TaxTMI 
TaxTMI 
2022 (6) TMI 1092
X X X X Extracts X X X X
X X X X Extracts X X X X
....e seized goods to them on appropriate terms and conditions in exercise of authority conferred by section 110A of Customs Act, 1962. In the meanwhile, two show cause notices proposing confiscation and other detriments has been issued on 25th May 2022 by Commissioner of Customs (I), Air Cargo Complex, Mumbai and some of the goods disposed off by the Directorate of Revenue Intelligence (DRI) under the procedure prescribed in section 110(1A) of Customs Act, 1962. 2. Even as the appellate remedy was sought, the importers also filed application for 'out-of-turn hearing' under Customs Excise Service Tax Appellate Tribunal (Procedure) Rules, 1982 as they were apprehensive of the 'coercive steps' initiated by the investigating officers invoking enablement of 'pre-trial' disposal even before the goods had been confiscated and attended, in accordance with section 125 of Customs Act, 1962, with offer of redemption on payment of fine as there is no prohibition on the import of the impugned goods. In view of the unorthodox circumstances thus brought to our notice, the application was allowed and the appeal itself taken up for disposal as adjudication would have rendered this appeal infruc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stoms Act, 1962. Pointing out that the reason adduced for declining provisional release, i.e. the discrediting of their claim to be the owner, was built on mere assumptions, it was contended that the goods had been seized only after filing of bills of entry and they remained owners in the absence of any challenge to their title. Furthermore, he submitted that they had been placed on notice of intent to confiscate the goods seized from a consignment imported in their name and that the adjudicating authority should not be permitted the luxury of taking different stands on the status of the importer to accommodate their purposes. It was also submitted that the goods are not usable in India and, having been wrongly shipped, must be sent back to the supplier or such person assigned by him. 5. Characterizing the appeal as abuse of process to forestall further sale of seized goods, Learned Authorized Representative made several submissions that sought to justify the seizure. It was pointed out that the appellant had not been responding to summons issued by the investigation agency and that they had denied any connection with the goods. It was further pointed out that investigations....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch is the subject matter of the present appeal. It is clear from the aforesaid direction that the respondent was allowed to get the goods released on provisional basis with certain conditions. We are informed that after the passing of this aforesaid direction by the High Court, the Respondent had even got the goods released after complying with the directions of the High Court. In these circumstances, nothing survives in the present appeal. Otherwise also, there is no reason to interfere with the order in question, when the arrangement made by the High Court in the said order was only provisional one by way of interim arrangement.' which sums of the scope of the proceedings before us. The appellant is in business and cannot be denied the cavil of the fiscal detriment arising from the terms offered by the adjudicating authority; the notice issuing authority cannot but be expected to incorporate the utmost detriment permissible by law, or even without, in framework of adjudicatory outcome. Between commercial objectivity on the one hand and administrative caution on the other, the operation of section 110 A of Customs Act, 1962 appears to have been rendered inoperable and, hence, ou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eized gold, gold jewellery and silver, provisionally, at any cost. We, therefore, finders is an agreement with Mr Ganesh that any remand, of the matter, to the ADG to fix the terms of provisional release, would have been an exercise in futility interest. For this reason, we are unable to hold that, in directing provisional release of gold, gold jewellery and silver, and fixing the terms thereof, the learned Tribunal exceeded the jurisdiction vested in it.' from which we reasonably conclude that the Tribunal may, in its appellate jurisdiction, consider intervention upon denial of provisional release and, thereafter, take up modification. Indeed, a plea for non- interference may be advanced only when release, contrary to prohibitions, has been demonstrated to have irreversible consequences. Import of mobile phones does not carry any such irreversible consequences to the law of the land. 9. Both confiscation and provisional release arise in the aftermath of seizure under section 110 of Customs Act, 1962. The scope for, and limits on, confiscation under section 111 of Customs Act, 1962, and, thereby, of redemption fine, stands settled by the decision of the Hon'ble Supreme Cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
....horities have ventured upon commercial disposal of the very same goods. 11. Disposal by the empowered officer under the authority of section 110(1A) of Customs Act, 1962 is not restricted to sale and it is trite that such sale does not erase the taint of prohibition that attaches to seized goods; therefore, it is abundantly clear that the impugned goods are not prohibited, or even restricted, for import and that it is compliance with section 47 of Customs Act, 1962 that is in dispute here. The power to seize goods, and, that too, only in the reasonable belief of liability to confiscation under section 111 of Customs Act, 1962, is accorded by section 110 of Customs Act, 1962. It must necessarily be followed by proceedings initiated in show cause notice, as provided for in section 124 of Customs Act, 1962, to culminate as decision to confiscate, or otherwise, with the option to redeem confiscated goods, as provided in section 125 of Customs Act, 1962, on payment of fine or fine imposed in lieu of confiscation. Computation of redemption fine is within the discretionary compass of the adjudicating authority but it is considered fair and reasonable only to the extent that the com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....trade in goods, whether seized or even confiscated. Section 110A is couched in such plain language as to give no room for controversy in interpretation or speculation of legislative intent; indeed, it does not even offer scope for discriminatory treatment among imported goods. 