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2016 (6) TMI 349 - MADRAS HIGH COURT

2016 (6) TMI 349 - MADRAS HIGH COURT - 2016 (337) E.L.T. 321 (Mad.) - Seeking unconditional release of imported goods - Section 110 (2) of the Customs Act, 1962 - Import of LED Spare Parts for lighting fixtures, Spare Parts for lighting fixtures and Capacitor for lighting fixtures from China - Detention of goods - Non-issuance of SCN to the petitioner till this date rather it should have been issued within six months from 15.04.2015 (i.e.) on or before 15.10.2015 as per Section 124(a). - Hel .....

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er Section 110(2) of the Act. Therefore, merely because a request has been made for provisional release of goods under Section 110-A of the Customs Act and the same has been acceded to by the respondent, the same would not take away the right of the petitioner for unconditional release of the goods under Section 110(2) of the Customs Act. The right under Section 110(2) of the Customs Act is absolute and cannot be curtailed or prevented by the Department. That apart, the Circular issued by the Mi .....

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s to release the imported goods viz., LED Spare Parts for lighting fixtures, Spare Parts for lighting fixtures and Capacitor for lighting fixtures covered under the Bill of Entry dated 15.04.2015 in terms of Section 110 (2) of the Customs Act, 1962. 2. According to the petitioner, they sought to import LED Spare Parts for lighting fixtures, Spare Parts for lighting fixtures and Capacitors for lighting fixtures from M/s.Zhongshan Zeda Lighting Company Limited, China. The said consignment was load .....

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e subject Bill of Entry for investigation and also examined the goods. On examination, the Officers attached to the 2nd respondent found that the goods were in order. Thereafter, the 2nd respondent issued summons dated 26.06.2015 under Section 108 of the Customs Act for appearance of the petitioner before him on 04.07.2015. The petitioner, by letter dated 07.07.2015, addressed to the 2nd respondent, sought for provisional release of the goods, informing him that the goods are likely to get spoil .....

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ts to assess and clear the imported goods in terms of Section 110-A of the Customs Act read with Customs (Provisional Duty Assessment) Regulations 1963 as amended by the 2011 Regulations. This Court, by order dated 17.08.2015, disposed of the Writ Petition by permitting the petitioner to file an application within one week for the release of the goods and directed the 2nd respondent to assess the goods and pass orders within three weeks. Thereafter, by letter dated 07.10.2015, the respondent inf .....

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g to the petitioner, they are victimized by the respondent for the reason that they knocked at the doors of this Court. According to the petitioner, as per the judicial pronouncements including those of the Hon'ble Apex Court and the High Court, it has been categorically held that the differential duty payable for the provisional release in terms of Section 110-A of the Customs Act read with Customs (Provisional Duty Assessment) Regulations can be only between 30% to 50% of the differential .....

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e returned to the person from whose possession they were seized. The proviso to the said Section provides 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. 5. According to the petitioner, in the instant case, the show cause notice, as mandated under Section 124(a) of the Customs Act ought to have been issued to the petitioner on or before 15.10.2015. Alternatively, if the proviso was sou .....

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oner so far, nor have the respondents extended the time for issuance of the show cause notice under Section 124(a) of the Customs Act by invoking the provisions of the proviso to Section 110(2) of the Act. Further, according to the petitioner under Section 110(2) of the Customs Act, if no show cause notice is issued within six months from the date of seizure or 12 months, as the case may be, the goods shall be unconditionally released. Further, the petitioner contended that merely because a requ .....

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(SIIB)] wherein the Division Bench of the Delhi High Court held as follows: 4.In view of the above, it is clear that since the show cause notice was not issued within the stipulated period, the effect would be that the seizure order would not apply any further and that the goods in question which were released provisionally and subject to the conditions under Section 110A of the said Act shall be deemed to have been unconditionally released. This would obviously mean that the Bank Guarantee whic .....

