2021 (2) TMI 262 - HC - Customs

Provisional release of seized conveyances alongwith the goods - allegation is that that the vehicle in question was found to have carried smuggled imported goods - corrigendum issued belatedly after issuance of SCN after this Hon'ble Court was seized of the matter - section 110(2) of the Customs Act - HELD THAT - Petitioner has been belatedly issued the corrigendum to the show cause notice on 21.12.2020 that too after this Hon'ble Court was seized of the matter. This Court had issued notice on 02.12.2020 noting the grievance of the petitioner that his vehicle continued to remain under seizure without any show-cause notice being issued for more than one year thus being violative of section 110(2) of the Customs Act. Therefore action of issuing corrigendum to the petitioner after the High Court had taken cognizance of the grievance of the petitioner has rendered such action highly questionable. That apart it is clearly discernible that there is a clear distinction between the conveyance used to transport the seized goods and the action of the importer which will be the subject matter of investigation. Both the issues relate to two different parties. On perusal of the extracts of statements reproduced in the show cause cum demand notice dated 29.09.2020, it prima facie, appears that though the petitioner's vehicle was hired for transportation of the seized goods, petitioner had no direct or indirect role in so far as the tampering and removal of goods was concerned - the grievance of the petitioner expressing hardship on account of availing bank loan for purchase of the seized vehicle; that he is paying monthly EMI of ₹ 33,437.00 to the bank; since 04.11.2019 his vehicle is lying stationery and not in use; it was his only source of income and he has no connection with the importer needs consideration. The impugned action of seizure of the petitioner's vehicle No.MH-46-H- 1284 as well as the order for provisional release of the vehicle calls for interference - The provisional release order dated 14.07.2020 at Exhibit 'D' to the writ petition for release of vehicle No.MH-46-H-1284 of the petitioner is modified as under - a. The petitioner shall furnish a bond for 10% of the value of goods seized as a pre condition for release of vehicle No.MH-46-H-1284; b. The petitioner shall furnish an undertaking that he shall cooperate with the investigation and appear before the investigating authorities as and when required. Subject to compliance of the above two conditions, the above vehicle of the petitioner shall be released forthwith - Appeal allowed in part.

Summary

Issues Involved:
1. Legality of the seizure of the petitioner's vehicle.
2. Validity of the provisional release order and its conditions.
3. Compliance with procedural requirements under the Customs Act.
4. Petitioner's involvement and knowledge of the smuggling activities.

Detailed Analysis:

1. Legality of the Seizure of the Petitioner's Vehicle:
The petitioner's vehicle, MH-46-H-1284, was seized by customs authorities on 04.11.2019 under the suspicion of transporting smuggled goods. The petitioner argued that he was merely providing transportation services and had no knowledge of the illegal activities. The court noted that the vehicle was indeed used to transport goods that were tampered with, but the petitioner had no direct or indirect role in the tampering or removal of the goods. The court found that the petitioner’s vehicle was seized without issuing a show-cause notice within the stipulated period under Section 110(2) of the Customs Act, making the seizure questionable.

2. Validity of the Provisional Release Order and Its Conditions:
The provisional release order dated 14.07.2020 required the petitioner to execute a bond of ?75,00,000 and produce a bank guarantee for ?22,50,000. The petitioner contended that these conditions were onerous and arbitrary, given that the vehicle’s cost was only ?9,50,000. The court agreed, noting that the petitioner, a small-time transporter, could not meet these conditions. The court modified the provisional release order, reducing the bond to 10% of the value of the goods seized and requiring the petitioner to furnish an undertaking to cooperate with the investigation.

3. Compliance with Procedural Requirements Under the Customs Act:
The court emphasized the importance of adhering to procedural requirements under the Customs Act. Section 110(2) mandates the issuance of a show-cause notice within six months of seizure, extendable by another six months. The respondents issued the show-cause notice to the importer on 29.09.2020 and a corrigendum to the petitioner on 21.12.2020, well beyond the permissible period. The court found this delay unjustifiable, especially since the corrigendum was issued after the court had taken cognizance of the matter, rendering the action highly questionable.

4. Petitioner's Involvement and Knowledge of the Smuggling Activities:
The court distinguished between the actions of the petitioner and those of the importer. The petitioner’s role was limited to providing transportation services, and there was no evidence of his involvement in the tampering or removal of goods. Statements recorded under Section 108 of the Customs Act from various individuals, including the petitioner, driver, and the clearing house agent’s employee, corroborated the petitioner’s lack of involvement. The court noted that the tampered goods were recovered following the disclosure by the clearing house agent’s employee, who admitted to the mischief.

Conclusion:
The court found the seizure of the petitioner's vehicle and the conditions for its provisional release to be excessive and not in compliance with the procedural requirements of the Customs Act. The provisional release order was modified to require a bond for 10% of the value of the goods seized and an undertaking from the petitioner to cooperate with the investigation. The vehicle was ordered to be released forthwith upon compliance with these conditions. The writ petition was allowed, with no order as to costs.