14. The novelty of this facilitation did not appear to have had the effect of disengaging the gears heretofore designed for perpetuating continuity of 'unilateral' deprivation of custody and every impediment was brought to bear on the exercise of powers under section 110A of Customs Act, 1962. Not the least of these was the refusal to submit to appellate oversight. The inevitable judicial intervention that followed prompted two significant changes therein, viz., substitution of 'adjudicating officer' and 'Commissioner of Customs' therein with 'adjudicating authority' through Finance Act, 2011 with provisional release governed, as of now, by '110 A. Provisional release of goods, documents and things seized pending adjudication. - Any goods, documents or things seized under section 110 may, pending the order of the adjudicating authority, be released to the owner on taking a bond from him in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e High Court of Delhi, upon being presented with the inexorable mandate of the very same circular in Additional Director General (Adjudication) v. Its My Name Pvt Ltd [2021 (375) ELT 545 (Del.)], was compelled to observe that '51.....Mr Ganesh relied on Agya Import Ltd: 2018 (362) DLT 1037 (Del), which holds that para 2 of the said Circular was merely in the nature of a "general guideline", and did not incorporate any mandate. We, having perused para 2 of Circular 35/2017-Cus supra, vis-à-vis Section 110 A of the Act, are not inclined to be so magnanimous. According to us, para 2 of Circular 35/2017-Cus is clearly contrary to Section 110 A and is, consequently, void and unenforceable at law. It is not permissible for the CBEC, by executive fiat, to incorporate limitations, on provisional release of seized goods, which find no place the parent provision, i.e. Section 110 A of the Act. Executive instructions may, the district, supplement 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 cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... tantamount to directions on disposal of particular cases in a particular manner. The circular traverses the boundaries envisaged in the delegated authority to issue such instructions by interfering in the exercise of discretion which must, after all, assign sufficient weightage to the facts peculiar to each case. 17. There is yet another, intended or unintended, consequence of the said circular. It is inevitable that investigations do foray into estimate of duty liability arising from non-payment or short-payment of duties of customs. The circular requires, in addition, that an estimate of fine, which is attendant only upon confiscation by lawfully constituted authority in statutorily acknowledged proceedings, and of a penalty must be undertaken as a prelude to provisional release. It is not anybody's guess as to the scope for exercise of uninfluenced assessment of facts and law in adjudication proceedings thereafter. It is not just the bar on release of some category of goods but also this guided outcome of adjudication that jeopardizes the continued authority of the circular. Moreover, as we have pointed out supra, the impugned goods, not being prohibited or even restrict....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se aspects were summarized thus: '42. The following position emerges from the aforesaid decision of the Delhi High Court in Its My Name : i. The Tribunal is not required to adjudicate either finally or tentatively at the time of provisional release as to whether the alleged infractions committed or the consequent liability, if any, of the seized goods to confiscation under the Customs Act; ii. The order of provisional release is an interlocutory exercise and does not finally adjudicate on any liability; iii. The exercise of power under section 110A of the Customs Act to release imported goods on a provisional basis is essentially and fundamentally discretionary in nature; iv. Section 110A of the Customs Act contemplates release of any goods. Thus, both prohibited goods and non- prohibited goods can be released; v. If the goods are not per se prohibited, question of going into prohibited goods as per Om Prakash Bhatia case does not arise at the stage of provisional release; vi. A Circular which absolutely proscribed provisional release of prohibited goods or where any provisions are contravened, is void; vii. The Tribunal is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rned, owing to absence of ownership. We have pointed out supra that for release under section 110A of Customs Act, 1962 to be influenced by the reasonableness of seizure or the ultimate fate of adjudicatory consummation is to obliviate this specific enablement of legislative mandate by insinuation of other legislative provisions into the decision. That would certainly not be consistent with legality and propriety. 23. Learned Authorized Representative appears to have confused safeguarding the interests of revenue with safeguarding the outcome of adjudicatory exercise. An adjudication, by and large, is concerned with duty/tax liability, fine in lieu of confiscation and penalty. Revenue is, doubtlessly, concerned with recovery of duty/tax not paid or short-paid, Revenue is, unquestionably, concerned with prohibitions imposed under section 11 of Customs Act, 1962. It can safely be posited that, as one of the guardians of the frontier, Revenue is obligated to deter the import of any goods that the laws prohibit for preserving the health and safety of those who reside under the protection of the State. Beyond these, it is only the interest of the enforcement mechanism that is pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or quantification of reasonable security. At least, as far as the impugned goods are concerned. 26. The goods may, ultimately, be held to be liable for confiscation and, considering the free importability, will, if available, have to be offered for redemption on payment of fine. There are, as we have elaborated supra, limits on discretion in quantifying the fine. It is in these circumstances that provisional release must be allowed. The only question that arises is the affording of an opportunity to the adjudicating authority to determine the terms of provisional release; however, we cannot but take notice of the observation of the Hon'ble High Court of Delhi was, in Spirotech Heat Exchangers Pvt Ltd v. Union of India [2016 (341) ELT 110 (Del)], that '6. The Court notices that despite the aforementioned orders of this Court and the Supreme Court, the respondents are continuing to impose harsh conditions for provisional release of goods. In the present case, apart from the exporter having to pay 100% of the differential duty it has to furnish a bank guarantee equivalent to 25% of the differential duty and execute a bond for 100% of the value of the goods. Since the re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... all the liabilities and consequences attached to ownership. Even the Disposal Manual of the Central Board of Excise & Customs (CBEC), with the same legal status as the circular referred supra, acknowledges that owners may affirm their claim and makes provision for delayed disposal in such cases. 'Owner' is not defined in Customs Act, 1962 but the expression has been deployed in definition of 'importer' in section 2 of Customs Act, 1962. The implication is clear: ownership is claimable at any stage and is, by default, attached to 'importer' which may be alienated by declaration but does not foreclose reassertion of ownership. It is not open to customs authorities to determine lack of ownership except in circumstances of rival claim and, that too, for the limited purpose of clearance of goods. 30. The goods have been seized under section 110 of Customs Act, 1962 and the seizure itself is not in dispute before us. Therefore, it does not lie in our jurisdiction to set aside the seizure. However, appellant has claimed that the goods were wrongly despatched to the importers and must, therefore, be returned to the owners. It is on record that the goods are not configured for use i....