2024 (3) TMI 296 - HC - Customs

HC sets aside lower order allowing gold bar release during pending smuggling adjudication proceedings

HC set aside lower court order in smuggling case involving gold bar confiscation. Respondent filed writ petition seeking mandamus for gold release while ... Smuggling - confiscation - fine - penalty - security towards the redemption fine - Seeking release of gold bars - offence punishable u/s 2(33) - HELD THAT:- In the present case, the first appellant had given an option to be exercised by the respondent by issuing a show cause notice dated 16.08.2022. Even though the respondent sent a reply dated 02.09.2022, without waiting for the conclusion of adjudication proceedings, he has filed the present writ petition, which was also erroneously allowed by the learned Judge, by order impugned herein. In view of the limited relief now sought by the learned counsel on either side and also considering the fact that the learned Judge, following the earlier orders passed in the writ petitions referred to above, and without examining the order-in-original passed by the adjudicating authority, has partly set aside the same, when the writ petition was filed only for a mandamus to release of the gold seized, this court, without going into the merits of the case, sets aside the order dated 23.08.2023 passed by the learned Judge in Writ Petition No. 29618 of 2022 and remands the matter to the learned Judge for considering the issue afresh, on merits and in accordance with law. We request the learned Judge to take up the writ petition and pass appropriate orders, as expeditiously as possible. In the mean while, the respondent / writ petitioner is directed to file a miscellaneous petition to amend the prayer made in the writ petition. Accordingly, this writ appeal stands disposed of. ISSUES PRESENTED AND CONSIDERED 1. Whether a writ of Mandamus directing release and return of goods seized under Section 110 of the Customs Act during the pendency of adjudication proceedings is maintainable. 2. Whether the learned Court below exceeded the scope of the relief sought by granting substantive relief (setting aside the adjudication order and directing release on conditions) that was not specifically prayed for in the writ petition. 3. Whether precedents permitting release of seized gold/jewellery on payment of customs duty, penalty or bank guarantee are applicable where the goods seized are gold bars concealed in paste form (alleged smuggling to evade detection) as opposed to personal jewellery. 4. Whether the adjudicating authority's invocation of confiscation provisions (Sections 111(d) and 111(h)) and the option to impose a redemption fine under Section 125 of the Customs Act preclude interim release by judicial order absent examination of the adjudication order. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability of Mandamus for release of goods during adjudication Legal framework: The statutory scheme governing seizure and adjudication is set out in the Customs Act, specifically the search/seizure and provisional custody procedures (Section 110) and the confiscation and penalty provisions (Sections 111 and 125). The Act permits provisional detention of seized goods pending adjudication and contemplates the adjudicating authority granting options (including payment of fine in lieu of confiscation). Precedent treatment: The Court below relied on prior orders permitting release of seized gold/jewellery upon payment of duty/penalty or provision of security. Those orders have recognised that not all seizures must culminate in confiscation and that interim release subject to securing revenue interest may be permissible in appropriate cases. Interpretation and reasoning: The Court emphasised that the statute contemplates both confiscation and alternative reliefs (such as redemption fines) and that judicial relief in the form of release can be warranted in particular factual matrices where the department's interest can be adequately secured. However, such relief should ordinarily be considered after a proper evaluation of the adjudication order and the specific facts of concealment or smuggling because the nature and mode of concealment bear on whether release is appropriate. Ratio vs. Obiter: Ratio - Judicial power to order release is contingent on securing departmental interests and must be exercised after scrutinising the adjudication material; Obiter - General policy statements that release is routinely appropriate on payment of duty/penalty without examination of adjudication. Conclusions: A Mandamus for return of seized goods during adjudication is not per se impermissible, but it requires a fact-sensitive assessment of departmental interest and adjudication findings; the exercise of such relief without considering the adjudication order is impermissible. Issue 2 - Whether the learned Court below exceeded the relief sought in the writ petition Legal framework: Principles of relief in writ jurisdiction require courts to confine orders to the reliefs properly invoked and to base such orders on issues pleaded and argued; Courts should not grant substantive relief that is beyond the scope of the petition without opportunity to the parties. Precedent treatment: The appellate Court noted earlier decisions where courts have set aside adjudication orders or ordered