Karnataka High Court
Shri Murali B vs The Intelligence Officer on 29 September, 2022
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 29TH DAY OF SEPTEMBER, 2022
BEFORE
THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION No.17928 OF 2022 (T-CUS)
BETWEEN:
SHRI MURALI B
S/O R BHASKAR
AGED ABOUT 34 YEARS,
RAMESHWARI VILLA 60TH FEET ROAD,
13TH CROSS,VINOBANAGARA
SHIMOGA
KARNATAKA-577204
...PETITIONER
(BY SRI.GOKUL RAJ.L., ADVOCATE FOR
SRI. PRAKASH.D., ADVOCATE)
AND:
1. THE INTELLIGENCE OFFICER
DIRECTORATE OF REVENUE INTELLIGENCE NHAVA
SHEVA-I, MUMBAI ZONAL UNIT
208, 209,215, 2ND FLOOR, D-WING
M/S NAVI MUMBAI SEZ COMMERCIAL COMPLEX
SECTOR 11 DRONAGIRI RAIGAD NAVI MUMBAI-400702
2. THE DEPUTY DIRECTOR
DIRECTORATE OF REVENUE INTELLIGENCE
MANGALORE ZONAL UNIT
BHARATI BHAWAN, BEJAI CHURCH ROAD,
MANGALORE-575004
3. THE COMMISSIONER OF CUSTOMS
JAWAHARLAL NEHRU CUSTOM HOUSE,
NHAVA SHEVA V COMMISSIONERATE TAL URAN RAIGAD
MAHARASHTRA-400707
4. THE DEPUTY COMMISSIONER OF CUSTOMS (SIIB)
NEW CUSTOM HOUSE PANAMBUR
MANGALURU-575010
...RESPONDENTS
(BY SMT.PREETHA MAHADEVAN., ADVOCATE)
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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF
THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
SEIZURE MEMO DTD 13.08.2021 AT ANNEXURE-A ISSUED BY
THE R1 AS IS NOT ISSUED BY THE PROPER OFFICER UNDER
THE ACT AND HENCE BAD IN LAW AND WITHOUT JURISDICTION
AND ETC.
THIS W.P. COMING ON FOR ORDERS THIS DAY, THE
COURT MADE THE FOLLOWING:-
ORDER
In this petition, petitioner has sought for the following reliefs:-
" a) Quash the Seizure Memo dated:
13.08.2021 at Annexure-A, issued by the 1st Respondent as is not issued by the " proper Officer" under the Act and hence ban in law and without jurisdiction.
b) Quash the Provisional Release
Order dated: 25.07.2022 in file No.
GEN/SIIB/MISC/29/2022-UBS-O/O-COMMR- CUS-MANGALURU at Annexure-F, issued by 4th Respondent imposing conditions for provisional release of the seized vehicle is arbitrary and bad in law.
c) Pass any other order or give any other direction as this Honorable Court deems fit and appropriate in the circumstances of the case."
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2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.
3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner invites my attention to the impugned provisional release order of the subject car in order to point out that while the 4th respondent was fully justified in directing release of the subject vehicle in favour of the petitioner, subject to the petitioner executing a Bond for the value of Rs.3,40,00,000/- which was the market value of the subject car, the said respondent did not have any jurisdiction or authority of law in directing the petitioner to furnish the Bank Guarantee in a sum of Rs.5,68,16,000/- which is without any basis and without recording any reasons as to why the petitioner as to furnish the Bank Guarantee to the tune of the aforesaid sum and the same being illegal, arbitrary and without any basis, deserves to be quashed.
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3.1 In this context, my attention is invited to the show cause notice dated 10.08.2022 issued by the 1st respondent to the petitioner and other persons under Section 124 of the Customs Act, 1962, in order to point out that perusal of paragraph-16.2 of the said Show Cause Notice in relation to the petitioner will clearly indicate that the applicable duty payable by the petitioner as quantified by the 1st respondent himself comes to only Rs.2,28,15,790/- with applicable interest and penalty which is far lesser than a sum of Rs.5,68,16,000/- demanded by the 4th respondent to furnish the Bank Guarantee.
