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2017 (4) TMI 879 - BOMBAY HIGH COURT

2017 (4) TMI 879 - BOMBAY HIGH COURT - TMI - Sealing of factory premises - seizure of machinery - EPCG Scheme - Held that: - there is partial compliance of the statement, which was recorded by this Court on 29th March, 2017. Now the lock placed on the outer door of the room, where the machine was installed, has been removed. Prima facie, this re-enforces this Court's view in arriving at a conclusion that the respondents proceeded to place a lock and seal on the immovable property, namely, the ou .....

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to law and for a reasonable period, namely, till 31st July, 2017, the petitioners shall not transfer or dispose of the machine, but, it shall be retained by them in safe custody - petition allowed - decided in favor of petitioner. - Writ Petition No. 3629 of 2017 - Dated:- 3-4-2017 - S. C. Dharmadhikari And Prakash D. Naik, JJ. Mr. Prakash Shah, a/w. Mr. Ajay Singh and Mr. Jas Sanghavi, i/b. M/s. PDS Legal, Advocate for the Petitioners Mr. Pradeep S. Jetly, Advocate for the Respondents ORDER P. .....

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e above request on 29th March, 2017. 3 After hearing both the sides, briefly, on 29th March, 2017, we passed the following order: 1. This writ petition challenges an action and which according to the Petitioners' counsel Mr.Shah is of sealing of premises. 2. Our attention is invited to Customs Act, 1962 by Mr. Shah and particularly Section 110 thereof. He would submit that the power and which flows from several provisions contained in Chapter XIII of the Customs Act, 1962, titled as Searches .....

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rmissible in law. 3. For meeting these contentions, Mr.Jetly would seek time. At his request, we place this matter and high on board on Monday, 3rd April 2017. 4. On our pointed query as to how from page 22 of the paper book can one decide whether it is only a sealing of a machine/goods and not of the premises, Mr. Jetly on taking instructions from the official of Customs present in Court makes a statement that it will not show correct position as it is only a photograph. The correct position is .....

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nd contentions of both sides, we allow seizure of the machine and if at all any seal is placed thereon, that shall continue till 3rd April 2017. Stand over to 3rd April 2017, high on board. 4 Before we proceed further, we would like to narrate some facts, which the petitioners have set out and which are based on the uncontroverted documents emanating from the Customs Department itself. 5 The first petitioner claims to be a Partnership Firm, registered under the Indian Partnership Act, 1932. It i .....

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General of the Foreign Trade under the EPCG Scheme. This Scheme, stated as Export Promotion Capital Goods Scheme , is a part and parcel of the Foreign Trade Policy for 2009-2014. 6 The petitioners claim that an EPCG license was issued on 18th August, 2011 for import of this machine and free of Customs Duty. There was an export obligation, which was required to be fulfilled. Reliance is placed on the Condition Sheet attached to the EPCG license; especially, Condition No.4 thereof, which is part a .....

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end. The petitioners state that the said period would come to an end only in August 2017. 8 In respect of this import, the petitioners have relied upon the Bill of Entry dated 14th October, 2011, evidencing execution of a Bond in the sum of ₹ 17,87,500/-, being the duty saved on the said import. The petitioners submit that they have also furnished a Bank Guarantee for the said sum. 9 This condition, as reproduced above, is claimed to have been complied with by the petitioners. They have se .....

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atement of the Partner of petitioner No.1 was recorded. No show-cause notice for duty demand and/or penalty has been issued to the petitioners, but, suddenly, the Deputy Commissioner of Customs (Preventive), respondent No.3 herein, issued a search warrant. That search warrant dated 21st March, 2017, issued by respondent No.3-Deputy Commissioner of Customs (Preventive), enabled respondent No.4-Superintendent of Customs (SIIB-X) to carry out the aforesaid act. 11 The petitioners, after completion .....

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ng not denied the essential factual position, seek to justify it by, firstly, urging that the petitioners have failed to comply with the export obligation on the goods imported under the Export Promotion Capital Goods Scheme at zero duty , claiming exemption under paragraph 5 of the Foreign Trade Policy 2009-14, read with Notification No.102/2009-Cus dated 11th September, 2009. It was a facility available to an exporter/manufacturer, subject to fulfillment of the export obligations. Further, the .....

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short, EODC ), and on the basis thereof, they have got the Bank Guarantee and Bond duly cancelled. Now, the fraud has been exposed during the investigations. The petitioners are, prima facie, found guilty of this fraud and having cheated the revenue. The Revenue must be allowed to unearth the fraud completely. 14. For the present, only duty obligation and payment thereof to the tune of ₹ 17,87,489/- is computed. The investigations are underway. The investigation would reveal as to how the .....

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nufactured in their factory using indigenous machines and not by utilizing the capital goods imported under the EPCG license, namely, 'offset machine'. 15 It is in these circumstances that the fraud, as revealed from the further statement of the petitioners' Partner Shri. Vipul Shah, has enabled the respondents to seal the factory premises of the petitioners and seize the machine as well. 16 We have perused the affidavit-in-reply filed by the respondents. 17 Mr. Shah, appearing on be .....

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the outer door of the factory premises, where the machine was installed. Thus, we do find the act of locking the immovable property instead of movable property, against the provisions of Section 110 of the Customs Act, 1962 and against the Scheme of the Act. Particularly, at this stage, we find that the documents, emanating from the Customs Department, are of the year 2014. The petitioners have relied upon the Redemption Letter dated 7th October, 2014, a copy of which is annexed at page No.17 of .....

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Commissioner of Customs (Export), Jawaharlal Nehru Custom House, Sheva, Tal. Uran, Dist. Raigad, by relying upon the communication from the Foreign Trade Development Officer, duly cancelled the Bank Guarantee executed by the petitioners. The Bond in the sum of ₹ 17,85,500/- executed by the petitioners also stood cancelled. The endorsement made in this communication, which is appearing on page No.18 of the paperbook, is that, if it is discovered later on that, any of the information or docu .....

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document or any act, which would enable us to hold that the Customs Department has doubted fulfillment of the export obligations by the petitioners. We are of the opinion that if the petitioners were involved in a systematic fraud, by conniving and in collusion with M/s. Riddhi Enterprises, two years period was enough and, in this case, to unearth such a fraud. If the fraud is perpetrated by the petitioners and the capital goods were never utilized by the manufacturer, then, we do not see any r .....

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in that behalf, then, even that power has been exercised purportedly in this case after the documents emanating from the Customs Department themselves were holding the field for two years and more. That is why if the proper officer had reason to believe that any goods are liable to be confiscated under the Customs Act, 1962 and has seized them, then, how, the respondents can insist that they will pass a provisional release order only on a bond from the petitioners and in a proper form. Addition .....

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