(-1-) MGN IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORIGINAL SIDE CIVIL JURISDICTION WRIT PETITION NO.316 OF 2008 WRIT PETITION NO.316 OF 2008 WRIT PETITION NO.316 OF 2008 Jayant Hansraj Shah ) residence of 119/B, Keshav Kunj ) Gujarat Society, Sion (W), ) Mumbai-400 022. )..PETITIONER Versus 1.Union of India ) Aaykar Bhavan Annexe, ) New Marine Lines, M.K. Road, ) Mumbai. ) 2.The Commissioner of Customs ) (General), New Custom House, ) Ballard Estate, Mumbai-1. ) 3.The Commissioner of Customs ) (EP), New Custom House, ) Ballard Estate, Mumbai-1 )..RESPONDENTS Mr.Anil Bakni with Mr. Ashok Kumar Singh, Ms. R. Pardeshi and Ms. Shilpa Bakni i/b. K.R.P. Legal for the petitioner. Mr. Girish Kulkarni with Mr. R. Ashokan and Mr. H.P. Chaturvedi, for the Respondents. CORAM: F.I.REBELLO & CORAM: F.I.REBELLO & CORAM: F.I.REBELLO & R.S.MOHITE,JJ. R.S.MOHITE,JJ. R.S.MOHITE,JJ. DATED: 29TH FEBRUARY,2008 DATED: 29TH FEBRUARY,2008 DATED: 29TH FEBRUARY,2008 JUDGMENT (PER F.I. REBELLO, J.): JUDGMENT (PER F.I. REBELLO, J.): JUDGMENT (PER F.I. REBELLO, J.): . Rule. Heard forthwith. 2. The petitioners approached this Court to seek clearance of the goods imported unconditionally without any deposit or bank guarantee and pay the amounts of container detention and demurrage charges incurred on the goods. Alternative relief is sought (-2-) by way of certiorari to set aside the order/decision of Respondent No.3 dated 30th March, 2007 detaining the goods in the interest of justice and consequential relief by way of mandamus to direct the respondent No.2 their officers, subordinates, servants and agents from implementing and/or giving any effect to the order dated 30th March, 2007 of respondent No.2. 3. According to the petitioner the consignment of Cosmetics was imported vide bill of lading dated 31st January, 2007 and as per the import document received from the overseas suppliers. The Bill of Entry dated 14th February, 2007 was filed based on the document received from the overseas supplier. The 1st Respondent duly assessed the bill with duty and levied duty thereon amounting to Rs.5,04,526/- which was paid on 2nd July, 2007. The goods were packed in 1213 cartons and detailed packing list was also filed along with the Bill of Entry showing the goods in each of the cartons. According to the petitioners the goods were examined by the officers of the Central Intelligence Unit working under the 2nd Respondent on 27th February, 2007. The officers found discrepancies and also that the items were in excess of the declared quantities. The goods were detained on 27th February, 2007. Thereafter the statement of the petitioner was recorded. The (-3-) petitioner was arrested on 8th March, 2007. The learned Magistrate after hearing the parties was pleased to release the petitioner on bail on 8th March, 2007. 4. A seizure memo was issued on 30th March, 2007 formally seizing the goods already placed under detention on 27th February, 2007. The petitioner on 29th May, 2007 sought provisional release of the goods under detention. Various reasons were given in that application. The 2nd Respondent in answer to the petitioner’s letter on 29th May, 2007 vide their letter dated 28th September, 2007 offered to allow clearance of the goods on payment of duty of Rs.15.00 lakhs and bank guarantee of Rs.35.00 lakh. . The petitioner then addressed another letter on 1st October, 2007 requesting that as the period of six months had elapsed since detention of the goods and no show cause notice was issued, the goods be released. It was also stated that no reasons had been set out in the letter of 2nd Respondent as to how the amount of Rs.15.00 lakhs was arrived at. The petitioner, however, in the interest of getting the goods released offered to submit a bank guarantee for full amount of Rs.50.00 lakhs instead of Rs.15.00 lakhs duty and Rs.35.00 lakhs Bank guarantee as sought by the 2nd respondent. (-4-) 5. The officer of the 2nd respondent according to the petitioner wrote to the petitioner by their communication dated 26th October, 2007 that the office has allowed provisional release within six months of the detention on payment of amount of Rs.15 lakhs and Bank Guarntee of Rs.35.00 lakhs and that the goods can be shifted to Customs Warehouse unconditionally if the petitioner so desires. The Petitioner by letter dated 3rd December, 2007 pointed out that as per the prevailing judicial pronouncements, when no show cause notice is issued within six months of the detention, the goods have to be released unconditionally and sought such unconditional release. On failure to release the goods various other letters to the same effect were addressed. 