By TIOL News Service

NEW DELHI, FEB 20, 2014: THE petition filed a writ petition under Article 226 of the Constitution of India, for de-freezing it's account held in Citibank, NA, 27 Central Market, Sector II, Western Avenue Road, Punjabi Bagh , New Delhi which has been frozen by the DRI during investigations into evasion of customs duties.

The Petitioner alleges that there were certain allegations of import of high value pesticides/insecticides in the guise of Sodium Bi-Carbonate against certain firms which led to some investigation by Respondent No.2. It is urged that the Petitioner has neither been indicted nor arraigned as a Noticee in the show cause notice purported to have been issued in pursuance of the investigation. In spite of this, the Petitioner's Bank Account bearing No.030874226 has been frozen. It is urged that as per the provisions of Sections 110 (1) of the Customs Act, 1962 (the Act), if any goods liable for confiscation under the Act are seized and a show cause notice under Section 124 of the Act is not given within six months, then the goods are liable to be restored to the person from whom the goods have been seized. It is stated that since the Bank account was frozen in July, 2011, the same is liable to be de- freezed.

After hearing both sides, the High Court held:

+ The distinction and the scope of Section 110(2) and 124 were dealt with in great detail by the Hon'ble Supreme Court of India in the judgment of Harbans Lal . The Supreme Court held that Sections 110 and 124 are independent, distinct and exclusive of each other and even if any seized goods are returnable in terms of Section 110 of the Act, the proceedings for confiscation of the goods under Section 124 may still continue.

+ Thus, it is well settled by the authoritative pronouncement of the Supreme Court in Harbans Lal that if the notice as required under Section 110(2) of the Act is not served, the goods are liable to be returned, though the same may not affect the proceedings for confiscation of the goods under Section 124 of the Act.

+ Section 110(3) of the Act deals with seizure of the documents or things which in the opinion of the proper officer would be relevant to any proceedings under the Act. Freezing of the bank account, will not be seizure of any document or thing useful or relevant to any proceedings under the Act. Rather freezing of the account was only with a view to stop the Petitioner from withdrawing the proceeds of the alleged violations under the Act.

+ In this view of the matter, since the freezing of the bank account, as stated above, was not seizure of the ‘goods' as envisaged under Section 110 of the Act, the Petitioner is not entitled to de-freezing of the bank account unconditionally. It is therefore, directed that the amount deposited in Bank Account No.030874226, Citibank, NA, 27 Central Market, Sector II, Western Avenue Road, Punjabi Bagh , New Delhi, after the date of freezing the account shall be released, subject to furnishing of a Bank guarantee to Respondent No.2 in respect of the amount credited in the account from the date of freezing of the account.

(See 2014-TIOL-213-HC-DEL-CUS)