Era International vs Union of India (UOI) and Others

Adarsh Kumar Goel, A.C.J.—This petition seeks quashing of seizure memos. dated 15.4.2011 (Annexure P-2) and 30.4.2011 (Annexure P-3) effected by the Intelligence Officer of the Directorate of Revenue Intelligence (DRI), Ludhiana.

Case of the Petitioner is that it purchased fourteen containers of heavy melting steel scrap (HMSS) on high sea sale basis. Bills of entry in respect thereof were filed with the Custom Freight Station (CFS), Ludhiana on 5.4.2011 for nine containers and on 27.4.2011 for five containers. In the said bills of entry, the Petitioner declared that No. customs duty was attracted, as the goods were scrap not exigible to any customs duty. However, the declaration of the Petitioner was not accepted on the basis of report of a chartered engineer obtained by the DRI and the goods were declared to be re-rollable material in respect of first consignment and secondary material in respect of second consignment, exigible to 5% duty in the first case and 10% duty in the second case. The Petitioner, accordingly, paid the said duty for the first consignment and sought release of goods. The reason for not paying duty for second consignment is stated to be absence of order under proviso to Section 46 of the Customs Act, 1962. Learned Counsel for the Petitioner submits that even as per valuation of the department, the Petitioner is willing to pay duty for the second consignment also as soon as the assessment is made. Since the goods were not being released, this petition was filed.

The stand taken by the DRI is that on 22.7.2011, order, Annexure R-1, has been passed in respect of first consignment, permitting provisional release of seized goods subject, inter-alia, to the conditions that the Petitioner furnishes bank guarantee equal to 25% of the market value of the seized goods and gives declaration that it will not challenge the value of the seized goods. In respect of second consignment, No. such order of provisional release has been passed as documents have been received by the DRI from Customs Department only on 18.8.2011. Stand of Customs Department is that seizure has been effected by DRI and thus, Customs Department has No. role in the matter.

We have heard learned Counsel for the parties.

Learned Counsel for the Petitioner submits that the action of the department is arbitrary, illegal and mala fide. The bill of entry was filed on 5.4.2011 and 27.4.2011 and customs duty was paid as per stand of department itself on 7.5.2011 in respect of the first consignment but still, without any valid reason, the goods have been kept seized for more than two months. Seizure was not by authorized officer. Provisional release order contains arbitrary conditions against orders of this Court in similar circumstances. Even the said order has been passed after long delay and after receiving notice from this Court. In respect of second consignment, it is submitted that the officers of the department are passing on the responsibility to each other. While according to the customs department, the matter is to be decided by the DRI, according to the DRI, delay is on account of documents not been made available to it by the Customs Department.

After hearing learned Counsel for the parties, we are satisfied that the stand of the Respondents is arbitrary and mala fide. Admittedly, the Petitioner has already paid the duty even as per assessment of the Respondents in respect of first consignment and has offered to pay duty for second consignment as may be assessed by the department. Still the goods continue to be kept under seizure. Seizure has not been effected by authorized officer. No. prompt steps have been taken after effecting seizure for long period.

Similar matter has been earlier dealt with by this Court on 9.5.2011 in CWP No. 6732 of 2011 Amit Enterprises v. Union of India 2001(269) ELT 314 and it was held that prima facie there was violation of judgment of the Hon''ble Supreme Court in Commissioner of Customs Vs. Sayed Ali and Another, , laying down that seizure can be effected only by an officer specifically authorized to act as such. In the present case, No. such authority has been produced by the officer effecting seizure. It has also been held that imposition of a condition to the effect that the value of goods will not be challenged at any stage, is abuse of power, as No. person can be debarred from asserting its case. It has been further held that requirement of furnishing bank guarantee equal to 25% of the full market value of the goods could not be justified on a simple dispute of classification and valuation. It has also been held that gross delay in taking decision after seizure without any valid justification was arbitrary. Mere dispute of classification or valuation could not justify power of confiscation and imposing of condition of furnishing of bank guarantee equal to 25% of the value of the goods. The said judgment is not shown to be distinguishable in its applicability to the present case.

Accordingly, we allow this petition and direct immediate provisional release of goods on conditions mentioned in the order of provisional release except the requirement of declaration that the Petitioner will not dispute the value of goods and will furnish bank guarantee. In respect of second consignment, the release will be on payment of customs duty as per valuation of the chartered engineer. It is, however, made clear that this order will not affect merits of the controversy to be adjudicated upon in accordance with law.