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2017 (1) TMI 1351 - MADRAS HIGH COURT

2017 (1) TMI 1351 - MADRAS HIGH COURT - TMI - Whether the detention of goods and seizure of goods are similar? - Classification of export goods - hand knotted woolen carpets or hand woven carpets? - CBEC circular dated 04.01.2011 - Held that: - Ordinarily, the word "detention" applies to person and not goods. However, in the context of the statute, with which, we are dealing with, detention is the terminology, which is also used in the context of goods. - Therefore, while seizure is an act of ta .....

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not to release the goods on terms or otherwise, despite, the petitioner's letter dated 08.06.2016, 17.06.2016, 24.02.2016 and 29.03.2016; though, I must note that in the letter dated 24.02.2016, as per the assertions made in the counter-affidavit by the respondents, the terminology used by the petitioner was, he be given permission to re-export the goods, as against seeking permission to export the goods - the continued detention of the subject goods is illegal. Therefore, the petitioner, in my .....

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iv Shakdher For the Petitioner : Mr.G.Derrick Sam For the Respondents : Mr.G.M.Syed Nurullah Sheriff Standing Counsel ORDER 1. This is a writ petition filed for issuance of a writ of Mandamus or, any other order or, direction of the like kind, to the respondents to release the goods, which are covered by the seizure mahazar dated 11.02.2016, to enable the petitioner to export the goods, in terms of Section 110(2) of the Customs Act, 1962 (in short "the Act"). 2. In order to adjudicate .....

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d 07.11.2015. 2.4. The total cumulative value of the consignment, which was covered by these ten (10) shipping bills, was pegged, by the petitioner, at ₹ 3,10,30,857/-. 2.5. Against each of these shipping bills, the petitioner had claimed duty draw back, which, cumulatively, amounted to ₹ 27,12,946/-. 2.6. It appears that the respondents noted discrepancies, as indicated above, in the shipping bills and the consignment and, accordingly, detained the subject goods. 2.7. While there is .....

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he petitioner attempted to export the subject goods on 30.11.2015. 3.2. Be that as it may, as indicated above, it is the common ground that the goods were detained in November 2015. The most plausible date available is 30.11.2015, when, even according to the respondents, examination of the detained goods was carried out. 3.3. The record shows that the respondents drew two sets of samples from the detained goods, each of which were sent to the Textile Committee for testing. As per the stand of th .....

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that he had acted as the Customs Broker for the petitioner. 3.5. This apart, the statement of the Proprietor of the petitioner, i.e., Kalpesh B. Patel, was also recorded on 15.062016, 16.06.2016, 25.06.2016 and 26.06.2016. 3.6. I may only record that, on the other hand, the respondents' stand is that the petitioner's statement was recorded on 29.12.2015, 25.05.2016 and 26.05.2016. 3.7. In the interregnum, though, i.e., on 17.06.2016, the petitioner claims that he received information, fo .....

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ten on behalf of the petitioner, by his Advocates, to seek release of the subject goods, as continued detention of the subject goods was, purportedly, in violation of the Circular issued by the Central Board of Excise and Customs (in short "CBEC), in Circular No.01/2011-Customs, dated 04.01.2011. 3.9. Insofar as the letter dated 17.06.2016 was concerned, that was replied to, by the Deputy Commissioner of Customs (Export), vide a letter dated 20.07.2016, whereby, he, while reiterating the re .....

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.2016, the Additional Commissioner of Customs, SIIB, Commissionerate III, Chennai, issued a show cause notice dated 05.08.2016, to the petitioner. 4.2. The aforementioned writ, however, came up for hearing before this Court on 21.09.2016. Hon'ble Mr.Justice T.S.Sivagnanam, vide order of even date, i.e., 21.09.2016, disposed of the writ petition, with the following operative direction, in the light of the fact that a show cause notice dated 05.08.2016, had already been issued to the petitione .....

