2025 (9) TMI 554 - HC - Customs

Provisional release of goods upheld; petitioner directed to join investigation after alleged misdeclaration of origin.

HC declined to interfere with the communication permitting provisional release of goods and directing the petitioner to join the investigation. The court ... Challenge to communication by which the provisional release of the goods of the Petitioner has been permitted and the Petitioner has been directed to join the investigation - seeking provisional release of the goods (4,99,020 units of mobile tempered glass) - in what manner the goods were found at the premises and from where they were seized? - HELD THAT:- The stand of the Petitioner, that the goods are locally manufactured goods, is belied by the labels affixed on the products. Even if these are locally manufactured goods but are shown as ‘Made in China’ or in some other foreign country, such incorrect misdeclaration even to the consumers would be contrary to overall public interest - especially, when as per the prevalent policy, ‘Made in India’ products are being encouraged and several incentives are being given for goods to be manufactured in India. Under these circumstances, insofar as the provisional release is concerned, since the Petitioner appears to be not stating or providing invoices and was found in possession of a substantial quantity of goods, this Court is not inclined to interfere in the said order/communication dated 10th June. 2025. The Petitioner is free to join the investigation to seek assessment or release in accordance with law. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the Court should interfere with the Customs Department's communication permitting provisional release of seized goods subject to submission of bonds and bank guarantees. 2. Whether the seized goods are imported goods liable to customs action or locally manufactured goods mislabelled as foreign origin, and the relevance of such classification to provisional release and investigation. 3. Whether factual enquiries regarding the provenance, place of manufacture and manner of seizure of the goods are permissible in a writ petition under Article 226. 4. Whether the availability of appellate and investigative remedies under the Customs Act affects the scope for judicial interference in the provisional release order. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Interference with provisional release subject to bonds/bank guarantee Legal framework: Provisional release by Customs may be conditioned upon submission of bonds and bank guarantees equivalent to assessable value and specified percentages thereof pending investigation/assessment. Precedent Treatment: No specific precedents were relied upon or considered by the Court in the judgment. Interpretation and reasoning: The Court examined the record showing seizure on apprehension of illegally imported goods and noted that the Customs Department had assessed the value (~Rs.56 lakhs) and permitted provisional release subject to bonds and a bank guarantee. Given the quantity of goods, absence of satisfactory invoices and the investigative character of the action, the Court found no reason to interfere with the provisional-release order. The Court emphasized that the provisional-release condition is an interim administrative measure to secure revenue and enable investigation. Ratio vs. Obiter: Ratio - the Court will not ordinarily interfere with provisional-release orders conditioned on security where the record shows substantial seizure, a claimed assessable value and an ongoing investigation. Obiter - emphasis that the observations do not preclude future adjudication on merits. Conclusions: The Court refused to set aside or modify the provisional-release communication; the petitioner may comply with bond/guarantee requirements or pursue statutory remedies. Issue 2 - Characterization of goods as imported vs. locally manufactured but mislabelled Legal framework: Classification of goods as imported implicates customs jurisdiction, duties and penalties; misdeclaration of country of origin engages public interest and policy encouraging indigenous manufacture. Precedent Treatment: No precedential authorities were applied or overruled in the Court's reasoning. Interpretation and reasoning: The petitioner asserted local manufacture and purchase from local suppliers; the Customs record and labels stating foreign origin (e.g., 'Made in China/USA') contradicted that stance. The Court noted that even if goods were locally manufactured, representing them as foreign-origin to consumers constitutes incorrect misdeclaration contrary to public interest and policy promoting 'Made in India'. The Court treated the label evidence and quantity as material suggesting further inquiry is necessary and not suitable for resolution in writ jurisdiction. Ratio vs. Obiter: Ratio - labels and surrounding circumstances that suggest misdeclaration justify investigative and revenue-protection measures and militate against immediate judicial interference with provisional release. Obiter - policy remarks on encouragement of domestic manufacture contextualize public interest considerations. Conclusions: The matter of origin requires factual investigation; mislabelling allegations reinforce the propriety of provisional-release conditions and investigative action by Customs. Issue 3 - Scope of writ jurisdiction vis-à-vis factual enquiries about provenance and manner of seizure Legal framework: Writ jurisdiction under Article 226 does not generally permit resolution of complex factual disputes better suited to statutory adjudicatory or investigative processes; courts refrain from entering into detailed factual inquiries where record and investigation are ongoing. Precedent Treatment: The judgment did not cite authorities but applied established principles limiting factual reappraisal in writ petitions. Interpretation and reasoning: The Court observed that questions regarding how and from where goods were seized and the provenance of the items require factual enquiry which cannot be conducted in the present writ petition. Given the substantial quantity seized and conflicting documentary/label evidence, the Court declined to adjudicate those disputes on the writ record and deferred to the investigatory and adjudicatory mechanisms under the Customs Act. Ratio vs. Obiter: Ratio - courts will not substitute fact-finding for statutory investigatory processes in a writ petition where substantive factual inquiries are necessary. Obiter - none beyond reiteration of the limitation on writ review. Conclusions: The Court will not decide factual provenance or manner-of-seizure disputes in this writ; such matters must be addressed through statutory investigation and appeals. Issue 4 - Availability of appellate remedy and investigative action under the Customs Act Legal framework: The Customs Act provides appellate remedies (e.g., under Section 128) and empowers Customs to investigate and take action against persons involved in import/representation offences; provisional-release decisions are amenable to statutory appeal and adjudication. Precedent Treatment: No case law was invoked; the Court relied on statutory scheme and principles of administrative law. Interpretation and reasoning: The Court explicitly informed the petitioner that provisional release had been allowed and that statutory appellate remedy was available; the petitioner was free to join the investigation and pursue assessment or release in accordance with law. The Court also noted Customs' freedom to investigate and take action against other persons implicated in the supply chain. Ratio vs. Obiter: Ratio - availability of statutory appellate and investigative remedies is a factor against judicial intervention in provisional-release communications in writ proceedings. Obiter - guidance that observations made will not affect final merits and that Customs may proceed against other respondents. Conclusions: The petitioner's appropriate course is to engage the investigatory and appellate mechanisms under the Customs Act rather than seek substantive factual adjudication in the writ; the Court preserved those remedies.