TaxTMI 
TaxTMI 
2022 (1) TMI 114
X X X X Extracts X X X X
X X X X Extracts X X X X
....low: "3. Having heard learned counsel for both the sides and looking to the facts and circumstances of the case, it appears that high end wrist watches have been seized and lying with the respondent No.2/DRI since 29th October, 2012. 4. Respondent No.1 had issued a show-cause notice dated 28.10.2013, which is at Annexure P-9 to the memo of this writ petition. However, the show-cause notice was not adjudicated upon by the respondents for several months. 5. Learned Senior Counsel appearing for the petitioner has submitted that they are ready and willing to deposit the duty under protest. As per the show-cause notice issued by the respondent No.1, the duty amount mentioned is Rs. 52,19,582/. Out of this amount, Rs:27,50,669/- has already been deposited by the petitioner during the course of investigation. 6. Thus, petitioner has shown the readiness and willingness to deposit the remaining amount of Rs. 24,68,913/- for the provisional release of the high end wrist watches, without prejudice to his rights and contentions in the adjudication process of the show- cause notice. 7. Learned Senior Counsel appearing for the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the provisional release of the goods, in accordance with law. The petitioner shall prefer application for provisional release of goods within a period of one week from today. The respondent No.1' shall decide the provisional release application preferred by the petitioner under Section 110-A of the Customs Act, 1962 within a period of two weeks from the date of the receipt of the provisional release application from the petitioner. 12. With these observations, this writ petition is hereby disposed of." (emphasis supplied) 3. The Principal Commissioner rejected the aforesaid application by order dated 11.09.2020 and the relevant portion of the order is reproduced below: "20. From the language of Section 110A of the Customs Act, 1962, I find that it is apparent that the Adjudicating Authority has been bestowed with discretionary mandate decide to the application for provisional release on merit based on the facts of the Case that could be different from Case to Case as has been held by the Hon'ble Courts in the judgments as detailed below. ******* 25. I observe that the discharge of liability of Duty, Inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e High Court of Delhi in the Case 'Its My Name Pvt. Ltd.' Supra [wherein Hon'ble Court did not allow provisional release of such seized Goods that were recovered without valid/licit documents] with the instant Case as said seized Goods as covered under Show Cause Notice dated 28.10.2013 were also recovered without any valid/licit documents and (iv) several other facts and judicial inferences as discussed in the preceding paras. 38. In view of the above facts and judicial verdicts I am of considered opinion that the request of provisional release of seized Goods as covered under said Show Cause Notice dated 28.10.2013 as made by said Shri Pushpak Lakhani(Noticee to the said Show Cause Notice dated 28.10.2013), C/o Sh. Mukesh Bellani, R/o F-82, Kirti Nagar, New Delhi-110015 vide his above said representation dated 31.08.2020 is legally not sustainable on grounds as discussed in the preceding paras and therefore, I reject the said request of said Shri Pushpal Lakhani for provisional release of said seized Goods as covered under said Show Cause Notice dated 28.10.2013." (emphasis supplied) 4. It would be useful, before noticing the submissions advanced by....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... needs to be noticed that the high-end wrist watches, foreign currency and cash recovered from the premises of M/s. Johnson Watch Co. Pvt. Ltd. and the residence of its Directors were released on an undertaking submitted by the Directors of M/s. Johnson Watch Co. Pvt. Ltd. without any formal application for provisional release. The high- end watches and 50% of the recovered cash amount were also released in the case of Purshottam Jajodia and Pankaj Lakhani by orders dated 17.03.2015 and 22.07.2016 passed by the Supreme Court. However, the goods seized from the premises of the appellant and Ms. Shikha Pahwa (who had stated that all the watches and cash recovered from her place belonged to the appellant only) continue to be seized and it is these high-end wrist watches that are in dispute in this appeal. 8. On 09.01.2013, the appellant had filed an application for provisional release of the seized watches under section 110A of the Customs Act, 1962 [the Customs Act]. The appellant also filed Writ Petition No. 6381 of 2013 before the Delhi High Court for provisional release of the goods. This petition was disposed of on 08.10.2013 with a direction that the Writ Petition shall....
