TMI Blog2021 (5) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... nly if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act. Thus, a discretionary power is vested upon the proper officer to seize such goods if he has reason to believe that those goods are liable to confiscation under the Customs Act. Petitioner has contended that the subject goods were imported from China to India by M/s. HP India Sales Pvt. Ltd. and petitioner had purchased the same from M/s. Connect Info Solutions after five stages of trading. No action was taken by the respondents against M/s. HP India Sales Pvt. Ltd. at the time of import if at all there was any violation. This provision cannot be invoked after five stages of trading that too at the stage when petitioner had purchased the goods, paid the IGST to the seller and on completion of all formalities obtained let export order for export. It is seen that in every case in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty must be preceded by an adjudicatory process in which principles of natural justice are required to be followed but before initiation of such adjudicatory process show-cause notice under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inates, servants and agents to release the goods of the Petitioner covered under Shipping Bill No.4245853 dated 3.8.20 and permit the same to be exported duty free as per the LeT export order No.39/94 issued by Central Board of Indirect Taxes and Customs; (c) this Hon ble Court be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ or order or direction under Article 226 of the Constitution of India quashing and setting aside the Provisional Release letters dated 24.8.20 and 28.8.20 issued by the 4th and 2nd Respondents respectively with consequential relief of free export as prayed for in clause (a) hereinabove; (d) this Hon ble Court may be pleased to hold and declare that the prejudicial portions of Para 3 of the Circular No.33/2005-Customs dated 2.8.2005 (to the extent that it advices denial of export benefit on provisional release) and prejudicial portions of Paras 4(a) and 4(c) of Circular No.1/2011-Cus., dated 4.1.2011 (to the extent that it advices mandatory security and denial of export benefit for/on provisional release) are ultra vires Sections 110, 110A and other connected provisions of the Customs Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es called M/s. Octagon International for supply of 5000 units of HP V190 18.25 LED Monitor 2NK17A7 (for short and for convenience LED Monitors hereinafter) at an unit price of 45 USD. The total value of the purchase order was 225000 USD. 5. On 29.07.2020 petitioner received advance payment of ₹ 1,67,94,767.00 in connection with the above export order. 6. Petitioner procured the items to be exported from M/s. Connect Info Solutions on 31.07.2020 for which supply invoice was raised upon the petitioner by the supplier M/s. Connect Info Solutions. Petitioner raised GST invoice on the same day for the said transaction carrying IGST payment of ₹ 19,98,956.88. 7. On 01.08.2020 the domestic supplier i.e. M/s. Connect Info Solutions sent the goods to the petitioner whereafter petitioner filed shipping bill No.4245853 dated 03.08.2020 for 3317 pieces of LED Monitors. Since the consignment and documents were in order, let export order No.39/94 dated 05.08.2020 was issued. The other consignment containing 1683 pieces of LED Monitors was sought to be exported by the petitioner vide shipping bill No.4311172 dated 06.08.2020. The second consignment was permitted to be exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligence Unit, Rummaging and Intelligence Division, Mumbai. As per the seizure memo, from an analysis of the data on record, it was suspected that petitioner was trying to export the consignment to avail undue export benefits and in contravention of the Customs Act, 1962. Therefore, the consignment was put on hold and examined under Panchnama dated 13.08.2020. In the course of examination, it was found that the cartons/packages containing the exportable goods were having misleading marking/labelling. It was noticed that the exportable goods in fact were imported to India from China by M/s. HP India Sales Pvt. Ltd., Bangalore as an exempted item. Pending investigation into possibility of duty evasion the consignment was held up as may be liable to confiscation under section 111(o) and 113(i) of the Customs Act, 1962. Therefore, the seizure was made in exercise of the powers conferred under section 110(1) of the Customs Act, 1962. 13. By subsequent internal communication dated 28.08.2020 a copy of which was marked to the petitioner, it was stated that the export consignment covered by shipping bill No.4245853 dated 03.08.2020 may be provisionally released on submission of bond and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 06.02.2020 under customs tariff heading No.85285200. The importer i.e. M/s. HP India Sales Pvt. Ltd. had also availed exemption granted vide notification No.24/2005 dated 01.03.2005. It was also revealed in the course of investigation that M/s. HP India Sales Pvt. Ltd. had imported the computer monitors under CTH No.85285200 vide bill of entry No.6783433 dated 06.02.2020. Without putting the said imported goods to use, M/s. HP India Sales Pvt. Ltd. had sold it under invoice to M/s. Rashi Peripherals Pvt. Ltd.. 16.3. It is thus stated that the consignment covered under shipping bill No.4245853 dated 03.08.2020 originally imported vide bill of entry No.6783433 dated 06.02.2020 by M/s. HP India Sales Pvt. Ltd. is liable to confiscation under section 111(o) of the Customs Act, 1962. 16.4. A chart has been provided by the respondents wherefrom it is stated that the goods imported by M/s. HP India Sales Pvt. Ltd. on exemption were subsequently sold to various distributors and retailers and finally to the exporter i.e. to the petitioner. However, at each successive step the price of the monitors were reduced. The exporter and his immediate supplier M/s. Connect Info Solutions had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . when the goods were imported by M/s. HP India Sales Pvt. Ltd.; when the goods were sold by M/s. HP India Sales Pvt. Ltd. to the petitioner; when the petitioner s shipping bill No.4311172 dated 06.08.2020 for 1683 items were cleared without any dispute; and when the subject consignment vide shipping bill No.4245853 dated 03.08.2020 for 3317 items were cleared by issuing let export order. 17.3. Thus, there is duty implication only under IGST which had been paid by the petitioner who is now claiming the refund. 