Seized goods under customs Act by Police

[Muthukumar Muthunarasimhan]

Sir,

My client took old jewellery and gold bar for making gold ornaments under job work procedures duly prescribed as per the GST Act alongwith Delivery challan. While travel he forget to accompany with DC and railway police seized the gold and produced before the District Magistrate after producing all evidences the police handedover the case to customs and they withdrawn the case. Now my client moving with Sessions Court for remedy and release the consificated goods.

My questions for expert advice are as follows;

1. As per Section 110 of Customs Act is it valid consfication of goods by police?

2. As per Sec 110 (A) police officer is a proper officer and have the right to handedover the goods to customs after produced all evidences and GST procedures?

3. Is Gold is a notified goods under customs Act?

4. No notice is given by the customs so far after time lapsed of limitation of time period of six months.

Please advice me with substantiate Notification under Customs Act.

[KASTURI SETHI]

Query-wise reply is as under:- Pl. note that Police have vast powers. They can nab any person on suspicion (offender) for contravention of the provisions of Income Tax, Customs, GST etc.

(i) Police has no power to confiscate the case property (seized goods). Police have powers to detect, detain and seize the notified goods (without any valid docs) in transit and thereafter to hand over the case to the concerned department.

(ii) Yes. Police cannot investigate the case. The concerned department will investigate the case and after completion of investigation, the Customs department will issue SCN in this case. For example ;if the Customs staff raids any person's residence and they find illegal weapons there, the Customs department will detain and seize the said weapons and will hand over to Police.

3. Yes.

4. After getting approval from Principal Commissioner, Customs, the time limit of six months for issuance of SCN can be extended for a period of another six months under Section 110 (A) of the Customs Act.

[YAGAY andSUN]

Return goods within 6 months if no SCN

Vide Section 110 (2) of the Customs Act, if no show cause notice is issued within Six months. the goods shall be return to person from whose possession they were seized.

This period of six months can be further extended by further period not exceeding six months for reasons to be recorded in writing, by Principal Commissioner of Customs. He should inform the person from whom such goods were seized, before the expiry of period of six months. First provisio to Section 110 (2) of Customs Act, inserted w.e.f. 29-03-2018.

Hon'ble Supreme Court, in AC v. Charandas Malhotra AIR 1972 SC 689 = 1983 (13) ELT 1477 (SC) = 1971 (2) TMI 41 - SUPREME COURT, had held that such extension can be approved only after giving opportunity of being heard to the affected party. Such extension cannot be granted mechanically. Information of confidential nature need not be disclosed to the person. Nature and course of enquiry need not be informed to the party as the investigation proceedings are confidential in nature. If period is not extended before it is over, the goods are required to be returned.

Price must be paid if seized goods not returned

In the matter of Shyamlata Sharma v CC - 1992 (57) ELT 415 (CEGAT) = 1989 (10) TMI 174 - CEGAT, CALCUTTA It was held tht if no notice is issued within 6 months, the goods must be returned and they cannot be seized. If these were not returned and sold by department, the seizure value must be paid to the owner of goods. The order is based on principle of " Harmonious Construction" of this Section 110 and 124 of the Customs Act, 1962.

AI Summary

Seizure under Customs Act: police may detain goods but Customs must issue a show cause notice or return seized goods. Police may detect, detain and seize goods in transit but lack power to confiscate; seized goods handed to Customs must be processed by issuance of a show cause notice. If no show cause notice is issued within the statutory period the goods must be returned, though the Principal Commissioner may extend that period for recorded reasons and after procedural safeguards. If goods are disposed of without issuance of notice, the owner is entitled to seizure value or compensation. Gold is treated as a notified good under the Customs framework.