9911796707
TMI Blog2017 (3) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... elligence (DRI for short) carried out searches in premises of Petitioner at Noida and Delhi. At Noida, the DRI officers seized 15 kg consignment of jewellery. The custom authorities had earlier seized 3 kgs. In total 18 kgs of gold of the petitioner has been seized. 4. On 23.12.2016, DRI officers seized of Rs. 2,48,45,500/- in demonetized currency notes and Rs. 13,40,000/- in new currency notes and various documents. The details thereof was recorded in the panchnama dated 23.12.2016. It may be noted that the prayers in the petition are restricted to the freezing of the bank accounts and as such in these proceedings, this court is not concerned with the legality or otherwise of the seizure of the gold, currency notes (demonetized and new) and other documents. 5. On 23.12.2016, the DRI issued the impugned letters to the Banks/Respondent 4 and 5 directing them to cease all banking activities of the petitioner's bank accounts. Consequent to the said letters the Banks have intimated the petitioner by the impugned letters dated 26.12.2016 that the bank accounts have been frozen. 6. It is submitted by learned counsel for the petitioner that neither any show cause notice was issued prio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and involvement of the other persons is yet to be worked out. It is submitted that since investigation is at a primary stage and the time for the issuance of show cause notice is six months, no show cause notice has been issued till date. 14. Reference is made to section 110(3) of the Act to contended that since investigation of the case is going on, the proper officer may seize any documents or things which in his opinion, would be useful for, or relevant to any proceedings under this Act. It is submitted that it would also include sale proceed of the Gold in question. It is submitted that there is every possibility that sale proceed of the Gold in question may be deposited in the bank accounts of the petitioner and therefore in order to save or to recover the sale proceeds, the bank accounts of the petitioner has been frozen. 15. Further reference is made to Section 111 of the Act to contend that as petitioner had imported duty free Gold in a special economic zone unit being run by him and the import was subject to the conditions that Gold in question would be used only for making jewellery and thereafter the jewellery would be exported and as the petitioner did not fulfill t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. Let us examine the applicability of the said provisions to the facts of the present case. 20. Section 110 of the Act reads as under: 110. Seizure of goods, documents and things. - (1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods: Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. (1A) ***** ***** ***** (2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. (3) The proper officer may seize any documents or things, which, in his opinion, will be useful for, or relevant to, any proceeding under this Act. (4) The person from whose custody any documents are seized under sub-section (3) shall be entitled to make copies thereof or take extracts there from in the presence of an officer of customs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was subject to the conditions that Gold in question was to be used only for making jewellery and after making the jewellery, same was to be exported but in the present case petitioner has not fulfil the said condition and sold the duty free Gold in open market, therefore the Gold imported by the petitioner come in the purview of section 111 (o) of the Customs Act and is liable to be confiscation. Since in the present case Gold in question has been sold out, therefore sale proceed of the same is liable to be confiscation, which may be kept in the bank accounts of the petitioner. 12. That since petitioner did not fulfil the condition of duty free import of the Gold and disposed off the Gold in question in open market, its come in to the definition of smuggling and as per section 121 of Customs Act sale proceed of the smuggled goods is liable to be confiscation. Here again freezing of the bank accounts of the petitioner is required because there is every possibility that sale proceeds may be kept in the said bank accounts." (underlining supplied) 24. The reason forthcoming from the counter affidavit is that the Gold, which was imported by the petitioner and which is not available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (194) ELT 267 (Guj), directed de-freezing of the Bank accounts as the petitioner was not dealing in currency or was not charged with illegally transacting in currency and further as no show cause notice was issued nor any formal order had been passed by virtue of which the bank accounts were seized. 29. Similar view has been taken by the Division Bench of the High Court of Judicature at Allahabad in M.Z. HANDICRAFTS (supra), Division Bench of the High Court of Judicature at Bombay in RAJENDRA VITTHAL SHINDE (supra) and KHAJA MUSTAFA KAMAL (supra). The consistent view taken is that the S. 110 of the Act does not enable the proper officer to attach the bank accounts. The authorities cannot stop business by freezing of bank accounts. 30. The Division Bench of the High Court of Judicature at Allahabad in RAGHURAM GARH PVT. LTD VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX 2005 (186) E.L.T. 50 (All) directed de-freezing of the bank accounts where the bank accounts were not been frozen under section 110 of the Act but had been frozen as investigation was being carried out. 31. In the present case also the stand is that the accounts have been frozen as investigation is going on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there can be no justification in freezing the cash credit accounts of the Petitioner. 35. The stand of the DRI is that 430 Ks of imported Gold is short and unaccounted. Investigations are going on. Certainly, DRI would be entitled to take appropriate steps, in accordance with law, with regard to the imported Gold that is alleged to have been diverted and its sale proceeds, if the competent officer of the DRI is of a reasonable belief that the sale proceeds are lying in a particular account or accounts. Until such time that there is such a reasonable belief expressed, there can be no justification in a blanket order of freezing of bank accounts that are cash credit accounts in which there is no credit balance and the effect of which is that the entire business operations of the petitioner come to a standstill. 36. Accordingly, I am of the view that 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. 37. The question then arises is whether the same are to be unconditionally de-frozen or the petitioner is t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
