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TMI Blog2022 (1) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... both the sides and looking to the facts and circumstances of the case, it appears that high end wrist watches have been seized and lying with the respondent No.2/DRI since 29th October, 2012. 4. Respondent No.1 had issued a show-cause notice dated 28.10.2013, which is at Annexure P-9 to the memo of this writ petition. However, the show-cause notice was not adjudicated upon by the respondents for several months. 5. Learned Senior Counsel appearing for the petitioner has submitted that they are ready and willing to deposit the duty under protest. As per the show-cause notice issued by the respondent No.1, the duty amount mentioned is Rs. 52,19,582/. Out of this amount, Rs:27,50,669/- has already been deposited by the petitioner during the course of investigation. 6. Thus, petitioner has shown the readiness and willingness to deposit the remaining amount of Rs. 24,68,913/- for the provisional release of the high end wrist watches, without prejudice to his rights and contentions in the adjudication process of the show- cause notice. 7. Learned Senior Counsel appearing for the petitioner submitted that along with high end wrist watches, gold ornaments i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r provisional release of goods within a period of one week from today. The respondent No.1' shall decide the provisional release application preferred by the petitioner under Section 110-A of the Customs Act, 1962 within a period of two weeks from the date of the receipt of the provisional release application from the petitioner. 12. With these observations, this writ petition is hereby disposed of." (emphasis supplied) 3. The Principal Commissioner rejected the aforesaid application by order dated 11.09.2020 and the relevant portion of the order is reproduced below: "20. From the language of Section 110A of the Customs Act, 1962, I find that it is apparent that the Adjudicating Authority has been bestowed with discretionary mandate decide to the application for provisional release on merit based on the facts of the Case that could be different from Case to Case as has been held by the Hon'ble Courts in the judgments as detailed below. ******* 25. I observe that the discharge of liability of Duty, Interest and Penalty in a Case is the legal obligation on the part of Concerned Noticee. However, I hold that the offer by the said Applicant S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without valid/licit documents] with the instant Case as said seized Goods as covered under Show Cause Notice dated 28.10.2013 were also recovered without any valid/licit documents and (iv) several other facts and judicial inferences as discussed in the preceding paras. 38. In view of the above facts and judicial verdicts I am of considered opinion that the request of provisional release of seized Goods as covered under said Show Cause Notice dated 28.10.2013 as made by said Shri Pushpak Lakhani(Noticee to the said Show Cause Notice dated 28.10.2013), C/o Sh. Mukesh Bellani, R/o F-82, Kirti Nagar, New Delhi-110015 vide his above said representation dated 31.08.2020 is legally not sustainable on grounds as discussed in the preceding paras and therefore, I reject the said request of said Shri Pushpal Lakhani for provisional release of said seized Goods as covered under said Show Cause Notice dated 28.10.2013." (emphasis supplied) 4. It would be useful, before noticing the submissions advanced by Shri Tarun Gulati learned senior counsel assisted by Shri Sumit K. Batra appearing for the appellant and Shri Rakesh Kumar learned authorized representative appearing for the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for provisional release. The high- end watches and 50% of the recovered cash amount were also released in the case of Purshottam Jajodia and Pankaj Lakhani by orders dated 17.03.2015 and 22.07.2016 passed by the Supreme Court. However, the goods seized from the premises of the appellant and Ms. Shikha Pahwa (who had stated that all the watches and cash recovered from her place belonged to the appellant only) continue to be seized and it is these high-end wrist watches that are in dispute in this appeal. 8. On 09.01.2013, the appellant had filed an application for provisional release of the seized watches under section 110A of the Customs Act, 1962 [the Customs Act]. The appellant also filed Writ Petition No. 6381 of 2013 before the Delhi High Court for provisional release of the goods. This petition was disposed of on 08.10.2013 with a direction that the Writ Petition shall be treated as a representation and shall be dealt with by the authorities within three weeks from the date of the order. 