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TMI Blog2022 (6) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... es arising from breach of the law or by substituting for the importer to trade in goods seized or even confiscated. The judicial approval was not forthcoming for the several strands of deployment of section 110A of Customs Act, 1962 that was manifested in ways and means of retention of seized goods till adjudication and beyond, upon confiscation, till appellate remedy was exhausted. The implementation of the incorporation for provisional release appeared to be founded on the belief that the said mechanism for conditional restoration of possession to the owner was restrictive and a measure to safeguard revenue. Before section 110A was incorporated in Customs Act, 1962, seized goods, upon confiscation, were offered for redemption on payment of fine and goods, subject to confiscation proceedings without the preliminary of retention by operation of common practice , could be saddled with fine in lieu thereof. 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bond for value of the goods and bank guarantee for ₹1,00,00,000 should suffice for the importers to regain possession of the goods. 3. While those proceedings were, as yet, underway, the lone consignment imported at Nhava Sheva was also seized, under the authority of section 110 of Customs Act, 1962, on 1st March 2022 in the reasonable belief of being liable to confiscation under section 111 (m) of Customs Act, 1962 for consequential misdeclaration of value to the extent of ₹ 9,19,79,886.72 and, on request of importer, vide letter dated 27th April 2022, allowed to be released, in exercise of powers conferred by section 110A of Customs Act, 1962, upon furnishing bond for the revised value of the goods along with bank guarantee covering estimated differential duty of ₹ 1,90,67,802, probable redemption fine of ₹ 6,70,34,552 under section 125 of Customs Act, 1962 and bank guarantee of ₹ 2,00,00,000 covering penalty likely to be imposed under Customs Act, 1962. 4. It is in these circumstances of requiring that bond for ₹ 44,68,97,008 backed by bank guarantee totaling ₹ 10,61,02,354 that the order of provisional release has come under cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant to the issue in dispute and in response to the reliance on the meaning assigned in a law lexicon, observed that This however might be the meaning in particular contexts when used in the sense of the cognate Latin expression Seized while in the context in which it is used in the Act in s. 178 A it means take possession of contrary to the wishes of the owner of the property . No doubt, in cases where a delivery is effected by an owner of the goods in pursuance of a demand under legal right, whether oral or back by a warrant, it would certainly be a case of seizure by the idea that it is the unilateral act of the person seizing is the very essence of the concept. In the light of this elucidation, it can surely be conjectured that every adjudication, and every consequent appeal, need not necessarily have been preceded by such unilateral act which, as a curtain raiser in any proceedings for permanent deprivation either of the goods or of a determined monetary equivalent, is also a detriment of itself. Hence, there could be appeals in which the impugned goods had never been seized or had been restored after temporary deprivation without any major inconvenience or co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on sought to subject the terms to the test of the golden mean of responsible and responsive discharge of statutory mandate with the merit of the seizure temporarily obliviated till the notice is disposed off under appropriate provisions of Customs Act, 1962. Our determination herein has no bearing on the adjudication proceedings. 8. Though the grievance is not about denial of access to the goods through the mechanism of section 110A of Customs Act, 1962, effective denial is attributed to the terms by the appellant. In such circumstances, we are obliged to revisit the totality of the statutory provision that, as alleged by appellant, has been invoked to their irreparable detriment and contrary to legislative intent. Reliance has been placed by Learned Counsel for the appellant on the decision of the Hon ble High Court of Bombay in Global Ace Shipping Lines Inc v. Principal Commissioner of Customs, (Import) [2020 (12) TMI 379 Bombay High Court] to contend that Iranian origin of goods does not, of itself, render the imports to be prohibited. 9. The power to seize goods, and, that too, only in the reasonable belief of liability to confiscation under section 111 of Customs Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that no fault can be found in the Tribunal entertaining the appeal from the letter dated 25 September 2017 directing provisional release of the vessel. This is for the reason that at the time the division bench of the Tribunal entertain the appeal and passed the impugned order dated 31 October 2017, it was bound to do so, as the issue was concluded by the decision of its larger Bench in Gaurav Pharma (supra). The decision of the larger bench continues to be binding in the absence of any stay from a higher forum, although the appeal filed therefrom is awaiting admission. The doctrine of precedents oblige the Tribunal to entertain the appeal xxxxx 14. Thus for the purposes of the Tribunal entertaining the appeal from the letter dated 25th September 2017, it would make no difference if it is an administrative or a quasi- judicial order/decision. However for the purpose of completeness we would like to refer to the test laid down by the Supreme Court in the Automotive Tyre Manufacturers Association v. Designated Authority and Others to draw a distinction between administrative and quasi-judicial order 15. On application of the above five tests to the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Gaurav Pharma (supra) as reproduced in the extracts herein above. xxxxx 20. We also noted that the Delhi High Court in the cases of Gurdeep Kaur (supra) and Candex Chemical (supra) has also taken a view similar to ours. Further before the Rajasthan High Court in the cases of Shiv Mahal Textiles (supra) and Gentleman Suitings (supra) the Revenue has successfully urged before the court that an appeal from an order passed under Section 110A of the Act is available. No reason has been shown for urging differently before us from that urged by the Revenue before the Rajasthan High Court. The order under section 110A of Customs Act, 1962 is not administrative in nature but, for the limited sphere therein, adjudicatory. We perceive no impediment in proceeding further to decide on the conformity of the impugned terms with legislative intent. 