Madhya Pradesh High Court
Mundhra Exim Pvt Ltd Represented By Its ... vs Union Of India on 21 April, 2025
Author: Sushrut Arvind Dharmadhikari
Bench: Sushrut Arvind Dharmadhikari
NEUTRAL CITATION NO. 2025:MPHC-IND:10229
1
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
HON'BLE SHRI JUSTICE GAJENDRA SINGH
WRIT PETITION No. 874 of 2025
MUNDHRA EXIM PVT LTD REPRESENTED BY ITS DIRECTOR MR ASHISH MUNDHRA
AND OTHERS
Vs
UNION OF INDIA AND OTHERS
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Appearance :
Ms. Richa Kapoor - learned counsel for the petitioners.
Shri Himanshu Joshi - learned Deputy Solicitor General for the
respondent No.1/Union of India.
Shri Chandan Airen - learned counsel for the respondent No.2.
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Heard on : 25.03.2025
Pronounced on : 21.04.2025
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ORDER
Per: Justice Sushrut Arvind Dharmadhikari With consent of the parties, the matter is heard finally at Motion Stage. Petitioner has filed petition under Article 226 of Constitution of India, 1950 seeking following reliefs :-
2."(a) Pass an order/ direction to call for the entire records relating to communication in F.No. DRI/IZU/63-2024/CI/INT-77(2023)/ENQ-25 dated 03.12.2024 of Respondent No. 2 sent to Respondent No. 3-5;Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM
NEUTRAL CITATION NO. 2025:MPHC-IND:10229 2
(b) to pass an appropriate writ/order or direction in the nature of mandamus /certiorari thereby setting aside the Impugned Intimation dated 03.12.2024 and consequently direct the Respondent No. 3-5 to de- freeze the Petitioners' bank accounts as mentioned in the table of Para No. 1 above and (Reproduced below for ready reference) Sr. Name of the A/c Holder Account No. IFSC Code No.
1. 1 Mundra Exim Pvt. Ltd. 603105265939 ICICI0006031
2. 2 Mundra Agro Foods LLP 603105255414 ICICI0006031
3. 3 Mundra Agro Foods LLP 3247753210 KKBK0000464
4. 4 Mundra Exim Pvt. Ltd. 09745100000116 DCBL0000097
(c) Pass such further or other orders as may be deemed fit and proper in the interest of justice.
(d) Allow the petition with costs."
3. Facts draped in brevity, as per pleadings of the parties, which are necessary for the disposal of the present petition are being reproduced as hereunder:-
i. Petitioners are importer of Sri Lankan-origin edible goods, specifically Areca Nuts, which had sought exemption benefits under the Indo-Sri Lanka Free Trade Agreement (ISLFTA).
ii. During an investigation into F. No. DRI /IZU /CI /INT-77(2023) /ENQ-52), Respondents scrutinized the past imports done by Petitioners in November, 2022 and it was noticed that petitioners had imported 4 consignments of Areca-Nuts in the past, declaring them as Srilankan origin, and availed the duty exemption under ISFTA. With regard to consignment imported in November, 2022, process of verifying the Certificates of Origin ('COO') in respect of the aforesaid 4 consignments was started and COO were sent to International Customs Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 3 Division ('ICD') of Central Board of Indirect Taxes and Customs ('CBIC') wherein CBIC reported that one of the COO bearing CO/ISFTA/2022/20614 in respect of Bill of entry No. 3540232 dated 30.11.2022 filed by M/s Mundhra Exim Pvt. Ltd/Petitioner No.1. was found to be fake. Pertinently, in relation to aforesaid file number, two intimation notices dated 07.12.2023 (Annexure P/8) had been issued under Section 110(5) of Customs Act, 1962 thereby provisionally freezing the bank account of the petitioners for 6 months and thereafter again two intimations dated 03.06.2024 (Annexure P/9) were issued thereby extending the period of freezing of bank accounts of petitioner for another 6 months which was to expire on 03.12.2024.
iii. Upon such revelation, the Respondents opened another investigation bearing File No. DRI/IZU/63-2024/CI/NT-77(2023)/ENQ-25 and issued the first summon dated 11.07.2024 (Annexure P-11) and recorded the statement of the Director of Petitioner No.1 namely Shri Ashish Mundra.
iv. It is not disputed that investigation is currently pending in the file number DRI/IZU/63-2024/CI/NT-77(2023)/ENQ-25 against petitioners and no Show Cause Notice under Section 28, 28-AAA or 28-B of Customs Act, 1962 was issued to petitioners herein.
v. during the pendency of the investigation in the file number DRI/IZU/63-2024/CI/NT-77(2023)/ENQ-25, Notes-sheet dated 02.12.2024 (Annexure R/1) was prepared wherein approval to provisionally attach bank accounts of Petitioners was obtained from Additional Director General, DRI, Indore Zonal Unit and on the basis of the said approval, impugned intimation dated 03.12.2024 was issued freezing the bank accounts of the petitioners for a period of 6 months.
Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PMNEUTRAL CITATION NO. 2025:MPHC-IND:10229 4
4. Learned Counsel for the petitioners has argued that Provisional Attachment under section 110(5) r/w section 28BA of the customs act cannot be imposed at a stage which is anterior to finalization of an assessment or raising of the Demand for which reliance has been place on the judgment of the Hon'ble Supreme Court in M/s Radha Krishan Industries v. State of H.P., AIR 2021 SC 2114.It has been further argued that the pendency of the proceedings of section 28, 28AAA or 28 B of the Customs Act is the pre-requisite mandate for invoking the provisions of section 110(5) of the Customs Actin view of conjoint reading of Section 28 BA r/w 110(5) of Customs Act, 1962, which in this case were admittedly not pending before adjudicating Authority as no show cause notice under Section 28, 28AAAor 28-B of Customs Act, 1962 was issued to petitioners for initiating such proceedings. The investigation which the Respondent Authorities are carrying out cannot be equated with the pendency of proceedings and hence provisional attachment in absence of pending proceedings is without jurisdiction. Reliance has also been placed upon Circular No. 10/2008-Customs and F.No.401/7/2004-Cus.III(Pt.) dated 30.06.2008 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise & Customs (Annexure P/12) wherein it has been specifically instructed that the proceedings for provisional attachment can be initiated only after issue of SCN under Section 28, 28AAA or 28B of Customs Act, 1962 and it is argued that the respondents have failed to comply the said circular which has full force of law and hence the order of provisional attachment is without jurisdiction. To bolster this submission further, reliance has been placed on the judgment of Hon'ble Delhi High Court in S.B. International v. Assistant Director, Directorate of Revenue Intelligence & Ors 2018 SCC OnLine Del 7052 (Para 34,38,39,40,41).
5. Learned Counsel for the Petitioners has further argued that the order under Section 110(5) of Customs Act, 1962 cannot be extended beyond the period of one year in any event. The accounts freezed by way of impugned Attachment Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 5 Order dated 03.12.2024 under File No. DRI /IZU /63-2024 /CI/NT-77(2023)/ENQ-25, were already subject to attachment through orders dated 07.12.2023 and 03.06.2024 in the earlier case (F. No. DRI /IZU /CI /INT-77(2023)/ENQ-52), and the Respondents attempt to prolong this measure after the expiry of the one-year limitation is an unlawful attempt to indirectly achieve an impermissible objective. It is argued that what cannot be done directly, is not permissible to be done obliquely, meaning thereby, whatever is prohibited by law to be done, cannot legally be effected by an indirect and circuitous contrivance on the principle of "quando aliquid prohibetur, prohibetur at omne per quod devenitur ad illud" i.e. An authority cannot be permitted to evade a law by shift or contrivance. Hence it is argued that Respondents authority have tried to evade the statute by adopting an indirect approach as directly they could not have attached the bank accounts of the petitioners beyond the period of 1 year in view of Section 110(5) of Customs Act, 1962. It is argued that the entire exercise undertaken by respondents is colourable exercise of power and hence is liable to be struck down.
6. Learned Counsel for the petitioners has further argued that the impugned attachment order dated 03.12.2024 issued under section 110(5) is Time- Barred, as Respondents exceeded the statutory limitation period of 2 years as prescribed under Section 28 of the Act. Section 28 permits proceedings only within two years in routine cases and up to five years in cases involving (a) collusion, (b) willful misstatement, or (c) suppression of facts. However, none of the conditions stipulated in Section 28(4), are applicable in the present case, as no such allegations have been made by answering Respondents or opined prior to issuance of the impugned attachment order dated 03.12.2024. To bolster this submission, reliance has been placed on judgment of Hon'ble Apex Court in Commissioner of Customs, Mumbai v. M.M.K Jewellers & Anr 2008 (5) SCC 617 and Uniworth textiles Ltd. v. Commissioner of Central Excise, Raipur 2013(9) SCC 753.
Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PMNEUTRAL CITATION NO. 2025:MPHC-IND:10229 6
7. Per Contra, learned Counsel for Respondents has argued that the present petition is not maintainable in view of alternative remedies being available to the petitioners under Section 110A of Customs Act, 1962. On merits, it has been argued that the petitioners have not challenged the basic order dated 02.12.2024 on the basis of which impugned intimation dated 03.12.2024 has been issued, and hence the present petition is not maintainable in view of law laid down by Hon'ble Apex Court in Hindustan Commercial Corporation Pvt. Ltd. Vs. State of M.P 2025 (1) JLJ 54. It has been argued that Note- sheet/Approval dated 02.12.2024 (Annexure R/1) records subjective satisfaction and reasons for provisionally attaching the bank account of the petitioner and hence all the legal requirement have been complied with before issuance of the impugned intimation under Section 110(5) of Customs Act, 1962. However, it has not been disputed that no notice/SCN under Section 28, 28-AAA or 28-B of Customs Act, 1962 has been issued to the petitioners in the case at hand and the case is at the investigation stage.
8. In rebuttal, Learned Counsel for the petitioners has submitted that availability of alternative remedy is not a bar for entertaining the present writ petition as the impugned freezing/attachment is wholly without jurisdiction and has been made in violation of principles of natural justice which forms exception to the Doctrine of Alternative Efficacious remedy. It has been further submitted that the remedy under Section 110A of Customs Act, 1962 is available during adjudication and not during the pendency of investigation and hence no alternative remedy is available the petitioners. With respect to the argument of Respondents regarding not challenging the basic order dated 02.12.2024,learned counsel for the Petitioners has argued that the same is not an order but merely a note-sheet in which approval has been obtained and the same was not even supplied to the petitioners. It has been further argued by pointing out order-sheet dated 12.03.2025 that the said contention of Respondents had already been rejected by this court while observing that" It is Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 7 an admitted fact that the said order dated 02.12.2024 has neither been annexed with the intimation dated 03.12.2024 nor communicated to the petitioner. Therefore, the said order has been merged with the communication dated 03.12.2024".
9. Heard Learned Counsel for the parties at length and perused the record with aid of able assistance of the counsel for the parties.
10. So far as objection of the Respondents, that the petitioners have not challenged the basic order dated 02.12.2024 on the basis of which impugned intimation dated 03.12.2024 has been issued, and hence the present petition is not maintainable, is concerned, the same has rightly been dealt by this court vide order dated 12.03.2025 as bare perusal of so called basic order dated 02.12.2024 would reveal that it is merely a note-sheet wherein approval has been obtained for issuing the intimation under Section 110(5) of Customs Act, 1962 and the same was not even communicated to the Petitioners for them to be able to challenge the same. Even otherwise, in the considered opinion of this court, there is no need for separate challenge to the note-sheet dated 02.12.2024 as the same stood merged with impugned intimation dated 03.12.2024.
11. So far as the objection of Respondents regarding the maintainability of the petition in view of availability of alternative efficacious remedy is concerned, it has been settled by catena of decisions that the availability of alternative remedy is not an absolute bar for granting relief in the exercise of power under Article 226 of the Constitution of India as the same is a rule of convenience and self imposed restriction and there are certain exceptions to the said rule, namely:-
i. The writ petition has been filed for the enforcement of any of the Fundamental Rights protected by Part III of the Constitution ii. There has been a violation of the principle of natural justice iii. The order or proceedings are wholly without jurisdiction.Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM
NEUTRAL CITATION NO. 2025:MPHC-IND:10229 8 iv. the vires of an Act is challenged.
(Vide Harbanslal Sahnia v Indian Oil Corpn. Ltd, (2003) 2 SCC
107)
12. At this juncture fruitful reference can be made tojudgment of Hon'ble Supreme Court in the case of "M/s Radha Krishan Industries v. State of H.P. (2021) 6 SCC 771", relied upon by the counsel for the petitioners whichhas extensively addressed the objections concerning the maintainability of the Writ Petition on the grounds of an alternative remedy and the nature of provisional attachment and how it is to be exercised. The Hon'ble Court held as under:-
"The High Court has dealt with the maintainability of the petition under Article 226 of the Constitution. Relying on the decision of this Court in Assistant Commissioner (CT) LTU, Kakinada and others v Glaxo Smith Kline Consumer Health Care Limited, the High Court noted that although it can entertain a petition under Article 226 of the Constitution, it must not do so when the aggrieved person has an effective alternate remedy available in law. However, certain exceptions to this "rule of alternate remedy" include where, the statutory authority has not acted in accordance with the provisions of the law or acted in defiance of the fundamental principles of judicial procedure; or has resorted to invoke provisions, which are repealed; or where an order has been passed in violation of the principles of natural justice."
"15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 9 this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged..... .......
