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2015 (4) TMI 888 - DELHI HIGH COURT

2015 (4) TMI 888 - DELHI HIGH COURT - 2015 (323) E.L.T. 558 (Del.) - Confiscation of goods u/s 111 - Freezing of bank account - Smuggling of goods - Whether such freezing of bank account is confiscation/seizure of goods - Held that:- Without even the order / notice / direction of freezing of the account and without proper pleadings, and merely on the basis of copies of some documents handed over across the bar, do not deem it appropriate to render any interpretation of Sections 110 and 121 of th .....

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count which has been frozen. The onus was/is on the appellant to explain the transactions in the said bank account and to establish that the said transactions were/are not tainted. No endeavour even in that direction has been made. We, at this stage, have thus but to presume that the monies in the bank account which has been frozen, are sale proceeds of smuggled goods. - Decided against assessee. - LPA 136/2014 - Dated:- 23-4-2015 - Hon ble The Chief Justice Hon ble Mr. Justice Rajiv Sahai Endla .....

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e amount deposited in the bank account of the appellant with the respondent no.3 Citibank after the date the same was frozen at the instance of the respondent no.2 Addl. Director General, Directorate of Revenue Intelligence (DRI), makes the same subject to the appellant furnishing a bank guarantee to the respondent no.2 DRI in respect of the amount credited in the account from the date of the freezing of the account. 2. The appeal came up for admission on 18th March, 2014 when the counsels for t .....

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espondent no.2 DRI in July, 2011; (ii) the aforesaid account was frozen in the follow up of an investigation initiated by the respondent no.2 DRI against few companies who were importing high value Pesticides/Insecticides in the guise of Sodium Bi-Carbonate; however even on culmination of investigation, the appellant had neither been indicted nor arraigned as a noticee in the show cause notice issued in relation to the said matter; (iii) the order of freezing of the bank account was passed witho .....

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) mandates that if a show cause notice under Section 124 has not been issued in respect of the said seizure, the person from whose possession the seizure was effected, shall be entitled to the release of the seized material; (vi) that the arbitrary freezing of the bank account has put the appellant s business to a halt; (vii) that the Customs Authorities have not issued any show cause notice under Section 124 in respect of the account; and, (viii) that the appellant has no liability under the Cu .....

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stored in various warehouses were drawn and sent to Central Insecticides Board, Faridabad and Institute of Pesticide Formulation Technology, Gurgaon; (c) that the extent of undervaluation resorted to by the said firms was massive; (d) that investigations revealed that such import was being done in the name of several fake front firms by one Mr. Vimal Kumar, proprietor of M/s. V.V.K. Traders, Bhagwan Dass Nagar, East Punjabi Bagh, new Delhi; goods imported against these fake front firms namely M .....

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ncluding imported Insecticides/Pesticides of different varieties worth more than ₹ 2 crores was detained/seized for further investigation; (f) modest estimate of the duty evasion on account of misdeclaration and undervaluation was in excess of ₹ 4 crore; (g) that the test reports confirmed that the goods were Pesticides; (h) correlation of batch number of the goods detained at the unit of the appellant with imported goods confirmed that the said goods were mis-declared as Sodium Bi-c .....

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st, 2012 statement of Shri Om Prakash another partner of the appellant firm was recorded under Section 108 of the Customs Act, who disclosed that besides him Shri Inderjit was the only other partner of the appellant and that the firm had been purchased from Mr. Arpit Rajvanshi; (m) on 16th November, 2011, statement of one Mr. Subodh Kumar, authorized signatory of the appellant qua the Citibank account, was recorded under Section 108 of the Customs Act; (n) that investigation into the transaction .....

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further revealed that M/s Classic International and M/s Galaxy Marketing were non-existent entities; (p) all this showed that the appellant had indulged in transfer of huge amounts to non-existent firms against the purchase of various types of illegally imported Pesticides in the name of non-existent firms; (q) it appeared that the Citibank account at Delhi was opened only to facilitate easy transfer of money to non-existent firms and for which reason only a person with whom the appellant firm h .....