6. At the hearing of this petition on behalf of the petitioner their learned Counsel contends that considering the plain language of Section 110(2) of the Customs Act where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they are seized. In the instant case it is submitted that no show cause notice under Section 124(a) was (-5-) served on the petitioner on the expiry of six months and even till date. Consequently the petitioner has vested right to get his goods released. The mere fact that the Petitioner had made an application for provisional release and an order was passed, is inconsequential as the petitioner had neither paid the amount nor furnished the bank guarantee. It is, therefore, submitted that the respondents are bound to release the seized goods. . On behalf of the respondents a reply has been filed by one Mahender Singh, Assistant Commissioner of Customs, Central Intelligence Unit. It is not necessary to refer to the various averments therein except to the limited context of what is necessary for deciding the controversy raised in this petition. It is pointed out that the impugned goods were released provisionally pursuant to an application made by the Petitioner under Section 110-A of the Customs Act, by order dated 28th September, 2007 pursuant to a request made by the petitioner on 6th August, 2007 for provisional release. Based on that application the provisional release order was passed on 28th September, 2007. Under these circumstances, it is submitted that the contention that the goods are still under seizure is not correct. The contention that no show cause notice has been issued within the statutory period (-6-) of six months or till date is devoid of merit as the goods are already provisionally released from seizure as per the petitioner’s request to enable the petitioner to clear the same. As such there is no question of releasing goods merely because show cause notice within six months from the date of seizure was not issued. The contention, therefore, of the petitioner that the goods had to be released on the expiry of six months in terms of Section 110(2) has to be rejected. Reference is also made to the misdeclaration made by the petitioner herein. 7. The question for our consideration is, if an importer applies for release of seized goods under Section 110A and though an order is passed under that Section does the failure to give a notice under Section 124(a) within six months of seizure give a vested right to an importer of seized goods under Section 110(2) to have those goods released without any security or deposit or bond. For that purpose we may firstly reproduce the relevant portion of Section 110(1A) and 110(1B) and 110(1C) which reads as follows:- (1A). The Central Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, (-7-) constraints of storage space for the goods or any other relevant consideration, by notification in the Official Gazette, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (1), be disposed of by the proper officer in such manner as the Central Government may, from time to time, determine after following the procedure hereinafter specified. (1B) Where any goods, being goods specified under sub-section (1A), have been seized by a proper officer under sub-section (1), he shall prepare an inventory of such goods containing such details relating to their description, quality, quantity, mark, numbers, country of origin and other particulars as the proper officer may consider relevant to the identity of the goods in any proceeding under this Act and shall make an application to a Magistrate for the purpose of--- (a) certifying the correctness of the inventory so prepared; or (b) taking, in the presence of the Magistrate, photographs of such goods, and certifying such photographs as true; or (-8-) (c) allowing to draw representative samples of such goods, in the presence of the Magistrate, and certifying the correctness of any list of samples so drawn. (1C) Where an application is made under sub-section *(1B), the Magistrate shall, as soon as may be, allow the application. . The next relevant Section is Section 110(2) which provides for release of goods after six months if no notice for confiscation of the seized goods is given under Section 124(c) of the Act. . Section 110(2) reads as under :- (2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they are seized: Provided that the aforesaid period of six months may, on sufficient cause being shown, (-9-) be extended by the Commissioner of Customs for a period not exceeding six months." . Before answering the issue we may pointed out that the settled position of law in respect of Section 110(2) and notice under Section 124 of the Customs Act 1962. Section 110(2) does not prescribe a limitation within which a show cause notice is to be issued. The only consequences of not issuing the notice within six months under Section 124(a) is that the person from whom the goods were seized would become entitled to their return. The Adjudicating Officer, however, would not be denuded of the power to initiate proceedings thereof (See See See Chaganlal Gainmull vs. Collector of Central Excise, Chaganlal Gainmull vs. Collector of Central Excise, Chaganlal Gainmull vs. Collector of Central Excise, 1999 (109) E.L.T. 21 (S.C.) 1999 (109) E.L.T. 21 (S.C.) 1999 (109) E.L.T. 21 (S.C.) Section 124 is a power to proceed to confiscate the goods seized by following the procedure as set out therein. On failure to give the notice to take steps to confiscating the goods under Section 124(a), on the expiry of six months, the goods shall be returned to the persons from whose possession they were seized. . Section 110A has been introduced by Act 20 of 2006 with effect from 13th July, 2006. Similarly Section (1A), (1B) and (1C) have been added to Section 110 by Act 80 of 1985 with effect from 27th December, 1985. (-10-) 8. Under Section 110(1A) considering the nature of the goods which have been seized, power has been conferred to dispose of the seized goods by a proper officer in the manner laid down. A notification has been issued under Section 110. This notifies the various goods which