2019 (3) TMI 358 - HC - Customs

Theft of Red Sanders - licensed Container Freight Station (CFS) - Red sanders kept in the warehouse - it is alleged that the seal in the container was broken open and replaced with another broken customs seal and the Red Sanders were stolen from the container - Release/Return of Bank Guarantee - Held that - The fact that the stolen goods have been seized and is now lying with the forest department has not been disputed by the respondents. The only thing they are disputing is that it has not been returned back to them by the forest department and therefore, at this stage, the 'Bank Guarantee' given by the petitioner cannot be returned by them. The 'Bank Guarantee' was given by the petitioner only for the purpose of securing the interest of the respondents and the Directorate of Revenue Intelligence, in respect of the stolen goods - Admittedly, the stolen goods are now very much available with the forest department which in all likelihood will be returned back to the respondents in accordance with law. This Court is of the considered view that no useful purpose would be served by the retention of 'Bank Guarantee'. Being a commercial establishment, the said amount of ₹ 6,79,50,000/- for which the 'Bank Guarantee' was issued will be useful for the petitioner for his day-to-day business, instead of remaining idle without benefiting both the parties - petition allowed.

Summary

Issues:
Challenge to rejection of request for release of Bank Guarantee.
Validity of suspension of license.
Interim order and subsequent writ appeal.
Compliance with court orders regarding Bank Guarantee.
Penal action and penalty imposed.
Dispute over returning Bank Guarantee.
Consideration of stolen goods by forest department.
Petitioner's compliance with regulations.
Decision on retention of Bank Guarantee.

Analysis:
The petitioner, a licensed Container Freight Station, challenged the rejection of their request for the release of a Bank Guarantee following the theft of Red Sanders from their custody. The Directorate of Revenue Intelligence entrusted the goods to the petitioner, but they were stolen, leading to the suspension of the petitioner's license. An interim stay was granted by the court, and after a writ appeal, the matter was remanded for fresh consideration. The petitioner complied with court orders by furnishing the Bank Guarantee. Subsequently, the first respondent refrained from revoking the license but imposed a penalty for violations. The petitioner sought the return of the Bank Guarantee as the stolen goods were seized by the forest department.

The respondents argued that the Bank Guarantee was security for the stolen goods and should not be released until the goods were returned. They contended that the adjudicating authority's decision was based on violations of regulations and the petitioner's compliance with court directions. The court noted that the stolen goods were seized by the forest department and held that retaining the Bank Guarantee served no purpose. Acknowledging the petitioner's compliance with regulations and their standing as a reputable business, the court quashed the rejection of the release request and directed the return of the Bank Guarantee within two weeks. The respondents retained the right to take legal action if the petitioner violated any regulations in the future. The writ petition was disposed of without costs.