2017 (1) TMI 1351 - HC - Customs

Whether the detention of goods and seizure of goods are similar? - Classification of export goods - hand knotted woolen carpets or hand woven carpets? - CBEC circular dated 04.01.2011 - Held that - Ordinarily, the word detention applies to person and not goods. However, in the context of the statute, with which, we are dealing with, detention is the terminology, which is also used in the context of goods. - Therefore, while seizure is an act of taking possession of a property, i.e., goods in pursuance of an legal authority or process, detention of goods is carried out by the respondents, as it were, by way of an administrative practice. Strangely, the authorities in derogation of its own circular dated 04.01.2011, rejected the request of the petitioner for a provisional release of the subject goods meant for export. The fine distinction between detention and seizure of the goods, if any, was lost, as the respondents chose not to release the goods on terms or otherwise, despite, the petitioner s letter dated 08.06.2016, 17.06.2016, 24.02.2016 and 29.03.2016; though, I must note that in the letter dated 24.02.2016, as per the assertions made in the counter-affidavit by the respondents, the terminology used by the petitioner was, he be given permission to re-export the goods, as against seeking permission to export the goods - the continued detention of the subject goods is illegal. Therefore, the petitioner, in my opinion, should be handed over the custody of the subject goods. What are the terms, on which, the petitioner be allowed release of goods? - Held that - the goods can be released to the petitioner, upon a personal bond being furnished by him, whereby, he will undertake to pay fine and penalty, if found payable, upon adjudication by the appropriate forum. Petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
1. Detention vs. Seizure of Goods.
2. Legality of Continued Detention.
3. Terms for Release of Goods.
4. Duty Drawback Entitlement.

Issue-Wise Detailed Analysis:

1. Detention vs. Seizure of Goods:
The core issue was whether the detention of goods is equivalent to their seizure. The court noted that the Customs Act does not define "detention" or "seizure." The dictionary meaning of "detention" is "the action or state of detaining or being detained," whereas "seizure" means "the act or an instance of taking possession of a person or property by legal right or process." The court concluded that detention is an administrative practice, while seizure is a legal act of taking possession of property. The court observed that the CBEC circular dated 04.01.2011 advises customs authorities to allow provisional exportation of goods even when there is a mis-declaration regarding quantity, value, and description.

2. Legality of Continued Detention:
The court found that the continued detention of goods was illegal. Despite the petitioner’s requests for provisional release, the respondents rejected these requests, citing fraud under Para 2.2(c)(iii) of Chapter XV of the Customs Manual. The court emphasized that the CBEC circular dated 04.01.2011 aims to prevent inordinate detention of goods, which can lead to delays in export orders and congestion at ports. The court concluded that the respondents’ refusal to release the goods on terms or otherwise, despite the petitioner’s repeated requests, was in derogation of the CBEC circular.

3. Terms for Release of Goods:
The court determined that the petitioner should be handed over the custody of the goods. Since there was no duty liability involved, the adjudication would only lead to the imposition of fine and penalty. The court ruled that the goods could be released to the petitioner upon furnishing a personal bond, undertaking to pay any fine and penalty upon adjudication. Additionally, the petitioner was required to disclose details of movable and immovable assets to secure the respondents' interests.

4. Duty Drawback Entitlement:
The petitioner argued that even if the respondents' case was accepted, they would still be entitled to some duty drawback. The respondents contended that due to the mis-declaration of the goods' value, the petitioner was not entitled to any duty drawback. The court noted that the re-determined value of the goods was less than the duty drawback claimed by the petitioner. The court concluded that the issue of whether Section 76(1)(b) of the Act would be applicable would arise during the adjudication proceedings, which the respondents were required to carry out pursuant to the show cause notice dated 05.08.2016.

Conclusion:
The court ordered the release of the detained goods to the petitioner upon furnishing a personal bond and disclosing details of assets. The petition was disposed of with no order as to costs.