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TMI Blog2017 (3) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... come to a standstill. The impugned letters dated 23.12.2016, issued by the Deputy Director DRI is liable to be quashed in so far as they relate to the cash credit accounts and the Bank accounts that are cash credit accounts are liable to be de-frozen - The petitioner shall be permitted to operate the cash credit accounts in Respondents No. 3 and 4 Banks - The petitioner shall, within a period of one week, furnish a security of ₹ 10,00,00,000/- in the form of an unencumbered property, over and above the amount of ₹ 7.5 Crores in the form of gold and currency seized by the Respondents - petition disposed off - decided partly in favor of petitioner. - W.P.(C) 12251/2016 & CM APPL. No. 48317/2016 - - - Dated:- 16-3-2017 - MR SANJEEV SACHDEVA J. Advocates who appeared in this case: For the Petitioners: Mr. Diljit Singh with Mr. Anubhav Mehrotra, Advocate. For the Respondents: Mr. Anil Dabas, Advocate for respondent No.1. Mr. P C Aggarwal, Advocate for Respondent no.2. JUDGEMENT SANJEEV SACHDEVA, J 1. The Petitioner by the present petition seeks quashing of letter dated 23.12.2016 whereby the Respondent No. 2 /Directorate of Revenue Intelli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts could not have been taken prior to adjudication of penalty and prior to any sum having been crystallized or ascertained. 9. It is further submitted that the cessation of operation of the bank accounts has virtually led to the entire business coming to a standstill and the petitioner is not in a position to carry on its day-to-day operation. It is further contended that the accounts that have been seized are cash credit accounts in which there is debit balance. 10. Reliance is placed on the decisions in the cases of (i) VIKAS GUMBER VERSUS UNION OF INDIA (2009) 234 ELT 439 (Del) (ii) MZ HANDICRAFTS VERSUS UNION OF INDIA 2015(322) ELT 57 (All.) (iii) RAJENDRA VITTHAL SHINDE VERSUS UNION OF INDIA 2016 (332) ELT 699 (Bom) (iv) KHAJA MUSTAFA KAMAL VERSUS UNION OF INDIA 2016 (337) ELT 221 (Bom) 11. The respondent DRI in its counter affidavit has contended that the petitioner used to import duty free imported gold for making jewellery with the condition that it would export the entire jewellery made from the imported duty free gold. It is contended that instead of exporting the gold jewellery, the petitioner used to divert the duty free imported g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale proceeds of smuggled goods is also liable to be confiscated. It is submitted that in these circumstances also, freezing of the bank accounts of the petitioner was required as there was every possibility that sale proceeds may be kept in the said bank accounts. Reliance is placed on the decision of the Supreme Court in COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS EUROASIA GLOBAL (2009) 6 SCC 58 and of this court in RAVI CORP SCIENCE VERSUS UNION OF INDIA 2015 (323) ELT 558 (Del) 17. The Impugned letter dated 23.12.2016 issued by the DRI to the Bank Manager of the Banks of the petitioners reads as under: It is to inform you that an investigation is being carried out against Shri Lal Mahal Limited, B- 058506, Bhagwan Dass Nagar, New Delhi - 110026. In this regard, you are requested to submit the bank account statement of Account Number 61005373144 maintained in your branch for the period from 01.04.2011 to 23.12.2015 at the above mentioned address within two days time and it is also requested to cease all the banking activities such as withdrawal, deposit, RTGS, NEFT etc. of the sais account until the prior permission of the undersigned officer. It is also requested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an investigation is being carried out against the petitioner. No show cause notice or order has either been communicated to the petitioner nor copy thereof filed in court. The only reason forthcoming is by way of the reply in the counter affidavit, wherein it is stated as under: 10. That so far the submission of the petitioner that the impugned letters are silent of the provision of law under which they have been issued. In this connection it is submitted that since investigation of the case is going on and as per the provision of the sub section 3 of section 110 of the Customs Act the proper officer may seize any documents or things which in his opinion, will be useful for, or relevant to any proceedings under this Act. After perusal of the aforesaid provision of law it is clear that proper officer may seize any document or thing, which includes sale, proceed of the Gold in question. Since there is every possibility that sale proceed of the Gold in question may be deposited in bank accounts of the petitioner, therefore in order to save or to recover the sale proceed the bank accounts of the petitioner is to be freeze otherwise sale proceed in question may be disbursed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limit of ₹ 1000 Crore. The accounts have a balance of only ₹ 1,69,00,000/-. The Petitioner in the petition has averred as under: J. BECAUSE however, respondent has ceased all bank accounts of the petitioner at Delhi, asphyxiating the running business into closure and exposing it to huge liabilities, both domestic and international. How this act does not satisfy the twin tests of necessity and least invasiveness is that while the seizing of the accounts does not protect the interests of revenue as the accounts have deposits of only ₹ 1,69,00,000/- (Rupees One Crore Sixty Nine Lac), it has a cascading effect on the business as these accounts are Cash Credit accounts, wherein, Petitioner has credit limits of more than ₹ 1000 crores, which are being used by Petitioner to do business, with the proceeds being used to repay to the bank. If the accounts remain seized, not only will the business of Petitioner be destroyed but it would expose it to legal challenges from international buyer. 26. To the categorical stand of the petitioner that the bank accounts that have been seized are cash credit accounts, there is no denial by the respondents. The freezing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch of the residential house of the petitioner therein currency amounting to ₹ 23.90 lakhs was recovered. The information given by the wife of the petitioner to the officer of DRI was that the amount constituted sale proceeds of imported goods. The said amount was seized under section 110 of the Act on the reasonable belief that the said currency was liable for confiscation as it represented sale proceeds of smuggled goods. 33. Per contra, in the present case, there is no confiscation under section 110 of the Act. The stand is that as the gold is not available, it may have been sold and the sale proceeds of the Gold may be kept in the bank accounts of the petitioner. There is not even a reasonable belief that there are any sale proceeds in the bank accounts. On the contrary, the stand of the petitioner is that the bank accounts are cash credit accounts. 34. The Judgment of the Division Bench of this court in the case of RAVI CROP SCIENCE (supra) relied upon by the Respondents is also not applicable to the facts of the present case. In the said case the categorical stand of the DRI was that the investigation had showed amounts had been received into the account that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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