12. Though power to seize has inhered, and as it should, in Customs Act, 1962 from the very beginning, and, indeed, as legacy carried over from section 178 of Sea Customs Act, 1878, for close to a century and half, it was only by section 26 of Taxation Laws (Amendment) Act, 2006, incorporating section 110A in Customs Act, 1962, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the plea for suspension of section 110(2) of Customs Act, 1962 owing to the provisional release, enabled by section 110A of Customs Act, 1962, having held that, notwithstanding the order of provisional release, breach of the stipulation for issue of notice under section 124 of Customs Act, 1962 would have the effect of discharge from all conditions imposed for provisional release, the amended proviso to section 110(2) of Customs Act, 1962 through Finance Act, 2018, rendered release within six months, extendable by another six months under notice of intendment, and provisional release to be mutually exclusive. 14. The stage was, in the meanwhile, firmly set for issue of circular no. 35/2017-Cus dated 16th August 2017 of Central Board of Excise Customs (CBEC), seemingly drawing support from the decision of the Hon ble High Court of Madras in Malabar Diamond Gallery Pvt Ltd v. The Additional Director General [2016 (341) ELT65 (Mad)] holding that breach of policy restrictions justifies continuation of seizure and from the decision of Hon ble High Court of Delhi in Mala Petrochemicals Polymers v. The Additional Director General of, Directorate of Revenue Intelligence [2017 (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the eligibility of the goods for provisional release, as distinct from entitlement thereof, which has to be determined by the adjudicating authority in exercise of the discretion conferred on her, or him by Section 110 A.) Para 2 of Circular 35/2017-Cus, therefore, effectively seeks to supplant Section 110 A, to that extent, and has, therefore, to be regarded as void and unenforceable at law. 15. Furthermore, the said circular has been issued, not under any authority of empowerment under section 110A of Customs Act, 1962 but, presumably, under SECTION 151A. Instructions to officers of customs. - The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of goods or with respect to the levy of duty thereon, or for the implementation of any other provision of this Act or of any other law for the time being in force, insofar as they relate to any prohibition, restriction or procedure for import or export of goods issue such orders, instructions and directions to officers of customs as it may deem fit and such officers of customs and all other persons employed in the execution of this Act shall observe and fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Supreme Court, the respondents are continuing to impose harsh conditions for provisional release of goods. In the present case, apart from the exporter having to pay 100% of the differential duty it has to furnish a bank guarantee equivalent to 25% of the differential duty and execute a bond for 100% of the value of the goods. Since the respondents do not appear inclined to follow the aforementioned order binding order of the Supreme Court, and are compelling exporters and importers to approach this Court everytime for relaxation of the conditions for the provisional release of the goods, the Court is of the view that relegating the petitioner to a statutory remedy would not be efficacious. Viewed through this prism of judicial interpretation of legislative intent, the circular does not appear to be relevant. 18. In re Its My Name Pvt Ltd, the Hon ble High Court of Delhi had, before it, a challenge from the customs authorities against order of the Tribunal permitting release, subject to terms, under section 110A of Customs Act, 1962 upon denial of such by the adjudicating authority in which the response of the adjudicating authority thus In view of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , till appellate remedy was exhausted. The implementation of the incorporation for provisional release appeared to be founded on the belief that the said mechanism for conditional restoration of possession to the owner was restrictive and a measure to safeguard revenue. That appears to have guided the contents of circular no. 35/2017 dated 16th August 2017 of Central Board of Excise Customs (CBIC) banning the exercise of such authority for certain categories of imports and establishing the floor limits of bond and bank guarantee to be prescribed for allowing provisional release. Doubtlessly, even if these are non-discriminatory in the strict legal sense and cannot be faulted in an administrative order for compliance by administrative authorities, the same cannot be said for adjudicatory disposal. 20. In the present instance, we are not concerned with such authority having been sought in the impugned order. Nonetheless, the emphasis placed by the judgement on exercise of discretion conferred by section 110 A of Customs Act, 1962 is not to be lost sight of; it is the propriety in the exercise of discretion that falls to us to examine in the appellate jurisdiction. Such exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix. High Courts would interfere with an order passed by the Tribunal for provisional release of the goods only on grounds of perversity; x. Allowing provisional release of the seized goods does not interfere with the adjudication of the show cause notice or with the jurisdiction of the adjudicating authority to hold that the goods were liable to confiscation and the mere fact that the goods may possibly be held liable to confiscation at a later stage cannot be a ground to refuse provisional release because in that case section 110A of the Customs Act would be rendered otiose; xi. The reliance on the allegations made in the show cause notice for denying provisional release is improper as in every case there would be allegations of contravention and section 110A of the Customs Act would be rendered otiose; and xii. Statements, before being admitted by following procedure under section 138B of the Customs Act, cannot be used straightaway. 22. Before section 110A was incorporated in Customs Act, 1962, seized goods, upon confiscation, were offered for redemption on payment of fine and goods, subject to confiscation proceedings without the preliminary of rete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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