"72. For the above reasons, we hold and conclude that The Joint Commissioner while ordering a provisional attachment under section 83 was acting as a delegate of the Commissioner in pursuance of the delegation effected under Section 5(3) and an appeal against the order of provisional attachment was not available under Section 107 (1);
ii) The writ petition before the High Court under Article 226 of the Constitution challenging the order of provisional attachment was maintainable;
iii) The High Court has erred in dismissing the writ petition on the ground that it was not maintainable;
iv) The power to order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled;
v) The exercise of the power for ordering a provisional attachment must be preceded by the formation of an opinion by the Commissioner that it is necessary so to do for the purpose of protecting the interest of the government revenue. Before ordering a provisional attachment the Commissioner must form an opinion on the basis of tangible material that the assesse is likely to defeat the demand, if any, and that therefore, it is necessary so to do for the purpose of protecting the interest of the government revenue.Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM
NEUTRAL CITATION NO. 2025:MPHC-IND:10229 10
vi) The expression "necessary so to do for protecting the government revenue" implicates that the interests of the government revenue cannot be protected without ordering a provisional attachment;
vii) The formation of an opinion by the Commissioner under Section 83(1) must be based on tangible material bearing on the necessity of ordering a provisional attachment for the purpose of protecting the interest of the government revenue;
viii) In the facts of the present case, there was a clear non-application of mind by the Joint Commissioner to the provisions of Section 83, rendering the provisional attachment illegal;
ix) Under the provisions of Rule 159(5), the person whose property is attached is entitled to dual procedural safeguards:
(a) An entitlement to submit objections on the ground that the property was or is not liable to attachment; and
(b)An opportunity of being heard; There has been a breach of the mandatory requirement of Rule 159(5) and the Commissioner was clearly misconceived in law in coming into conclusion that he had a discretion on whether or not to grant an opportunity of being heard;
x) The Commissioner is duty bound to deal with the objections to the attachment by passing a reasoned order which must be communicated to the taxable person whose property is attached;
xi) A final order having been passed under Section 74(9), the proceedings under Section 74 are no longer pending as a result of which the provisional attachment must come to an end; and
xii) The appellant having filed an appeal against the order under section 74(9), the provisions of sub-Sections 6 and 7 of Section 107 will come into operation in regard to the payment of the tax and stay on the recovery of the balance as stipulated in those provisions, pending the disposal of the appeal."Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM
NEUTRAL CITATION NO. 2025:MPHC-IND:10229 11
13. In the case at hand, learned counsel for the petitioners has tried to persuade this court that the present petition is maintainable as the availability of alternative remedy provided under Section 110A of Customs Act is only available during the pendency of adjudication and not during the pendency of investigation. Furthermore, it has been argued that the impugned intimation dated 03.12.2024 issued by Respondents under Section 110(5) of Customs Act, 1962 is itself without jurisdiction on account of it being issued during pending of investigation and not during the pendency of the proceedings/adjudication which is not permissible in view of conjoint reading of Section 28-BA and Section 110(5) of Customs Act, 1962. If this court comes to conclusion that the impugned intimation dated 03.12.2024 is without jurisdiction as the same has been issued during investigation and not during any proceedings which is impermissible in accordance with provisions of law, then certainly this petition would be maintainable and liable to be entertained by this court.
14. Before adverting the aspect that whether the impugned intimation/attachment order dated 03.12.2024 issued under Section 110(5) of Customs Act, 1962 has been issued without jurisdiction or not? it would be apposite to reproduce relevant excerpts of legal provisions of Customs Act, 1962 and Circular No. 10/2008-Customs and F.No.401/7/2004-Cus.III(Pt.) dt. 30.06.2008 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise & Customs, interpretation of which is essential to adjudicate the controversy involved in the present lis.
Relevant Legal Provisions
28. Recovery of [duties not levied or not paid or short-levied or short-paid] or erroneously refunded.--
(1) Where any [duty has not been levied or not paid or short-levied or short-paid] erroneously refunded, or any interest payable has not been paid, part-paid or erroneously refunded, for any reason other than the Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 12 reasons of collusion or any wilful mis-statement or suppression of facts,
--
(a) the proper officer shall, within [two years] from the relevant date, serve notice on the person chargeable with the duty or interest which has not been so levied [or paid] or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:
[Provided that before issuing notice, the proper officer shall hold pre- notice consultation with the person chargeable with duty or interest in such manner as may be prescribed;]
(b) the person chargeable with the duty or interest, may pay before service of notice under clause (a) on the basis of, --
(i) his own ascertainment of such duty; or
(ii) the duty ascertained by the proper officer, the amount of duty along with the interest payable thereon under section 28AA or the amount of interest which has not been so paid or part-paid.