X X X X Extracts X X X X
X X X X Extracts X X X X
....el for the petitioner states that payment in terms of the show cause notice including interest amount calculated by the petitioner has been paid within thirty days. In view of the said position, he, submits that the present writ petition may be treated as representation to the respondents. In case, any further amount is due and payable as interest, the respondents may inform and the petitioner upon verification shall comply. Statement made by counsel for the petitioner is accepted subject to all just exceptions. The writ petition will be treated as representation to the respondents and the respondents will pass an appropriate order, if required and necessary, after hearing the petitioner. Parties are, however, given liberty to revive the petition in case there is any dispute. Keeping in view the nature and controversy and as the Statute had fixed a time limit, we feel that the respondents should dispose of the entire issue within a period of two weeks from the date copy of this order is received by them. Writ petition is disposed of." 12. The said representation was decided by an order dated 24.03.2014. The order notices that si....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Another noticee Pankaj Lakhani also filed a Writ Petition before the Delhi High Court for release of the goods on the basis of the judgment of the Delhi High Court in Writ Petition No. 416 of 2014 filed by Purushottam Jajodia. Relief was not granted to Pankaj Lakhani and the order of the Delhi High Court is reproduced below: "The learned counsel for the petitioner places reliance on a Division Bench's decision of this Court in Purushottam Jajodia vs. Directorate of Revenue Intelligence, New Delhi Directorate of Revenue Intelligence, New Delhi, 2014 (307) ELT 837 (Del). However, the learned counsel for respondents points out that the operation of the said judgment has been stayed by the Supreme Court by virtue of an order dated 11.09.2014 in SLP (C) No.24478/2014 and the stay order is continuing. Although, subsequently, the Supreme Court by an order dated 11.05.2015 directed that the goods shall be released within a week. The learned counsel for the petitioner submitted that although the Supreme Court stayed the operation of the said judgment, yet it granted release of the goods and, therefore, the same order should be passed by this Court. We are afraid that we cannot acc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to him in accordance with law in the proceedings pursuant to the impugned SCN, except of course that it has not been served on him. 13. The writ petition is dismissed. The interim order is vacated." 21. Thereafter, the appellant filed another application for provisional release of the goods on 31.10.2019. 22. In the meantime, the show cause notice dated 27.10.2017 earlier issued to M/s Johnson Watch Co. Pvt. Ltd., was adjudicated upon by order dated 27.05.2020. In paragraph 39 of the order a finding has been recorded that M/s. Johnson Watch Co. Pvt. Ltd. did not co-operate in the investigation and despite repeated requests for providing details, the Directors did not turn up for investigation. The said paragraph also gives a summary of verification of the watches contained in Annexure-A to the show cause notice dated 27.10.2017, as follows: Annexure-A - Summary of verification and duty calculation (Amount in Rs.) S.No. Reference of Annexure (A1 to A11 for various showrooms/stores/ residence of JWCPL) Total Watches detained/seized No. of watches for which documents available No. of watches for which no documents available (1) (2) (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e duty and after examining the orders whereby goods of other parties had been released. The said order has been reproduced in paragraph 2 of this order and the operative part is again reproduced: "11. Looking to the above submission and the readiness shown by the petitioner to make the payment of remaining duty as stated hereinabove, and also looking to the orders which are at Annexure P-3, P-16 and P-18, and also keeping in mind the judgment and order dated 01.06.2020 passed by the Division Bench of this Court in CUSAA 229/2019, we hereby direct the respondent No.1 to decide the application for the provisional release of the goods, in accordance with law. The petitioner shall prefer application for provisional release of goods within a period of one week from today. The respondent No.1' shall decide the provisional release application preferred by the petitioner under Section 110-A of the Customs Act, 1962 within a period of two weeks from the date of the receipt of the provisional release application from the petitioner." (emphasis supplied) 25. Thereafter, the appellant filed an application dated 31.08.2020 before the Principal Commissioner of Customs (P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atch Co. Pvt. Ltd. 28. Shri Rakesh Kumar, learned authorized representative of the department, however, supported the impugned order passed by the Principal Commissioner and made the following submissions: i. Section 110A of the Customs Act provides for a discretionary mandate to the adjudicating authority and each case has to be seen on its own merits; ii. The admission made by the appellant regarding the engagement in illegal smuggling activities in the statement recorded under section 108 of the Customs Act has till date not been retracted; iii. The adjudicating authority, in the order dated 27.05.2020 adjudicating the show cause notice dated 27.10.2017, referred to the earlier show cause notice dated 28.10.2013 and as observed that both the show cause notices are inter-linked and have to be seen and treated collectively; iv. The seized goods are important piece of evidence in proceedings that may be initiated under sections 132 and 135 of the Customs Act and so provisional release shall adversely affect the prosecution ; and v. Seized goods i.e. foreign watches are deemed to be "prohibited goods....