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2022 (6) TMI 1092 - AT - CustomsSeeking release of seized goods - section 110A of Customs Act, 1962 - memory cards of different specifications - 1826 nos. iPhone 13 Pro of different specifications - prohibited/restricted goods or not - failure to disclose these phones was the bone of contention in the investigation as well as in the show cause notice issued thereafter - HELD THAT - Both confiscation and provisional release arise in the aftermath of seizure under section 110 of Customs Act, 1962. The scope for, and limits on, confiscation under section 111 of Customs Act, 1962, and, thereby, of redemption fine, stands settled by the decision of the Hon ble Supreme Court in WESTON COMPONENTS LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI 2000 (1) TMI 45 - SC ORDER and of the Hon ble High Court of Bombay in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS FINESSE CREATION INC. 2009 (8) TMI 115 - BOMBAY HIGH COURT . Provisional release under section 110A of Customs Act, 1962 does not, in any way, impede completion of adjudication proceedings commenced under section 124 of Customs Act, 1962 and is to be invoked upon seizure with due acknowledgement of legislative intent to which we may now bring our attention to bear. Disposal by the empowered officer under the authority of section 110(1A) of Customs Act, 1962 is not restricted to sale and it is trite that such sale does not erase the taint of prohibition that attaches to seized goods; therefore, it is abundantly clear that the impugned goods are not prohibited, or even restricted, for import and that it is compliance with section 47 of Customs Act, 1962 that is in dispute here. The power to seize goods, and, that too, only in the reasonable belief of liability to confiscation under section 111 of Customs Act, 1962, is accorded by section 110 of Customs Act, 1962 - The denial of provisional release appears not to have considered the legal framework for exercise of authority laid down in section 110 to section 126 of Customs Act, 1962 and, instead, has been sought to be justified in terms of section 150 of Customs Act, 1962. A perusal of this provision leaves no room for doubt that section 150 of Customs Act, 1962 is a procedural enablement for distribution of sale proceeds of goods that are permitted by law to be sold; in any case, section 150 of Customs Act, 1962 does not empower sale or disposal and justification for denial of provisional release is acceptable only if in accord with the legislative intent of section 110A of Customs Act, 1962. It is on record that section 110(1A) of Customs Act, 1962 has been invoked for undertaking disposal of seized goods before even being vested, under the authority of section 126 of Customs Act, 1962, in the Central Government by confiscation. The substitution of the merchant-importer by the Central Government cannot legalize a beach of restrictions imposed for the security of the State or the safety of those who reside within its territorial confines; the commencement of pre-trial disposal by sale admits that breach by the importer of the impugned goods has only commercial implications. There is no suggestion that any policy has been contravened in the import. The sum and substance of the alleged breach is the failure to declare the goods with intent to evade duty for which restitution lies in section 28 of Customs Act, 1962 - Before section 110A was incorporated in Customs Act, 1962, seized goods offered for repossession, by operation of common practice , could be saddled with fine in lieu thereof by retention of confiscatory interest. Over the years, the quantification of fine has been placed within the practical framework of offsetting the potential for windfall deriving from the breach for which the goods are confiscated. Rarely would it be the value of goods; some proportion thereof suffices. There can be no golden formula for it and it is here that the discretion of the authority is called for. The goods have been seized under section 110 of Customs Act, 1962 and the seizure itself is not in dispute. Therefore, it does not lie in the jurisdiction to set aside the seizure. However, appellant has claimed that the goods were wrongly despatched to the importers and must, therefore, be returned to the owners. It is on record that the goods are not configured for use in India. In any case, no harm would be caused to the interests of Revenue by export of goods that have not been cleared for home consumption or even after such clearance. Provisional release under section 110A of Customs Act, 1962, by adjudicatory determination or on appellate intervention, does not stand in the way of disposition as the owner deems fit. Shipping bills, filed for declaration of intent to export, is to be dealt in accordance with section 51 of Customs Act, 1962 for which responsibility vests with the supervisory establishment of the customs administration. This advisory is enunciated as a reminder that legislative intent must be adhered to at all times. The impugned order declining provisional release is modified to allow provisional release upon execution of bond for value of impugned goods and furnishing revenue deposit of ₹ 5,00,00,000 not later than seven days of service of this order. Entry for export under section 50 of Customs Act, 1962, as and when filed, shall be disposed off expeditiously in accordance with section 51 of Customs Act, 1962 - Appeal disposed off.