[Provided that the proper officer shall not serve such show cause notice, where the amount involved is less than rupees one hundred.] (2) The person who has paid the duty along with interest or amount of interest under clause (b) of sub-section (1) shall inform the proper officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause (a) of that sub-section in respect of the duty or interest so paid or any penalty leviable under the provisions of this Act or the rules made there under in respect of such duty or interest:
[Provided that where notice under clause (a) of sub-section (1) has been served and the proper officer is of the opinion that the amount of duty along with interest payable thereon under section 28AAor the amount of interest, as the case may be, as specified in the notice, has been paid in Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 13 full within thirty days from the date of receipt of the notice, no penalty shall be levied and the proceedings against such person or other persons to whom the said notice is served under clause (a) of sub-section (1) shall be deemed to be concluded.] (3) Where the proper officer is of the opinion that the amount paid under clause (b) of sub-section (1)falls short of the amount actually payable, then, he shall proceed to issue the notice as provided for in clause (a) of that sub-section in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-
section and the period of[two years] shall be computed from the date of receipt of information under sub-section (2).
(4) Where any duty has not been [levied or not paid or has been short- levied or short-paid]or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of,--
(a) collusion; or
(b) any wilful mis-statement; or
(c) suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been [so levied or not paid] or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice.
(5) Where any [duty has not been levied or not paid or has been short- levied or short paid] or the interest has not been charged or has been part-paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or the employee of the Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 14 importer or the exporter, to whom a notice has been served under sub- section (4) by the proper officer, such person may pay the duty in full or in part, as may be accepted by him, and the interest payable thereon under section 28AA and the penalty equal to [fifteen per cent.] of the duty specified in the notice or the duty so accepted by that person, within thirty days of the receipt of the notice and inform the proper officer of such payment in writing.
(6) Where the importer or the exporter or the agent or the employee of the importer or the exporter, as the case may be, has paid duty with interest and penalty under sub-section (5), the proper officer shall determine the amount of duty or interest and on determination, if the proper officer is of the opinion --
(i) that the duty with interest and penalty has been paid in full, then, the proceedings in respect of such person or other persons to whom the notice is served under sub-section (1) or sub- section (4),shall, without prejudice to the provisions of sections 135, 135A and 140 be deemed to be conclusive as to the matters stated therein; or
(ii) that the duty with interest and penalty that has been paid falls short of the amount actually payable, then, the proper officer shall proceed to issue the notice as provided for in clause (a) of sub-section (1) in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of [two years] shall be computed from the date of receipt of information under sub- section (5).
(7) In computing the period of [two years] referred to in clause (a) of sub-section (1) or five years referred to in sub-section (4), the period during which there was any stay by an order of a court or tribunal in respect of payment of such duty or interest shall be excluded.
Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PMNEUTRAL CITATION NO. 2025:MPHC-IND:10229 15 [(7A) Save as otherwise provided in clause (a) of sub-section (1) or in sub-section (4), the proper officer may issue a supplementary notice under such circumstances and in such manner as may be prescribed, and the provisions of this section shall apply to such supplementary notice as if it was issued under the said sub-section (1) or sub-section (4).] (8) The proper officer shall, after allowing the concerned person an opportunity of being heard and after considering the representation, if any, made by such person, determine the amount of duty or interest due from such person not being in excess of the amount specified in the notice.
(9) The proper officer shall determine the amount of duty or interest under sub-section (8),--
(a) within six months from the date of notice, in respect of cases falling under clause (a) of sub- section (1);
(b) within one year from the date of notice, in respect of cases falling under sub-section (4).
[Provided that where the proper officer fails to so determine within the specified period, any officer senior in rank to the proper officer may, having regard to the circumstances under which the proper officer was prevented from determining the amount of duty or interest under sub- section (8), extend the period specified in clause (a) to a further period of six months and the period specified in clause (b) to a further period of one year:
[Provided further that where the proper officer fails to determine within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued;] [(9A) Notwithstanding anything contained in sub-section (9), where the proper officer is unable to determine the amount of duty or interest under sub-section (8) for the reason that--Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM
NEUTRAL CITATION NO. 2025:MPHC-IND:10229 16
(a) an appeal in a similar matter of the same person or any other person is pending before the Appellate Tribunal or the High Court or the Supreme Court; or
(b) an interim order of stay has been issued by the Appellate Tribunal or the High Court or the Supreme Court; or
(c) the Board has, in a similar matter, issued specific direction or order to keep such matter pending; or
(d) the Settlement Commission has admitted an application made by the person concerned, the proper officer shall inform the person concerned the reason for non-determination of the amount of duty or interest under sub-section (8) and in such case, the time specified in sub-section (9) shall apply not from the date of notice, but from the date when such reason ceases to exist.] (10) Where an order determining the duty is passed by the proper officer under this section, the person liable to pay the said duty shall pay the amount so determined along with the interest due on such amount whether or not the amount of interest is specified separately.
