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2016 (1) TMI 11 - BOMBAY HIGH COURT

2016 (1) TMI 11 - BOMBAY HIGH COURT - 2016 (332) E.L.T. 699 (Bom.) - Constitutional right to do business - powers under Customs Act to stop business, search and seizure - Allegation of smuggling of red sanders and certain endangerous species of wild flora and fauna - Article 226 of the Constitution of India discloses as to how the Respondents, despite clear legal pronouncements, go on insisting that they can stop the running business activities by freezing the bank accounts of the concerned pers .....

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t was seized and upon the satisfaction arrived at by the DRI. That should not have been released pending adjudication was the order passed and that too unconditional release of the sum was found to be unsustainable.

None prevented the authorities from August, 2015 or at least from the date the Petitioner requested to issue the letter or notice calling upon him to remain present and answer the allegations. The statements now made by Mr. Jetly, on instructions, are after a copy of this .....

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nd duly employed by him to earn their livelihood. In these circumstances, we continue the freezing and attachment of the immovable properties subject however to a limited liberty to the Petitioner to deal with the said properties in his ordinary and usual course of business. There will be no transfer, alienation or parting with possession thereof in any manner until an adjudication order in accordance with law is passed. Similarly, the Petitioner is free to operate his bank accounts and the sums .....

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lauses of the Petition. We are mindful of the fact that in such matters an early adjudication serves the larger interest of public. - Writ Petition No. 12728 of 2015 - Dated:- 22-12-2015 - S. C. Dharmadhikari And B. P. Colabawalla, JJ. For the Appellant : Mr. Anil Balani i/b. P R Mr. Yadav For the Respondent : Mr. Pradeep S. Jetly ORDER P. C. This Writ Petition under Article 226 of the Constitution of India discloses as to how the Respondents, despite clear legal pronouncements, go on insisting .....

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n para 3 and it is stated that what the communications mentioned therein seek to do is to restrain the Petitioner from dealing with his immovable properties and freezing of his bank accounts. 3) A certain consignment stated to be 7.12 metric ton of red sanders, concealed in the cement blocks and bricks of fly ash for export came to be seized by the Respondent No. 2 to this Writ Petition. The Respondents, particularly Respondent No. 2 is Senior Intelligence Officer in the Directorate of Revenue I .....

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Petitioner from dealing with his immovable properties, more particularly mentioned in para 7 and the communications/letters of 19th August, 2015 and 20th August, 2015, copies of which are at Annexures B to E to the Writ Petition. 5) By another communication Annexure F , the bank accounts of the Petitioner have been frozen. The bank accounts stated to be of the Petitioner and his group companies, details of which are mentioned in the list at Annexure F , stand frozen and attached. 6) The Petition .....

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ion of ITC products at Ulhasnagar and he is also having sea food processing and export business. Since all properties are frozen and attached, it is impossible for the Petitioner to carry on his day to day business. The Petitioner s specific contention and as elaborated by Mr. Balani is that there are no proceedings in the offing. There is no show cause notice nor any penalty is adjudged or imposed so far. Therefore, this attachment and freezing of properties hampers him and not only he gets aff .....

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e had indicated in advance that we would pass final orders on the Writ Petition today. 9) Mr. Jetly has relied upon the provisions of the Customs Act, 1962. He would submit that this is a clear case of smuggling of red sanders in this country. This is a prohibited activity. The Petitioner is believed to be actively involved in the same. That is how the seizure of goods and action under section 110 of the Customs Act, 1962 was taken. 10) Mr. Jetly would rely upon Chapter XIV of the Customs Act, 1 .....

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peculiar circumstances, the orders releasing the bank accounts from attachment came to be passed. 12) However, in the present case, the authority has found the Petitioner s involvement and which is apparent from the record. The criminal case is pending. In these circumstances, he would rely upon a Division Bench Judgment of this court delivered in the case of Nitin Shirsat vs. union of India reported in 2015 (325) ELT 561 (Bom). He would also rely upon the prior judgment that too of a Division B .....

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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. (1A) The Central Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant .....

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s containing such details relating to their description, quality, quantity, mark, numbers, country of origin and other particulars as the proper officer may consider relevant to the identity of the goods in any proceedings under this Act and shall make an application to a Magistrate for the purpose of - (a) certifying the correctness of the inventory so prepared; or (b) taking, in the presence of the Magistrate, photographs of such goods and certifying such photographs as true; or (c) allowing t .....