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eceived by the respondents. 5.1. The first letter is dated 24.02.2016, whereby, the petitioner sought permission to re-export the goods. The second letter is dated 29.03.2016, whereby, the petitioner sought provisional release of the subject goods. 5.2. The facts pertaining to aforementioned letters emanate from the assertions made by the respondents in paragraph 8 of the counter-affidavit. 5.3. According to the respondents, the first letter dated 24.02.2016, was not replied to, as according to .....

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er XV of Customs Manual. 6. The petitioner, however, being aggrieved, and, perhaps, re-energized by the liberty given by this Court, filed the instant petition on 18.10.2016. 6.1. On 21.10.2016, Hon'ble Mr.Justice T.S.Sivagnanam, issued notice in the writ petition. Pursuant to issue of notice, as indicated above, a counter-affidavit was filed by the respondents. 6.2. The matter came up before me, for hearing, on 08.12.2016. Upon hearing arguments, judgement was reserved in the matter. 7. On .....

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. (ii).That there was no duty element involved in the matter. Even, if, the case of the respondents were to be accepted, in totality, which is, that the goods were hand woven carpets and not hand knotted woolen carpets, as declared by the petitioner, all that would happen, would be that the petitioner would be entitled to duty draw back, only in the sum of ₹ 2,41,850/-, as against the sum of ₹ 27,12,946/-, that is, the claim made by the petitioner qua the shipping bills. Besides, red .....

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s-declared the description and the value of the goods. Assuming without admitting that even, if, the said charge levelled by the respondents, at this stage, is taken to be correct, detention of the subject goods is not justified on the ground that the purported investigation, would have logically came to an end, with the issuance of show cause notice dated 05.08.2016. In support of this submission, reliance was placed on CBEC's circular dated 01.04.2011. (iv).The respondents' stand that .....

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months by the Commissioner of Customs, upon sufficient cause being shown in that behalf. In support of this submission, learned counsel relied upon the judgment of the Kerala High Court in the matter of M.Mohammed V. Collector of Customs and Commissioner of Excise, Cochin, 1999 (110) E.L.T. 451 (Ker.). (vii).Furthermore, reliance was also placed by the learned counsel for the petitioner on the following judgements : (1) Santosh Handloom V. Commissioner of Customs (Import), 2016 (331) E.L.T. 44 ( .....

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respondents, the market value of the goods was declared by the petitioner as ₹ 3,10,30,857/-, against which, duty draw back of ₹ 27,12,946/- was claimed, whereas, market inquiries had revealed that the value of the subject goods was a sum equivalent to ₹ 24,93,291/-, against which, the petitioner was entitled to duty draw back only to a sum equivalent to ₹ 2,41,850/-. 7.4. Therefore, according to the counsel for the respondents, since, the re-determined market price of th .....

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6, he was asked to explain the discrepancy. The said statement has been signed by the petitioner, and therefore, the petitioner cannot now say that he was not given a copy of the report of the Textile Committee. 7.6. It was also the submission of the counsel for the respondents that the detention of goods could not be equated with seizure. The detention of the subject goods, as in this case, was made to ascertain as to whether or not the declaration made by the petitioner was correct. It was sub .....

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10(2) of the Act. 7.7. In other words, it was the contention of the learned counsel for the respondents that only when the Officer concerned had reason to believe that the subject goods were liable for confiscation, that he proceeded to seize the same, and therefore, followed it up, by issuing the show cause notice within the prescribed time limit. In support of his submission, counsel for the respondents, like the counsel for the petitioner, relied upon the CBEC's circular dated 04.01.2011. .....

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e, with which, one is concerned with, for the moment. The Dictionary meaning of the word "detention" would be : "the action or state of detaining or being detained" (See Concise Oxford English Dictionary, Tenth Edition, Revised, page No.390). Whereas, "seizure" means : "the act or an instance of taking possession of a person or property by legal right or process". 8.2. Ordinarily, the word "detention" applies to person and not goods. However, in .....

