer has to record his reasons to believe that the goods that he proposes to seize are liable to confiscation. The said reasons for exercise of the power have to be recorded prior to the seizure. In the present case, as already noticed, apart from the panchnama, there is no separate order passed under Section 110(1) of the Act by the proper officer recording the reasons to believe that the goods are liable for confiscation. Since till date no other order exists and no such order has been communicated to the Petitioner, it is not possible to accept the plea of Mr. Agarwala, learned counsel for the DRI, that the detention of the goods by the DRI was with the authority of law and in any event should be treated as a seizure in terms of Section 110(1) of the Act. The net result is that the detention by the DRI of the goods imported by the Petitioner under the aforementioned B/E from 13th May, 2016 onwards is entirely without the authority of law. . The Customs will proceed to inspect the goods and assess the B/E. In other words, the grant of NOC by the DRI to the further course of action to be taken by the Customs has to be presumed. At the time of assessing the B/E, however, the concerns expressed by the DRI, as set out in para 13, 14 and 15 of the affidavit of Mr.. S.K. Mishra, will be kept in view by the Customs. Once the B/E is assessed and the duty, as assessed is paid by the Petitioner, the goods will be released to it subject to whatever conditions the Customs might want to impose for such release. - Decided in favor of petitioner.

Summary

Issues Involved:
1. Provisional release of imported goods.
2. Provision of panchnama copy.
3. Legality of detention vs. seizure of goods.
4. Responsibility for warehousing charges.
5. Coordination between DRI and Customs.

Issue-wise Detailed Analysis:

1. Provisional Release of Imported Goods:
The petitioner sought the provisional release of goods imported under Bill of Entry (B/E) No. 5216412 dated 10th May 2016. The court found that the detention of goods by the Directorate of Revenue Intelligence (DRI) from 13th May 2016 onwards was without legal authority. Consequently, the Customs authorities were directed to inspect the goods, assess the B/E, and release the goods upon payment of the assessed duty by the petitioner. The Customs were to proceed as if the DRI had granted a No-Objection Certificate (NOC).

2. Provision of Panchnama Copy:
The petitioner requested a complete copy of the panchnama dated 12/13th May 2016. The court noted that while Annexure C of the panchnama was served to the petitioner, there was no proof that the entire panchnama was provided. The DRI was thus ordered to serve a complete copy of the panchnama to the petitioner.

3. Legality of Detention vs. Seizure of Goods:
The court emphasized that there is no provision in the Customs Act, 1962 that justifies the detention of goods without recording reasons. The DRI's action of detaining the goods was not equated with seizure under Section 110 of the Act. The court highlighted that seizure requires a proper officer to record reasons to believe that the goods are liable for confiscation. The panchnama alone did not constitute a valid seizure order, and thus, the detention was deemed unauthorized.

4. Responsibility for Warehousing Charges:
The court held that the petitioner could not be held responsible for warehousing charges resulting from the unauthorized detention of goods by the DRI. The DRI was made responsible for bearing the warehousing expenses.

5. Coordination between DRI and Customs:
The court suggested that detailed instructions need to be issued by the Customs in consultation with the Central Board of Excise and Customs (CBEC) to ensure proper coordination between the DRI and Customs. This would prevent indefinite detention of goods without legal authority in the future.

Conclusion:
The court ordered the Customs to complete the inspection and assessment of the B/E within two weeks and release the goods to the petitioner upon payment of the assessed duty. The petitioner was exempted from warehousing charges, which were to be borne by the DRI. The writ petition was disposed of with no orders as to costs.