[(10A) Notwithstanding anything contained in this Act, where an order for refund under sub-section (2) of section 27 is modified in any appeal and the amount of refund so determined is less than the amount refunded under said sub-section, the excess amount so refunded shall be recovered along with interest thereon at the rate fixed by the Central Government under section 28AA, from the date of refund up to the date of recovery, as a sum due to the Government.
(10B) A notice issued under sub-section (4) shall be deemed to have been issued under sub-section (1), if such notice demanding duty is held not sustainable in any proceeding under this Act, including at any stage of appeal, for the reason that the charges of collusion or any wilful mis- statement or suppression of facts to evade duty has not been established Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 17 against the person to whom such notice was issued and the amount of duty and the interest thereon shall be computed accordingly.] [(11) Notwithstanding anything to the contrary contained in any judgment, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub- section (1) of section 4 before the 6th day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section.] Explanation 1.--For the purposes of this section, ―relevant date means, (a) in a case where duty is[not levied or not paid or short-levied or short-paid], or interest is not charged, the date on which the proper officer makes an order for the clearance of goods;
(b) in a case where duty is provisionally assessed under section 18, the date of adjustment of duty after the final assessment thereof or re- assessment, as the case may be;
(c) in a case where duty or interest has been erroneously refunded, the date of refund;
(d) in any other case, the date of payment of duty or interest. ..........
28AAA. Recovery of duties in certain cases.--
(1) Where an instrument issued to a person has been obtained by him by means of --
(a) collusion; or
(b) wilful mis-statement; or
(c) suppression of facts, for the purposes of this Act or the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), by such person or his agent or employee and such instrument is utilised under the provisions of this Act or the rules made or notifications issued there Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 18 under, by a person other than the person to whom the instrument was issued, the duty relatable to such utilisation of instrument shall be deemed never to have been exempted or debited and such duty shall be recovered from the person to whom the said instrument was issued:
Provided that the action relating to recovery of duty under this section against the person to whom the instrument was issued shall be without prejudice to an action against the importer under section 28. ................
(2) Where the duty becomes recoverable in accordance with the provisions of sub-section (1), the person from whom such duty is to be recovered, shall, in addition to such duty, be liable to pay interest at the rate fixed by the Central Government under section 28AA and the amount of such interest shall be calculated for the period beginning from the date of utilisation of the instrument till the date of recovery of such duty.
(3) For the purposes of recovery under sub-section (2), the proper officer shall serve notice on the person to whom the instrument was issued requiring him to show cause, within a period of thirty days from the date of receipt of the notice, as to why the amount specified in the notice (excluding the interest) should not be recovered from him, and after giving that person an opportunity of being heard, and after considering the representation, if any, made by such person, determine the amount of duty or interest or both to be recovered from such person, not being in excess of the amount specified in the notice, and pass order to recover the amount of duty or interest or both and the person to whom the instrument was issued shall repay the amount so specified in the notice within a period of thirty days from the date of receipt of the said order, Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 19 along with the interest due on such amount, whether or not the amount of interest is specified separately.
(4) Where an order determining the duty has been passed under section 28, no order to recover that duty shall be passed under this section. (5) Where the person referred to in sub-section (3) fails to repay the amount within the period of thirty days specified therein, it shall be recovered in the manner laid down in sub-section (1) of section 142.] [28BA. Provisional attachment to protect revenue in certain cases.
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(1) Where, during the pendency of any proceeding under section 28, [or section 28AAA or section 28B], the proper officer is of the opinion that for the purpose of protecting the interests of revenue, it is necessary so to do, he may, with the previous approval of the [Principal Commissioner of Customs or Commissioner of Customs], by order in writing, attach provisionally any property belonging to the person on whom notice is served under [sub-section (1) or sub-section (4) of section 28] [or sub-
section (3) of section 28AAA or sub-section (2) of section 28B], as the case may be, in accordance with the rules made in this behalf under section 142. (2). Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1):
Provided that the [Principal Chief Commissioner of Customs or Chief Commissioner of Customs] may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years:
Provided further that where an application for settlement of case under section 127B is made to the Settlement Commission, the Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 20 period commencing from the date on which such application is made and ending with the date on which an order under sub-section (1) of section 127C is made shall be excluded from the period specified in the preceding proviso.] .......
110. Seizure of goods, documents and things.--
.......
(5) Where the proper officer, during any proceedings under the Act, is of the opinion that for the purposes of protecting the interest of revenue or preventing smuggling, it is necessary so to do, he may, with the approval of the Principal Commissioner of Customs or Commissioner of Customs, by order in writing, provisionally attach any bank account for a period not exceeding six months:
Provided that the Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend such period to a further period not exceeding six months and inform such extension of time to the person whose bank account is provisionally attached, before the expiry of the period so specified. 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.] ......
