Customs seizes bank account over wrongful claims, ordered to process application promptly.

ROHIT KUMAR Versus UNION OF INDIA

ROHIT KUMAR Versus UNION OF INDIA - 2002 (141) E.L.T. 27 (Cal.) Issues Involved:
1. Whether the Customs authorities have the right to direct the petitioner's bank to freeze the bank account.
2. Whether the Customs authorities have the right to withhold payment of drawback on suspicion of irregularities in separate exports.

Summary:

Issue 1: Right to Freeze Bank Account
The petitioner challenged the Customs authorities' inaction in releasing the drawback against shipping bills for exports made in December 2000 and January 2001 and the seizure of the petitioner's bank account with United Bank of India. The petitioner argued that u/s 142 of the Customs Act, 1962, the respondent authority has no power to attach or seize the bank account without due process. The Customs authorities contended that the petitioner made bogus exports and misdeclared goods, leading to an investigation. The Court found that the Customs authorities could seize documents and things u/s 110(3) of the Customs Act if they are relevant to any proceeding under the Act. The Court concluded that the money in the petitioner's bank account, derived from wrongful drawback claims, belongs to the department and not the petitioner. Therefore, the seizure of the bank account was lawful.

Issue 2: Right to Withhold Drawback Payment
The petitioner argued that the Customs authorities have no right to withhold drawback payments if all conditions for claiming the drawback are met. The Customs authorities must process and dispose of each application on its own merit. The Court agreed that the Customs authorities have no jurisdiction to withhold drawback payments if all legal conditions are fulfilled. However, the authorities are entitled to conduct investigations to ensure no fraud is committed. The Court directed the Customs authorities to finalize the petitioner's drawback claim within 12 weeks, ensuring compliance with legal provisions.

Conclusion:
The Court upheld the Customs authorities' right to seize the petitioner's bank account due to wrongful drawback claims but directed them to process the drawback application within 12 weeks, ensuring all legal conditions are met. No order as to costs was made.