Issues Involved:
1. Denial of provisional release of seized goods. 2. Legality of the seizure and subsequent actions taken by the customs authorities. 3. Justification for discriminatory treatment of the imported goods. 4. Impact of non-disclosure of goods in the bill of entry. 5. Validity of the forced sale of seized goods. 6. Ownership and responsibility for the seized goods. 7. Conditions for provisional release under section 110A of the Customs Act, 1962. 8. Judicial precedents and legislative intent regarding provisional release. 9. Compliance with procedural requirements under the Customs Act, 1962. Issue-Wise Detailed Analysis: 1. Denial of Provisional Release of Seized Goods: The appellant requested provisional release of goods seized under section 110 of the Customs Act, 1962, which was denied by the adjudicating authority. The Tribunal emphasized that under law, a person from whom goods are seized has the right to seek provisional release immediately even as adjudication proceedings take their course. The refusal to permit provisional release was deemed a blatant breach of the statute, as no reasonable ground remained for retention of the seized goods in departmental custody. 2. Legality of the Seizure and Subsequent Actions: The consignment declared as 'memory cards' also comprised undeclared iPhones, leading to their seizure under the reasonable belief of being liable to confiscation under section 111 of the Customs Act, 1962. The Tribunal noted that the scope of appellate disposal does not concern the correctness of the seizure but focuses on the provisional release pending adjudication. 3. Justification for Discriminatory Treatment of the Imported Goods: The appellant argued that the goods, being freely importable, were neither prohibited nor restricted for import. The Tribunal agreed, noting that the impugned goods are not prohibited or restricted, and the refusal to release them provisionally was unjustified. 4. Impact of Non-Disclosure of Goods in the Bill of Entry: The failure to disclose the iPhones in the bill of entry was considered a procedural breach. The appellant contended that they could not have declared goods not ordered by them or usable in India without prior intimation from the supplier. The Tribunal found this argument reasonable and noted that the breach was procedural, not substantive. 5. Validity of the Forced Sale of Seized Goods: The forced sale of some lots of the phones by the Directorate of Revenue Intelligence (DRI) without the formality of confiscation under section 111 of the Customs Act, 1962, was objected to by the appellant. The Tribunal found the sale unjustified and noted that the goods should not have been sold without proper confiscation proceedings. 6. Ownership and Responsibility for the Seized Goods: The appellant claimed ownership of the goods, which was contested by the respondent. The Tribunal noted that the goods were seized from consignments claimed by the importer, and non-inclusion in the bill of entry does not supplant custodial ownership. The Tribunal emphasized that ownership is claimable at any stage and is attached to the importer by default. 7. Conditions for Provisional Release under Section 110A of the Customs Act, 1962: The Tribunal highlighted that provisional release under section 110A does not impede adjudication proceedings and is intended to benefit the importer without disadvantaging the State. The Tribunal emphasized that the refusal to release the goods provisionally was contrary to the legislative intent of section 110A. 8. Judicial Precedents and Legislative Intent Regarding Provisional Release: The Tribunal referred to several judicial decisions, including those of the Hon'ble Supreme Court and High Courts, which support the provisional release of goods pending adjudication. The Tribunal emphasized that the legislative intent of section 110A is to facilitate the provisional release of seized goods and that the refusal to do so was contrary to judicial interpretation. 9. Compliance with Procedural Requirements under the Customs Act, 1962: The Tribunal noted that the denial of provisional release did not consider the legal framework for the exercise of authority laid down in sections 110 to 126 of the Customs Act, 1962. The Tribunal emphasized that compliance with procedural requirements is essential, and the refusal to release the goods provisionally was not in accordance with the legislative intent. Conclusion: The Tribunal modified the impugned order to allow provisional release upon execution of a bond for the value of the goods and furnishing a revenue deposit of ?5,00,00,000. The Tribunal directed that entry for export under section 50 of the Customs Act, 1962, be disposed of expeditiously in accordance with section 51 of the Customs Act, 1962. The appeals were disposed of accordingly.
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