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tory, the consequence of not issuing a show cause notice within the period or extended period specified is clearly spelt out to be that the goods shall be returned to the person from whose possession they were seized (apparent from a combined reading of Section 110(2) and its proviso). The corollary is not that the Customs authorities lose jurisdiction to issue show cause notice. ... 13. In the light of the above discussion, the Petition has to succeed. It is declared that the effect of non-issu .....

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in the above terms; no costs. (iii) 2013 (293) E.L.T. 669 (P & H) [Rama Overseas Vs. Union of India] wherein the Division Bench of Punjab and Haryana High Court held as follows: 8. 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 af .....

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yntex (P) Limited Vs. Union of India] wherein the Division Bench of the Punjab and Haryana High Court held as follows: 14. In our opinion, a plain and combined reading of Sections 110(2), 124 and 110A spells out that any order of provisional release shall not take away the right of the assessee under Section 110(2) read with Section 124 of the Act. However, where no action is initiated by way of issuance of show cause notice under Section 124(a) of the Act within six months or extended period st .....

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ayant Hansraj Singh's case (supra). The said interpretation is not borne out from the plain reading of the aforesaid provisions. 7. The learned counsel appearing for the petitioner also relied upon a Circular issued by the Ministry of Finance (Department of Revenue), Central Board of Excise & Customs, New Delhi vide Circular:7/2013-Cus. Dated 19.02.2013. The said Circular has been issued by the Government of India, taking into consideration the judgment of the Division Bench of Bombay Hi .....

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ction 124(a) of the Customs Act and that a Show Cause Notice can be issued in such cases of provisional release on completion of investigations. For this, reliance was placed on the Hon'ble Bombay High Court judgment in Writ Petition No.316 of 2008 (reported in Jayant Hansraj Shah Vs. Union of India 2009 (1) Bom. CR 474 and 2008 (229) E.L.T.339 (Bom.)) to say whenever the power to issue show cause notice is preserved, and a request is made, to release the goods taken into custody, there woul .....

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s shall be returned . 5. While, the department is in the process of filling SLP against the said order, the matter has been examined in the Board. Accordingly, the following instructions are issued for strict compliance by the field formations: (1) While, Section 110(2) provides for unconditional release of the goods on non-issue of notice within the stipulated period, there is no time limit provided for issue of Show Cause Notice under Section 124 and that the proceedings of confiscation of goo .....

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se Notice is issued to the owner of the goods or such person under Section 124 of the Customs Act, 1962 within six months of the date of seizure of goods or within the period extended by the Commissioner of Customs in terms of Proviso to Section 110(2). This is necessary in order to avoid the play of unconditional release of seized goods to the person from whom the goods were seized. (3) The field formations should invariably report all cases (including seizure cases) pending investigation in An .....

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e of the goods under Section 110-A of the Customs Act was done in accordance with the provisions of the Customs manual and not in accordance with the Customs (Provisional Duty Assessment) Regulations. Further, the respondents contended that the goods were not seized and the petitioner was granted permission to store the goods under Section 49 of the Customs Act. Since the goods were not seized by the 2nd respondent, the question of time limit of six months from the date of seizure does not arise .....

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Excise] wherein the Hon'ble Supreme Court held as follows: 3. It appears to us that the consequence that flows from the failure to issue a show cause notice under Section 124(a) within the period of six months is limited to what is envisaged in Sub-section (2) namely that the goods shall be returned to the person from whose possession they were seized. Section 110 (2), does not prescribe a period of limitation within which a show cause notice is to be issued. But if no action by way of issue .....

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of the goods. The procedure for confiscation of the goods can be resorted to if the goods are not provisionally released. If the owner in terms of Section 110A applies for provisional release and an order is passed it can be said that the goods continue to be under seizure as the order under Section 110A is a quasi judicial order. Section 110(2) would not be operative. It is only in the case where no provisional order is passed for release of the seized goods and if no notice is issued under Sec .....

