By TIOL News Service

NEW DELHI, NOV 30, 2015: THE issue before the Five Member Larger Bench of the CESTAT is, "Whether an appeal lies before the Tribunal against the order passed by Commissioner (Customs) under Section 110A of the Customs Act, 1962 for provisional release of the goods or not".

The issue was decided by the Tribunal by majority of 2-1 in the case of Akanksha Syntax Pvt. Ltd. vs. CC (General), Mumbai - 2012-TIOL-1697-CESTAT-MUM which ruled that an appeal against an order under Section 110A is not maintainable before the Tribunal under Section 129A of the Customs Act, 1962.

A Division Bench of the Tribunal in 2015-TIOL-1994-CESTAT-DEL did not agree with the Akanksha Syntax order and directed the matter to be placed before a larger bench to consider the issue. Accordingly, the President constituted the present five member bench, which gave its verdict on 27.11.2015.

Preliminary Objection of Revenue: revenue raised a preliminary objection on the following three points:

(c) The correctness of Larger Bench order of the CESTAT in the case of Akanksha should have been considered by a Bench of co-equal strength only

(d) the clear legislative intent as per Section 129C (5) is for the President to refer to "other members" "including those who first heard it".

(e) the present reference by Division Bench was made without taking into consideration all arguments made by Revenue.

The five-member Bench after careful consideration of all applicable and binding precedents and circumstances of reference in the present case, found that there is no merit in the preliminary objection raised by the Revenue. The objection is therefore rejected.

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.

Mr. B. Ravinchandran, the Member (Technical) writing the unanimous decision of the five-member bench observed,

Section 110 of the Act empowers that if the proper officer has reasons to believe that any goods are liable to confiscation under this Act, he may seize such goods; upon seizure the said goods are in control/custody of the customs department. Ownership of seized goods continues with the person from whom such goods were seized. Section 110A provides for provisional release of seized goods pending the order of the adjudicating authority. Such release can be ordered only by adjudicating authority with such conditions as he may require. Later, sustainability of seizure and consequences for the owner will be decided after due completion of investigation, by the adjudicating authority.

Order for provisional release restores the seized goods to the owner. The conditions imposed for such restoration is decided by the adjudicating authority. Such decision will certainly have legal consequence to the owner of goods.

Revenue's contention is that no statutory appellate remedy is provided against such decision or orders issued under Section 110A. What is relevant to consider is whether such appellate remedy; (i) clearly falls within the ambit of the provisions of Section 129A (1) (a); and/or (ii) is to be inferred within the general scope of the appellate provisions therein and in the absence of any specific bar against any such appeal being preferred.

Section 129A (1) (a) provides for any aggrieved person to file an appeal to the Appellate Tribunal against "a decision or order passed by the Principal Commissioner of Customs or Commissioner of Customs as an adjudicating authority". It is not disputed that an order under Section 110A can be issued only by an adjudicating authority. Revenue argues that though the order is by an adjudicating authority, it is not an adjudication order. This will take us to who is an "adjudicating authority". Section 2 (1) states that "adjudicating authority" means any authority competent to pass any order or decision under this Act…". Having arrived at the uncontested conclusion that an order under Section 110A is issued by adjudicating authority it will be illogical to infer that and order under Section 110A is of a non-adjudicatory disposition but passed by the adjudicating authority. It is interesting to note that the words "adjudicating authority" replaced "Commissioner of Customs" in Section 110A, with effect from 08/04/2011.

An order for provisional release of seized goods is not to be issued mechanically. The same is issued after due consideration of various factors like the nature of goods, the seriousness of the offence etc. When the order has civil consequences, remedy against any adverse order is by way of appeal. Judicial review by the courts in exercise of constitutional powers cannot be the only automatic recourse as argued by Revenue. Here, the provisions of Section 129A (1) (a) cannot be restrictively interpreted to mean that only final adjudication orders are covered under the terms "a decision or order passed by Commissioner of Customs as adjudicating authority". There is neither a textual or normative warrant for such interpretation.

Another submission by Revenue is that an order under Section 110A is an interim order of the Adjudicating Authority and hence no appeal is available under Section 129A. Such argument apart from being fallacious also presumes that in all cases of seizure of goods, there will be a "final" adjudication order. It may not be so. There may be situations where on completion of investigation no offence is made out against the owner of the seized goods. There will not be any "final" adjudication in such cases. The case is closed.

The Larger Bench unanimously held,

(a) the contention that an order or decision by the Adjudicating Authority under Section 110A is administrative or interim in nature is misconceived.

(b) provisions of Section 129A (1) (a) clearly authorize an appeal against an order or decision by the Adjudicating Authority issued under Section 110A. There is no legal basis to restrict the scope of such appeal in the absence of any restrictive conditions in the provision.

The reference to the Larger Bench is answered as:

An appeal lies before this Tribunal against an order passed by Commissioner of Customs under Section 110A of the Customs Act, 1962 for provisional release of the goods.

(See 2015-TIOL-2541-CESTAT-DEL-LB)