By TIOL News Service

CHENNAI, FEB 23, 2017: THE Intelligence Wing of the Customs House had examined the goods imported by the Petitioner on 11.11.2013 and drawn a detailed mahazar proceedings for ascertaining the true quantity and description of goods found imported and lying in the container. After drawing the detailed mahazar on 12.11.2013, the container was sealed using one time Customs Seal. On 18.11.2013 necessary permission was accorded to the petitioner-importer for bonding the goods under Section 49 of the Customs Act. The Customs Authorities have once again drawn a mahazar on 03.12.2013 this time around effecting seizure of the goods.

It is thereafter, on 20.05.2014, the Commissioner of Customs House, Chennai, invoking the proviso to Section 110 (2) of the Act, has proposed to extend the period for issuance of show cause notice under Section 124 of the Act, by a further period of six months, in the process, reckoning the date of seizure of the consignment as 03.12.2013. Time was granted up to 28.05.2014 for filing the objections.

The Petitioner contended that the SIIB officials of the Customs House have undertaken a detailed examination of the container by de-stuffing the cartons contained therein and prepared a detailed mahazarnama on 11.11.2013 and the container was once again sealed. Thus, the writ petitioner/appellant has been successfully and effectively prevented from gaining access, control and or possession of the goods imported in spite of payment of necessary Duty thereon. Therefore, the 'act of detention of goods' by the customs amounts to seizure of the goods. When once the goods are seized and if no show cause notice was drawn within a period of six months thereafter, such goods become liable to be released unconditionally. In spite of making such a specific request on 19.05.2014, the Commissioner of Customs has drawn necessary show cause notice the next day on 20.05.2014 proposing to extend the time limit to commence the adjudication proceedings by a further period of six months. It is contended that when once the six months period has elapsed, the question of invoking the proviso to sub-section (2) of Section 110 of the Act would not arise. The Petitioner is in Writ Appeal against the dismissal of Writ Petitions filed.

However, the High Court held:

+ What has been undertaken on 11.11.2013 and 12.11.2013 is nothing but examination of the imported goods and their inventorisation. It is thereafter, the container has been re-stuffed back with all the cartons containing the imported goods. The container cannot be left open and unattended to and hence the container was sealed using a Customs One Time Seal. It is therefore, a case of sealing the container with a view to preserve the integrity of the imported goods contained in various cartons loaded therein, till the necessary follow up action under the Act is taken up. If the container were not to be sealed, the imported goods would get exposed to the grave risk of being pilfered. In which event, it is the Customs Officer to whom the custody of the goods are entrusted becomes liable to pay duty on such goods as per the provisions contained in sub-section (3) of Section 45 of the Act, but not the importer. It is with a view to prevent any such ill effects flowing on to the authorities of the Customs, the container has been sealed using the One Time Seal of the Customs on 12.11.2013. Whereas actual seizure of the goods has taken place only on 03.12.2013, based upon the factual finding that an attempt has been made to smuggle certain goods. The fundamental requirements for effecting seizure of goods is the reason to believe that the goods are liable to be confiscated under the Act. Hence, only upon there being a reason to believe that the goods are liable to be confiscated under the Act, any such goods then can be seized. Under Clause (f) of Section 111 of the Act, any dutiable or prohibited goods required to be mentioned under the Regulations, any import manifest or import report which are not so mentioned, such goods are liable to be confiscated. The examination that was concluded on 12.11.2013 having revealed the presence of large number of goods undisclosed and concealed in the container as many as 2741 cartons which are not declared did the occasion arise for consideration as to whether the goods are liable to be confiscated or not. Under Clause (i) of Section 111, goods found concealed in any manner in any package either before or after unloading are liable for confiscation. Unless the goods become liable for confiscation, they cannot be seized. Hence, the exercise carried on 11th and 12th November, 2013 is only an ascertainment exercise as to whether the goods imported tally with the details found mentioned in the import manifest delivered or in that guise any clandestine import of undeclared goods is attempted at. Unless a correct factual finding is arrived at, the occasion for application of mind as to whether such goods are liable to be cleared for Home Consumption or liable to be confiscated under Section 111 of the Act, would not arise. Hence, the examination and inventorisation undertaken on 12.11.2013, does not amount to effecting seizure of such goods.

+ The computation of six months period is thus to commence, obviously, only from the date the goods are seized by the Proper Officer under sub-section (1) of Section 110; but not from the date of their detention as urged. It is wholly proper to note that in law there is a well marked distinction between "Detention" and "Seizure".While every detention does not amount to seizure, but every seizure automatically encompasses detention. Further, while seizure can lead to the consequential confiscation, every detention need not necessarily lead to any such inevitable result.

+ It will be relevant to notice in this context that the Commissioner of Customs has drawn a show cause notice under the proviso to sub-section (2) of Section 110 of the Act, on 02.06.2014, proposing to extend the period for issuance of show cause notice under Section 124 of the Act, by another six months, i.e., up to 03.12.2014 in respect of the seized goods under mahazar drawn on 03.12.2013. This order passed by the Commissioner of Customs on 02.06.2014 is in accordance with the provisions contained under sub-section (2) of Section 110 of the Act, and it is well within the time limit set out therein, when the time limit of six months is so reckoned from 03.12.2013.

Accordingly, the High Court dismissed the Writ Appeal. The High Court also dismissed another Writ Appeal filed against confiscation of the imported goods.

(See 2017-TIOL-355-HC-MAD-CUS)