Writ petition challenging DRI show cause notice for duty-free gold diversion under Advance Authorization dismissed

Delhi HC dismissed a writ petition challenging DRI's show cause notice regarding diversion of duty-free imported gold under Advance Authorization Scheme. The court held that bank account attachments had automatically ceased after the statutory six-month period expired. While petitioner argued 53 kg gold bars were found in declared premises and shouldn't have been seized, the court declined to adjudicate factual disputes in writ proceedings. The court ruled that unless a show cause notice is ex facie without jurisdiction, writ petitions shouldn't be entertained when contentions can be raised before the adjudicating authority. Petitioner was directed to seek license extension/revalidation after adjudication of the show cause notice.

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Issues Involved:
1. Legality of the detention and seizure of 53 kg gold.
2. Freezing of the petitioner's bank accounts.
3. Extension of the period for issuance of Show Cause Notice.
4. Jurisdiction of DRI, Noida.
5. Revalidation/extension of the petitioner's license by DGFT.

Summary:

1. Legality of the Detention and Seizure of 53 kg Gold:
The petitioner argued that the detention and subsequent seizure of 53 kg of legally imported gold by the Directorate of Revenue Intelligence (DRI) was without jurisdiction and contrary to the Customs Act. The petitioner contended that once goods are cleared by customs, they cease to be "imported goods" and cannot be seized. The Court agreed that Section 110 of the Customs Act does not empower the detention of goods without an order of seizure. However, the Court noted that the Seizure Order dated 22.12.2020 recorded categorical reasons for the seizure, indicating that the gold was kept outside the declared premises with the intention of diversion. The Court concluded that the issue should be adjudicated by the appropriate authority.

2. Freezing of the Petitioner's Bank Accounts:
The Court observed that the attachment of the petitioner's bank accounts had ceased to be operative due to the efflux of time. Therefore, no order was required to be passed regarding the defreezing of the bank accounts.

3. Extension of the Period for Issuance of Show Cause Notice:
The petitioner argued that the extension of time for issuing the Show Cause Notice was not permissible without a prior hearing. The Court noted that the proviso to Section 110(2) of the Customs Act, as amended, requires the authorities to inform the person from whom the goods were seized before the expiry of the period if any order for extension is passed. The Court found that the appropriate authority had recorded reasons for the extension and communicated the same to the petitioner. Therefore, the extension was held valid.

4. Jurisdiction of DRI, Noida:
The petitioner contended that DRI, Noida, lacked the territorial jurisdiction to pass the Seizure Order. The Court noted that the DRI officers have all-India jurisdiction as per the relevant notifications. The issue of whether DRI officers are "Proper Officers" under Section 110 of the Customs Act is pending before the Supreme Court. The Court refrained from deciding this issue in the present petition.

5. Revalidation/Extension of the Petitioner's License by DGFT:
The Court noted that the DGFT had affirmed that no application for revalidation of the petitioner's license was pending and that any such application would be decided as per policies and procedures uninfluenced by the DRI's recommendations. The petitioner was granted liberty to apply for revalidation/extension of the license after the adjudication of the Show Cause Notice. The DGFT was directed to consider any such application in accordance with the law, considering the peculiar facts of the case.

Conclusion:
The Court disposed of the writ petition, directing that the issues related to the seizure of gold and the jurisdiction of DRI should be adjudicated by the appropriate authority. The petitioner was allowed to apply for provisional release of the gold and revalidation/extension of the license post-adjudication.

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