Expeditious disposal of seized/confiscated goods - Customs - F. No. 711/29/88-Cus. (As)

Expeditious disposal of seized/confiscated goods F. No. 711/29/88-Cus. (As) Dated 18-7-1988 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Expeditious disposal of seized/confiscated goods. Improvement in the collection of revenue is the constant concern of the Government. One of the areas identified in this regard is expeditious disposal of seized/confiscated goods. In this connection attention is drawn to Member (Anti-smuggling)'s D.O. of even No. dated 22nd April, 1988 in which this fact had been emphasised. 2. Minister of State (Revenue) has also expressed concern over the pace of disposal of goods that have become ripe for disposal and wants efforts to be stepped up to expedite their disposal. A copy of the note recorded by him and of the note on the discussion subsequently held with Secretary (Revenue) is enclosed. 3. The collectors are, therefore, directed to organize a Special drive for disposal of confiscated goods which have become ripe for disposal. 4. Special efforts should also be made by examining each file to ensure that seized/confiscated goods become ripe for disposal. The main reason why seized/confiscated goods are not disposed of is that departmental or court proceedings are pending or Section 110 (1A) of the Customs Act is not invoked. Minister of State (Revenue) desires that every case which is more than one year old should be examined by the Collector and orders obtained from the Court/departmental authorities for permitting disposal of such goods. A Monthly report on the action taken and the results achieved should be sent to the Directorate of Preventive Operations with a copy to the Ministry, beginning from the first week of August, 1988. Copy of Note recorded by the Minister of State in the Ministry of Finance. FIRST NOTE - INCREASE COLLECTION OF REVENUE 1. While going around various custom houses in the country, I feel that the following need to be looked into in greater detail and implemented as far as possible in order to increase collection of revenue. I. Sale of goods where bonding period has expired (i) In the bonded warehouses, a huge lot of goods are lying in all the parts where the bonding periods have expired, even after extensions. (ii) The amount of duty involved for these goods have not been properly ascertained but it would be worthwhile calling for a proper account of such goods and the duty involved every three months. (iii) It is imperative that very determined action is taken to dispose of the goods where bonding period has expired so that the duty involved comes to the Government and is not indefinitely deferred. (iv) The legal provision for enforcing the realisation of duty where bonding period has expired is that we give a notice to the importer to pay the duty and if he does not, we auction the goods. At that stage, the importers come rusting to pay the duty and interest. The reason why the importers are interested in not clearing the goods from godown is that they get cheap godown facility in the bonded warehouses and also that the interest rate which is 12% is much lower than the current market rate of 18%. The Importers also know that auctions are not very effective and their goods which often are specifically needed for one factory or industry only are not sold to or brought by other people. (v) In order therefore, to improve the collection or revenue from the above source, it is also necessary to take recourse to some coercive method which is available under Section 142 of the Customs Act. (vi) Under this section, if any duty has not been paid by any importer, then we hold up the goods imported him in subsequent consignments. And unless he pays the duty, the subsequent consignments will not be released. (vii) This is a very effective method particularly for those who are regular importers. This method would be resorted to very effectively by issuing notices under Section 142 and putting them in the computers which are now available in all the custom Houses. Even without the computer, in the conventional method also this can be very effective. To Sum up : In respect of this item of work, the following steps may be taken. (a) A three-monthly statement of time-expired bonded goods and the duty involved should be submitted by all Collectors to Board, this will show the improvement effected in realising the duty due from such goods. (b) Number of auctions for selling such goods should be increased. It is possible to have one auction per week. For this purpose, one Assistant Collector should be put in exclusive charge. (c) Effective use of Section 142 - this has been discussed in detail already. (d) Interest rate payable on the bonded goods should be made equal to the market rate. (e) Machinery items should not be allowed to be bonded, except with special permission of Collector. It has been found that in auction it is not possible to sell