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oner. 12. Hence, the petition in W.M.P.No.8734 of 2016 is ordered. 13. On a careful consideration of the materials available on record, the submissions made by the learned counsel on either side and also the judgments relied upon by them, it could be seen that the goods viz., LED Spare Parts for lighting fixtures, Spare Parts for lighting fixtures and Capacitor for lighting fixtures were imported from China on 04.04.2015 by the petitioner. On arrival of the consignment, the petitioner filed Bill .....

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viso to Section 110(2) of the Customs Act is invoked, the respondents should have issued show cause notice to the petitioner on or before 15.04.2016. Admittedly, the respondents have not issued any show cause notice to the petitioner till this date. Since the entire issue devolves around Section 110 of the Customs Act, it would be appropriate to extract Section 110 of the Customs Act, which reads as follows: 110.Seizure of goods, documents and things. - (1) If the proper officer has reason to be .....

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of time, constraints of storage space for the goods or any other relevant considerations, by notification in the Official Gazette, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (1), be disposed of by the proper officer in such manner as the Central Government may, from time to time, determine after following the procedure hereinafter specified. (1-B) Where any goods, being goods specified under sub-section (1-A), have been seized by a prop .....

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phs of such goods, and certifying such photographs as true; or (c) allowing to draw representative samples of such goods, in the presence of the Magistrate, and certifying the correctness of any list of samples so drawn. (1-C) Where an application is made under sub-section (1-B), the Magistrate shall, as soon as may be, allow the application.] (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 se .....

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shall be entitled to make copies thereof or take extracts therefrom in the presence of an officer of customs. [110-A. Provisional release of goods, documents and things seized pending adjudication Any goods, documents or things seized under section 110, may, pending the order of the Adjudicating Authority, be released to the owner on taking a bond from him in the proper form with such security and conditions as the Adjudicating Authority may require.] 14. As per Section 124(a) of the Act, no ord .....

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ver, as per the proviso to Section 110(2), the Commissioner of Customs may extend the period for issuance of the show cause notice by another six months on sufficient cause being shown for the extension of the time. In the case on hand, though the goods were detained on 15.04.2015, till this date, the respondents have not followed the provisions of Section 110(2). The contention of the petitioner that since the 2nd respondent had passed the order for provisional release of the goods stipulating .....

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ending the order of the Adjudicating Authority, be released to the owner on taking a bond from him in the proper form with such security and conditions as the Adjudicating Authority may require. When provisional release can be done only in respect of the seized goods and when the 2nd respondent had passed an order in the application filed under Section 110-A of the Customs Act, now the respondents cannot take a contrary stand stating that there is no seizure at all. The contention cannot be acce .....

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nder Section 110-A of the said Act, shall be deemed to have been unconditionally released. Further, the Division Bench held that this would obviously mean that the Bank Guarantee, which was furnished at the time of provisional release, would seize to operate. The Division Bench also directed the respondents to cancel the Bank Guarantee and return the same to the petitioner. The judgment relied upon by the learned counsel for the respondents reported in 2008 (229) E.L.T. 339 (Bom.) [Jayant Hansra .....

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ions under Section 110-A shall be deemed to have been unconditionally released. In the judgment reported in 2008 (229) E.L.T. 339 (Bom.) [Jayant Hansraj Shah Vs. Union of India], the Division Bench of Bombay High Court held that it is only in the case where no provisional order is passed for the release of the seized goods and if no notice is issued under Section 124(a) for confiscation of the goods, then only would Section 110(2) apply and the respondent would be bound to release the goods. Sin .....

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goods shall be returned to the person from whose possession they were seized , which is apparent from the combined reading of Section 110(2) and its proviso. The corollary is not that the Customs authorities lose jurisdiction to issue show cause notice. The object of enacting Section 110(2) of the Act is that the Officer of the Customs Department may not deprive the right to property for indefinite period to the person from whose possession the goods are seized under Sub-section (1) thereof. Sub .....

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