Absence of statutory power to freeze bank accounts under Customs law leads to quashing of restraint notices.

Customs officers had no express statutory authority to freeze bank accounts merely because an investigation was pending into alleged bogus addresses used for IGST refund claims. The Court applied the settled principle that coercive action under the Customs Act must rest on clear legal power, and that the Act does not authorise restraint of banking operations in aid of investigation. The notices freezing the accounts were therefore unsustainable and were quashed. The petitioners were allowed to operate their bank accounts, while remaining obliged to cooperate with the investigation.

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Issues: Whether the Customs authorities had any legal power to freeze the petitioners' bank accounts pending investigation.

Analysis: The impugned notices sought to restrain operation of the bank accounts while inquiries were undertaken into alleged bogus addresses for IGST refund purposes. The Court followed the settled view that the Customs Act permits seizure or confiscation only in the manner provided by law, including in relation to sale proceeds of smuggled goods, but contains no provision authorising freezing of bank accounts or suspension of banking operations merely during investigation.

Conclusion: The notices freezing the bank accounts were unsustainable and were quashed, in favour of the petitioners.

Final Conclusion: The writ petitions succeeded, and the petitioners were entitled to operate their bank accounts, while remaining bound to participate in the investigation.

Ratio Decidendi: In the absence of express statutory authority, Customs officers cannot freeze bank accounts or stop banking operations merely because an investigation is pending.

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