9. On 28.10.2013, a show cause notice was issued to the following eleven persons, including the appellant in respect of the 116 high-end wrist watches and cash amounting to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner upon verification shall comply. Statement made by counsel for the petitioner is accepted subject to all just exceptions. The writ petition will be treated as representation to the respondents and the respondents will pass an appropriate order, if required and necessary, after hearing the petitioner. Parties are, however, given liberty to revive the petition in case there is any dispute. Keeping in view the nature and controversy and as the Statute had fixed a time limit, we feel that the respondents should dispose of the entire issue within a period of two weeks from the date copy of this order is received by them. Writ petition is disposed of." 12. The said representation was decided by an order dated 24.03.2014. The order notices that since the appellant had deposited only Rs. 27,50,669/- as against the demand of Rs. 52,19,582/-, the said deposit cannot be treated as compliance of section 28(5) of the Customs Act. It was also stated that the show cause notice shall, therefore, be adjudicated upon in due course. 13. This order led to the filing of another Writ Petition No. 2650 of 2014 by the appellant contending that in case of shortfall of any duty and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directorate of Revenue Intelligence, New Delhi Directorate of Revenue Intelligence, New Delhi, 2014 (307) ELT 837 (Del). However, the learned counsel for respondents points out that the operation of the said judgment has been stayed by the Supreme Court by virtue of an order dated 11.09.2014 in SLP (C) No.24478/2014 and the stay order is continuing. Although, subsequently, the Supreme Court by an order dated 11.05.2015 directed that the goods shall be released within a week. The learned counsel for the petitioner submitted that although the Supreme Court stayed the operation of the said judgment, yet it granted release of the goods and, therefore, the same order should be passed by this Court. We are afraid that we cannot accept this argument inasmuch as the Supreme Court has stayed the operation of the said judgment on which the petitioner places reliance. The powers of the High Court are not equivalent to those of the Supreme Court and it is also not clear as to under which circumstances the goods were directed to be released in that case. Renotify on 22.02.2016." 19. Pankaj Lakhani, thereafter, moved the Supreme Court and by order dated 22.07.2016 the Supreme Court dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been recorded that M/s. Johnson Watch Co. Pvt. Ltd. did not co-operate in the investigation and despite repeated requests for providing details, the Directors did not turn up for investigation. The said paragraph also gives a summary of verification of the watches contained in Annexure-A to the show cause notice dated 27.10.2017, as follows: Annexure-A - Summary of verification and duty calculation (Amount in Rs.) S.No. Reference of Annexure (A1 to A11 for various showrooms/stores/ residence of JWCPL) Total Watches detained/seized No. of watches for which documents available No. of watches for which no documents available (1) (2) (3) (4) (5) 1 Annexure A1 Showroom/Store of JWCPL at A-12 South Ex. Pt-I, New Delhi 1622 982 640 2 Annexure A2- residence of Director of JWCPL at K-6A Ground Floor Green Park Ex., New Delhi 1460 1306 154 3 Annexure A3- residence of Director of JWCPL at K-6A Ground Floor Green Park Ex., New Delhi 117 46 71 4 Annexure A4- Showroom/Store of JWCPL at G-6 Ambience Mall NH- 8, Gurgoan 584 0 584 5 Annexure A5- Showroom/Store of JWCPL at K-1 Cannaught Place, New Delhi 250 0 250 6 Annexure A6- Showroom/Store of JWCPL at K- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner shall prefer application for provisional release of goods within a period of one week from today. The respondent No.1' shall decide the provisional release application preferred by the petitioner under Section 110-A of the Customs Act, 1962 within a period of two weeks from the date of the receipt of the provisional release application from the petitioner." (emphasis supplied) 25. Thereafter, the appellant filed an application dated 31.08.2020 before the Principal Commissioner of Customs (Preventive) with a prayer to consider the release of goods on payment of the entire duty amount. This application was rejected by order dated 11.09.2020. The relevant portion of the order has been reproduced in paragraph 3 of this order. 26. This appeal has, accordingly, been filed to assail the aforesaid order dated 11.09.2020. 27. Shri Tarun Gulati, learned senior counsel assisted by Shri Sumit Kumar Batra appearing for the appellant made the following the submissions: i. The order dated 11.09.2020 passed by the Principal Commissioner rejecting the request of the appellant for provisional release of the goods deserves to be set aside for the reason that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice dated 28.10.2013 and as observed that both the show cause notices are inter-linked and have to be seen and treated collectively; iv. The seized goods are important piece of evidence in proceedings that may be initiated under sections 132 and 135 of the Customs Act and so provisional release shall adversely affect the prosecution ; and v. Seized goods i.e. foreign watches are deemed to be "prohibited goods" and, therefore, the Principal Commissioner was justified in rejecting the application filed for provisional release. 