Court rules seizure by DRI illegal, orders return of items due to non-compliance with Customs Act.

The court ruled in favor of the petitioner, declaring the seizure and retention of cash and other items by the Directorate of Revenue Intelligence (DRI) illegal due to non-compliance with the statutory period for issuing a show cause notice under Section 110(2) of the Customs Act, 1962. The respondents were ordered to return the seized cash and items within eight weeks, emphasizing the necessity of adhering to statutory timelines and procedures in such cases.

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Issues Involved:
1. Legality of the seizure and retention of cash and other items by the Directorate of Revenue Intelligence (DRI).
2. Compliance with the statutory period for issuing a show cause notice under Section 110(2) of the Customs Act, 1962.
3. Entitlement of the petitioner to the return of seized goods and cash due to the lapse of the statutory period.

Issue-wise Detailed Analysis:

1. Legality of the Seizure and Retention of Cash and Other Items by the DRI:

The petitioner, a sole proprietor of JBM Textiles, Surat, engaged in textile trading and export, faced a search operation by the DRI on 03.04.2019. During this operation, cash amounting to Rs. 64,86,100/-, two mobile phones, and business documents were seized. The petitioner claimed that his signature on the panchnama was obtained forcibly. Despite the seizure, there was no proposal for confiscation of the seized items. The respondents issued a show cause notice on 27.11.2020 concerning alleged illegal export activities by M/s. Amira Impex, involving the petitioner. The petitioner argued that the statutory period for issuing such a notice had lapsed, and thus, the seized items should be returned.

2. Compliance with the Statutory Period for Issuing a Show Cause Notice under Section 110(2) of the Customs Act, 1962:

Section 110(2) mandates that if no show cause notice is issued within six months of the seizure, the seized goods must be returned. This period can be extended by the Principal Commissioner of Customs or Commissioner of Goods for a further six months. In this case, the search was conducted on 03.04.2019, and the show cause notice was issued on 27.11.2020, well beyond the statutory period. The respondents failed to provide any reasoned order for extending the period, thus violating the statutory provisions.

3. Entitlement of the Petitioner to the Return of Seized Goods and Cash Due to the Lapse of the Statutory Period:

The court emphasized that the respondents did not comply with the statutory mandate under Section 110(2) and Section 124 of the Customs Act. The respondents' failure to issue a show cause notice within the prescribed period or to provide a reasoned order for extension led to the conclusion that the seizure and continued retention of the items were illegal. The court referred to previous judgments, such as Deepak Natvarlal Soni vs. Union of India, which established that non-compliance with these provisions necessitates the return of seized goods.

Conclusion:

The court ruled in favor of the petitioner, stating that the respondents must return the seized cash and other items within eight weeks. The respondents retain the right to initiate adjudication proceedings afresh, in accordance with the law, if permissible. The judgment underscores the importance of adhering to statutory timelines and procedures in seizure and confiscation cases under the Customs Act.

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