2020 (12) TMI 329 - HC - Customs

Detention of goods - Seeking Unconditional clearance of imported goods - Primary contention of the petitioner is that the imported goods were detained for more than six months but without issuing show-cause notice under section 124 of the Customs Act though there is no seizure of the goods under section 110 of the Customs Act - HELD THAT - A conjoint reading of sections 110(2) and 124 of the Customs Act would make it clear that a show-cause notice has to be issued to the person from whom the goods were seized within six months of seizure failing which the goods shall be returned to the person from whose possession the goods were seized. However, it is provided under the first proviso that the said period of six months can be extended for a further period not exceeding six months by the higher authority for reasons to be recorded in writing with intimation to the person concerned within the extended period. There is no provision in the Customs Act authorizing detention of goods. Secondly, even if the understanding of the customs department is accepted, then also detention would be at a stage after seizure. Detention and seizure therefore cannot be used interchangeably meaning one and the same thing. Detention cannot be taken resort to or the customs authorities cannot take the plea of detention to avoid consequences of seizure under sub section (2) of section 110 of the Customs Act. If no show-cause notice under section 124(a) is issued, customs authorities cannot retain the seized goods for more than six months though the aforesaid period of six months can at best be extended for a further period not exceeding six months. Therefore beyond the period of one year at the maximum, there cannot be any detention of goods even in the case of seizure without issuing show-cause notice under section 124(a) of the Customs Act. It is glaring to the naked eye that the respondents have committed two illegalities. First illegality is they have detained the goods without affecting seizure. Secondly, they have exceeded the time limit for detention of the goods even if it is construed to be a case of seizure. In such circumstances, the impugned action cannot at all be justified and is liable to be appropriately interfered with. Respondents are directed to forthwith release the imported goods of the petitioner - petition allowed.

Issues Involved:
1. Legality of detention of imported goods without seizure.
2. Compliance with statutory timelines under the Customs Act.
3. Requirement of the proprietor's presence for examination and warehousing of goods.
4. Jurisdictional conflict between customs authorities and the Directorate of Revenue Intelligence (DRI).

Issue-wise Detailed Analysis:

1. Legality of Detention of Imported Goods Without Seizure:
The petitioner, Exim Incorporation, imported goods that were detained by customs authorities without being formally seized under Section 110 of the Customs Act. The court found no provision in the Customs Act authorizing the detention of goods without seizure. It was emphasized that detention and seizure are distinct actions, with detention being permissible only after seizure. The court cited precedents, including the case of Ramnarain Bishwanath vs. Collector of Customs, which clarified that detention should follow seizure. The court concluded that the customs authorities' action of detaining goods without seizure was illegal.

2. Compliance with Statutory Timelines Under the Customs Act:
The court examined Sections 110(2) and 124 of the Customs Act, which mandate that a show-cause notice must be issued within six months of seizure, extendable by another six months. In this case, no show-cause notice was issued within the prescribed period, and the goods were detained for more than a year. The court referenced several judgments, including Om Udyog vs. Union of India and Mohd. Salman Khan vs. Union of India, which held that indefinite detention without adherence to statutory timelines is unlawful. The court ruled that the customs authorities exceeded the permissible detention period, making the continued detention of goods illegal.

3. Requirement of the Proprietor's Presence for Examination and Warehousing of Goods:
The customs authorities, acting on instructions from the DRI, insisted on the presence of the petitioner's proprietor for the examination and warehousing of goods. The court noted that the DRI's investigation into alleged fraudulent imports by a syndicate, including the petitioner, led to this requirement. However, the court found that the customs authorities at Nhava Sheva did not file any affidavit supporting this requirement. The court held that the non-clearance of goods due to the proprietor's non-appearance was unjustified, especially since the goods were not seized and the statutory period for detention had lapsed.

4. Jurisdictional Conflict Between Customs Authorities and the DRI:
The petitioner faced summons from the DRI, Kolkata, and a criminal complaint was filed against the proprietor. The petitioner sought relief from the Calcutta High Court, which stayed the proceedings. The court observed that the customs authorities at Nhava Sheva were influenced by the DRI's instructions, leading to the unlawful detention of goods. The court emphasized that the DRI's grievances should be addressed in the Calcutta High Court and not used as a basis for detaining goods at Nhava Sheva.

Conclusion:
The court concluded that the customs authorities' actions were unauthorized and unlawful. The respondents were directed to release the imported goods within two weeks, completing necessary legal formalities. The court refrained from imposing costs but warned of potential costs for future misuse of power. The writ petition was allowed to the extent of ordering the release of detained goods.

← Previous Next →