Section 110A Customs Act: Owner Does Not Include Importer Of Goods: Bombay High Court

CASE TITLE:
Commissioner of Customs (Import) Vs Dinesh Bhabootmal Salecha

DATE OF ORDER:
8 September, 2022

BENCH:
Justice Dhiraj Singh Thakur and Justice Abhay Ahuja

PARTIES:
Appellant: Commissioner of Customs (Import)
Respondent: Dinesh Bhabootmal Salecha

SUBJECT

The Bombay High Court ruled that only the owner of the seized items may receive a provisional release under Section 110A of the Customs Act, 1962 (the Act), and no one else. The Court stated, “The said section does not include or envisage release of goods provisionally in favour of an importer of goods much less does it envisage, a release in favour of ‘any person’, in addition to the owner as mentioned in Section 124 of the Act, who has been served a notice under the said section.”

IMPORTANT PROVISIONS

The Customs Act, 1962

• Section 110A- 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 the proper form with such security and conditions as the adjudicating authority may require.
• Section 124 - Issue of show cause notice before confiscation of goods, etc. - No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person -

(a) is given a notice in writing with the prior approval of the officer of Customs - grounds on which to confiscate;

(b) is given an opportunity of making a representation in writing within such reasonable time against the grounds of confiscation; and

(c) is given a reasonable opportunity of being heard in the matter.

• Section 125 - Option to pay fine in lieu of confiscation. -

1. Whenever confiscation authorised, the officer adjudging it may give to the owner of the goods an option to pay in lieu of confiscation such fine as the said officer thinks fit.
2. Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods, shall, in addition, be liable to any duty and charges payable in respect of such goods.
3. Where the fine imposed under sub-section (1) is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending.

• Section 130 - An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 if the High Court is satisfied that the case involves a substantial question of law.

BRIEF FACTS

• Two shipments were seized by the Directorate of Revenue Intelligence according to Section 110A of The Customs Act, 1962, coming from Hong Kong once they were found to be mis-declared. These shipments were allegedly containing Memory Module of 4GB, 8GB and 32GB D-RAM valuing about 80 lakh rupees. It was discovered to contain 3800 iPhones valuing about 42 Crore Rs. on examination.
• Under Section 110A of The Customs Act, an application was filed for the release of goods. It was rejected by the adjudicating authority on the basis that the respondent did not bring forth any evidence with regard to the ownership of the goods in question.
• The present case is an appeal under Section 130 of The Customs Act, 1962 against the order dated 23rd June, 2022 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (CESTAT).
• The CESAT ordered the provisional release of the seized goods which were iPhones in supposed exercise of powers under Section 110A of the Act.

ISSUES RAISED

• Whether the Hon’ble CESTAT misread, misinterpreted and grossly erred in allowing the provisional release of the goods in favour of the Respondent in violation of Section 110 A of the Customs Act, 1962 when the Respondent’s ownership of such goods itself is seriously disputed?

ARGUMENTS ADVANCED BY THE APPELLANT

• The Counsel for the Appellant urged that the Respondent has claimed that he was not the owner of the seized goods, which was also his stand in the Writ Petition filed by him in the Court (later withdrawn).
• It is stated that in the said writ petition, it was submitted that the consignments were erroneously sent to India instead of Dubai by the supplier in Hong Kong. Thus the appellant urged that since the Respondent denied ownership of the seized goods, he could not seek release of those goods provisionally, as it could only be done in favour of the owner.
• The appellant therefore submits that the respondent was smuggling iPhones in India and had created a syndicate for the smuggling and delivery by imports which were made by M/s Salecha Electronics Inc and M/s 2000 Semiconductor.
• He further urged that the release of such smuggled items to the Respondent, the ownership of which was denied, would amount to placing a premium on the illegal activities being carried out in an organized manner, conducted by the Respondent.

ARGUMENTS ADVANCED BY THE RESPONDENT

• The Counsel for the Respondent submitted that since the authorities had considered the Respondent to be the owner of the seized goods, therefore the show cause notice was issued to him under Section 124 of The Customs Act.

JUDGEMENT ANALYSIS

• The Court noted that the issuance of a show cause notice under Section 124 of the Act does not essentially establish that the person in whose name it is issued is necessarily the owner.
• The Court concluded that the reading of Section 124 suggests that before the passing of an order of confiscation, a notice of the proposed confiscation of goods shall have to be given to an owner or any other person. Therefore, merely because a show cause notice has been issued in favour of the Respondent does not certainly infer that he is to be considered as an owner of the seized goods, which are sought to be confiscated.
• The court additionally observed that Section 110A evidently offers that the seized goods could be released to the owner but it does not involve or envision the release of goods provisionally to an importer of such goods.

CONCLUSION

The Court discussed Section 125 of The Customs Act which unambiguously stipulates that in absence of the owner, the adjudging officer can givean option to pay fine in lieu of such goods, to the person from whose custody the goods have been seized. This right is not presented under Section 110A of the Act.

The Bench was therefore of the opinion that the order passed by the Tribunal is unmaintainable and held that the goods could have been released provisionally only in favour of an owner, under Section 110A of the Act, which the Respondent failed to establish. Thus, they answered the question in favour of the Appellant and allowed the appeal accordingly.

Click here to download the original copy of the judgement

Learn the practical aspects of CrPC HERE, CPC HERE, IPC HERE, Evidence Act HERE, Family Laws HERE, DV Act HERE