By TIOL News Service

NEW DELHI, JULY 28, 2016: THE Petitioner placed an order for importing unbranded mobile accessories, parts, memory card adaptor, plastic watches, tempered glass and mobile phone LCD on its foreign supplier. The goods were dispatched through air by Airway bill (AWB) and on arrival of the goods the Petitioner filed B/E for home consumption.

The goods were examined by the DRI in the presence of panch and the Customs House Agent (CHA). The Petitioner states that only Annexure C to the panchnama and not the entire document was handed over to it.

The Petitioner further informs that they kept requesting for a copy of the entire panchnama as well as for the provisional release of the goods, but did not receive any response.

Aggrieved by the continued inaction of the Respondents, the present petition is filed.

By a letter dated 12th May 2016 the DRI requested the Customs that in order to avoid detention and demurrage charges, the requests made by the importers for warehousing of imported consignments under Section 49 of the Act, should be considered favourably.

More than a month after the detention of the goods, summons were issued to the importer to appear before the DRI on 21st June 2016 and to produce the relevant documents and bank statements. On 28th June 2016 the importer made a representation for provisional release of the goods.

Before the High Court the counsel for the DRI submitted that in view of the decision in S.J. Fabrics Pvt. Ltd. = 2011-TIOL-532-HC-KOL-CUS , for all practical purposes the detention of the goods should be treated as 'seizure' under Section 110 of the Act.

The petitioner submitted that there was no concept of 'detention' of goods u/s 110 of the Act and that recording of reasons prior to the making a seizure u/s 110(1) of the Act was a sine qua non to justify a valid seizure of imported goods.

To a query by the Court as to who would bear the demurrage or the warehouse charges in the event of such 'detention', counsel for the Revenue submitted that where the detention was only for a short period and ultimately the goods were not found to be of a nature that required any seizure, then the importer could not be saddled with the resultant demurrage or warehouse charges. However, the counsel was unable to inform the Court if there existed any instructions/directions issued by the Customs or the CBEC regarding such 'detention' of the goods, and that too without recording of reasons.

The Court, therefore, observed –

+ there is no provision in the Act which justifies the detention simpliciter of goods by the authorities whether it is the Customs or the DRI, and that too without recording of reasons.

+ in the present case, no order was served on the owner of the goods in terms of proviso to Section 110(1) of the Act. What the panchnama talks of is the custodian being told by the DRI not to remove, part with or otherwise deal with the goods. Clearly, therefore, no action was proposed and, in fact, taken in terms of the proviso to Section 110(1) of the Act, which is the only exception to not immediately seizing the goods.

+ for there to be a valid seizure of the goods it is incumbent on the proper officer to record reasons to believe, under Section 110(1) of the Act, that the goods are liable to be confiscated [Mapsa Tapes Pvt. Ltd. v. Union of India refers].

+ since till date no other order exists and no such order has been communicated to the Petitioner, it is not possible to accept the plea of counsel that the 'detention' of the goods by the DRI was with the authority of law and in any event should be treated as a seizure in terms of Section 110(1) of the Act.

+ the net result is that the detention by the DRI of the goods imported by the Petitioner under the aforementioned B/E from 13th May, 2016 onwards is entirely without the authority of law.

+ the Customs will proceed to inspect the goods and assess the B/E. In other words, the grant of NOC by the DRI to the further course of action to be taken by the Customs has to be presumed.

+ it is made clear that the Petitioner cannot be saddled with the warehouse charges as it has happened entirely due to the illegal action of the DRI. In other words, the Petitioner cannot be asked to bear the warehousing expenses. It will be for the DRI to bear the responsibility in this regard.

The High Court also advised the respondent Customs to issue a detailed set of instructions in consultation with the CBEC for appropriate coordination between the DRI and the Customs department and to ensure that there is no indefinite detention of goods without the authority of law.

The writ petition was disposed of.

(See 2016-TIOL-1550-HC-DEL-CUS)