29. The submissions advanced by the learned senior counsel for the appellant and the learned authorized representative appearing for the department have been considered. 30. Section 110A of the Customs Act deals with provisional release of goods, documents and things seized pending adjudication and is reproduced below: "110A. Provisional release of goods, documents and things seized or bank account provisionally attached pending adjudication. Any goods, documents or things seized or bank account provisionally attached under section 110, may, pending the order of the adjudicating authority, be released to the owner or the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t all the 6233 high-end wrist watches recovered from M/s. Johnson Watch Co. Pvt. Ltd., were released merely on the basis of an undertaking given by the Directors in 2012 even without any application having been moved by M/s. Johnson Watch Co. Pvt. Ltd. for provisional released of the seized goods. This apart, the 5 high-end wrist watches recovered from Purushottam Jajodia and 16 high-end wrist watches recovered from Pankaj Lakhani were also released pursuant to the orders passed by the Supreme Court. All the cash amount of Rs. 3050000+5413700+750000+$4700 recovered from M/s. Johnson Watch Co. Pvt. Ltd. and 50% of the cash recovered from Purushottam Jajodia and Pankaj Lakhani were also released, pursuant to the orders passed by the Supreme Court. 34. Thus, it is only in the matter of the appellant that relates to 95 high-end wrist watches and Rs. 61 Lakhs in cash that an order has that not been passed by the department for release of the watches and infact the application filed by the appellant for provisional release of the goods has also been rejected. 35. The details of the high-end wrist watches/cash seized and released are as follows: S. No. Name No. of Watche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t watches as while in the case of M/s. Johnson Watch Co. Pvt. Ltd., 3364 high-end wrist watches for which documents had not been produced by the said Company were released in 2012 itself merely on the basis of an undertaking given by the Directors, but in the case of the appellant, even though a formal application was moved and an amount of the Rs. 27,50,669/- towards duty demanded under the show cause notice had also deposited with an undertaking that the balance amount of duty would be deposited, yet the application filed by the appellant for provisional release of the seized goods has been rejected. For this reason alone, the application filed by the appellant for provisional release of the goods deserves to be allowed. 38. In Gauri Enterprises vs. Commissioner of Customs [2002 (81) ECC 501], the Tribunal examined whether the Commissioner of Customs, Pune was correct in absolutely confiscating the impugned goods when admittedly 37 such consignments of used Diesel Engines imported by various other importers through C.F.S., Pune were released on payment of Redemption Fine. In regard to this issue, the Tribunal held that the adjudicator cannot be selective in its approa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the adjudicator is being selective in his approach to the import of similar goods." (emphasis supplied) 39. Even otherwise, none of the reasons mentioned in the impugned order by the Principal Commissioner can be said to be good and valid reasons for rejecting the application filed for provisional release of the goods. 40. The reasons given by the Principal Commissioner for rejecting the application filed by the appellant for provisional release of the goods are as follows: i. The adjudicating authority has a discretion to decide the application for provisional release but the offer made by the appellant to deposit the balance amount of duty under protest is not legally sustainable since proceedings pursuant to the subsequent show cause notice dated 27.10.2017 have been completed and the appellant has been held liable to penalty; ii. The facts of the case covered under the show cause notice dated 28.10.2013 are identical to Its My Name case decided by the Delhi High Court as provisional release of seized goods was not allowed where the goods were found to be without valid documents; iii. The seized goods covered under the show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisional release of the seized gold, gold jewellery and silver. An order of provisional release is, at all times, an interlocutory exercise, and does not finally adjudicate on any liability. The following passages, from U.O.I. v. Manju Goel: 2015 (321) ELT 19 (SC), merit reproduction, in this context: "3. The High Court, after hearing the matter, disposed of the writ petition vide impugned judgment dated 2-3-2005 directing the appellants to release the goods on provisional basis on the condition that the respondent herein would deposit the amount of customs duty and would also furnish a bank guarantee of 20 