Kerala High Court
Mohini Jewellers vs Joint Commissioner on 14 August, 2023
Author: C.S.Dias
Bench: C.S.Dias
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.S.DIAS
MONDAY, THE 14TH DAY OF AUGUST 2023 / 23RD SRAVANA, 1945
WP(C) NO. 17271 OF 2023
PETITIONER:
MOHINI JEWELLERS,
NO.25, RAMESH, GOLDEN MARKET, NAGARTHPET MAIN ROAD,
BANGALORE, KARNATAKA, REPRESENTED BY PROPRIETOR
BHARATH KUMAR KHATRI, S/O. GOVINDARAM, NO.45, 4TH
FLOOR, BURJIBA, MANSION, SANJEEVAPPA LINE, AVENUE
ROAD, BANGALORE NORTH, BANGALORE CITY, KARNATAKA, PIN
- 560002
BY ADVS. HRITHWIK D. NAMBOOTHIRI
P.N.DAMODARAN NAMBOODIRI
RESPONDENTS:
1 JOINT COMMISSIONER,
CUSTOMS PREVENTIVE COMMISSIONERATE, CATHOLIC CENTRE,
BROADWAY, COCHIN, PIN - 682031
2 THE SUPERINTENDENT OF CUSTOMS,
OFFICE OF THE SUPERINTENDENT OF CUSTOMS (PREVENTIVE),
CUSTOMS PREVENTIVE & NARCOTIC UNIT, PALAKKAD,
PIN - 678001
BY ADV P.G.JAYASHANKAR
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
14.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C)No.17271/2023
-:2:-
Dated this the 14th day of August, 2023
JUDGMENT
The writ petition is filed, inter alia, to quash Ext P5 order passed by the second respondent.
2. The relevant facts for the determination of the writ petition, in a nutshell are:
(i) The petitioner is a registered dealer engaged in the sale of gold, bullion & Jewels, functioning under the name and style 'Mohini Jewellers'.
(ii)The petitioner had sold 675.500 grams of gold bullions to a company in Thrissur, by invoice dated 07.12.2019. The petitioner had entrusted the gold to one of his employees to deliver it to the company.
(iii)On 09.12.2019, the Kuzhalmannam Police seized the gold and registered Crime No.0383/2019.
(iv) The second respondent and the petitioner filed W.P.(C)No.17271/2023 -:3:- Crl.M.P. Nos.8615 & 8671/2019, respectively, before the Jurisdictional Magistrate, for the release of the gold.
(v) The learned Magistrate, by Ext P1 order, rejected the petitioner's application, but allowed the second respondent's application.
(vi) Although the petitioner had challenged Ext P1 order before the Court of Session, Palakkad, in Crl.R.P.Nos.18 & 19/2020, the same were also dismissed.
(vii)The petitioner has produced all the documents before the courts below to prove his innocence.
(viii) Subsequently, the petitioner filed Ext P4 application, under Section 110A of the Customs Act, 1962(in short, 'Act'), seeking for the provisional release of the gold. The petitioner had specifically sought for a personal hearing.
(ix) The second respondent, by Ext P5 order, has rejected Ext P4 application.W.P.(C)No.17271/2023 -:4:-
(x) Ext P5 is patently wrong, illegal and erroneous.
Hence, the writ petition.
3. The respondents have, through their Standing Counsel, filed a statement denying allegations in the writ petition. It is contended that the person from whom the gold was seized(the employee of the petitioner) has given a voluntary statement to the respondents, under Section 108 of the Act, which reveals that the entire transaction is illegal and the gold was smuggled. The adjudicating authority has the discretion to decide whether the seized goods have to be provisionally released. There is no illegality in Ext P5 order. The writ petition may be dismissed.
4. Heard; Sri. Hrithwik D. Namboothiri, the learned counsel appearing for the petitioner and Sri.P.G.Jayashankar, the learned Standing Counsel appearing for the respondents.
5. Sri. Hrithwik D. Namboothiri drew the W.P.(C)No.17271/2023 -:5:- attention of this Court to Ext P4 application, wherein the petitioner has specifically sought for an opportunity of being heard. He placed reliance on the decisions of the High Courts of Punjab & Haryana and Bombay in Commissioner of Central Excise & Service Tax v. Gaurav Pharma Limited [MANU/PH/1715/2018] and The Commissioner of Customs (Import-I) v. S.S. Offshore Pvt. Ltd. [MANU/MH/3738/2017], respectively, and also the guidelines dated 16.08.2017 framed by the Central Board of Excise & Customs[CBEC] regarding provisional release of the seized imported goods. He argued that Ext P5 order is a laconic and passed in total disregard to the provisions of the Act, the law laid down in the decisions cited by him and the guidelines laid down by the CBEC. Hence, Ext P5 order warrants to be quashed by this Court.