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t detention of goods was also backed by legal authority and/or legal process. 8.5. As a matter of fact, I cannot conceive of the situation, where, Mr.Sheriff, would argue to the contrary. It is, perhaps, because of the reason, which is, that there is no clear legislative backing for detaining the goods, as against seizing them that nothing was shown in this behalf by Mr.Sheriff. 8.6. As a matter of fact, the CBEC, by way of administrative direction, vide its circular dated 04.01.2011, exhorts th .....

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r dated 19.05.2016, has not been filed by the respondents. It is further averred that the request for provisional release of the subject goods made by the petitioner, is declined, as the mis-declaration constituted a fraud, within the meaning of paragraph 2.2(c)(iii) of Chapter XV of the Customs Manual. For the sake of convenience, paragraph 8 of the counter affidaivt is extracted hereinbelow : "..... 8. It is most respectfully submitted, vide letter dated nil which was received by this off .....

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formed that his request for provisional release of the goods had been processed, and the same was denied by the Competent Authority as the case fell under Para 2.2(c)(iii) of Chapter XV of Customs Manual, as the case involves fraud." 8.8. In my view, the said provision, that is, para 2.2.(c)(iii) of Chapter XV of the Customs Manual, has to be read along with the circular. 9. Quite clearly, fraud, if at all, as allegedly committed by the petitioner, pivots around the allegation of the respon .....

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dvises the customs authorities to ensure that inordinate detention of seized goods, leads to delays in fulfillment of export orders and at times their cancellation, as also, congestion in ports and accumulation of demurrage charges, and therefore, mis-declared goods, which are seized and are liable for confiscation, should be released provisionally, on the terms, indicated in the circular. 9.3. Strangely, as indicated above, the respondents, in derogation of its own circular dated 04.01.2011, re .....

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ase it was reported that the detained goods were not allowed to be exported provisionally on the ground that Board's Circular referred above provides for provisional release of only the seized goods. 3. In this regard it is observed that inordinate detention of the seized goods entered for exportation results in delays in fulfillment of export order and at times cancellation of such orders. Detention of goods also adds to congestion in ports besides resulting in payment of demurrage charges .....

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1962 and thereafter the provisions of Section 110A of the Customs Act, 1962 would come into play. However, there may be situations when the goods are to be detained for purpose of tests etc. to confirm the declaration. In such cases the endeavour should be to quickly undertake the necessary action (test / enquiry etc.) and take appropriate legal action thereafter so that the period of detention is kept to the minimum. Thus, the following course of action is prescribed in respect of goods entere .....

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rohibited in terms of the Customs Act, 1962 or ITC (HS), the same should be seized and appropriate action for confiscation and penalty initiated. (c) In case the export goods are suspected of mis-declaration or where declaration is to be confirmed and further enquiry / confirmatory test or expert opinion is required (as in case of chemicals or textiles materials), the goods should be allowed exportation provisionally. The exporters in these cases are required to execute a Bond of an amount equal .....

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of tests etc. must be dealt with on priority and the export allowed expeditiously unless the prohibited nature of goods is confirmed. Continued detention of any export goods in excess of 3 days must be brought to the notice of the Commissioner of Customs, who will safeguard the interest of the genuine exporters as well as the revenue. ...." 10. Therefore, having regard to the facts and circumstances of the case, the provisions of the CBEC circular dated 04.01.2011 and the foregoing discussi .....

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e-export the goods, as against seeking permission to export the goods. 10.1. Quite clearly, therefore, the continued detention of the subject goods is illegal. Therefore, the petitioner, in my opinion, should be handed over the custody of the subject goods. 11. The other question, which arises for consideration, is as to the terms, on which, the petitioner be allowed release of goods. 11.1. Even, Mr.Sheriff, during the course of the arguments, admitted that there was no duty liability involved, .....

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