17.4. In so far the action of seizure is concerned, petitioner has referred to section 110 of the Customs Act, 1962 and submits that the said provision uses the word may and not the word shall . Therefore, discretion is vested on the customs authorities whether to seize or not to seize. Referring to para 1.24 of the Foreign Trade Policy 2015-2020, it is submitted that no seizure shall be made by any agency so as to disrupt manufacturing activity and delivery schedule of exports. 17.5. Finally, it is submitted that even if the contention of the respondents is accepted that there was any error in packaging, the same could be amended as per section 149 of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods originally imported from China by M/s. HP India Sales Pvt. Ltd. after five stages of trading. No action was taken against M/s. HP India Sales Pvt. Ltd.. Therefore, there cannot be any seizure in respect of a trader who is downstream in five stages of trading. In any case, there is no violation of section 113(i) of the Customs Act, 1962. The value was correctly declared and that was why let export order was issued for clearing the said consignment. That apart, section 110 of the Customs Act, 1962 provides a discretionary power upon the proper officer to make seizure, but before doing that he must have reason to believe that such goods are liable for confiscation. Finally, learned counsel for the petitioner submits that respondents were not at all justified to have instructed the banker of the petitioner i.e. HDFC Bank not to accept fresh foreign inward remittances for export. 19. On the other hand, Mr. Jetly, learned senior counsel for the respondents submits that for all intent and purpose the writ petition has become infructuous. The goods which were put on hold and subsequently seized have been released provisionally. Now, the remaining grievances of the petitioner would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 111(o) and 113(i) of the Customs Act, 1962. Therefore, in exercise of powers conferred on me under Section 110(1) of the Customs Ac,t 1962, I, Rajendra Singh, Intelligence Officer, HQUI, R I, NCH, Ballard Estate, Mumbai-400 001, hereby seize the above said consignment, and hereby direct the exporter M/s Mbility Services (IEC AEQPB2212P) and JWR CFS, NhavaSheva, the present custodian of the said goods, to not to remove, part with, or otherwise deal with the said goods except with the permission of the Joint Commissioner of Customs (P), HQIU, R I, Mumbai. Sd/ Rajendra Singh IO/HQIU, R I, Mumbai 22. From a perusal of the seizure memo, it is seen that according to the Intelligence Officer on an analysis of the data on record it was suspected that the export consignment of the petitioner vide shipping bill No.4245853 dated 03.08.2020 was sought to be exported to avail undue export benefits in contravention of the provisions of the Customs Act, 1962 and other relevant laws for the time being in force. It is stated that the said consignment was put on hold and examined under Panchnama dated 13.08.2020. In the course of examination, it was found that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for further six months by the Principal Commissioner of Customs or by the Commissioner of Customs for reasons to be recorded in writing. 24. Section 110A provides for provisional release of seized goods amongst others pending adjudication. 25. We have already noticed that when seized goods are provisionally released under section 110A, the prescribed period of six months as provided in sub section (2) of section 110 would not be applicable. 26. From a reading of section 110, more particularly sub section (1) thereof, it is discernible that seizure is not an end in itself. Seizure can be made only if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act. Thus, a discretionary power is vested upon the proper officer to seize such goods if he has reason to believe that those goods are liable to confiscation under the Customs Act. 27. That brings us to Chapter XIV of the Customs Act which deals with confiscation of goods and conveyances and imposition of penalties. Section 111 which forms part of Chapter XIV deals with confiscation of improperly imported goods etc.. It says that the category of goods mentioned in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged without limit by a Principal Commissioner of Customs or Commissioner of Customs or a Deputy Commissioner of Customs; and up to such limit by such officers, as the Central Board of Indirect Taxes and Customs may by notification specify. 32. The adjudication procedure is dealt with in section 122A which ensures that principles of natural justice are duly complied with in such adjudication process by giving opportunity of hearing to the concerned party. Section 123 deals with burden of proof. 33. Section 124 provides for issue of show-cause notice before confiscation of goods etc.. It says that no order confiscating any goods or imposing any penalty on any person shall be made under Chapter XIV unless the owner of the goods or such person (a) is given a notice in writing with the prior approval of the officer of customs not below the rank of an Assistant Commissioner of Customs, informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty; (b) is given an opportunity of making a representation in writing within such reasonable time a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 113(i) may require adjudication on facts, we therefore deem it fit and proper to relegate the petitioner to the forum of adjudicatory authority for a decision on the validity or otherwise of the impugned seizure and the consequential fall out. 37. Having regard to the above, it would not be necessary to deal with the challenge to the two circulars dated 02.08.2005 and 04.01.2011. Likewise it would not be necessary to deal with the prayer for refund, which would be subject to outcome of the adjudication. 38. Accordingly and in the light of the above, we direct that the jurisdictional Principal Commissioner of Customs may authorize an appropriate officer of the customs department to adjudicate on the impugned seizure memo dated 28.08.2020 and the consequences which would follow by issuance of notice under section 124(a) of the Customs Act. The said notice shall be issued within a period of three weeks from the date of receipt of a copy of this judgment and order. The entire proceeding of adjudication shall thereafter be completed within a period of eight weeks from the date of issue of notice under section 124(a) of the Customs Act. 39. No opinion has been expressed on merit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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