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ion 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. (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. (4) The person from whose custody any documents are seized under sub-section (3) shall be entitled to make copies thereof or take extract therefrom in the presenc .....

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at the smuggled goods cannot be separated from such other goods, the whole of the goods shall be liable to confiscation: Provided that where the owner of such goods proves that he had no knowledge or reason to believe that they included any smuggled goods, only such part of the goods the value of which is equal to the value of the smuggled goods shall be liable to confiscation. 121. Confiscation of sale-proceeds of smuggled goods. - Where any smuggled goods are sold by a person having knowledge .....

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by an Assistant Commissioner of Customs or Deputy Commissioner of Customs; (c) where the value of the goods liable to confiscation does not exceed fifty thousand rupees, by a gazetted officer of customs lower in rank than an Assistant Commissioner of Customs or Deputy Commissioner of Customs. 122A. Adjudication procedure. - (1) The adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, .....

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officer to direct seizure of goods, documents and things and if he has reason to believe that any goods are liable to confiscation under the Customs Act, 1962. Thereafter, the steps enumerated in the sub-sections follow. In terms of section 119, what we find is that confiscation of goods used for concealing smuggled goods is permissible. Confiscation of smuggled goods notwithstanding any change in form is permissible in terms of section 120 reproduced above. By section 121, confiscation of sale .....

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judication of confiscation of penalties have been advisably inserted in this provision and would disclose the intent of the legislature. The legislature, therefore, mandated adjudication of confiscation and penalties and that is by the adjudication procedure set out in section 122A, which was inserted by Act 23 of 2004 with effect from 10th September, 2004. That mandates the adjudicating authority to give an opportunity of being heard to the party in the proceeding, if the party so desires. If t .....

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months thereafter to release his properties or at least his bank accounts so that he can carry on legitimate business activities. We need not express any opinion as to the nature of activities the Petitioner indulges in or whether they are legitimate or not. Even if the Petitioner is alleged to have indulged in smuggling, he has to be proceeded against in accordance with law. If he has to be punished under the Act and criminal proceedings have been launched, which are pending, then, they would t .....

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ied upon by Mr.Jetly are applicable. 16) In the Hon'ble Supreme Court's decision in the case of Euroasia Global (supra) the intelligence collected revealed that the person indulged in fraudulent import of PVC Cloth. He misdeclared the value and description. The person was visiting China regularly. The modus operandi has been set out in para 3(a) of the order passed in this case. There, the Hon'ble Supreme Court found that a search of the residential house of the concerned person resu .....

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visions and the powers vested in the authorities under the Customs Act, 1962. We have referred to the very provisions to which the Hon'ble Supreme Court makes reference. The amount was seized and upon the satisfaction arrived at by the DRI. That should not have been released pending adjudication was the order passed and that too unconditional release of the sum was found to be unsustainable. This order, therefore, renders no assistance to Mr. Jetly. 18) In the case of Shri Krishna Chaitanya .....

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nt referred by the Department. There was no show cause notice and no adjudication order and hence, the complaint was that the freezing of bank account is illegal. 19) In para 6, the Division Bench noted the request of the Petitioner and on his own that without prejudice to the rights and contentions and since the business has been completely paralysed, he was ready and willing to give Bank Guarantee. On furnishing such Bank Guarantee, the conditional release of bank account was ordered. There is .....

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oner of Customs. In that case, goods liable to confiscation were confiscated on the reasonable belief. Once again, paras 4, 5 and 6 deal with the power of the authorities and even to of freezing of the bank account. We are not at all disputing this legal position. The matter before the Division Bench revealed sufficient material establishing linkage between the moneys with the bank account and the modus operandi to obtain benefit of drawback. Thus, the Bench found that expeditious adjudication w .....

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e Petitioner requested to issue the letter or notice calling upon him to remain present and answer the allegations. The statements now made by Mr. Jetly, on instructions, are after a copy of this Petition was served on the Respondents. We are mindful of the seriousness of the allegations and the rampant smuggling of red sanders. However, we are not directing that the immovable properties which are attached shall stand released from attachment. All that we are taking care of is the grievance of t .....

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ienation or parting with possession thereof in any manner until an adjudication order in accordance with law is passed. Similarly, the Petitioner is free to operate his bank accounts and the sums therein can be released by the banks so as to enable the Petitioner to meet the liabilities in his business activities and in relation to the deals, which are disclosed in para 10 of the Writ Petition. The Petitioner, therefore, will be able to carry on his day to day business activities and for that pu .....

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