Shivam Marketing vs Union of India, Ministry of Law and Justice

Heard on I.A. No. 3240/2015, an application for setting aside of order dated 7/05/2015 and 5/06/2015, passed by Assistant Commissioner (Customs) retention of 25% goods by respondents while complying with the order passed by this Court on 23/04/2015.

The petitioner has imported the goods from China to the tune of Rs. 2,51,25,568/- and on the said imported goods the petitioner paid the amount to the tune of Rs. 69,48,207/- on 19/02/2015.

On 23/02/2015, the goods were seized and the custom duty was accepted by the Department as the same was evaluated by the Government approved valuer as prescribed by the Department.

On a writ petition filed by the petitioner prayer for interim relief was made that there is a provision under Section 110(A) of the Customs Act, 1962 regarding provisional release of goods, documents and things seized pending adjudication.

This Court, on 23/04/2015, after hearing the learned counsel for the parties, in presence of Shri S.B. Hatangadi, Assistant Director, D.R.I. (DRI) passed an interim order in favour of the petitioner with the following observations:-

"On considering the above and considering the urgency of the matter, we find that the interim relief needs to be allowed in the interest of justice. It is, therefore, directed that subject to the petitioner''s filling the bond in the proper form with such the security and conditions as the adjudicating authority may require, the respondents release the goods in accordance with the provisions of law. Needless to say that this Court is not making any observations on the merits of the case. The Competent Authority is free to arrive on its own conclusion in accordance with the provisions of law and grant the interim relief. In the meanwhile, Counsel for the respondent Shri Prasanna Prasad is directed to file reply to the petition within four weeks"

After order dated 23/04/2015, a letter dated 28/04/2015 was filed by the petitioners stating therein that the entire duty of the consignment in question i.e. Bill of Entry No. 515 amounting to Rs. 69,48,207/- and Rs. 66,12,005/- have already been deposited based on the value approved by the Government approved valuer''s report and, thus, no Bank Guarantee/Security is required for the release of the said goods. It is also pointed out that consignments are held up from the Mid February onwards and the petitioner is suffering a huge loss due to non-supply of the goods in the market.

By communication letter dated 7/05/2015, the Assistant Commissioner (Customs) directed to release seized goods of Bill of Entry No. 000515 dated 12/02/2015 provisionally on the following conditions:-

(a) on execution of Bond equal to assessed value of the goods.

(b) Payment of applicable duty which may be adjusted from Rs. 69,48,207/- already paid.

(c) Security as per norms under Customs Law and procedure for likely fine and penalty.

On 5/06/2015 (Annexure-P/5), the Assistant Commissioner (Customs), requested to Ms/Allcargo Logistics Ltd.; (CD-KHEDA), Pithampur to retain 25% of value of goods as security in lieu of Bank Guarantee as per list enclosed of seized goods and release the remaining goods.

It is submitted by the learned counsel for the petitioner that the petitioner has already furnished a bond with the department of the 100% of the value of goods of the total imported Cargo as security there was no reason to retain 25% of the goods as security. It is also pointed out that most of the goods retained by the department would lose their value rapidly on account of lack of due care and apart from that these goods are not meant to be kept for long and have to be sold in the Market immediately and in respect of some of the goods even require requisite temperature which is to be maintained for keeping the goods in proper conditions. In such circumstances, the 25% of the retained goods which are worth more than 63.00 lakh should be released immediately otherwise it would diminish substantially in value in no time and prays for appropriate direction to the authorities.

Shri Prasanna Prasad, learned counsel, who is appearing on behalf of the respondent No. 2 submits that the conditions imposed by the adjudication authority against the petitioners is well within the legal framework. The competent authority has rightly imposed the condition in his order. The petitioner is involved in smuggling of goods, and the same has been admitted by them in preliminary stage of investigation initiated by the respondent No. 5. It is further submitted that in terms of Section 112 of the Customs Act, 1962 any persons involved in acts of omission or commission, in relation to any goods which renders such goods liable to confiscation under Section 111 of the said Act, shall be liable to penalty as imposed by the Adjudication Authority. The condition imposed by the Adjudication Authority is a safeguard for fine/penalty which may be imposed subsequently during the adjudication proceedings and prayed for dismissal of the application.

To counter the aforesaid submissions of the learned counsel for the respondent No. 2, learned counsel for the petitioner has submitted that the petitioner under the threat and pressure deposited a sum of Rs. 66,12,005/- on the previous consignments which were cleared only after the Government approved valuer, valued the goods and the Custom Officers had no iota of doubt about the consignment. He submitted that in respect of present consignment, whole duty amount has been deposited by the petitioner amounting to Rs. 65,46,577/-. He submitted that the goods has been wrongly retained as the goods cannot be confiscated in terms of Section 111(M) of the Customs Act, 1962. He has also drawn our attention to the decision of the (1) M/s. Kuber Casting (P) Ltd. Vs. Union of India and Another, ; (2) Bombay High Court in the case of Mr. Biharilal Singhal, carrying on business in the name and style of Hi-Tech Corporation, as a sole a Proprietorship, Hasti Industrial Premises Co-op. Society Ltd. Vs. The Union of India (UOI), Ministry of Finance, Department of Revenue, The Chief Commissioner of Customs, The Commissioner of Customs (Import) and The Joint/Deputy Commissioner of Customs (CIU), and; (3) decision of Punjab & Haryana High Court in the case of Kundan Rice Mills Limited Vs. Union of India (UOI) and Others, .

In the case of Kundan Rice Mills Ltd. (supra), the Division Bench has held that Mere existence of power of confiscation not sufficient to justify harsh conditions unless case for confiscation is shown. Exercise of power to impose harsh conditions without valid justification will be arbitrary exercise of power hit by Article 14 , 19 , and 21 of the Constitution.

In the matter of Kuber Casting (P) Ltd., the Division Bench of Punjab & Haryana High Court has held that when duty levied by authorities at the time of initial clearance of goods had been paid, then furnishing of bank guarantee/cash deposit/fix deposit, even to extent of 25% of full value of seized goods was highly onerous condition which made relief of provisional release nugatory. It is not only harsh but squeezes out importer to extent of pushing them out of system. The Court also deprecated the action of Customs authorities and observed that the condition of furnishing of bond for value of seized goods and payment of differential duty, does not put extraordinary financial burden on importer and does not constitute impediment, in their normal business functioning.

On due consideration of the aforesaid, without expressing any opinion on merits of this case, at this stage, we stay the condition of retaining 25% goods and direct the respondents to release the whole goods on other conditions imposed on the letter of provisional release issued by the authorities and after examining the fact that the whole duty amount had already been paid by the petitioner, subject to result of the writ petition.

With the aforesaid, I.A. No. 3240/2015 is allowed.