machinery items because they are usually meant for particular industries. When we try to sell them, nobody comes to bid. (f) No bonding of goods are to be allowed to an importer who has already stocks of such uncleared goods in the warehouses. (g) Proper and regular supervision must be done at Collector's level and a monthly improvement report should be sent to Board. II. Sale of confiscated goods (i) Confiscated goods are of two types. The first type is those lying in warehouses under the Custom houses. The goods are baggage items and secondly, the seized goods in course of raids by preventive parties. (ii) A proper account of all these goods and the duty involved is already available. This will show a large amount of goods which are lying for disposal. (iii) Some are not ripe for disposal and some are ripe for disposal. It is necessary to examine both these aspects. Where they are not ripe for disposal, it is necessary that steps are taken to make them ripe for disposal. Often the reason for treating the goods as unripe for disposal is that the so-called disposal orders are not received from the concerned officers. The process of getting the disposal orders must be expedited. Some times, it is necessary to decide on, an adhoc disposal of all goods before 1986 or so, particularly in respect of baggage goods. (iv) Even in respect of other goods often it is found that they are kept pending with the remark that Court cases are pending. In those cases, it is necessary to examine each case and find out whether any bar is there or not in selling these goods. In some cases, if the cases are mentioned before the Hon'ble Judges pointing out that the goods might deteriorate if stored indefinitely, there may be favourable results also. (v) Every case which is more than 1 (one) year old should be looked into by Collector and a monthly report should be sent. (vi) The second type of goods are confiscated goods lying in the docks. These are normal import goods usually in large quantities which are confiscated due to licence not being there or mis-declaration etc. The duty involved in such goods is very large. Special efforts to dispose them of are necessary. A very large chunk of revenue will come from here. A monthly progress report is necessary for this item of work also. III. Realisation of revenue which have been blocked in Court cases Estimate shows nearly 2000 crores of rupees have been blocked in court injunctions. The litigations are conducted by Law Ministry. It is common knowledge that payment by Law Ministry is very slow. There is no freedom of choice of lawyers by us. Whereas the responsibility to raise revenue is with us, the power to fight law cases is with the Law Ministry. This duality has led to this blockade of revenue at such a large scale. The Collectors must be given power to appoint lawyers and pay them. Then the number of injunctions also will come down and the blockade of revenue will also come down. If we are to fight the importers also such injunctions only to stall the payment of revenue, we need the freedom to appoint lawyers and pay them ourselves according to the pre-determined rate. Even if the Law Ministry objects to the final arrangement, as an interim and a adhoc measure this can be authorised. Otherwise the drag on revenue will continue. 2. I am sure that Secretary (Revenue) will take an emergent meeting on these points and let me know as quickly as possible, the steps that have been decided to be taken. Kindly take a positive decision by June 25, 1988 so that action may start all over. India from July 1, 1988. Sd/- Ajit Kumar Panja MOS (Revenue) June 14, 1988 . Copy of Note on the discussion with Secretary (Revenue) The matter was discussed with Secretary (R) on 20.6.88. In regard to the three points, the following action may be taken :- I. Sale of goods where bonding period has expired : (a) A special drive may be intimated on the lines indicated by MS(R) in regard to finalisation of cases where warehousing period has expired; (b) The quarterly report may be called for; (c) It may not be physically possible to have weekly auctions but the frequency should be substantially increased; (d) The question of increasing the interest rate may be examined urgently; (e) The number of cases where machinery items have been pending clearance after warehousing period has expired and the amount of revenue involved in those cases should be ascertained; (f) Monthly report in regard to the improvement brought about should be called for. II. Sale of confiscated goods : (a) A special drive should be organised for disposal of confiscated goods ripe for disposal; (b) the other points indicated by MS(R) should be examined urgently; (c) Monthly report in regard to cases pending for over one year should be called for. III. Realisation of revenue blocked in court cases : Action may be taken in regard to appointment of lawyers on a priority basis. Sd/- S. Venkatarama Iyer 1-7-1988