Rama Overseas vs Union of India

Hemant Gupta, J.—The petitioner has claimed a writ of mandamus for directing the respondents to immediately return one container lying at Inland Container Depot, Ballabgarh, Faridabad. The said claim is based upon the factum of petitioner filing the bill of entry dated 1-6-2011. The Officers of Directorate of Revenue Intelligence (DRI) seized the container on 13-7-2011. On 14-7-2011, the petitioner sought provisional release of goods which was allowed but the petitioner has not sought the release of goods on account of the onerous conditions imposed for the provisional release of goods. A show cause notice in terms of Section 124 of the Customs Act, 1962 (for short ''the Act'') was issued on 19-9-2012.

The assertion of the petitioner is that in terms of Section 110 of the Act, the authorities have a right to seize the goods if they have a reason to believe that the goods are liable for confiscation. Once the goods are seized, a show cause notice is required to be issued within six months or within another extended time of six months. But if no notice is issued, the authorities under the Act are bound to release the seized goods. The relevant Sections i.e. 110 and 124 of the Act read as under:--

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.

(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:

Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Commissioner of Customs for a period not exceeding six months.

Issue of show cause notice before confiscation of goods, etc.--No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person:--

(a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;

(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and

(c) is given a reasonable opportunity of being heard in the matter:

Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the person concerned be oral.

There is no dispute about the factual position as asserted by the petitioner. However, Mr. Aggarwal learned counsel for the respondents, has argued that the show cause notice has been issued though even after filing of the writ petition but that will not entitle the petitioner for release of goods. He relies upon the Constitutional Bench judgment of the Supreme Court reported in a case of Sanjay Dutt Vs. State through C.B.I., Bombay, . The Court while considering the provisions of Terrorist and Disruptive Activities (Prevention) Act, 1987, held that the right to bail in accordance with Section 20(4)(bb) of the TADA Act read with Section 167(2) of the Code of Criminal Procedure is a right of bail only from the time of default of completion of the investigation till the filing of the challan and it does not survive or remain enforceable on the challan being filed. Reliance is also placed upon judgment of Bombay High Court in Jayant Hansraj Shah Vs. Union of India (UOI) and Others, . It is, thus, contended that though the petitioner may have a right to seek release of goods prior to the issuance of the show cause notice on the expiry of six months but once the show cause notice has been given, the petitioner cannot seek the release of goods in terms of Section 110(2) of the Act.

On the other hand, learned counsel for the petitioner has referred to the Constitutional Bench judgment interpreting Sections 110 and 124 of the Act reported as I.J. Rao, I.J. Rao, Asstt. Collector of Customs and Another Vs. Bibhuti Bhushan Bagh and Another, as well as judgment reported as Harbans Lal Vs. Collector or Central Excise and Customs, Chandigarh, . He also relies upon a Division Bench judgment of E.S.I. Ltd. Vs. Union of India (UOI), ) as well as Division Bench judgment of this Court in a case ofM/s. Akanksha Syntex (P) Limited v. Union of India and Others passed in C.W.P. No. 6030 of 2012, decided on 30-11-2012. Further reference has been made to a judgment of Delhi High Court reported as Jatin Ahuja Vs. Union of India and Others, wherein it has been held that the seized goods are bound to be released if show cause notice is not issued within six months or the extended period, if any.

We have heard learned counsel for the parties at length and find that the stand of the Revenue in resisting the claim of the petitioner for release of the goods is not tenable. The Supreme Court in I.J. Rao''s case (supra) has considered the provisions of Section 110(2) of the Act and observed as under:--

...It cannot be disputed that Section 110 sub section (2) contemplates either notice (within six months from the date of seizure) to the person from whose possession the goods have been seized in order to determine whether the goods should be confiscated or the restoration of the goods to such person on the expiry of that period. If the notice is not issued in the confiscation proceedings within six months from the date of seizure the person from whose possession the goods have been seized becomes immediately entitled to return of the goods. It is that right to the immediate restoration of the goods upon the expiry of six months from the date of seizure that is defeated by the extension of time under the proviso of Section 110(2).

Same view was reiterated in Harbans Lal''s case (supra). A Division Bench of this Court in M/s. Akanksha Syntex''s case (supra) has examined the judgment of Bombay High Court in Jayant Hansraj Singh''s case (supra) and has dissented from the view expressed following the Supreme Court judgment reported as Chaganlal Gainmull v. Collector of Central Excise . This Court held to the following effect:

In our opinion, a plain and combined reading of Sections 110(2), 124 and 110A spells out that any order for provisional release shall not take away the right of the assessee u/s 110(2) read with Section 124 of the Act. However, where no action is initiated by way of issuance of show cause notice u/s 124(a) of the Act within six months or extended period stipulated u/s 110(2) of the Act, the person from whose possession the goods were seized becomes entitled to their return. The remedy of provisional release is independent of remedy of claiming unconditional release in the absence of issuance of any valid show cause notice during the period of limitation or extended limitation prescribed u/s 110(2) of the Act. With due respect, we are unable to subscribe to the interpretation to the contrary placed by the Bombay High Court in Jayant Hansraj Singh''s case (supra). The said interpretation is not borne out from the plain reading of the aforesaid provisions.

Keeping in view the aforesaid Division Bench judgment of this Court examining the provisions of Section 110(2) of the Act as well as the judgment of the Supreme Court in I.J. Rao''s case (supra), we do not find any merit in the arguments raised by the Revenue. Mere fact that show cause notice has been issued after the filing of the present petition will not defeat the right of the petitioner to seek release of goods. The judgment in Sanjay Dutt''s case (supra) interprets provisions of a different statute, whereas the judgment in I.J. Rao''s case (supra) pertains to the statute in question itself. Therefore, the petitioner cannot be denied the right to possess goods for the inefficiency or in action of the Revenue for a period of more than one year. In view of the above, we allow the present petition and direct the respondents to release the goods seized on 13-7-2011 in accordance with the law.