Bombay High Court
Shri Kanheiya Lal Vaishnav Proprietor ... vs Union Of India (Through The Secretary) ... on 10 February, 2021
Author: Milind N. Jadhav
Bench: Ujjal Bhuyan, Milind N. Jadhav
Priya Soparkar 1 wpl 6821-20 and ors-os
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L.) NO.6821 OF 2020
Shine Star Exports ... Petitioner
V/s.
Union of India and ors. ... Respondents
WITH
WRIT PETITION (L.) NO.6827 OF 2020
Sea Shine Exports ... Petitioner
V/s.
Union of India and ors. ... Respondents
WITH
WRIT PETITION (L.) NO.6826 OF 2020
Jayshree Enterprises ... Petitioner
V/s.
Union of India and ors. ... Respondents
AND
WRIT PETITION (L.) NO.6824 OF 2020
Ganesh Exports ... Petitioner
V/s.
Union of India and ors. ... Respondents
WITH
CIVIL APPELLATE JURISDICTION
WRIT PETITION (ST.) NO.96099 OF 2020
Shri Mukesh Madhu Regar ... Petitioner
V/s.
Union of India and ors. ... Respondents
AND
WRIT PETITION (ST.) NO.96777 OF 2020
Shri Kanheiya Lal Vaishnav ... Petitioner
V/s.
Union of India and ors. ... Respondents
---
::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 :::
Priya Soparkar 2 wpl 6821-20 and ors-os
Dr.Sujay Kantawala alongwith Mr.Anupam Dighe, Ms.Chandani
Tanna, Mrs.Shrushti Relekar i/by M/s India Law Alliance, Advocates
for the Petitioners in WPL Nos.6821 of 2020, 6827 of 2020, 6826
of 2020 and 6824 of 2020.
Mr.A. Batra i/by Mr.Brijesh Pathak, Advocates for the Petitioners in
WPST Nos.96099 of 2020 and 96777 of 2020.
Mr.Pradeep S. Jetly, Senior Advocate with Mr.J.B.Mishra, Advocates
for the Respondents in all the writ petitions.
Ms.Anusha Amin, Advocate for Respondent No.1-Union of India in
WPL Nos.6821 of 2020, 6827 of 2020, 6826 of 2020 and 6824 of
2020.
---
CORAM : UJJAL BHUYAN &
MILIND N. JADHAV, JJ.
DATE : FEBRUARY 10, 2021.
P.C.:-
Heard Dr.Kantawala, learned counsel for the petitioners in Writ Petition (L) Nos.6821, 6824, 6826 and 6827 of 2020; Mr. Batra, learned counsel for the petitioners in Writ Petition (St.) Nos. 96099 and 96777 of 2020; and Mr.Pradeep S. Jetly, learned senior counsel alongwith Mr.J.B.Mishra, learned counsel for the respondents.
2. In all the above writ petitions petitioners are aggrieved by seizure memos dated 31st October, 2020 and 2nd November, 2020 whereby declared quantities of cut and polished diamonds of the petitioners sought to be exported vide different shipping bills were seized by the customs authorities.
3. Following notice issued on admission as well as on the prayer for stay, respondents have filed reply affidavit justifying the seizure.
4. When the cases were heard on 21 st January, 2021, court had taken the view that instead of entering into the rival contentions ::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 ::: Priya Soparkar 3 wpl 6821-20 and ors-os as to the legality and validity of the seizures at this stage it would be in the interest of justice if the Commissioner of Customs was directed to act in terms of section 110A of the Customs Act, 1962 (briefly "the Customs Act" hereinafter) for provisional release of the exportable goods. Relevant portion of the order dated 21 st January, 2021 reads as under:-
"5. Without entering into the rival contentions at this stage, we are of the view that it would meet the ends of justice if a direction is issued to the Commissioner of Customs to act in terms of section 110A of the Customs Act, 1962. Section 110A as it stands today, reads as under :-
"110A. Provisional release of goods, documents and things seized [or bank account provisionally attached] 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 [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."