3.2 It is therefore submitted that the impugned condition in the provisional release order dated 25.07.2022 directing the petitioner to furnish Bank Guarantee in a sum of Rs.5,68,16,000/- is illegal, arbitrary and the same deserves to be quashed. In support of his submissions, learned counsel for the petitioner places reliance upon the decision of the co-ordinate Bench of this Court in the case of Shri Suriya vs. The Intelligence Officer & Others - W.P.No.6765 / 2022 dated 14.06.2022.
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4. Per contra, learned counsel for the respondents in addition to reiterating the various contentions urged in the statement of objections, submit that the 4th respondent is fully justified in imposing condition No.2 in the provisional release order, thereby directing the petitioner to furnish the Bank Guarantee in a sum of Rs.5,68,16,000/- and that the impugned condition doer not warrant interference by this Court in the present petition.
5. As rightly contended by the learned counsel for the petitioner, a perusal of paragraph - 16.2 of the Show Cause Notice dated 10.08.2022 will clearly indicate that the 1st respondent has come to the categorical conclusion that the petitioner was liable to pay only Rs.2,28,15,790/- together with applicable interest and penalty, which would, at any rate be much lesser than a sum of Rs.5,68,16,000/-, in respect of which, the Bank Guarantee is directed to be furnished by the petitioner. It is also relevant to state that the impugned condition No.2 has been imposed by the 4th respondent is without any basis and without any quantification as to why the petitioner is liable to furnish the 6 Bank Guarantee in respect of the aforesaid sum of Rs.5,68,16,000/- sought to be imposed by the 4th respondent. Further, in Shri.Surya's case supra, under identical circumstances, this Court passed the following order:-
" A Range Rover Sport 5.0 SVR Car bearing Reg. No.PB-36-H-0900 has been imported to India by evading duty by fraudulently availing duty exemption to a tune of Rs.60,13,920/-. Hence, the said Car has been seized by respondent No.1 and a seizure memo dated 16.07.2021 bearing No.DRI/MZU/NS-1/INT-51/2021 vide Annexure - A to the writ petition is issued. Subsequent to the seizure, petitioner claiming to be the owner of the said Car has sought for release of the same. Pursuant to his application, an order of provisional release of goods under Section 110A of the Customs Act, 1962 dated 29.12.2021 bearing order No.06/PR/OS/2021 bearing S/26- Misc-1195/2021-22/Grp.5B JNCH has been passed by the respondent No.3. Aggrieved by the seizure as well as the terms of the order of the provisional release, the instant writ petition is filed.
2. During the course of the arguments, the learned counsel for the petitioner submitted that the matter requires adjudication in terms of the provisions of the Customs Act, 1962 and in the 7 instant writ petition, he limits his challenge only to the terms of the order of provisional release of goods under Section 110A of the Customs Act, 1962. It is contended that subsequent to the seizure, there has been a provisional order passed releasing the vehicle. However, the terms imposed are harsh and arbitrary and requires to be set aside. The order of release is subjected to the following terms:-
"ORDER I hereby order to release the vehicle Range Rover bearing registration No.PB36H0900 provisionally under Section 110A of the Customs Act, 1962 subject to fulfillment of following conditions:-
1. The beneficial owner shall pay the differential duty amounting to Rs.60,13,920/- (Rupees Sixty Lakhs Thirteen Thousand Nine Hundred and Twenty Only).
2. Execute a Bond for Rs.29,48,000/- (Rupees Twenty Nine Lakhs Fourty Eight Thousand only) with an undertaking that they shall pay the duty, fine and/or penalty as may be adjudged by the Adjudicating Authority, subject to appellate provisions under the Customs Act, 1962 as prescribed in para 5 of Circular No.35/2017- Customs dated 16.08.2017.
3. Execute a Bank Guarantee of Rs.1,50,00,000/- (Rupees One Crore Fifty Lakhs 8 only) having clause binding the issuing bank to keep it renewed and valid till final adjudication of the case, or in the event of non-renewal of Bank Guarantee as above, the guaranteed amount be credited to the Government account by the bank on its own as prescribed in para 5 of Circular No.35/2017-Customs dated 16.08.2017."
