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2016 (7) TMI 1164 - DELHI HIGH COURT

2016 (7) TMI 1164 - DELHI HIGH COURT - 2016 (340) E.L.T. 174 (Del.) - Provisional release of goods - undervaluation - declaration of goods evasion of duty - import of branded goods declared as unbranded - import of mobile accessories, parts, memory card adaptor, plastic watches, tempered glass and mobile phone LCD - Petitioner states that it kept requesting for a copy of the entire panchnama as well as for the release of the goods, but did not receive any response. - Held that:- The power of .....

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are liable for confiscation. Since till date no other order exists and no such order has been communicated to the Petitioner, it is not possible to accept the plea of Mr. Agarwala, learned counsel for the DRI, that the 'detention' of the goods by the DRI was with the authority of law and in any event should be treated as a seizure in terms of Section 110(1) of the Act. - The net result is that the detention by the DRI of the goods imported by the Petitioner under the aforementioned B/E from .....

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s paid by the Petitioner, the goods will be released to it subject to whatever conditions the Customs might want to impose for such release. - Decided in favor of petitioner. - W.P.(C) 5939/2016 - Dated:- 25-7-2016 - S. MURALIDHAR & NAJMI WAZIRI JJ. Petitioner Through: Mr.s. Anjali J. Manish and Mr.. Priyadarshi Manish, Advocates. Respondents Through: Mr. Pramod Kumar Rai, Senior Standing Counsel for the Customs. Mr. Satish Aggarwala, Advocate for R-3/ DRI. O R D E R Dr. S. Muralidhar, J.: 1 .....

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enue Intelligence (Respondent No. 2) ( DRI ), to provisionally release the goods imported by the Petitioner under Bill of Entry (B/E) No. 5216412 dated 10th May, 2016. A further prayer is for the direction to the Respondents to provide to the Petitioner a copy of the panchnama dated 12/13th May, 2016 which makes reference to the above B/E. 2. The brief facts are that, the Petitioner is engaged in the business of import of mobile accessories. It is stated that, in the normal course of its busines .....

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sable value was declared as ₹ 10,61,351.54/- and the duty payable as ₹ 2,63,494/-. 3. It is stated that the Petitioner filed the B/E under first check so that the Customs could itself verify the contents and indicate the duty to be paid. The Petitioner states that the goods were examined on 12th May, 2016 by the DRI in the presence of two panch witnesses we well as an Inspector of Customs and two other persons besides the Customs and the Customs House Agent (CHA). The Petitioner stat .....

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reated as an application under Section 110A of the Customs Act, 1962 ( Act ), for provisional release of the goods in case the goods had been seized. Aggrieved by the continued inaction of the Respondents, the present petition is filed. 5. Notice was issued in the petition to the Respondents on 13th July, 2016. On behalf of Mr.. Satish Aggarwala, notice was accepted for the DRI. He was asked to obtain instructions on the next date of hearing. 6. An affidavit in response to the notice was filed b .....

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ones and mobile accessories, in respect of which an Import General Manifest had been filed. According to the DRI, a letter was addressed to the Customs by it on 27th April, 2016 stating that all consignments of mobile accessories imported by the traders (other than brand owners/ manufacturers) should be examined in the presence of the officers of the DRI. 7. It is further stated in DRI's affidavit that by a letter dated 12th May 2016 the DRI requested the Customs that in order to avoid deten .....

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s. It was stated that on examination of the documents submitted by the CHA, it was noted that the IGM No. 936163 had mentioned the AWB date as 28th April 2016, whereas in the B/E the date of the AWB was 25th April, 2016. The suspicion was that the CHA was trying to mislead the DRI officials that the goods had arrived after the alert dated 26th Aril, 2016. It was stated that the detailed inventory was prepared and it was noticed that the consignment included high value goods such as branded wrist .....

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clared in the invoice or B/E appeared to be on the lower side vis-a-vis the recovered goods. It was further stated that the importer had declared 12 pieces of small Chinese CCTV cameras and during examination 12 pieces of PMP wireless NVR Kit containing 4 pieces of HD WIFI cameras and 1 piece 4 Chanel WIFI NVR were recovered. Although, it was stated that on the completion of the panchnama, the DRI handed over a copy thereof to a representative of the CHA company, this has been denied by the Peti .....

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half of the importer under Section 108 of the Act on 5th July, 2016. He appears to have submitted a bank account statement, copies of the sales invoice running to 91 pages and import documents running to 266 pages. 11. Pursuant to the order passed by the Court, the original file was produced by Mr. Satish Agarwala, learned Counsel appearing for the DRI before the Court on 21st July, 2016. The order passed by the Court on that date noted what was found in the file as under: 1. The original file h .....

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n the file that Annexure C to the panchnama was served on the Petitioner (which in any event is not disputed by the Petitioner), there is no proof in the file that the entire panchnama was served on the Petitioner. He undertakes to serve on the counsel for the Petitioner during the course of the day, one copy of the entire panchnama. 3. The second feature of the panchnama is that it states that the above said goods were detained by the DRI Officers under Section 110 of the Customs Act, 1962 bein .....

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refore, not possible to accept a statement made at the Bar by Mr. Agarwala that the Court should proceed on the basis that the goods in question have been seized by the DRI under Section 110 of the Act. 4. Significantly, in the counter affidavit filed by Mr.. S.K. Mishra, on behalf of the DRI, there is no statement to the effect that the goods have been seized under Section 110 of the Act. What is stated in para 6 therein is that the goods were detained under proper Panchnamas drawn on the spot .....