per cent of the value of the goods in question and for the balance value of the goods, she would furnish a personal bond to the satisfaction of the concerned authority in the Customs Department. Operative portion of the judgment reads as under: "However to protect the interest of revenue, we direct that the goods in question be released on provisional basis within two weeks from the date of receipt of this order, provided that the petitioner deposits the amount of CD and furnishes bank guarantee of 20% of the value of the goods in question and for the balance value of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eizure of imported goods as a result of undervaluation and seizure of imported goods upon mis-declaration cannot per se be said to be irrational. On the contrary, the failure to draw such a distinction and treat all types of wrongful imports on an equal footing might result in miscarriage of justice. That is perhaps why Section 110A has been worded in the way it has, leaving some margin to the Customs in the exercise of their discretion subject, of course, to the recognised legal limits." Mala Petrochemicals & Polymers was followed, subsequently, in Maggie Marketing (P) Ltd v. Commissioner of Customs (Exports) (2019) 366 ELT 70 (Del). 48. Clearly, provisional release may be allowed, under Section 110A of the Act, of "any goods, documents or things seized". The Court, as the interpreter of the legislation, cannot profess to greater wisdom than the legislator. Where the legislature has not thought it appropriate to limit, in any manner, the nature of goods, documents or things which may be provisionally released, under Section 110A, in our view, it is no part of the function of a court to read, into the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r having been imported in contravention of the Act, the gold, gold jewellery and silver, which were seized, had acquired the character of "prohibited goods" and had, consequently, become ineligible for provisional release. We do not deem it necessary to enter into the niceties of the issue of whether, applying Om Prakash Bhatia, the goods in issue could be regarded as "prohibited" or not. It is not the case of the Revenue that the gold, gold jewellery or silver, forming subject matter of controversy, was prohibited for import per se, in that there was any provision, in the Foreign Trade Policy, or any other statutory instrument, absolutely prohibiting import thereof. The learned ASG seeks to treat the import of the seized gold, gold currency and silver as "prohibited", by drawing an analogy from Om Prakash Bhatia. Even if, for the sake of argument, the gold, gold jewellery and silver were to be treated as "prohibited", that, by itself, would not render the ineligible for provisional release, under Section 110A of the Act, for the simple reason that Section 110A does not except its application in the case of "prohibited" goods. Rather, it indicates, unequivocally, to the contrary, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it appropriate to deal with the residual submission, of the learned ASG, to the effect that the learned Tribunal ought not, in any case, to have itself exercised the jurisdiction, vested in the adjudicating authority - in the present case, in the ADG, DRI - and fixed the terms of provisional release. According to her, the only course of action open to the learned Tribunal, consequent to quashing the Order, dated 4th October, 2019, of the ADG, was to remand the matter to the ADG, to exercise the jurisdiction vested in him by Section 110A of the Act, and fix the terms of provisional release. The learned Tribunal, according to her, could not have undertaken this exercise, and, by doing so, it effectively usurped the jurisdiction of the learned ADG, conferred by Section 110A. ********* 55. We are unable to agree, for various reasons. 56. Firstly, Section 129B(1) of the Act empowers the learned Tribunal, seized with an appeal, challenging the order of the adjudicating authority, to "pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohibited goods, it appears that it would be premature to arrive at any conclusion, about provisional release of seized goods, before completion of adjudication proceedings." To us, this finding is completely inscrutable, and is, on the face of it, contradictory in terms. There can be no question of provisional release of seized goods, after completion of adjudication proceedings. Section 110A of the Act specifically empowers provisional release "pending the order of the adjudicating authority". It is impossible, therefore, to conceive provisional release consequent on adjudication, or to understand how the ADG chose to opine that it would be "premature" to arrive at any conclusion about provisional release, before completion of adjudication proceedings. As, after conclusion of adjudication proceedings, the question of provisional release of the goods would be rendered infructuous and, in fact, the adjudicating authority would become functus officio in that regard, in view of the specific words used in Section 110A, the only conclusion, that can follow from the afore-extracted inexplicable finding of the ADG, is that he had made up his mind not to release the seized gold, gold jew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeking provisional release. That is an exercise which has to suffer the rigour of the adjudicatory process, which, in the case of the present respondent, stands set in motion with the issuance of Show Cause Notice dated 26th September, 2019. 