TMI Blog2008 (5) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... e, grey, ivory, black, brown etc. to Thailand, Hong King, United States of America, Italy and other countries through Container Freight Station, Ludhiana and Container Freight Station, New Delhi (for brevity, CFS ). 3. On 26.12.2007, the factory premises of the petitioner as well as residential premises of its partners were searched by the officers of the DRI and entire records of exports, one computer and some documents were seized from the factory premises whereas one Laptop, two mobile phones and some other records were seized fro the residence of Shri Gaurav Sud, partner of the petitioner firm (P-1 P-2). It is alleged that Shri Gaurav Sud, Managing Partner and Shri Paramjit Singh, Production Incharge of the petitioner were forcibly taken to Ludhiana by the officers of the DRI and they were not allowed to leave the office of DRI till next morning i.e. 27.12.2007. During this time they were allegedly intimidated to make a self-inculpatory statement under the threat of arrest under the provisions of the Customs Act, 1962 (for brevity, the Customs Act ) and detention under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be made by it. Accordingly, the petitioner has approached this Court questioning the methodology adopted by the respondents for obtaining a draft of ₹ 70,00,000/- from the petitioner by misusing the powers of search, arrest and detention. 6. In the written statement filed on behalf of DRIrespondent Nos. 1 and 2 a preliminary objection has been raised that under Section 27 of the Customs Act, there is provision for refund of duty erroneously paid. It has been asserted that under the provisions of Section 28 of the Customs Act, the party against whom investigations are underway, can deposit the disputed amount of Customs duty on their own during the pendency of investigation and even before the proceedings of adjudication to project that there was no mens rea of evasion of Customs duty and also to avoid mounting up of heavy interest. With regard to non issuance of show cause notice, it has been submitted that as per the provisions of Sections 124 and 28 of the Customs Act, a show cause notice is to be issued on conclusion of the investigations, which is to be adjudicated for confiscation of the goods, imposition of fine and penalty in quasijudicial proceedings before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, when their activities came to surface, the managing partner of the petitioner showed his willingness to make good the loss to the Government and accordingly cheque of ₹ 70,00,000/- was voluntarily presented on 26.12.2007, towards their estimated duty liability, which was replaced with a demand draft of equal amount on 27.12.2007 afternoon. The allegation of illegal detention to appear before the SIO to tender evidence and the allegations of use of force, coercion and intimidation, as have been levelled in the writ petition, have been denied. 9. Controverting the averments made in the written statement filed on behalf of respondent Nos. 1 and 2 and reiterating the averments made in the writ petition, a replication has been filed by the petitioner stating that despite lapse of four months it has not received any notice or any other formal intimation for violation of any of the provisions of the Customs Act. It has also been submitted that the petitioner is facing undue harassment, loss of work capital and loss of goodwill due to the hasty action on the part of the DRI. It has been claimed that the DRI has prima facie no information/evidence against the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned application came up for consideration, the Division Bench, of which one of us (M.M.Kumar, J.) was also a member, specifically asked the learned counsel for respondent Nos. 1 and 2 to find out as to why the goods at the first instance were cleared by the CFS, Ludhiana and New Delhi. However, to the aforementioned query no reply has been filed either in the written statement filed to the writ petition or to the reply filed to the application. Reply to the aforementioned query was considered extremely significant because once goods have been cleared by the Customs Department for export or import then there is sufficient justification for the exporter or importer to feel secure and safe that it has paid duty or revenue in accordance with law. It is evident from the written statement filed by respondent No. 3 that in accordance with the provisions of the Customs Act and other elaborate formalities mentioned at Page 8 to 13 of the written statement to which the consignment of goods belonging to the petitioner were subjected, the goods in question were found matching with the declaration made in the shipping bills. However, on the basis of some intelligence report, the premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sections 50 and 51 of the Customs Act, 1962, are required to be followed. It is only after complete satisfaction by the Customs Department and payment of duty on the goods that the entrepreneur is permitted to proceed further. It would be extremely difficult for any genuine entrepreneur to bear the onslaught by a third agency like Directorate of Revenue Intelligence-respondent No. 2 to undertake further operations without associating the Customs Department. As to how the classification of the goods was accepted by the Customs Department, which in the opinion of the Directorate of Revenue Intelligence is different than the one recognised by the Customs Department. If such a course is allowed then every consignment of export or import cleared by the Customs Department would be exposed to any questioning at the instance of respondent No. 2. At the first instance respondent No. 2 is required to associate the Customs Department before taking any steps against an entrepreneur. 15. The Division Bench further noticed its earlier orders passed in such like matters which included interim order passed in C.W.P. Nos. 9553, 9554 and 9918 of 2006, on 11.7.2006 and C.W.P. 18601 of 2007. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. It is admitted that final adjudication of this notice has yet to be made and there is no amount outstanding against the petitioners. We have heard counsel for the parties. The learned counsel appearing for the Department strenuously contends that as and when the demand against the petitioners is finalised the amount of ₹ 50 lacs deposited by them in June, 1999 wil be adjusted against that demand and, therefore, this court should not direct the respondents to refund the aforesaid amount of ₹ 50 lacs to the petitioners. We are unable to agree with the learned counsel. Since the adjudicating authority has not yet determined any amount as due which is payable by the petitioners, there is no justification for the Department to retain the sum of ₹ 50 lacs which was admittedly deposited by the petitioners way back in June, 1999. If and when any demand is created, it will be open to the Department to recover the same from the petitioners in accordance with law. We, therefore, allow the writ petition and direct the respondents to refund the sum of ₹ 50 lacs to the petitioners along with interest at the rate of 9% per annum from the date of deposit till the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he would not create any charge or encumbrance on the said property without prior permission of this Court. It has also been deposed that the aforesaid plot is worth more than ₹ 70,00,000/-. The aforementioned affidavit was further supplemented by affidavits dated 28.5.2008 filed by Shri Gaurav Sud, managing partner of the petitioner and his father Shri Narinder Kumar Sud. Shri Narinder Kumar Sud also gave similar undertaking as that of Shri Gaurav Sud. 20. Mr. Ashwani Kumar Chopra, learned senior counsel for the petitioner has argued that the Division Bench judgment of this Court as noticed in the order dated 5.3.2008, in the case of M/s Bhagwati International (supra) in unmistakable terms lays down that in the absence of demand the DRI or any other authority could not ask the petitioner to deposit any amount much less by using coercive method. Learned counsel has maintained that a period of about six months have expired, yet, no demand has been raised and the bank guarantee of ₹ 70,00,000/- furnished by the petitioner may be released so as to enable the petitioner to make use of that money by circulating the same in the business. He has further argued on the bas ..... 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