Court rules post-clearance sampling by DRI beyond jurisdiction under Customs Act; goods to be released immediately

The court held that the Directorate of Revenue Intelligence (DRI) lacked jurisdiction to draw samples post-clearance under Section 144 of the Customs Act, emphasizing that sampling must occur before goods are cleared. The court found the seizure of imported goods and documents post-clearance to be unlawful, directing their immediate release to the petitioners. It clarified that no fresh samples can be drawn once goods are assessed and cleared. The court ruled that the authorities' actions, including seizing goods post-assessment, were without jurisdiction and quashed the seizure, ordering compliance within a specified time to avoid contempt proceedings.

---

---

Issues:
1. Jurisdiction of Directorate of Revenue Intelligence to draw samples after clearance of goods under Section 144 of the Customs Act, 1962.
2. Legality of seizing imported stock and documents by the authorities post-clearance of goods.
3. Interpretation of Section 144 of the Customs Act, 1962 regarding the power to draw samples.
4. Compliance with procedural requirements for provisional and final assessment of customs duty.

Issue 1: Jurisdiction of Directorate of Revenue Intelligence (DRI) to draw samples post-clearance under Section 144 of the Customs Act, 1962.
The petitioner contended that the DRI had no authority to draw samples after goods were cleared as per Section 144 of the Act. The respondents argued that they had the power to draw samples post-clearance based on notifications authorizing such actions. The court accepted the petitioner's legal plea, emphasizing that samples can only be drawn under Section 144 before goods are cleared from the customs area.

Issue 2: Legality of seizing imported stock and documents post-clearance.
The petitioner's goods were seized by authorities on 11.08.2016, alleging misdeclaration and short payment of duty. The petitioner argued that the seizure was unwarranted as final assessment had been completed based on test reports vindicating the goods' description. The court found the seizure without jurisdiction and quashed the panchnamas, directing the release of seized material and documents to the petitioners.

Issue 3: Interpretation of Section 144 of the Customs Act, 1962.
The court referred to Section 144, which allows sampling for examination or testing before goods are cleared. It clarified that once goods are assessed and cleared, no fresh samples can be drawn. The court held that drawing samples post-clearance, as done by the authorities, was unauthorized under Section 144.

Issue 4: Compliance with procedural requirements for provisional and final assessment of customs duty.
The court explained the procedural requirements under the Customs Act, where provisional assessment is followed by final assessment based on test reports. In this case, the authorities had already completed final assessment and returned the bank guarantee. The court found the actions of the respondents, including seizing goods post-assessment, to be without jurisdiction and directed the immediate release of the seized material and documents to the petitioners.

In conclusion, the court allowed both writ petitions, quashing the seizure of imported stock and directing the release of the material and documents to the petitioners. Failure to comply with the court's directions within the stipulated time would result in contempt proceedings and costs. No costs were awarded in the judgment.

---