Custom, Excise & Service Tax Tribunal
Shri Parminder Singh Sabharwal vs Commissioner Of Customs (Export), ... on 19 February, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. III Appeal No. C/88658/2014 (Arising out of Order-in-Original No. 02/2014-15 dated 5.6.2014 passed by the Commissioner of Customs (Export), Mumbai). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) Honble Shri P.S. Pruthi, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Shri Parminder Singh Sabharwal Appellant Vs. Commissioner of Customs (Export), Nhava Sheva Respondent Appearance: Shri Rizwan G. Merchant, Advocate for Appellant Shri M.S. Reddy, DC (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) SHRI P.S. PRUTHI, MEMBER (TECHNICAL) Date of Hearing: 19.02.2015 Date of Decision: .2015 ORDER NO. Per: Anil Choudhary
The appellant, Shri Parminder Singh Sabharwal, has preferred this appeal against Order-in-Original No. 02/2014-15 dated 5.6.2014 passed by the Commissioner of Customs (Exp), JNCH, Dist. Raigad, wherein the learned Commissioner has been pleased to extend the time for issue of show-cause notice, to detain the assets recovered from the appellant and his family members on 6.12.2013, by a further period of six months w.e.f. 5.6.2014 in terms of the provisions of Section 110(2) of the Customs Act, 1962.
2. The brief facts of the case are that the appellant is a transporter and the Director of the company, namely, M/s Acer Logistics Pvt. Ltd. The Revenue in the course of investigation seized some container wherein by mis-declaration Red Sanders were attempted to be smuggled out of the country, in July, 2013. In the course of further investigation, the Revenue felt that the appellant is also one of the person involved in the smuggling of the consignment seized in July, 2013 as well as in some previous consignments. Search was conducted in the premises of the appellant on 6.12.2013 and the following assets found were detained and taken custody by the Revenue: -
(i) One BMW 525 D Car bearing No. HR-26-BQ-1600;
(ii) One Jaguar XJ Car bearing No. CH-23-T-3631;
(iii) 20 (Twenty) used Luxury Wrist Watches;
(iv) Indian Currency amounting to Rs.9,78,500/-
(v) Assorted jewellery of yellow metal purported to be of gold.
(vi) Three pieces of fur of wild animals.
Pursuant to search, the appellant was arrested by the Revenue authorities on 7.12.2013 and on the same date, his statement was also recorded under Section 108 of the Customs Act.
2.1 So far the appellant is concerned, the Revenue has alleged at para 53.1(iii) of the show-cause notice dated 13.1.2014 that the appellant was alleged to be instrumental in shipment of 19 container loads of Red Sanders to Hong Kong with the help of Santosh Pandurang Patil, Ajay Kumar Sharma @ Manish Verma, Kirti Patel and others. Considering the average quantity of Red Sanders in a 40 feet refrigerated container to be 22MTs, the total quantity of Red Sanders shipped out by the appellant works out to approx. 418 MT valued at 167.20 crore. The said quantity of Red Sanders was consigned by him in truck loaded from Delhi to Bhiwandi/Navi Mumbai through Global Carriers, in the guise of furniture parts, and the same was received by Shri A.K. Sharma @ Manish Verma for shipment thereof to Hong Kong in the guise of onions by Santosh Pandurang Patil. By his acts and omissions, the appellant has rendered the subject goods liable to confiscation under Section 113(d), 113(f), 113(g), 113(h), 113(k), Section 115(2) read with Section 50 of the Customs Act, 1962 and read with Section 11 of the Foreign Trade (development & Regulation) Act, 1992 and Rule 14(2) of the Foreign Trade (Regulation) Rules rendering himself liable to penalty under Section 114(i) and 114AA of the Customs Act.
2.2 Further, the appellant was required to show cause as to why not penalty under Section 114AA of the Act be not imposed and it was further observed in the aforementioned show-cause notice that financial investigation in respect of the case, including the appellant, are in progress and separate show-cause notice covering these aspects to be issued in the course of time. There was no proposal to confiscate the items recovered and taken under detention from the premises of the appellant on 6.12.2013. The appellant was subsequently released on Bail by the Honble Bombay High Court vide order dated 14.2.2014 imposing the condition that the appellant shall attend the office of the DRI, Mumbai between 10 a.m. to 12 noon on every Monday until further direction. Accordingly, the appellant was regularly attending the office of the DRI, Mumbai and has been assisting in the investigation. The appellant preferred miscellaneous application No. 29/N/2014 to 33/N/2014 before Additional Chief Metropolitan Magistrate, 8th Court, Esplande, Mumbai for return of Passport and for return of articles taken charge under Panchanama dated 6.12.2013. After receiving notice from the Court of Magistrate, Esplanade, the officers of DRI moved Miscellaneous Application before the Honble High Court seeking imposition of an additional condition of surrender of appellant's passport to the Customs Department till disposal of the trial. The said application was disposed of without granting any relief as claimed by the Revenue.