6. This provision was analyzed by this Court in Siddharth Vijay Shah Vs. Union of India decided on 08.09.2020 in the following manner :-
"12. From a reading of section 110-A, as extracted above, it is evident that any goods, documents or things seized or bank account provisionally attached under section 110 may, pending the order of adjudicating authority, be released 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. Thus, this provision confers a right on the owner to seek provisional release of seized goods etc., while at the same time a corresponding discretionary power is vested on the adjudicating authority who may release the seized goods etc. upon a bond with such security and conditions pending order of the adjudicating authority. Though much ::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 ::: Priya Soparkar 4 wpl 6821-20 and ors-os emphasis has been placed by the respondents on categorization of the imported vehicle as a prohibited good as defined under sub-section (33) of section 2, we do not find any limitation imposed in section 110-A that a good which is categorized as a prohibited good under section 2(33) cannot be subjected to provisional release under section 110-A. The words "goods, documents and things seized" are expressions of general import without any qualifications and / or are not accompanied by any qualifying words. Therefore, no restriction or restrictive meaning can be read into the said expressions which is not contemplated by the statute.
13. As a matter of fact, section 110A provides a pragmatic mechanism to facilitate provisional release of seized goods etc. to the owner pending adjudication but at the same time protecting the interest of the revenue. Keeping the above in mind, the provision is required to be understood and applied."
7. We do not find any impediment to exercise of power by the Commissioner of Customs under section 110A of the Customs Act, 1962.
8 Accordingly, we direct the Commissioner of Customs to pass order(s) for provisional release of the exportable goods of the petitioners in accordance with law within seven days from the date of receipt of a copy of this order.
9. Stand over to 01.02.2021."
5. When the cases were taken up on 1 st February, 2021 six separate but identical orders, all dated 29th January, 2021 issued by the Principal Commissioner of Customs, were placed before us. As per the said orders dated 29th January, 2021 Principal Commissioner of Customs had ordered that the subject goods should not be released provisionally as there was no request from the concerned persons for provisional release of the goods.
This court expressed surprise at such orders being passed in
::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 :::
Priya Soparkar 5 wpl 6821-20 and ors-os
contravention of the direction of the High Court. However, on
request of Mr.Jetly that he would take up the matter with the
Principal Commissioner that the cases were deferred to 3 rd
February, 2021 for further consideration. Relevant portion of the order dated 1st February, 2021 is extracted hereunder:-
"2. On 21.01.2021, we had passed a detailed order directing Commissioner of Customs to pass order(s) for provisional release of the exportable goods of the petitioners under section 110A of the Customs Act, 1962 within seven days from the date of receipt of a copy of the said order.
3. We may note that on 28.01.2021 a praecipe was moved by Mr. J.B.Mishra, learned counsel for the respondents for substituting "adjudicating authority"
for "Commissioner of Customs" and also to replace "seven days" by "fourteen days" in the order dated 21.01.2021. On that day no order was passed since the cases have been fixed today.
4. Today when the matters are called upon, Dr. Kantawala has placed before us six separate but identical orders all dated 29.01.2021 whereby one Dr. Sanjay Kumar Agarwal, Pr. Commissioner of Customs has ordered not to release the subject goods provisionally as there is no request from the concerned persons for provisional release of the goods.
5. On the face of it, this order is directly in contempt of our order dated 21.01.2021 which order was taken cognizance of in the order dated 29.01.2021 in the first paragraph itself.
6. At this stage, Mr. Jetly submits that this bunch of cases may be listed on 03.02.2021 so that he can have a talk with the Principal Commissioner.
7. While granting time to Mr. Jetly as prayed for, we express our complete shock and surprise by the manner in which the aforesaid orders dated 29.01.2021 have been passed in complete violation of the High Court's order dated 21.01.2021.
8. Stand over to 03.02.2021 for further consideration. To be taken up First on Board."
::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 :::Priya Soparkar 6 wpl 6821-20 and ors-os
6. Thereafter, the cases were taken up on 3rd February, 2021. On that day Mr.Jetly furnished before us copies of fresh provisional release order dated 2nd February, 2021 in respect of all the petitioners. He clarified that the earlier orders dated 29 th January, 2021 were withdrawn whereafter the fresh set of orders dated 2nd February, 2021 have been passed. Liberty was granted to the petitioners to amend the writ petitions by incorporating the provisional release orders dated 2 nd February, 2021 and also to examine the conditions imposed for provisional release of the goods. Relevant portion of the order dated 3 rd February, 2021 is as hereunder:-
"2. Pursuant to our order dated 01.02.2021, Mr. Jetly has furnished before us fresh provisional release orders dated 02.02.2021 in respect of all the petitions. On a query by the Court he has taken us to paragraph-5 of the provisional release orders wherefrom we find that the earlier orders dated 29.01.2021 has been withdrawn and in place of the earlier orders, the present set of orders dated 02.02.2021 have been passed.