6. Sri.P.G.Jayashankar vehemently resisted the W.P.(C)No.17271/2023 -:6:- writ petition. He contended that there is no necessity for conducting an adjudication in an application filed under Section 110A of the Act. He placed reliance on the decision of the High Court of Madras in Malabar Diamond Gallery P. Ltd. v. Addl. Dir.General, Directorate of Revenue Intelligence, Chennai [2016(341) E.L.T. 65 (Mad.)] to fortify his contention that the power under Section 110A of the Act is provisional and not absolute. He argued that Chapter 13 pertains to search, seizure and arrest and Chapter 14 relates to confiscation of goods, conveyance and imposition of penalty. They are entirely on two different areas. Thus, the power under Section 122A of the Act cannot be applied to proceedings under Chapter 13 of the Act. The powers of the authority under Section 110A is ministerial in nature and there is no necessity to afford any opportunity of being heard to the petitioner. The writ petition is meritless and is W.P.(C)No.17271/2023 -:7:- only liable to be dismissed.
7. Section 110A of the Customs Act, 1962, reads as follows:
"110A. Provisional release of goods, documents and things seized pending adjudication.--Any goods, documents or things seized[or bank account provisionally attached] 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."
8. Section 2(1) of the Act also defines the 'adjudicating authority'.
9. Section 122A of the Act deals with the adjudicating procedure. It is apposite to extract the Section 122A of the Act, which reads thus:
"122A. Adjudication procedure.--
(1) The adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires.
(2)The adjudicating authority may, if sufficient cause is shown, at any stage of proceeding referred to in sub-section (1), grant time, from time to time, to the parties or any of them W.P.(C)No.17271/2023 -:8:- and adjourn the hearing for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during the proceeding."
10. A reading of Section 110A of the Act establishes that the adjudicating authority has been conferred with the power to provisionally release any goods, documents, things seized or bank accounts to the owner or the bank account holder, on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require.
11. Thus, the above provision read with Section 122A of the Act clearly establishes that during the pendency of the adjudicating procedure, the adjudicating authority has the power to provisionally release the things enumerated under Section 110A of the Act, on taking a bond and/or security.
12. It is to be born-in-mind that, Section 110A was inserted by Act, 2006 with effect from 13.07.2006. W.P.(C)No.17271/2023 -:9:- Likewise, the word 'Adjudicating Officer' and 'Commissioner of Customs' was substituted with the words 'Adjudicating Authority' by Act No.8 of, 2011, with effect from 08.04.2011.
13. Consequent to the above amendments to the Act, the CBEC has issued guidelines dated 16.08.2017, the relevant portion which reads thus:
"The following guidelines are being issued for guidance of the adjudicating authorities in order to ensure uniformity and to streamline the divergent procedures being followed for grant of provisional release of imported goods which are seized under Section 110 of the Customs Act, 1962. Section 110A of the Customs Act, 1962 states that "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."
2. While provisional release of seized imported goods under Section 110A of the Customs Act, 1962 may normally be considered by the competent adjudicating authority upon a request made by the owner of the seized goods, provisional release shall not be allowed in the following cases-
(i) Goods prohibited under the Customs Act, 1962 or any other Act for the ime being in force;W.P.(C)No.17271/2023 -:10:-
(ii) Goods that do not fulfill the statutory compliance requirements / obligations in terms of any Act, Rule, Regulation or any other law for the time being in force;
(iii) Goods specified in or notified under Section 123 of the Customs Act, 1962;
(iv) Where the competent authority, for reasons to be recorded in writing believes that the provisional release may not be in the public interest."
14. The guidelines have been promulgated to bring in uniformity and streamline the divergent procedure that were followed in the country, and fortifies that on the adjudicating authority has the power to provisionally release the goods to the owner, on getting a proper bond in such form with security and conditions as the adjudicating authority may require.
15. In Gaurav Pharma (supra), the High Court of Punjab & Hariyana held thus:
"14. It cannot be disputed that the powers vested with the adjudicating authority to be exercised for considering the prayer for provisional release of goods is circumscribed with well settled principles of law governing W.P.(C)No.17271/2023 -:11:- the same. Such an order is not based on my policy, rather on settled principles of law. These orders cannot be issued mechanically, rather many factors are required to be considered such as the nature of goods, seriousness of offence, whether the goods being imported are prohibited, etc. etc. Any such order passed has civil consequences, hence, it cannot be opined that the same is passed by the adjudicating authority in exercise of its administrative powers rather it has rightly been opined by the Tribunal that the exercise of powers by the Commissioner under Section 110A of the Act is quasi judicial in nature and so the order passed."
