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2022 (2) TMI 970 - HC - CustomsValidity of SCN - Time limitation - whether the show cause notice given under Section 124 of the Act after six months of seizure can be sustained under the law? - HELD THAT - The mode of service of notice prior to the amendment by Finance Act, 2018 included the summons or notice issued under Section 153 of the Act. This Court in case of DEEPAK NATVARLAL SONI VERSUS UNION OF INDIA 2018 (9) TMI 1912 - GUJARAT HIGH COURT was considering the similar issue and addressed this question of issuance of the notice as envisaged under Section 110(2) vis-a-vis Section 124 and Section 153 which is no longer res integra - it had held that the action of respondents-authority in not returning the goods seized upon failure to comply with Sections 110(2), 124 and 153 of the Act, is illegal and the writ petition was allowed by directing the respondents to return all gold ornaments/gold items and two apple IPage phones seized under panchnama to the petitioner within a specified period unconditionally subject to adjudication process to be carried out afresh in accordance with law. In case of KORE KONCEPTS VERSUS DEPUTY COMMISSIONER OF CUSTOMS (SIIB) AND ORS 2013 (5) TMI 876 - DELHI HIGH COURT where the show cause notice was not issued within stipulated period according to the Court, the seizure order would not sustain and the goods which were released earlier provisionally were held to have been released unconditionally and the Bank Guarantee furnished at the time of provisional release would cease to operate, the same also was required to be returned - Reverting to the facts on hands, M/s. Amira Impex of Maharashtra engaged in the business of various items is alleged to have indulged in gross over valuation and mis-declaration of the export goods with an intent to wrongfully avail IGST refund in various other export related incentives. A search was conducted at the office premise of the proprietor of JBM Textiles Shri Amit Harishankar Doctor and also of Shri Mihir Mahesh Chevli and Shri Aazam Sabuwala at Surat. The statements were recorded of the authorized signatory of about eight firms, which were also operating independently from the same premise - the notice for confiscation and penalty also was given under the Act on 27.11.2020. Admittedly, the search proceedings had been carried out as per the panchnama drawn and placed before this Court on 03.04.2019. The statements have also been recorded on 04.04.2019 and a show cause notice had been issued on 27.11.2020 for the alleged illegal export attempted by M/s.Ameera Impex by the Additional Director of Revenue Intelligence-respondent No.4, served upon the petitioner on 14.12.2020. Admittedly, this notice of confiscation is issued beyond the prescribed statutory period of six months. In the instant case, admittedly there has been no provisional release of the seized goods. Further extension of six months with the reasoned order by the Principal Commissioner of Customs or Commissioner of Customs also is completely missing. The period of six months from the date of signature expired on 03.10.2019 - even further period of six months as provided in the first proviso to Section 110(2) also got over on 03.04.2020. Of course, in absence of any order, much less reasoned order by prescribed authority, extension would need to be disregarded yet, the respondents chose not to return the seized currency or mobile phones and the request of the petitioner has not been addressed nor replied to. Noticing that the period prescribed under the law has already lapsed long before the show cause notice has been issued, this Court needs to intervene for this being a clear violation of statutory provisions of section 110 and other provisions of Customs Act, these items are required to be returned to the petitioner - the Court notices that nothing has been explained in the entire reply of 27 paragraphs with regard to the non compliance of the statutory mandate under Section 110(1)(2) read with Section 124 of the Act. It is quite unfathomable as to why the time limit is not adhered to and issuance of the show cause notice has been delayed beyond the statutory time period and hence, intervention will be necessary at the end of this Court by keeping open the rights of the respondents to initiate adjudication process afresh in accordance with law. The present petition is allowed - the respondents shall return the cash and articles/goods to the petitioner not later than period of eight weeks seized from the petitioner.
Issues Involved:
1. Legality of the seizure of cash and mobile phones. 2. Compliance with the statutory period for issuing a show cause notice under Section 124 of the Customs Act, 1962. 3. Return of seized goods due to non-compliance with statutory provisions. 4. Validity of the respondents' actions in retaining the seized goods beyond the statutory period. Detailed Analysis: 1. Legality of the Seizure of Cash and Mobile Phones: The petitioner, a sole proprietor of JBM Textiles, Surat, had his office searched by the Directorate of Revenue Intelligence (DRI) on 03.04.2019, resulting in the seizure of ?35,99,000/- in cash and two mobile phones. The petitioner claimed that his signature on the panchnama was obtained forcibly. The respondents alleged that the petitioner was involved in illegal export activities and that the seized amount was related to fraudulent IGST refunds and commission from third-party exports under the EPCG Scheme. 2. Compliance with the Statutory Period for Issuing a Show Cause Notice: The petitioner argued that no show cause notice was issued within the six-month period prescribed under Section 110(2) of the Customs Act, 1962. The respondents issued a show cause notice on 27.11.2020, which was received by the petitioner on 14.12.2020, well beyond the statutory period. The petitioner contended that the seized goods should have been returned as no notice was issued within the mandated timeframe. 3. Return of Seized Goods Due to Non-Compliance with Statutory Provisions: The court noted that under Section 110(2) of the Customs Act, if no show cause notice is issued within six months, the seized goods must be returned. The statutory period can be extended by another six months by the Principal Commissioner of Customs, but this extension must be recorded in writing and communicated to the concerned person before the expiry of the initial six months. In this case, no such extension was granted, and the respondents failed to return the seized goods despite the lapse of the statutory period. 4. Validity of the Respondents' Actions in Retaining the Seized Goods Beyond the Statutory Period: The court found that the respondents did not comply with the statutory mandate under Section 110(2) and Section 124 of the Customs Act. The respondents' failure to issue a show cause notice within the prescribed period or to obtain an extension from the Principal Commissioner rendered their actions illegal. The court emphasized that the statutory provisions are clear and mandatory, and the respondents' non-compliance necessitated judicial intervention. Judgment: The court allowed the petition, directing the respondents to return the seized cash and mobile phones to the petitioner within eight weeks. The court also left open the possibility for the respondents to initiate a fresh adjudication process in accordance with the law, if permissible. The court did not award any costs.
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