Appeal Not Maintainable Against Section 110 Customs Seizure Memo; Remedy Lies in Section 110A, 124, 125 Proceedings

CESTAT held that an appeal against a seizure memo issued under Section 110 of the Customs Act is not maintainable under Section 128 prior to adjudication of confiscation. Seizure under Section 110 is only an interim measure, to be followed by a show cause notice under Section 124 and a confiscation order under Section 125, against which appeal lies. If aggrieved by seizure, the proper remedy is to seek provisional release under Section 110A. As no such order existed, the appellate proceedings were premature and the appeal was dismissed.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether an appeal lies under Section 128 of the Customs Act, 1962 against a seizure memo issued under Section 110 of the Act.

1.2 Whether proceedings before the appellate authorities challenging seizure prior to adjudication of confiscation are premature.

1.3 Whether the appropriate remedy against seizure, pending adjudication, is to seek provisional release under Section 110A of the Customs Act, 1962.

2. ISSUE-WISE DETAILED ANALYSIS

2.1 Appealability of seizure memo under Section 128 of the Customs Act, 1962

(a) Legal framework

2.1.1 The Court reproduced and considered Section 128 of the Customs Act, 1962, which provides for appeals to the Commissioner (Appeals) against any "decision or order" passed under the Act by an officer of customs lower in rank than a Commissioner (Appeals), within the prescribed time.

2.1.2 Section 110 of the Customs Act, 1962 was noted as the provision under which seizure of goods is effected on the basis of reasonable belief that the goods are liable to confiscation.

(b) Interpretation and reasoning

2.1.3 The Court found that the appeal before the Commissioner (Appeals) had been filed directly against the seizure memo issued under Section 110, and that no order of confiscation had yet been passed by any authority.

2.1.4 It was held that a seizure under Section 110 is only an interim step, evidencing the proper officer's reasonable belief that the goods are liable to confiscation; it is not a "decision or order" of the type contemplated in Section 128 for the purpose of filing an appeal.

2.1.5 The Court observed that, after completion of investigation, a show cause notice under Section 124 is required to be issued and, thereafter, an order of confiscation or otherwise is passed under Section 125. Only such adjudication orders are amenable to the statutory appellate remedy.

2.1.6 Reliance was placed on the reasoning of a High Court decision (Jaymatajee Enterprises) where it was specifically recorded that "no appeal lies against a seizure order", which was cited in the context of examining the availability and efficacy of alternative remedy under the Act.

(c) Conclusions

2.1.7 The Court concluded that no appeal lies under Section 128 against a seizure memo issued under Section 110 of the Customs Act, 1962, and therefore the appeal before the Commissioner (Appeals), and the further appeal before the Tribunal, were not maintainable in law.

2.2 Prematurity of appellate proceedings against seizure in absence of confiscation order

(a) Legal framework

2.2.1 The Court referred to the statutory sequence under the Customs Act: seizure under Section 110; issuance of show cause notice under Section 124; adjudication and order relating to confiscation, fine, etc., under Section 125; and appeal under Section 128 against a decision or order.

(b) Interpretation and reasoning

2.2.2 The Court noted that no adjudication order under Section 125 had been passed in relation to the seized betel nuts at the time the appeal was filed before the Commissioner (Appeals).

2.2.3 The Court reasoned that, in the absence of any adjudication or confiscation order capable of being challenged, the proceedings before both the first appellate authority and the Tribunal were premature.

(c) Conclusions

2.2.4 It was held that, as no appealable adjudication order existed, the entire appellate proceedings initiated against the seizure memo were premature and could not be sustained.

2.3 Availability of provisional release under Section 110A as appropriate interim remedy

(a) Legal framework

2.3.1 The Court referred to Section 110A of the Customs Act, 1962, which provides for provisional release of seized goods pending adjudication, subject to conditions.

(b) Interpretation and reasoning

2.3.2 The Court observed that, if the person aggrieved by the seizure was suffering loss or damage on account of detention of the goods, the appropriate statutory course would have been to seek provisional release under Section 110A.

2.3.3 The Court recorded that there was nothing on record to show that any application for provisional release had been made, or that any order on such request had been passed.

(c) Conclusions

2.3.4 The Court concluded that, in the facts of the case, the remedy, if any, lay in seeking provisional release under Section 110A rather than pursuing an appeal against the seizure memo, which is not maintainable.

2.4 Overall disposition

2.4.1 On the combined reasoning that (i) no appeal lies against a seizure memo under Section 128, and (ii) no adjudication or confiscation order existed, rendering the appellate proceedings premature, the Court held that there was no merit in the appeal.

2.4.2 The appeal was dismissed.

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