3. Mr. Jetly submits that the previous set of orders dated 29.01.2021 were passed due to a misinterpretation of the Court orders. He further submits that there was no intention on the part of the respondents to violate orders of this Court in any manner.
4. Without expressing any opinion at this stage, we permit learned counsel for the petitioners to amend the writ petitions by incorporating the provisional release orders dated 02.02.2021.
5. Learned counsel for the petitioners may also examine the conditions imposed for provisional release of the goods and make submissions thereon.
6. Stand over to 5th February, 2021."::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 :::
Priya Soparkar 7 wpl 6821-20 and ors-os 7. Thereafter, the provisional release orders dated 2 nd February, 2021 have been brought on record and detailed
submissions were made by learned counsel for the parties on 5 th February, 2021.
8. Learned counsel for the petitioners submits that the mala- fide intention of the Principal Commissioner of Customs is clearly manifest. Initially he had passed order dated 29 th January, 2021 directing that the subject goods should not be provisionally released as there was no request from the concerned person for provisional release of the goods which was in direct contravention of the order of this court dated 21st January, 2021 directing the Commissioner of Customs to pass orders for provisional release of the exportable goods of the petitioners within seven days. When he realized that such an order was in contempt of the High Court, he has now passed fresh set of orders dated 2 nd February, 2021 whereby though provisional release of the goods have been allowed, the conditions imposed are so onerous that it is next to impossible for compliance. Thus, what he could not do directly, he is now trying to do indirectly. Various other submissions have been made by learned counsel for the petitioners relating to the conditions imposed for provisional release.
9. On the other hand, Mr.Jetly learned senior counsel for the respondents submits that in terms of the direction of this court, Principal Commissioner of Customs has now passed the orders for provisional release with conditions which are necessary to protect the interest of the revenue. If the petitioners are aggrieved by the conditions, they can prefer appeal against the conditions imposed in the orders of provisional release.::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 :::
Priya Soparkar 8 wpl 6821-20 and ors-os
10. Submissions made by learned counsel for the parties on the question of interim prayer have been duly considered.
11. At the outset, we may deal with the submissions made by Mr. Jetly that petitioners should be relegated to the appellate forum for redressal of their grievance pertaining to the conditions imposed in the orders of provisional release.
12. On due consideration, we cannot agree with such submissions made by Mr.Jetly. In all the writ petitions challenge have been made to the orders of seizure which will be gone into in due course. However, in the proceedings held on 21 st January, 2021 this court took the view that at this stage it would meet the ends of justice if provisional release of the exportable goods of the petitioners are considered. Accordingly, without entering into the merit of the challenge vis-a-vis the impugned orders of seizure and observing that there was no impediment to exercise of power under section 110A of the Customs Act, direction was issued to the Commissioner of Customs to pass orders for provisional release of the exportable goods of the petitioners within seven days. When this court had directed the Commissioner of Customs to pass orders for provisional release and in compliance to such direction the Principal Commissioner of Customs has now passed orders for provisional release of the exportable goods of the petitioners with certain conditions, it would not at all be just and proper to relegate the petitioners to the appellate forum to ventilate their grievance as to the conditions imposed.
13. At this stage, we may mention that the goods under consideration are cut and polished diamonds which are freely importable/ exportable. Petitioners are having Importer Exporter Code (IEC) on the basis of which they are carrying on the ::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 ::: Priya Soparkar 9 wpl 6821-20 and ors-os business of import and export. In the instant case it is a matter of export. The Importer and Exporter Codes of the petitioners have neither been cancelled nor suspended by the competent authority.