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davit of Mr. S.K. Mishra also reveals that the goods stand warehoused under Section 49 of the Act since 8th July, 2016. The question arises as to who is responsible for paying the warehousing charges since clearly the Petitioner cannot be faulted for the unauthorised detention of the goods. 6. A further question that arises is regarding the nature of the goods in question. These are stated to be wrist watches of various makes and in terms of notification number 31/86-Customs dated 05th February, .....

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(B/E) at the first check stage. She points out that the Customs authorities are yet to even inspect and assess the goods and determine the duty payable. 8. The question also arises as to the further steps that should be taken to have the B/E dated 10th May 2016 filed by the Petitioner, assessed in the first instance by the customs authorities to enable the Petitioner to pay the requisite custom duty and get the goods cleared. 9. None has been appearing on behalf of the Department of Customs. A c .....

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treated as 'seizure' under Section 110 of the Act. In particular, he drew attention to the following observations in para 6 of the above decision: 6. From the aforesaid averment, it is clear that although no specific order of seizure has been issued to the writpetitioner, it is apparent that there has been actual detention of the goods under Section 110 of the Act and time will run for giving show-cause notice under Section 124(a) from at least 4th August, 2010. It further appears that .....

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contend that there was no requirement for recording of reasons before making a seizure. Although, the said decision was in the context of a search under Section 105 of the Act, Mr. Agarwala contended that it would equally apply to a seizure under Section 110 of the Act. 14. Countering the above submissions, it was pointed out by Mr.s. Anjali Manish, learned Counsel appearing for the Petitioner, that there was no concept of detention of goods under Section 110 of the Act. Referring to the decisio .....

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take place immediately upon their arrival and this might require the goods to be detained for a short or a temporary period, though he was unable to specify what constituted either a short or a temporary period. According to him, there may be instances where the DRI, acting on intelligence, proceeds to intercept the goods with prior intimation to the Customs. In response to a specific query as to who would bear the demurrage or the warehouse charges in the event of such detention , Mr. Rai said .....

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there is no provision in the Act which justifies the detention simpliciter of goods by the authorities whether it is the Customs or the DRI, and that too without recording of reasons. 17. Mr. Agarwala drew the attention of the Court to the proviso to Section 110(1) of the Act which envisages a situation where it is not practical to seize imported goods. The proviso states that in such instance the proper officer may serve on the owner of the goods an order that he shall not remove, part with, o .....

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ot immediately seizing the goods. It appears to be imperative that if the proper officer decides to seize the goods, then he must record first reasons to believe that such goods are liable to be confiscation under the Act. 19. In R.S. Seth Gopikisan Agarwal (supra) the Supreme Court discussed Section 105 of the Act dealing with search and not Section 110 of the Act which deals with seizure. In any event, even the Supreme Court did not suggest that no reasons at all are required to be given for a .....

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Act. 20. Even the decision in S.J. Fabrics Pvt. Ltd. v. Union of India (supra) does not suggest that the proceedings under Section 110(1) of the Act is not to be followed. The above observations in para 6 of the decision are relevant in the context of the computation of the period of limitation for the purposes of issuance of the show cause notice under Section 124(a) of the Act. The said decision does not suggest that for effecting a seizure under Section 110(1) of the Act, no order is required .....

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ion of the goods without recording reasons to believe that seizure of the goods was warranted under Section 110(1) of the Act. The following discussion in Mapsa Tapes Pvt. Ltd. v. Union of India (supra) supports the case of the Petitioner that, for there to be a valid seizure of the goods it is incumbent on the proper officer to record reasons to believe, under Section 110(1) of the Act, that the goods are liable to be confiscated: 23. The case in hand, in our opinion, will fall within the four .....

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took place. All what has been relied upon is the report of Directorate of Revenue Intelligence, Delhi Zonal Unit (DRI) which is much prior to the date of seizure and important aspect of the matter is that the goods were cleared under Section 47 of the Act after the above report was available with DRI. Further, undisputed allegations of the petitioners are that even after the clearance of the consignment, seizure of which is in question, in the present petition a number of consignments were clea .....

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e in the case of the petitioner. On this ground alone, we are of the view that action of search and seizure is liable to be quashed and accordingly we answer the second issue in favour of the petitioner and against the revenue. 26. Before parting with the judgment, we make it clear that we are not going into question of alleged liability for undervaluation or mis-description or any other consequence or the liability of the petitioners as a result of pending show cause notice issued to the petiti .....

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urt observed that such composite order is unheard of . It further observed: 27. Technically, asking the party to submit fresh PD Bonds for a period of six months on one hand and proceeding to seize the goods on the other hand may not perhaps be faulted with, however, burden lies on the authority to explain rationale to rush into seizure/ confiscation of the goods in such circumstances, the reason is the proper officer cannot proceed to seize the goods under Section 110 of the Act unless he has r .....

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be exercised for valid reasons. The proper officer has to record his reasons to believe that the goods that he proposes to seize are liable to confiscation. The said reasons for exercise of the power have to be recorded prior to the seizure. In the present case, as already noticed, apart from the panchnama, there is no separate order passed under Section 110(1) of the Act by the proper officer recording the reasons to believe that the goods are liable for confiscation. Since till date no other o .....

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thority of law. 25. The question that next arises is, what should be the consequential direction that has to be issued in the matter? As already pointed out by the learned counsel for the Petitioner, the B/E has been presented as a first check B/E. The Customs has not even examined the goods and assessed the B/E. Therefore, it is imperative that the Customs should now proceed with further steps in the matter. 26. At this stage, it is pointed out by Mr. Rai, learned Counsel for the Customs, that .....

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