High Court rules against DRI in goods seizure case, orders immediate release with modified conditions

The High Court found the actions of the Directorate of Revenue Intelligence (DRI) to be arbitrary and mala fide in a case involving the seizure of goods. The court allowed the petition, directing the immediate provisional release of the goods with modified conditions, excluding certain requirements imposed by the DRI. The release of the second consignment was conditioned on the payment of Customs Duty as per the chartered engineer's valuation, emphasizing that the court's order did not affect the ongoing legal adjudication.

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Issues:
1. Quashing of seizure memos by Directorate of Revenue Intelligence (DRI)
2. Declaration of goods as re-rollable material and secondary material
3. Payment of Customs Duty for first consignment
4. Delay in releasing goods for second consignment
5. Arbitrary and mala fide actions by the department
6. Lack of prompt action after seizure
7. Legality of seizure by an authorized officer
8. Conditions for provisional release of seized goods

Analysis:

1. The petition sought the quashing of seizure memos dated 15th April, 2011, and 30th April, 2011, by the Intelligence Officer of the Directorate of Revenue Intelligence (DRI) in relation to the purchase of Heavy Melting Steel Scrap (HMSS) on high sea sale basis.

2. The petitioner declared the goods as scrap not attracting any Customs Duty, but the DRI classified them as re-rollable material and secondary material, subject to 5% and 10% duty, respectively. The petitioner paid duty for the first consignment but faced delays and challenges for the second consignment due to the absence of a specific order under the Customs Act, 1962.

3. The DRI imposed conditions for the provisional release of the seized goods, including a bank guarantee and a declaration not to challenge the value of the goods. The Customs Department distanced itself from the matter, stating that the seizure was conducted by the DRI.

4. The petitioner argued that the department's actions were arbitrary, illegal, and mala fide, leading to prolonged seizure despite duty payment and willingness to pay for the second consignment. The delay was attributed to the passing of responsibility between departments.

5. The High Court found the respondents' actions to be arbitrary and mala fide, noting the lack of prompt action, unauthorized seizure, and unjustified conditions for provisional release. Previous judgments highlighted the need for authorized seizure, avoidance of conditions restricting challenges to goods' value, and the unjustifiability of bank guarantees for simple disputes.

6. Citing earlier cases, the High Court allowed the petition, directing the immediate provisional release of goods with modified conditions, excluding the declaration not to dispute value and the bank guarantee requirement. The release of the second consignment was conditioned on payment of Customs Duty as per the chartered engineer's valuation, emphasizing that the order did not impact the pending legal adjudication.

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