14. Having said that we may now advert to the relevant portion of one of the provisional release orders dated 2 nd February, 2021 which reads as under :-
"10. In view of the above legal provisions and in compliance of directions dated 01.02.2021 of the Hon'ble High Court, I pass the following order:-
10.1 I order the provisional release of the goods covered under two Shipping Bills No.6035966 dated 22.10.2020 & 6045935 dated 22.10.2020, under Section 110A of the Customs Act, 1962 on the following conditions:
a. The owner of the goods shall furnish a bond equal to FOB value of the goods. b. The owner of the goods shall furnish a security in form of Bank Guarantee or Revenue Deposit equal to the declared FOB value of the goods to cover the probable redemption fine under Section 125 and penalty under Section 114 & 114AA of the Customs Act, 1962 which may be imposed by the adjudicating authority.
c. The goods shall be released to the actual owner of the goods only. At the time of releasing the goods, the actual owner shall present himself alongwith the relevant documents to prove the ownership of the goods to the satisfaction of the Adjudicating Authority."
15. Before dwelling on the above conditions, we may briefly refer to one of the impugned seizure memos since all the seizure memos are identically worded having similar allegations against the petitioners. The basic allegation is that the exporter is not operating its business from the notified address and is existing only on paper. Therefore, under the reasonable belief that the ::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 ::: Priya Soparkar 10 wpl 6821-20 and ors-os exporter is indulging in "some fraudulent practices" the seizure has been made.
16. Since we are not dealing with the challenge to the seizure memos at this stage, we refrain from making any comment thereon.
17. Reverting back to the conditions imposed in the provisional orders of release dated 2nd February, 2021, we may refer to some of the definitions given in section 2 of the Customs Act. As per section 2(3A) "beneficial owner" has been defined to mean any person on whose behalf the goods are being imported or exported or who exercises effective control over the goods being imported or exported. "Exporter" is defined under section 2(20). As per this definition, exporter in relation to any goods at any time between their entry for export and the time when they are exported includes any owner, beneficial owner or any person holding himself out to be the exporter.
18. From the above, it is evident that the definition of "exporter" under the Customs Act is both elastic as well as wide. Exporter would include the owner or a beneficial owner or any person holding himself out to be the exporter.
19. Viewed in the above context, condition No.(c) in the provisional release orders dated 2nd February, 2021 does not appear to be justified. Any person whether the owner, beneficial owner or an agent (including a customs house agent) can seek release of the goods on production of the relevant papers and on payment of the duty.
::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 :::Priya Soparkar 11 wpl 6821-20 and ors-os
20. In so far condition No.(b) is concerned, we are of the view that insistence on bank guarantee or revenue deposit equal to the amount declared free on board of the goods plus the probable redemption fine and penalty is not only harsh and oppressive but also amounts to prejudging as to what the adjudicating authority would do upon adjudication. Presupposing that adjudicating authority will impose redemption fine and penalty will amount to taking a view before hand as to what decision the adjudicating authority would render. It goes without saying that an adjudicating authority while adjudicating post seizure of goods exercises quasi-judicial powers. Therefore, there can be no interference, either implicit or explicit, in the exercise of such power by the adjudicating authority.
21. In the light of the discussions made above, we modify the conditions imposed by the Principal Commissioner of Customs in the orders dated 2nd February, 2021 while ordering provisional release of the exportable goods of the petitioners. The modified conditions are as under:-
(a) Petitioners shall furnish a bond equal to the free on board value of the goods.
(b) Further, petitioners shall furnish bank guarantee to the extent of 20% of the free on board value of the goods.
(c) Petitioners shall also furnish an undertaking to the adjudicating authority that they would co-operate in the investigation and in the event of any amount that may be found due relatable to the exports, they would discharge their liability.::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 :::
Priya Soparkar 12 wpl 6821-20 and ors-os
(d) Petitioners shall not claim any duty drawback
or other benefits relatable to the exports till disposal of the writ petitions.
22. Subject to the above, the seized goods of the petitioners shall be provisionally released within seven days from the date of receipt of a copy of this order.
23. Stand over to 22nd March, 2021.
(MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) ....
::: Uploaded on - 11/02/2021 ::: Downloaded on - 11/02/2021 22:10:31 :::