Relevant Excerpt of Circular No. 10/2008-Customs and F.No.401/7/2004-Cus.III(Pt.) issued by the Government of India, Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 21 Ministry of Finance, Department of Revenue, Central Board of Excise & Customs dated 30.06.2008 ...
Subject:-Instructions regarding Section 28 BA of the Customs Act, 1962 ...
2. In this connection the law ministry has advised that suitable guidelines should be issued to implement Section 28 BA of the Act. The following guidelines are therefore, issued to maintain uniformity in implementation by field formations.
i. The proceedings of provisional attachment can be initiated only after issue of SCN under Section 28 or 28 B of the Act ii. During the pendency of proceedings under Section 28 or 28 B of the act, if the proper officer is of the opinion that in order to protect the interests of revenue, it is necessary to attach the property of the notice, he shall prepare a proposal in the format prescribed in the Annexure hereto and forward the same to the jurisdictional commissioner of customs for his approval, except in cases where the proceedings under Section 28 or 28 B of the Act are pending before such Commissioner of Customs, in which case he shall himself make the order of attachment in accordance with the procedure set out in para
(iv) below.
...................
Note:- At the time of issuance of this circular, Section 100(5) of Customs Act, 1962 had not been enacted and was inserted vide Finance (No. 2) Act, 2019(23 of 2019), dt. 01.08.2019, w.e.f. 01.08.2019.
15. Before analysing and interpreting the aforesaid provisions of law, it would be apposite to refer to rules laid down by Hon'ble Apex Court in Chief Commissioner of Central Goods and Service Tax & Ors. Vs. M/s Safari Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 22 Retreats Private Ltd. & Ors.(2025) 2 SCC 523, pertaining to interpretation of taxing statutes, which are being reproduced as hereunder:-
"RULES REGARDING THE INTERPRETATION OF TAXING STATUTES
25. Regarding the interpretation of taxation statutes, the parties have relied on several decisions. The law laid down on this aspect is fairly well-settled. The principles governing the interpretation of the taxation statutes can be summarised as follows:-
a. A taxing statute must be read as it is with no additions and no subtractions on the grounds of legislative intendment or otherwise; b. If the language of a taxing provision is plain, the consequence of giving effect to it may lead to some absurd result is not a factor to be considered when interpreting the provisions. It is for the legislature to step in and remove the absurdity;
c. While dealing with a taxing provision, the principle of strict interpretation should be applied;
d. If two interpretations of a statutory provision are possible, the Court ordinarily would interpret the provision in favour of a taxpayer and against the revenue;
e. In interpreting a taxing statute, equitable considerations are entirely out of place;
f. A taxing provision cannot be interpreted on any presumption or assumption;
g. A taxing statute has to be interpreted in the light of what is clearly expressed. The Court cannot imply anything which is not expressed. Moreover, the Court cannot import provisions in the statute to supply any deficiency;Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM
NEUTRAL CITATION NO. 2025:MPHC-IND:10229 23 h. There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly;
i. If literal interpretation is manifestly unjust, which produces a result not intended by the legislature, only in such a case can the Court modify the language;
j. Equity and taxation are strangers. But if construction results in equity rather than injustice, such construction should be preferred; k. It is not a function of the Court in the fiscal arena to compel the Parliament to go further and do more;
l. When a word used in a taxing statute is to be construed and has not been specifically defined, it should not be interpreted in accordance with its definition in another statute that does not deal with a cognate subject. It should be understood in its commercial sense. Unless defined in the statute itself, the words and expressions in a taxing statute have to be construed in the sense in which the persons dealing with them understand, that is, as per the trade understanding, commercial and technical practice and usage."
16. Applying the rules for interpretation as laid down in Chief Commissioner of Central Goods and Service Tax & Ors. Vs. M/s Safari Retreats Private Ltd. & Ors.2025 (2) SCC 523to the relevant legal provisions as enumerated above, it is quite apparent that the word "proceedings" has not been defined under Customs Act, 1962 but the said word has been used in Section 110(5) of Customs Act, 1962 making it a condition precedent that provisional attachment of bank account can be done during pendency of any proceedings under the Customs Act, 1962. Pertinently, Section 110(5) has been introduced vide Finance (No. 2) Act, 2019(23 of 2019), dated 01.08.2019, prior to which the relevant provision for provisional attachment was Section 28 BA. In Section 25 BA, the word "proceedings" has been used in reference to Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 24 proceedings under "Section 28, or Section 28AAA or Section 28B".Hence, in the considered opinion of this court, the word "proceedings" which finds mention in Section 110(5) of Customs Act, 1962 is referrable to proceedings initiated under "Section 28, or Section 28AAA or Section 28B".