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed out at the residential premises of the employees of M/s. Johnson Watch Co. Pvt. Ltd. on 29.10.2012 and also at its various showrooms and the residence of its Directors on 29.10.2012 and 30.10.2012. Details of the high-end wrist watches recovered from the residence of Pushpak Lakhani, Shikha Pahwa, Pankaj Lakhani, Purushottam Jajodia and the Directors and showrooms of M/s. Johnson Watch Co. Pvt. Ltd., have been mentioned in paragraphs 5 and 6 of this order. It is seen that while 95 high-end wrist watches were recovered from the appellant, about 6233 high-end wrist watches were recovered from M/s. Johnson Watch Co. Pvt. Ltd., 5 high-end wrist watches were recovered from Purushottam Jajodia and 16 high-end wrist watches were recovered from Pankaj Lakhani. What is important to notice is that all the 6233 high-end wrist watches recovered from M/s. Johnson Watch Co. Pvt. Ltd., were released merely on the basis of an undertaking given by the Directors in 2012 even without any application having been moved by M/s. Johnson Watch Co. Pvt. Ltd. for provisional released of the seized goods. This apart, the 5 high-end wrist watches recovered from Purushottam Jajodia and 16 high-end wrist wat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....representative appearing for the Department is that the appellant had not been able to show documents in respect of the 95 high-end wrist watches that had been seized. A perusal of the chart shows that even M/s. Johnson Watch Co. Pvt. Ltd. had not been able to show documents for 3364 high-end wrist watches, but these watches were released by the Department itself merely on the basis of an undertaking given by the Directors of the Company even though a formal application for provisional release of the goods had not even been filed. There is no distinction between the high-end wrist watches seized from the appellant and the 3364 high-end wrist watches seized from M/s. Johnson Watch Co. Pvt. Ltd. and indeed none could be pointed out by the learned authorized representative appearing for the Department. It is certainly not open to the Department to adopt a different approach for release of high-end wrist watches as while in the case of M/s. Johnson Watch Co. Pvt. Ltd., 3364 high-end wrist watches for which documents had not been produced by the said Company were released in 2012 itself merely on the basis of an undertaking given by the Directors, but in the case of the appellant, even ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....., in the case of Sheikh Md. Omar & Shehla Enterprises (where undervalued diesel engines were absolutely confiscated) he could have applied those case law, in his knowledge, to the case M/s. Preet International before him. Since, as Commissioner (Appeals), he could have exercised the statutory power given to him under first proviso to Section 128A(1), by putting the appellants in M/s. Preet International case to a notice. This was not done. The learned DRs defence, therefore does not and cannot shield, the present order from the consequences, of what the Advocate here in this case submitted before us as regards the conduct of the Commissioner, "A mala fide bias against us". Be that as it may, the mere fact that an order has been challenged in Appeal, as it is not accepted by the Department, cannot be a cause to have obliterated the effect of that order, especially when it is not stayed. We therefore do find that the adjudicator is being selective in his approach to the import of similar goods." (emphasis supplied) 39. Even otherwise, none of the reasons mentioned in the impugned order by the Principal Commissioner can be said to be good and valid reasons for rejecting t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e authority below, the question of whether any "substantial question of law", relatable to the infractions alleged to have been committed by the respondent, at all arises before us at this stage, becomes seriously questionable. ********* 45. Having thus generally delineated the scope of appellate jurisdiction under Section 130 of the Act, we deem it appropriate to emphasize, at the cost of repetition, that this Court is not sitting in appeal, consequent to an adjudicatory exercise, determining the correctness of the allegations in the Show Cause Notice dated 26th September, 2019, having been completed, and carried in appeal before the learned Tribunal. The present appeal is directed against an order of provisional release. No final determination, of the liability of the imported gold, gold jewellery, or silver, to confiscation, has taken place; nor has the learned Tribunal accorded its imprimatur to any such decision. The learned Tribunal has directed provisional release of the seized gold, gold jewellery and silver. An order of provisional release is, at all times, an interlocutory exercise, and does not finally adjudicate on any liability. The following passages....