TMI Blog2019 (6) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... TC shall release the security/BG amount to the Petitioner, to the extent it is entitled in accordance with law, forthwith and in any event not later than 10 days from today. As far as the SCN is concerned, if no further hearings are contemplated, the Adjudication Officer should proceed to pass the adjudication order not later than three months from today in accordance with law - petition allowed. - W.P.(C) 3624/2018 - - - Dated:- 30-5-2019 - S. MURALIDHAR AND ASHA MENON JJ. Petitioner Through: Mr. Shubhankar Jha, Advocate. Respondents Through: Mr. Satish Aggarwala, Senior Standing Counsel for DRI/R-1 with Mr. Vineet Sharma, Advocates. Mr. K.S. Negi, Advocate for R-2. O R D E R Dr. S. Muralidhar, J.: 1. This petition by M/s Ambika Vikas Udyog through its Partner, seeks a direction to the Respondent No. 1, Directorate of Revenue Intelligence ( DRI ) to issue a no objection certificate ( NOC ) to the MMTC Limited ( MMTC ) (Respondent No.2) for release of the bank guarantee ( BG )/security furnished by the Petitioner to the MMTC. 2. The background facts are that the Petitioner is in the business of export of gold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e released to these parties without the permission of DRI, Delhi Zonal Unit . The said instruction dated 29th October, 2015 was reiterated by another communication dated 17th December, 2015 stating that the bond/fixed deposit/cash furnished as security by the present Petitioner may be kept on hold till further clearance from this office . However, the Petitioner was allowed to commence normal operations and procure duty free as well as duty paid goods so that its normal day-to-day business activities were not affected. 7. The grievance of the Petitioner is that for more than three years since the above instruction, the MMTC has been constrained not to release the BG/ security furnished by the Petitioner to the extent of ₹ 81,70,000/-. 8. A show cause notice ( SCN ) dated 27th November 2017 was issued to the Petitioner and other co-noticees by the DRI, where inter alia, specific to the Petitioner, in paragraph 31.1 (a) the Petitioner was asked to show cause why: (a) Customs duty amounting to ₹ 46,48,286/- (Rupees Forty Six Lakh Forty Eight Thousand Two Hundred Eighty Six Only) forgone on duty free gold, totally weighing 18.7 kg, imported by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h would be useful to and relevant in any proceedings under this Act . However, there is no categorical statement by the DRI whether the instructions issued by it to the MMTC should be treated as a seizure of any document or thing . 13. Mr. Shubhankar Jha, learned counsel for the Petitioner, states that till date no adjudication order in the SCN dated 29th November, 2017 has been passed. He points out that there is no justification in law for the DRI s instructions to the MMTC not to release the security amount to the Petitioner. He referred to the decision of the Bombay High Court in Lawson Tours and Travels (India) P. Ltd. v. Dy. Director, DGCEI, Zonal Unit, Mumbai 2015 (317) ELT 248 (Bom.) where in similar circumstances, the Bombay High Court quashed the communications issued to the banks freezing the accounts of those Petitioners pending the adjudication of the SCN. 14. Mr. Satish Aggarwala, learned Senior Standing Counsel for the DRI, on the other hand, refers to the decision of the Supreme Court in Commissioner of Customs v. Euroasia Global 2009 (236) ELT 627 (SC) and a decision dated 19th August, 2010 of the Division Bench of this Court in LPA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such instructions. 18. Section 110 (3) of the Act permits the Proper Officer to seize any document or thing which in his opinion will be useful or relevant to any proceedings under this Act . This requires the Proper Officer to actually apply his mind and pass a reasoned order under the said provision in regard to such seizure . Once there is a seizure made under Section 110 (3) of the Act, the time limit for issuance of an SCN would begin to run in terms of Section 110 (2) of the Act. In the present case, the instructions to the MMTC were first issued on 29th October 2015, and reiterated on 17th December, 2015. If this was to be treated as some kind of a seizure , for the purpose of Section 110 (3) of the Act, then clearly the SCN issued to the Petitioner, would be well beyond the time permitted in terms of Section 110 (2) of the Act. Perhaps conscious of this difficulty, the DRI has nowhere in its counter affidavit sought to justify the impugned instructions given to the MMTC as a seizure under Section 110 (3) of the Act. Consequently, the Court understands the DRI as not seeking to justify the impugned instructions to the MMTC as a seizure in terms of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Petitioner. There the bank accounts of the Petitioner were frozen pending the completion of adjudication of the SCNs. The Bombay High Court disapproved of the said action and observed: We are not concerned as much with the adjudicating proceedings; the outcome thereof, leave alone the merits. But, we do find that there was no reason for the authority to hastily freeze and attach the bank account. If the Petitioner has a huge liability and which is towards taxes due to the Government, then, the least that was expected is that the competent authority decides the adjudication proceedings and by an appropriate order. It is only thereafter that the dues could be said to be crystallized and adjudicated. Presently, merely on issuance of show cause-cum-demand notice, copy of which is at Annexure 'B', the bank account could not have frozen and attached. More so, when the petitioner claims to have made some payments. As a result of the above discussion, the writ petition succeeds. Both communications at Annexures 'A1' and 'A2' are quashed and set aside. The bank account of the Petitioner with South Indian Bank shall stand released from the attachment. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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