16. A similar view has been taken in S.S. Offshore Pvt. Ltd.(supra) by the Bombay High Court by holding as follows:
"15. On application of the above five tests to the present case, the nature of the power conferred under Section 110 read with Section 110A of the Act is to deprive a owner of the goods the use of his property till the final adjudication of the proposed confiscation or allowing the provisional release of the goods subject to certain conditions to safeguard the Interest of the Revenue till the final decision is taken. It is undisputed that the exercise of power which is conferred under Section 110A of the Act would have civil consequences. The power when exercised could lead to either the State being left without security by the time the adjudication order is passed or the conditions W.P.(C)No.17271/2023 -:12:- for provisional release could be so onerous that it would be impossible for the importer to comply with them and use the goods till adjudication is over. The person vested with| the power to allow provisional release of the seized goods is the adjudicating authority under the Act. The Act itself deals with import of goods into the country. All of the above, would suggest that the order/decision given for provisional release would be in the nature of quasi judicial decision/order."
17. On an overall appreciation of the statutory provisions, its interpretations given above, the guidelines laid down by the CBEC, leads me to irresistible conclusion that the Act of adjudicating authority in deciding an application for provisional release is adjudicating procedure and not a ministerial act as contended by the respondents. Therefore, the adjudicating authority is bound to adhere to the elementary principles of natural justice by adverting to the contentions raised in an application seeking provisional release and afford the applicant an opportunity of being heard.
W.P.(C)No.17271/2023-:13:-
18. A reading of Ext P5 order shows that the second respondent has not adverted to any of the contentions raised by the petitioner in Ext P4 application and has not afforded it an opportunity of being heard. Instead, the second respondent by the cryptic Ext P5 order has held as follows:
"M/s. Mohini Jewellers request for release of seized goods under Section 110A of Customs Act, 1992 do not merit for consideration hence, rejected."
19. The finding of the second respondent in Ext P5 is erroneous, wrong and in blatant violation of the rudimentary principles of natural justice.
20. Sri. P.G. Jayashankar submitted that Ext P5 order has been passed by the second respondent, who is not the adjudicating authority under Section 110A. Hence, Ex P4 application would have directed to be decided by the adjudicating authority constituted under Section 110A of the Act, if this Court is W.P.(C)No.17271/2023 -:14:- proposing to order the above course.
21. In the light of the analysis and findings rendered above, I am of the view that Ext P4 application is to be directed to be considered by the adjudicating authority, constituted under Section 110A of the Act.
Resultantly, in exercise of the plenary powers of this Court under Article 226 of the Constitution of India, I order the writ petition in the following manner:
(i) Ext P5 order is set aside.
(ii) The adjudicating authority constituted under Section 110A of the Act, is directed to consider and dispose of Ext P4 application, in accordance with law and as expeditiously as possible, at any rate, within a period of one month from the date of receipt of a certified copy of this judgment, after affording the petitioner an opportunity of being heard.
(iii) It is made clear that this Court has not W.P.(C)No.17271/2023 -:15:- expressed anything on the merits of Ext P4 application.
Sd/-
C.S.DIAS,JUDGE
DST/14.08.23 //True copy//
P.A.To Judge
W.P.(C)No.17271/2023
-:16:-
APPENDIX
PETITIONER EXHIBITS
EXHIBIT-P1 TRUE COPY OF THE COMMON ORDER DATED
03.03.2020 IN CRL.M.P.8615/2019 & CRL. M. P. 8671/2019 ON THE FILES OF JUDICIAL FIRST CLASS MAGISTRATE COURT - I, PALAKKAD. EXHIBIT-P2 TRUE COPY OF THE SALES INVOICE BEARING NO.
84 DATED 07.12.2019 TO M/S.OPTIMUM GOLD AND DIAMONDS PVT. LTD. THRISSUR .
EXHIBIT-P3 TRUE COPY OF THE COMMON JUDGMENT DATED 31.01.2023 IN CRL. R. P. 18/2020 & 19/2020 BEFORE THE SESSIONS COURT, PALAKKAD . EXHIBIT-P4 TRUE COPY OF THE APPLICATION DATED 26.04.2023 SUBMITTED BEFORE THE 2ND RESPONDENT.
EXHIBIT-P5 TRUE COPY OF THE ORDER DATED 15.05.2023 ISSUED BY THE 2ND RESPONDENT IN PURSUANCE OF THE APPLICATION DATED 26.04.2023. RESPONDENT'S EXHIBITS: NIL