release; however, such orders stemmed from petitions that engaged with adjudication material or were grounded on distinct factual matrices. Interpretation and reasoning: The Court found that the writ petition sought only a Mandamus to direct release of the seized goods, but the learned Judge below went further by setting aside the Order-in-Original and directing deposit of duty and a specified sum as redemption/penalty without having examined the adjudicating authority's order. Granting relief beyond the pleaded relief and effectively modifying/superceding the adjudicatory outcome without addressing issues raised in the adjudication was beyond the scope of permissible relief in the circumstances. Ratio vs. Obiter: Ratio - A writ court must not grant substantive relief that alters or sets aside adjudication orders beyond the relief claimed in the writ petition without proper adjudicatory scrutiny; Obiter - Practical observations on remand being preferable when relief sought is limited. Conclusions: The learned Judge's order ran beyond the scope of the writ petition and was legally unsustainable in that it partially set aside the adjudication outcome without the requisite examination; remand for fresh consideration was warranted. Issue 3 - Applicability of precedents permitting release where goods were concealed as paste (alleged smuggling) versus personal jewellery Legal framework: Distinguishing tests in judicial review require assessment of factual parity; the mode of concealment and purpose (commercial smuggling v. personal carriage) materially affect the appropriateness of release under judicial supervision. Precedent treatment: Prior orders allowing release dealt with jewellery items held to be personal effects where release subject to conditions was seen as appropriate. The departmental decisions upholding confiscation in cases of deliberate smuggling have also been affirmed where concealment and commercial intent were established. Interpretation and reasoning: The Court emphasized that gold paste concealed to evade detection differs materially from ordinary personal jewellery. Such concealment suggests deliberate smuggling and greater risk of misuse or repeat contravention; therefore, precedents on release of personal jewellery cannot be mechanically applied to cases involving concealed gold bars. The suitability of release must be determined on the specific facts, including evidence of concealment, absence of import documentation, and the findings of the adjudicating authority. Ratio vs. Obiter: Ratio - Factual distinction between personal jewellery and concealed/smuggled bullion is legally material and may preclude application of precedents permitting release; Obiter - General endorsement that departmental interest must be secured in all cases. Conclusions: The precedents relied upon by the learned Judge could not be applied without analysing the adjudication record and the factual differences; the case of gold concealed as paste requires careful consideration before ordering release. Issue 4 - Effect of adjudicating authority's invocation of confiscation provisions and option under Section 125 on interim judicial release Legal framework: Sections 111(d) and (h) prescribe confiscation for contraventions; Section 125 enables option in lieu of confiscation by payment of redemption fine. The adjudicating authority is empowered to determine liabilities and to offer alternatives consistent with statutory scheme. Precedent treatment: Courts have recognised both the primacy of the adjudicatory process and their power to grant interim relief where the department's interests can be adequately protected; meanwhile, where confiscation is clearly warranted based on findings, courts have declined interim release. Interpretation and reasoning: The appellate Court highlighted that where adjudication has resulted in findings supporting confiscation, the statutory scheme contemplates structured consequences and options; judicial interference in advance of adjudicatory consideration undermines the statutory process. Therefore, assessment of whether to permit interim release in lieu of confiscation or to require deposit of duty/fine must await evaluation of the adjudication order or be based on a robust prima facie appraisal, which was absent below. Ratio vs. Obiter: Ratio - Adjudication findings invoking confiscation provisions must ordinarily be examined before courts order release under alternative statutory provisions; Obiter - Remarks on the utility of security and bank guarantees in protecting revenue interest. Conclusions: The presence of confiscation findings and the statutory option under Section 125 necessitate examination by the court before ordering interim release; absent such scrutiny, the lower Court's direction was inappropriate. Overall Disposition and Direction (Court's Conclusion) The appellate Court set aside the order of the learned Court below because that order granted relief beyond the prayers in the writ petition and partially set aside the adjudication order without examination. The matter is remitted to the learned Court below to consider the writ petition afresh, on merits and in accordance with law, with a direction to expedite disposal; the petitioner was directed to seek amendment of the prayer in the writ petition in the interim. No costs were imposed.