2002 (4) TMI 96 - HC - Customs

Appeal success: Goods seized unlawfully returned to appellants under Customs Act.

The appeal focused on the legality of the detention and seizure of goods under section 110(1) of the Customs Act, 1962, the validity of the show cause ... Seizure under Section 110(1) of the Customs Act, 1962 - detention under the proviso to Section 110(1) of the Customs Act, 1962 - obligation to issue show cause notice under Section 124 within six months - loss of dominion as constituting seizure - right to return of goods under Section 110(2) of the Customs Act, 1962 on lapse of statutory periodSeizure under Section 110(1) of the Customs Act, 1962 - detention under the proviso to Section 110(1) of the Customs Act, 1962 - loss of dominion as constituting seizure - obligation to issue show cause notice under Section 124 within six months - right to return of goods under Section 110(2) of the Customs Act, 1962 on lapse of statutory period - Whether the detention of imported goods on 9th November, 2000, and the subsequent sealing of the rooms on 22nd November, 2000, amounted to seizure for the purposes of Section 110(1), thereby triggering the sixmonth period for issuance of a show cause notice under Section 124 and entitling the appellant to return of goods on failure to issue such notice within six months. - HELD THAT: - The Court held that when the Customs officers sealed the rooms in which the detained bales were kept on 22nd November, 2000, the dominion over the goods passed out of the hands of the appellants and, for all practical purposes, the detention stood superseded and became a seizure. Reliance was placed on precedent treating an overt act of sealing and restraint which removes the owner's access and control as amounting to seizure rather than a mere prohibitory order under the proviso to Section 110(1). The consequence of such seizure was that the obligation to issue a show cause notice under Section 124 arose and had to be performed within six months of the date of seizure. As the notice to show cause was not issued within six months of 22nd November, 2000, the appellants acquired the right to the return of the seized goods under Section 110(2). The Court distinguished the earlier decision where no element of loss of dominion arose and held that the Single Judge erred in treating actual seizure as having occurred only on 1st March, 2001; the correct date of seizure for the purpose of the statutory timelimit was 22nd November, 2000. [Paras 20, 21, 22, 23]Sealing of the rooms on 22nd November, 2000, constituted seizure; the respondents failed to issue the show cause notice within six months and the appellants are therefore entitled to return of the goods.Final Conclusion: Appeal allowed. The Single Judge's order is set aside and the respondents directed to forthwith release the goods described in Annexure P3; no order as to costs. Issues Involved:1. Legality of the detention and seizure of goods u/s 110(1) of the Customs Act, 1962.2. Validity of the show cause notice issued u/s 124 of the Customs Act, 1962.3. Entitlement of the appellants to the return of the seized goods u/s 110(2) of the Customs Act, 1962.Summary:1. Legality of the detention and seizure of goods u/s 110(1) of the Customs Act, 1962:The appellants imported raw silk yarn which was detained and seized by the Customs authorities on 9th November, 2000. The appellants argued that the detention on 9th November, 2000, amounted to seizure as the rooms containing the goods were sealed by the Customs Officers on 22nd November, 2000, thereby taking dominion over the goods out of the appellants' hands. The respondents contended that the goods were merely detained on 9th November, 2000, and actually seized on 1st March, 2001.2. Validity of the show cause notice issued u/s 124 of the Customs Act, 1962:The appellants claimed that the show cause notice issued on 30th July, 2001, was beyond the statutory period of six months from the date of seizure, as required u/s 124 of the Customs Act. The respondents argued that the notice was within the statutory period since the actual seizure occurred on 1st March, 2001.3. Entitlement of the appellants to the return of the seized goods u/s 110(2) of the Customs Act, 1962:The Court held that the detention on 9th November, 2000, followed by the sealing of the rooms on 22nd November, 2000, amounted to seizure. Since the show cause notice was not issued within six months from 22nd November, 2000, the appellants were entitled to the return of the seized goods u/s 110(2) of the Customs Act.Judgment:The appeal was allowed, and the order of the learned Single Judge was set aside. The respondents were directed to release the goods to the appellants forthwith. There was no order as to costs. The prayer for stay was refused.