can be disposed off and under Item No.14 includes goods seized by proper officer under Section 110 of the Customs Act, 1962, for which order for provisional release has been passed, but the provisional release has not been taken by the concerned person within the period of one month from the date of communication of such order. According to the respondents herein, as orally argued at the bar an application was made to the Magistrate under Section 110A. We do not find anything in the affidavit filed by the respondents that such an application was made and if any order was passed thereto. At any rate in our opinion whether an application for disposal is made or not would be immaterial considering the question to be decided. . The petitioner by his application of 11th June, 2007 had prayed that the goods be provisionally released. This request was again reagitated by the application dated 6th August, 2007. The Competent Officer informed the petitioner by notice of 28th (-11-) September, 2007 that the request for provisional release had been considered by the Department against payment of duty amount of Rs.15.00 lakhs and execution of bank guarantee of Rs.35.00 lakhs and was directed to make necessary arrangements and get the goods released on provisional basis. The petitioner by his letter dated October 1, 2007 on receipt of the communication for provisional release in para.8 without prejudice to other contentions prayed that they are furnishing bank guarantee for a total amount of Rs.50.00 lakhs instead of depositing Rs.15.00 lakhs and furnishing bank guarantee for Rs.35.00 lakhs as informed to the petitioner by the respondents. The petitioner, though indicated that the bank guarantee may be accepted in fact did not annex the bank guarantee. In response to the letter dated 25th October, 2007 the petitioner was informed that the goods are being provisionally cleared and to comply with the same. The petitioners thereafter by his communication of December, 3, 2007 informed the respondents that the communication dated 28th September, 2007 calling for provisional release by paying duty is beyond the period of six months and to release the goods. The provisional order of release was made within six months of the seizure. 9. Under Section 110A there is a power to provisionally release the seized goods pending order (-12-) of adjudication on taking a bond in a proper form with security and conditions as the Commissioner of Customs may require. It is, therefore, clear that from the date of seizure till the order of adjudication the Commissioner of Customs has the power to release the goods provisionally. This power was exercised. The petitioner accepted this order of provisional release but wanted variation of the said order which he was informed could not be done. 10. Section 110 speaks of no notice being given under clause (a) of Section 124 within six months of the seizure or confiscation of the goods. The procedure for confiscation of the goods can be resorted to if the goods are not provisionally released. If the owner in terms of Section 110A applies for provisional release and an order is passed it can be said that the goods continue to be under seizure as the order under Section 110A is a quasi judicial order. Section 110(2) would not be operative. It is only in the case where no provisional order is passed for release of the seized goods and if no notice is issued under Section 124(a) for confiscation of the goods then only would Section 110 (2) apply and the respondent would be bound to release the goods. (-13-) . Any other reading of the Section would mean that a person whose goods are seized would seek a provisional release of the goods, get an order of provisional release, allow the authorities to proceed to believe on that basis that such person seeks to release the goods provisionally and on the expiry of the period of six months if notice is not issued under Section 124(a) then contend that the terms for provisional release of the goods are no longer binding as the period of six months has expired and no notice has been served. The period of notice is only when the respondents seek to confiscate the goods. If there be a provisional release order it is not within the jurisdiction of the respondents to proceed to issue the notice under Section 124. At the highest they can proceed under Section 110(1A) by following the procedure set out therein. In our opinion, therefore, as procedure for confiscation could not have been initiated pursuant to the order of provisional release the contention urged by the petitioners that the goods should be released under Section 124(2) has to be rejected. 11. At this stage the learned Counsel submits that atleast the goods be released and the terms be varied. In our opinion this would not be a fit case to vary the terms for provisional release as passed (-14-) by the Additional Commissioner, Central Intelligence Unit. We, however, vary the order to the extent that instead of depositing Rs.15.00 lakhs the petitioners to furnish bank guarantee in the sum of Rs.50.00 lakhs in terms of the request made by the petitioners in terms of his communication dated October 1, 2007. 12. Rule made partly absolute to the aforesaid extent. In the circumstances of the case there shall be no order as to costs. (R.S.MOHITE, J.) (F.I.REBELLO, J.) (R.S.MOHITE, J.) (F.I.REBELLO, J.) (R.S.MOHITE, J.) (F.I.REBELLO, J.)