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pellant, relying on Harbans Lal Vs. Collector of Central Excise & Customs (1993) 3 SCC 656 that since no notice under Section 110(2) had been given within a period of six months, the goods seized were liable to be restored to the person from whose possession they had been seized; II. per contra, it was the contention of the respondent no.2 DRI that though Section 110(2) provides for a notice to be served within six months but there is no such requirement under Section 124 of the Act and the .....

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rbans Lal supra has held that liability to release the seized goods upon non-service of notice under Section 110(2) within six months does not affect the proceedings for confiscation of the goods under Section 124 of the Act; V. it was also the contention of the counsel for the respondent no.2 DRI that the seizure in the instant case was not under Section 110(2) but under Section 110(3) of the Act whereunder there is no requirement for issuance of notice within six months and that investigations .....

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lant was not entitled to de-freezing of the bank account unconditionally. Accordingly, it was directed that the amount deposited in the bank account, after the date of freezing the account be released subject to furnishing of a bank guarantee in respect of the amount credited in the account from the date of freezing of the account. 7. The counsel for the appellant before us argued, (i) that the appellant did not import anything and thus the Customs Act does not apply to it; (ii) that till then e .....

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eedings. 9. The counsel for the appellant in rejoinder argued, (i) that the appellant had been granted bail by the Supreme Court and it had further been ordered that proceedings be held in the presence of the Advocate for the appellant; (ii) that the offences under the Customs Act are bailable; (iii) nothing against the appellant was found in the search seizure; (iv) that the notice of freezing the account is without any particulars; and, (v) copies of some bills, ledger and accounts was handed .....

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ed and a copy of the judgment of the Bombay High Court in Veritas Exports Vs. Union of India 2005 (184) ELT 341 Bombay. 11. The counsels, during the hearing referred to Sections 110(1), (2) & (3) of the Customs Act and which are 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 .....

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cause being shown, be extended by the Principal Commissioner of Customs or Commissioner of Customs for a period not exceeding six months. (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. 12. The hearing before us revolved around whether such freezing of bank account is confiscation/seizure of goods. We had during the hearing raised several queries and are constrained to observe that neither are there .....

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rectorate of Revenue Intelligence 1999 (113) ELT 383 (Cal.); (iv) Veritas Exports Vs. Union of India 2005 (184) ELT 341 (Bom.); (v) Vikas Gumber Vs. Union of India 2008 [3] JCC 2004; (vi) Motilal Lalchand Shah Vs. L.M. Kaul AIR 1972 Gujarat 115 (V 59 C 19); (vii) Mohan Shet Vs. Commissioner of Customs (Prev.), Mumbai 2001 (129) ELT 358 (Tri. - Mum.); (viii) Hansraj Baid Vs. Collector of Customs (Prev.), W.B., Calcutta 2000 (123) ELT 531 (Tribunal); and, (ix) Laxman Overseas Vs. Union of India 16 .....

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50/2012 titled as Director General, Directorate of Revenue Intelligence Vs. Sajjan Kumar; (ix) Harbans Lal Vs. Collector of Central Excise and Customs, Chandigarh (1993) 3 SCC 656; and, (x) Jeevraj Vs. Collector of Customs (1997) 8 SCC 519. 13. In so far as we could understand, the case of the respondent no.2 DRI against the appellant is that the appellant firm facilitated sale of goods imported by mis-declaration and evasion of stamp duty. 14. Section 111 of the Act, to which a reference is fou .....

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ct and to which attention of the counsels was drawn during the hearing and which is as under:- 121. Confiscation of sale-proceeds of smuggled goods. - Where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation. 15. We had enquired from the counsels that since a express provision for confiscation of sale proceeds of smuggled goods exists, whether it could be said that the same was .....

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