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the adjudicating authority, be released to the owner or the bank account holder on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require." It merits mention, here, that, while, earlier, this Court had expressed the view that there was no substantial difference between "provisional release" and "provisional attachment", a clear departure, from this view, was voiced in Mala Petrochemicals & Polymers v. A.D.G., D.R.I.: 2017 (353) ELT 346 (Del), in which, additionally, the fundamentally discretionary nature of the power exercised by the Commissioner/ADG, under Section 110A of the Act was underscored, thus (in para 23 of the report): "The power under Section 110A of the Act involves exercise of discretion. The scope of judicial review is to examine if the discretion has been rightly exercised; that it is not based on irrelevant materials and is fair and reasonable in the circumstances. It is not an appellate power. The drawing of a distinction between seizure of imported goods as a result of undervaluation and seizure of imported goods upon mis-declaration cannot per se be said to be irrational. On the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....redemption fine, of goods prohibited, as well as not prohibited. In the case of prohibited goods, Section 125(1), by using the word "may", confers discretion, on the adjudicating authority, to grant, or not grant, the person, from whose custody or possession the goods had been seized, the option to release the goods on payment of redemption fine. In the case of goods which are not prohibited, however, Section 125 (1) mandates grant of permission, to the person, from whose custody or possession the goods were seized, the option to redeem the goods on payment of redemption fine. We are not concerned, in the present case, with Section 125, directly, as the issue of liability to confiscation is still at large before the adjudicatory authority; reference to the said provision has been made only to indicate that, even in the case of prohibited goods, the Act permits release thereof, on payment of redemption fine. 50. We are, therefore, unable to subscribe to the submission, of the learned ASG, relying on Om Prakash Bhatia: 2003 (155) ELT 423 (SC), that , by virtue of their having been imported in contravention of the Act, the gold, gold jewellery and silver, which were sei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment the statute, where such supplementation is needed, but can never supplant the statutory provision. By excluding, altogether, certain categories of goods, from the facility of provisional release, para 2 of Circular 35/2017-Cus supra clearly violates Section 110A, whereunder all goods, documents and things, are eligible for provisional release. Goods, which are eligible for provisional release under Section 110A of the Act, cannot be rendered ineligible for provisional release by virtue of the Circular. (Be it noted, here, that we refer to the "eligibility" of the goods for provisional release, as distinct from the "entitlement" thereof, which has to be determined by the adjudicating authority in exercise of the discretion conferred on her, or him, by Section 110A.) Para 2 of Circular 35/2017-Cus, therefore, effectively seeks to supplant Section 110A, to that extent, and has, therefore, to be regarded as void and unenforceable at law. ********* 54. Before proceeding to deal with the actual aspect of provisional release of the seized gold, gold jewellery and silver, we deem it appropriate to deal with the residual submission, of the learned ASG, to the ef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e that the demand is not resorted to, as an "easy way out", that the legislature has, advisedly, conferred wide powers, on the learned Tribunal, to confirm, modify or annul the order before it. On principle, therefore, we are unable to discern any apparent illegality, or want of propriety, on the part of the learned Tribunal, in directing provisional release and fixing the terms thereof, rather than remand in the matter to the ADG, to undertake the said exercise. 57. Secondly, in the present case, any such demand, by the learned Tribunal, to the ADG, as Mr. Ganesh has correctly submitted, would have been an exercise in futility. We are entirely in agreement with the finding, of the learned Tribunal, regarding the unsustainability, ex facie, of the order, dated 4th October, 2019, of the learned ADG. In fact, the order borders on perversity, and may also amount, perilously, to disobedience, of the directions issued by us in our order dated 9th October, 2019 in WP (C) 8707/2019. Para 7.3 of the order, dated 4th October, 2019, of the learned ADG, reads thus: "In view of above mentioned citations on restricted and prohibited goods, it appears that it would be pre....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... its jurisdiction in directing provisional release of the seized gold, gold jewellery and silver, and fixing the terms thereof. 