61. At the same time, provisional release is not a rule, or a vested right. Section 110A has, advisedly, left the matter to the discretion of the adjudicating authority, to be exercised in his best judgement, keeping in mind the overall facts and circumstances. The use of the word "may" is amply sufficient to clothe the adjudicating authority with the jurisdiction to decide one way or the other, on the request for provisional release, keeping, at all times, the interests of justice paramount. The sequitur would, however, be that, where the authority - in the present case, the learned Tribunal - has decided to provisionally release the goods in issue, and has fixed the terms of provisional release, this Court would, in appellate jurisdiction under Section 130 of the Act, interfere only where the exercise of discretion, by the learned Tribunal, is found to be perverse, in that it is contrary to the facts before the learned Tribunal, amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o invite, in its inevitable wake, a Show Cause Notice, proposing confiscation thereof. If the mere fact of issuance of such a Show Cause Notice, and the allegations therein, are to be treated as sufficient to justify rejection of the prayer for provisional release, Section 110A would be reduced to a dead letter. ********* 76. We are not persuaded to change our view, on the basis of the various statements, recorded under Section 108 of the Act, on which the learned ASG sought to rely. Statements, under Section 108 of the Act, we may note, though admissible in evidence, acquire relevance only when they are, in fact, admitted in evidence, by the adjudicating authority and, if the affected assessee so chooses, tested by cross examination. We may, in this context, reproduce, for ready reference, Section 138B of the Act, thus: "138B. Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 20. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence in-chief has to precede cross-examination, and cross examination has to precede re-examination. 21. It is only, therefore, - (i) after the person whose statement has already been recorded before a Gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Tribunal, in allowing provisional release of the quantity of 25299.68 grams of gold jewellery, for which no registered or signed Bill of Entry, having an assigned Job No, was available, exercised its discretion in accordance with law. The exercise of discretion by the learned Tribunal, in respect of this quantity of gold, therefore, in our view, suffers from perversity in law, and cannot sustain." (emphasis supplied) 42. The following position emerges from the aforesaid decision of the Delhi High Court in Its My Name : i. The Tribunal is not required to adjudicate either finally or tentatively at the time of provisional release as to whether the alleged infractions committed or the consequent liability, if any, of the seized goods to confiscation under the Customs Act; ii. The order of provisional release is an interlocutory exercise and does not finally adjudicate on any liability; iii. The exercise of power under section 110A of the Customs Act to release imported goods on a provisional basis is essentially and fundamentally discretionary in nature; iv. Section 110A of the Customs Act contemplates release of any goods. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for confiscation under section 110(d) of the Customs Act. As noticed above, the watches of all other co-noticee were released by the Department and this issue has been raised by the Department only in the case of the appellant. Even while adjudicating the show cause notice issued to M/s. Johnson Watch Co. Pvt. Ltd., by order dated 27.05.2020, only a fine has been imposed under section 125(1) of the Customs Act and the goods have not been confiscated. The Delhi High Court had also in Its My Name held that both prohibited and non-prohibited goods can be released under section 110A of the Customs Act. 45. The view taken by the Principal Commissioner for rejecting the application filed by the appellant for provisional release of the goods for the reason that a discretion is vested in the authority and since the subsequent show cause notice dated 27.10.2017, was adjudicated upon and the appellant was held liable to penalty, also suffers from an error. 46. As noticed above, the watches of M/s. Johnson Watch Co. Pvt.Ltd. had been released even though no application had been filed for provisional release of the goods and even otherwise only a fine has been imposed while adju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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