2021 (10) TMI 40 - HC - Customs

Court Orders Respondents to Issue Show Cause Notices on Seized Goods

Kaka Overseas Ltd., Rugsotic Pvt. Ltd., M/s. Rugsotic, through its proprietor Nitesh Kumar Roy. Versus Union of India, through the Secretary, Ministry of Law and Justice, Directorate of Revenue Intelligence Mumbai Zonal Unit, Commissioner of Customs (Export) NS-I

The court ordered the respondents to issue show cause notices regarding the seized goods by December 6, 2021, and to take appropriate decisions regarding ... Seeking provisional release of goods - Withholding the clearance of the petitioners’ silk fabrics, woollen and silk carpets etc. covered under various shipping bills - Seizure of goods - HELD THAT:- The respondents ought to be permitted to adopt the further course of action of issuance of show cause notices to the petitioners on or before December 6, 2021. Dr. Kantawala would also have no objection for such course of action to be adopted. Of course as to what has happened in the interregnum shall be subject to the outcome of any adjudication of the proceedings on the show cause notice. Whether detaining of the 53 carpets as samples for forensic purposes can continue indefinitely, would be required to be answered considering the provisions of Section 105, Section 110 read with Section 124 and Section 2(22) of the Act? - HELD THAT:- The proper officer did not have any authority to retain the 53 carpets contrary to what has been provided for in sub-section (2) of Section 110. This more particularly as these carpets are retained for forensic purpose and also that the seized goods are already permitted to be provisionally released as per the provisions of Section 110A of the Act - 53 carpets which are retained as samples for forensic purpose are also required to be returned to the petitioners at the end of the extended period. Mr. Jetly would also fairly state that the department is at the final stage of investigation. These petitions would not warrant any further adjudication - Petition disposed off. Issues Involved:1. Withholding of export clearance by Directorate of Revenue Intelligence (DRI).2. Legality of seizure and retention of goods, documents, and cash.3. Issuance of show cause notice.4. Retention of samples for forensic purposes.Issue-wise Detailed Analysis:1. Withholding of export clearance by Directorate of Revenue Intelligence (DRI):The petitioners, manufacturers and exporters of silk fabrics and carpets, contended that the DRI Mumbai Zonal Unit withheld the clearance of their export goods covered under various shipping bills. The petitioners argued that their goods were examined and cleared by Customs authorities, but were later held up by DRI without proper notice, causing undue delay in their export operations.2. Legality of seizure and retention of goods, documents, and cash:The petitioners claimed that during a search on December 7, 2020, DRI officers seized certain materials and cash from their premises despite documentary evidence of the cash's legitimate withdrawal. The respondents argued that the petitioners were involved in fraudulent activities, including money laundering and overvaluation of goods to fraudulently claim high rates of drawback. They justified the seizure based on intelligence indicating overvaluation and fraudulent activities.3. Issuance of show cause notice:The petitioners contended that despite the seizure on December 7, 2020, no show cause notice was issued, leaving their goods in a state of provisional release. They argued that the investigation should have been completed and a show cause notice issued within a reasonable period. The court noted that the respondents were at the final stage of investigation and directed them to issue show cause notices by December 6, 2021, as the period of six months had been extended.4. Retention of samples for forensic purposes:The petitioners challenged the indefinite retention of 53 carpets as samples for forensic purposes. They argued that these goods should be returned within six months as per Section 110(2) of the Customs Act. The court examined the relevant provisions, including Sections 105, 110, and 124 of the Customs Act, and concluded that the proper officer did not have the authority to retain the 53 carpets beyond the extended period. The court directed the respondents to return the samples by December 6, 2021.Conclusion:The court ordered the respondents to issue show cause notices regarding the seized goods by December 6, 2021, and to take appropriate decisions regarding the 53 sample carpets and seized cash. If the show cause notices were not issued within the specified period, the goods should be returned to the petitioners, and all legal consequences would follow. The petitions were disposed of accordingly, with no costs awarded.