By TIOL News Service

NEW DELHI, APR 01, 2016: NEPALESE currency Rs.5 lakhs (equivalent to INR 3.1 lakhs) were seized from the petitioner by the Air Custom Officer (Preventive), Indira Gandhi International Airport, Terminal-3 when he was on his way to Dubai on 17th June 2014. He was given a detention receipt No. 19455 dated 17th June 2014.

The Petitioner has approached the Delhi High Court seeking release of the currency as their application dated 07.07.2014 to the Customs authorities did not yield any response.

The Respondent Revenue in the counter affidavit have submitted that apart from seeking release through the above application through his Advocate, "the petitioner was not present himself for examination or has not submitted any document to prove the legitimate possession of the currency."

It is specifically averred by the Revenue that "department did not convert the detention into seizure as the Petitioner never turned back and did not cooperate".

The petitioner points to Section 110(2) of the Customs Act, 1962 and submits that if no Show Cause Notice (SCN) in writing is given within six months under Section 124 (a) of the Act to the person from whom the goods are seized then the goods shall be returned to such person. Furthermore, the said period of six months may, on sufficient cause being shown, be extended for a period not exceeding six months.

Inasmuch as despite the expiry of more than eighteen months since the date of seizure of the Nepalese currency from the petitioner, no SCN has been issued &the application for release of the currency had yet not been disposed of.

The High Court observed that the Respondent was unable to point out any provision in the Act that permitted 'detention' of goods in lieu of 'seizure'.

Thereafter, the High Court referred to Section 110(2) of the Customs Act and observed -

+ Whatever may be the justification that the Customs Department wishes to put forth for seizing the goods, there is a definite time limit within which the Department has to determine if the seized goods are to be confiscated and if so, for giving a SCN under Section 124 (a) of the Act. There appears to be no provision for 'detention' of goods instead of their 'seizure'.

+ Therefore, where a customs officer is satisfied that the person found with the goods is not able to produce the necessary documents to justify being in possession thereof, the Customs officer has to form an opinion under Section 110 (1) of the Act as to whether the said goods are liable to be confiscated and if so, to give a SCN under Section 124 (a) of the Act. Section 110(2) makes it clear that the maximum time limit for giving a SCN is six months from the date of seizure and this period is extendable by another six months.

+ The procedure for dealing with confiscation of goods and for their release has been provided in the Act itself. Section 110A also talks of provisional release of the goods that have been seized.

+ The upshot of the above discussion is that the Customs Department cannot take shelter under the device of 'detention' of goods in order to avoid the consequences flowing from the 'seizure' of goods. In other words, if the Customs Department is unable to give a SCN under Section 124 (a) of the Act within six months (plus another six months where a specific order to that effect has been passed) then in terms of Section 110 (2) of the Act, the said goods have to be released to the person from whom they were seized.

+ In the present case, there appears to be no legal justification for the Customs Department not 'seizing' the Nepalese currency recovered from the Petitioner in the first place and secondly, in not giving a SCN within six months of such seizure. In the absence of any provision in the Act that permits 'detention' of such goods, the Court has to proceed on the basis that what was effected on 17th June 2014 was a 'seizure' of Nepalese currency from the Petitioner. That the seized currency was in the possession of the Petitioner and seized from him is also not in dispute.

+ If that is the position, then under Section 110(2) of the Act, a SCN had to be given under Section 124 (a) of the Act within six months of 17th June 2014. With no such SCN having been given, the inevitable consequence, therefore, is that as mandated by Section 110 (2) of the Act, the seized goods "shall be returned to the person from whose possession it was seized".

The Respondent Revenue was directed to release the Nepalese currency, for which a 'detention' receipt was issued on 17th June 2014, to the Petitioner upon him presenting himself.

The writ petition was disposed of.

In passing: Extract from the CBEC Customs Manual, 2015 -

Chapter 15

Detention and Release/Storage of Imported/Export Goods

1. Introduction:

1.1 Normally, the goods liable for confiscation under the Customs Act, 1962 are seized by the Customs. However, in some cases where seizure is not practicable, it may become necessary to detain the goods for investigation. The provisions for detention of goods are contained in Section 110 of the Customs Act, 1962. The goods are detained for various reasons and at the instance of various agencies of the Department, such as the Directorate of Revenue intelligence, the Directorate of Central Excise Intelligence, Narcotics Control Bureau and Directorate of Enforcement and even other agencies, like the Central Bureau of Investigation. Once order for detention of goods is served to the owner of the goods, he cannot remove, part with, or otherwise deal with the goods except with the prior permission of the proper officer of the Customs. During investigation and subsequent adjudication proceedings, if the contravention of provisions of the Customs Act, 1962 and other allied laws is established, action is taken against the importers/offending goods as provided in the law. In other cases, the charges are dropped at initial stages or at the appeal stage.

(See 2016-TIOL-635-HC-DEL-CUS)