60. Proceeding to the merits, we reiterate that our jurisdiction, conferred by Section 130 of the Act, is limited to deciding substantial questions of law, arising from the impugned order of the learned Tribunal. We are not an appellate authority on facts; we exercise appellate jurisdiction only on "substantial questions of law". It is obvious that an order of provisional release, is essentially a discretionary order, as is apparent from the very tenor of Section 110A of the Act. The scope of interference, by an appellate court, with a discretionary order of the court below, especially where the appellate jurisdiction is statutorily limited to substantial questions of law, is heavily circumscribed. In passing an order of provisional release, there is no adjudication, by the authority concerned, of the competing rights and liabilities of the parties before it. The authority does not pronounce on the issue of whether there has, or has not, been an actual evasion of duty, or other contravention of Customs law, by the importer seeking provisiona....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is precisely for this reason that, at the time of provisional release, the importer is required to furnish a bond, covering the full value of the imported goods, along with security, in accordance with law. Allowing provisional release of the seized gold jewellery does not, therefore, interfere, in any manner, with due adjudication of the Show Cause Notice, or with the jurisdiction, of the adjudicating authority, to hold the gold jewellery liable to confiscation. The mere fact that imported goods, consequent on adjudication may, possibly, be held to be liable to confiscation at a later stage, cannot be a ground to refuse provisional release. Else, Section 110A of the Act would, in our view, be largely rendered nugatory and otiose. 74. The order, dated 4th October, 2019 supra, of the ADG, DRI, as also the submissions advanced by the Revenue before the learned Tribunal and, thereafter, before us (through the learned ASG) rely, essentially, on the allegations in the Show Cause Notice, dated 26th September, 2019, as a ground to oppose the request for provisional release of the seized gold jewellery. This, in our view, is an erroneous approach. Seizure of goods is, in nea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proceedings, as to criminal proceedings. Following this, it has been held, by the High Court of Punjab and Haryana, in Jindal Drugs Pvt Ltd v. U.O.I. : 2016 (340) ELT 67 (P&H) that, unless and until one of the circumstances contemplated by clause (a) of Section 138B(1)(a) applies, the adjudicating authority is bound to follow, strictly, the procedure outlined in clause (b), before treating a statement, recorded under Section 108 of the Act, as relevant. (We may note, here, that Jindal Drugs was rendered in the context of Section 9D of the Central Excise Act, 1944 which is, however, in pari materia, and in haec verba, with Section 138B(1)(b) of the Act.) Paras 19 to 21 of the judgement in Jindal Drugs may, for ready reference, be reproduced thus: "19. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....release of the seized 25400.06 grams of gold jewellery, covered by Bill of Entry No. 107190, dated 20th April, 2019. ********* 79. We are, however, of the view that the learned Tribunal erred in clubbing the aforesaid quantity of 25400.06 grams of gold jewellery which 25299.68 grams of gold jewellery, the Bill of Entry in respect of which was undated, unregistered and unsigned, by the importer as well as by the Customs Import Clerk. Submission of a registered Bill of Entry, in accordance with Section 46 of the Act, is the sine qua non for licit importation of goods. In the absence of a registered Bill of Entry, importation of goods is impermissible. The quantity of 25299.68 grams of gold jewellery, being not covered by any registered, signed or apprised Bill of Entry, bearing the signature either of the importer or of the Customs Import Clerk, could not, in our view, have been provisionally released, as the import was invalid and irregular ab initio. The exercise of discretion, by the learned Tribunal, in allowing provisional release of the said quantity, by clubbing it with the 25400 grams of gold jewellery, in respect of which there was a registered, signed and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nfiscation and the mere fact that the goods may possibly be held liable to confiscation at a later stage cannot be a ground to refuse provisional release because in that case section 110A of the Customs Act would be rendered otiose; xi. The reliance on the allegations made in the show cause notice for denying provisional release is improper as in every case there would be allegations of contravention and section 110A of the Customs Act would be rendered otiose; and xii. Statements, before being admitted by following procedure under section 138B of the Customs Act, cannot be used straightaway. 43. It would also be seen from the aforesaid decision of the Delhi High Court in Its My Name, that the decision of the Tribunal has only been faulted for the reason that there were two category of gold but the Tribunal clubbed the two categories without separately exercising of discretion for each category. Thus, the decision of the Delhi High Court in Its My Name does not support the Department and the Principal Commissioner committed an error in placing reliance upon this decision for rejecting the application filed by the appellant for provisional rele....