3. Learned counsel appearing for the respondents submits that the duty that has escaped is Rs.60,13,920/- and the petitioner is liable to pay the sum along with the interest and penalties and further contends that the conditions are in accordance with law and prays for dismissal of the writ petition.
4. The duty as per the respondents which is recoverable is Rs.60,13,920/-. Under the circumstances, it would be reasonable to ask the petitioner to deposit 50% of the maximum duty payable and provide bank guarantee in respect of other 50% along with necessary bond as demanded by the authority apart from an undertaking that the vehicle shall not be further encumbered or alienated pending disposal of the adjudication. Hence, the following:-
ORDER The conditions of release imposed in the order of provisional release of goods under Section 110A of the Customs Act, 1962 bearing Order No. 06/PR/OS/2021 bearing S/26-Misc-9
1195/2021-22/Grp.5B JNCH dated 29.12.2021 issued by the respondent No.3 is modified as follows:-
(i) The beneficial owner shall pay 50% of differential duty out of Rs.60,13,920/- and execute bank guarantee in respect of other 50% and shall keep it renewed and valid till final adjudication of case, or in the event of non-renewal of Bank Guarantee as above, the guaranteed amount be credited to the Government account by the bank on its own as prescribed in para 5 of the Circular No.35/2017-Customs dated 16.08.2017.
(ii) Shall execute a bond of Rs.29,48,000/- with an undertaking that they shall pay the duty, fine and/or penalty as may be adjudged by the Adjudicating Authority subject to appellate provisions under the Customs Act, 1962 as prescribed in para 5 of Circular No.35/2017- Customs dated 16.08.2017.
(iii) The beneficial owner shall not alienate or otherwise encumber the vehicle till the adjudication is completed.
(iv) The writ petition is disposed of accordingly."
6. As can be seen from the material on record and the aforesaid order passed by this Court, the petitioner therein was directed to pay 50% of the differential duty and execute the Bank Guarantee in respect of other 50%, 10 subject to the conditions imposed by this Court in the said order. Accordingly, I am of the considered opinion that in the absence of any justifiable material produced by the petitioner to establish as to how the 4th respondent was entitled to demand the Bank Guarantee in a sum of Rs.5,68,16,000/- from the petitioner, the impugned condition in this regard deserves to be quashed.
7. Insofar as the contention urged by the respondents that the petition is not maintainable in view of alternative remedy available by way of an appeal under Section 128 of the Customs Act is concerned, having regard to the findings above that the impugned condition directing furnishing of Bank Guarantee is illegal, arbitrary and without jurisdiction or authority of law, merely because alternative remedy is available, the said circumstance cannot be made the basis to come to the conclusion that the present petition is not maintainable and consequently, the said contention cannot be accepted. Insofar as the other contentions on merits are concerned, this order is only restricted to the limited purpose of considering the 11 validity of the impugned condition No.2 in relation to Bank Guarantee and the other contentions need not be gone into at this stage.
8. In the result, I pass the following:-
ORDER
(i) Petition is hereby allowed
(ii) The impugned condition No.2 (ii) in the provisional release order dated 25.07.2022 directing the petitioner to furnish Bank Guarantee in a sum of Rs.5,68,16,000/- is modified as hereunder:-
(a) Petitioner shall pay 50% of
Rs.2,28,15,790/- in favour of the 4th
respondent within a period of six weeks from today;
(b) In addition to the aforesaid payment of 50% of Rs.2,28,15,790/-, the petitioner shall furnish the Bank Guarantee in respect of the remaining 50% and keep it renewed till the final adjudication of the matter by the respondents.
(iii) Immediately upon the petitioner complying with the aforesaid directions and making the payment and 12 furnishing the Bank Guarantee, the 4th respondent shall release the subject car in favour of the petitioner forthwith and at any ratewithin 48 hours thereafter.
Sd/-
JUDGE Srl.