17. In view of conclusion arrived by this court hereinabove, a bare reading of Section 28, or Section 28AAA or Section 28B would reveal that the proceedings under the said Sections would commence only after issuance of Show Cause Notice as provided under the said Sections. Furthermore, as per Circular No. 10/2008-Customs and F.No.401/7/2004-Cus.III(Pt.) dated 30.06.2008 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise & Customs also, it has been specifically instructed that the proceedings for provisional attachment can be initiated only after issuance of SCN under Section 28, 28AAA or 28B of Customs Act, 1962. In the case at hand, it is an admitted fact that investigation is still pending and no show cause notice has been issued to the petitioners under the aforesaid provisions. Hence, in the considered opinion of this court, when there is no "proceeding" pending against the petitioners within the meaning attached to the said word under the provisions of Customs Act, 1962, Respondents had no jurisdiction/authority in law to pass an order of provisional attachment under Section 110(5) of Customs Act, 1962 pending investigation.
18. The view taken by this court hereinabove is further fortified in light ofthe judgment of Calcutta High Court inMineral Metal Centre v. Dir. General of Central Excise Intelligence : 2016 (333) E.L.T. 267 (Cal.), wherein it has been held that "that there is no provision under the Act which confers power on the authority to freeze the bank account in the pending investigation."
19. It would now be apposite to discuss whether the petitioners have alternative remedy under Section 110A of Customs Act, 1962 or not. In view of the interpretation regarding the word "proceedings" arrived by this court, Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 25 bare reading of Section 110A would reveal that remedy under Section 110A against provisional attachment of bank account would only be available to the petitioners only after initiation of "proceedings" pending order of the adjudicating authority whereas in the case at hand no proceedings are pending before adjudicating authority as no SCN has been issued to petitioners and the matter is still under investigation. Hence, in the considered opinion of this court, the remedy under Section 110A is not available to the petitioners during the stage of investigation but is only available after the proceedings are initiated before the adjudicating authority. Therefore, in view of the above, this court is of the considered opinion that the present petition challenging impugned intimation is maintainable as no alternative remedy is available to the petitioners under Section 110A of Customs Act, 1962 against impugned intimation dated 03.12.2024.
20. Learned Counsel for the petitioners has also raised a ground regarding colourable exercise of power by Respondents in provisionally attaching the bank accounts of the petitioners by finding out ways to keep the bank accounts of petitioners remain provisionally attached for a period of more than one year in order to circumvent statutory restriction provided under Section 110(5) of Customs but since this court has already held hereinabove that the provisional attachment of bank accounts during investigation is itself without jurisdiction, the said question does not require consideration for the adjudication of the present petition and the same is left open in peculiar facts and circumstances of the present case.
21. So far as the plea of petitioners that the impugned attachment order is time barred as Respondents exceeded the statutory limitation period of 2 years as prescribed under Section 28 of the Act is concerned, the petitioner has neither pleaded specifically nor established as to what is the "relevant date" from which the limitation would start to run in terms of Section 28. Even otherwise the said question also does not warrant consideration for the adjudication of Signature Not Verified Signed by: SANTOSH KUMAR TIWARI Signing time: 4/22/2025 2:47:01 PM NEUTRAL CITATION NO. 2025:MPHC-IND:10229 26 the present petition as the said limitation has been provided for initiation of proceedings under Section 28 by issuance of Show Cause Notice and in the case at hand, no proceedings have been initiated as no show cause notice has been issued to petitioners and since this court has already held that the provisional attachment during investigation is itself without jurisdiction, the said question is also left open in peculiar facts and circumstances of the present case.
22. In view of the foregoing discussion, this petition deserves to be allowed and is hereby allowed. Ex Consequenti, impugned intimation dated 03.12.2024 issued under Section 110(5) of Customs Act, 1962 is hereby quashed for it being issued without jurisdiction and Respondents are directed to defreeze the bank accounts of the petitioners which have been provisionally attached vide impugned intimation dated 03.12.2024 with immediate effect.
23. This court is constrained to observe that though the impugned intimation dated 03.12.2024 had been stayed by this court vide interim order dated 16.01.2025 but the Respondents have not defreezed the bank accounts of the petitioners which is a clear cut case of contempt of this court's interim order. However, since the petition is being allowed and disposed off finally, it is expected from Respondents to comply with this order immediately and any non-compliance thereof, would be viewed seriously by this court.
24. No order as to Costs.
(SUSHRUT ARVIND DHARMADHIKARI) (GAJENDRA SINGH)
JUDGE JUDGE
skt
Signature Not Verified
Signed by: SANTOSH
KUMAR TIWARI
Signing time: 4/22/2025
2:47:01 PM