2.3 A show-cause notice dated 2.6.2014 in terms of proviso to Section 110(2) of the Act was issued by the DRI stating therein that the department requires time for ascertaining the genuine nature of the documents submitted by the appellant and the various accounts operated by him and his family members as well as in the name of the company/firm under their management, wherein it is revealed that large amount of cash deposits have been made on regularly basis. It was further stated that details of such deposit have been sought and therefore in such circumstances the order was sought from the competent authority for extension of further time to issue show-cause notice in connection with the goods detained under the Panchanama dated 6.12.2013 from the premises and Bank Locker of the appellant and his family members.
2.4 The Commissioner has recorded the finding to the effect that the appellant is one of the persons whose involvement is alleged in the smuggling of Red Sanders seized on 15.7.2013 and the show-cause notice dated 13.1.2014 have already been issued seeking confiscation of the seized Red Sanders and for imposing penalty on the noticee-appellant and further in the said show-cause notice, it is mentioned that the financial investigation against the appellant under notice is required for which separate notice will be issued after completion of the investigation. It is further recorded that in the course of investigation after 6.12.2013, the appellant and his relatives have submitted large number of invoices in support of their claim of acquisition of the assets under detention through licit means and sources. It is further noticed that the said details have been submitted on 2.6.2014. Accordingly, the learned Commissioner found force in the stand taken by the investigating agency that these documents need to be verified for ascertaining the involvement of the appellant. It is further noticed that the details of cash deposit have been sought for which some time is prayed by the appellant.
2.5 The appellant opposed the show-cause notice dated 2.6.2014 by filing written submissions dated 4.6.2014 and also appeared on the same date before the Commissioner of Customs (Export). Opposing the prayer for extension by the Revenue, the appellant had stated that the goods were detained on 6.12.2013 without any recording of reasonable belief under which the goods were taken charge of and/or detailed. Further, the Panchanama does not spell out that the detained goods were seized for the purpose of enquiry under the Customs Act. Consequently rendering the entire detention or the seizure as illegal and bad in law. It was further stated that granting extension of time as prayed by the DRI for issue of show-cause notice would amount to endorsing and legalizing the said illegal detention. It was further contended that the appellant was in judicial custody for almost 60 days and no attempt was made to record statement and to investigate from the assessee about the aforementioned goods in detention. Even after a large number of bills etc. were filed during the regular visit and/or attendance of the appellant in the office of the DRI, no inquiry or investigation was made for several months. It is further stated that necessary information and explanation have been made to the investigating officers vide representation dated 2.2.2014, 3.3.2014 and 10.3.2014 along with prayer for return of the detained/seized assets. In spite of the submission of the supporting bills and details regarding the assets, no further investigation were carried out by the DRI. It is further stated that for failure of the investigating agency to inquire or investigate the stand taken by the appellant in Feb- March, 2014, with regards to the assets, the investigating officers were under the provisions of Section 102, were required to complete the inquiry within six months and issue show-cause notice, if deemed fit. It was further urged that the request for extension of time by the Revenue/ DRI is mischievious and is only aimed to legalize the illegality committed by Revenue. It is further urged that prayer of DRI for extension of time for issue of show-cause notice is a colourable exercise of power as it is only after the appellant moved before the Court of Metropolitan Magistrate for release of the detained articles, they further inquired by resorting to and ascertaining further documents collected from the appellant including recording of statement to justify and/or convincing the existence of reasonable ground for extension of time. This is evident on the face of the record as effort to cause further inquiry of the detained goods/assets was taken up by the officers of DRI only a few days before the issue of show-cause notice dated 2.6.2014. It was further urged that the Revenue has no reasonable belief recorded to claim the goods under detention are required for investigation. If so, the goods would have been made liable to confiscation under by the show-cause notice dated 13.1.2014, or timely issue of notice corrigenda.
2.6 The ld. Commissioner has observed that the Panchanama dated 6.12.2013 states that the goods were detained for further investigation under the provisions of the Customs Act. Further, as show-cause notice with respect to Red Sanders seized on 13.7.2013 was issued within six months. The DRI believe that the high value of goods/assets found during the search at residence of the appellant, there is reasonable belief to be liable for confiscation and detained rightly for further investigation. Further, it appears from the Panchanama dated 6.12.2013 that had the appellant or any of his relatives have provided any legal admissible proof for purchase or procurement of the said goods, the DRI may not have detained the seized goods for further investigation and accordingly held the detention to be justified, legal and tenable. It was further observed that the appellant have provided several documents (invoices etc.) on 2.6.2014 to the DRI authorities, which needs to be verified and the same cannot be completed within 2-3 days and hence, there is need for extension of time for issue of notice. Further it is observed that there would have been no reason and the appellant and/or the relatives did not submit the invoices etc. at an earlier dated in order to facilitate the completion of investigation in time bound manner. The ld. Commissioner has further observed that the statement of the appellant was recorded on 26.5.2014 by the DRI, wherein he was asked to explain sources of the cash deposit, for which the noticee had sought time to provide the details. Thus, there is no force in the allegation of the appellant that the department has not utilized stipulated time for completion of investigation with regard to the detained goods.
2.7 As regards the stand of the appellant that the details have been provided much earlier in Feb/March, 2014, the ld. Commissioner found with reference to sale invoice for four wrist watches and invoices of the two cars along with two separate payments schedule by HDFC Bank, no other document was submitted by the appellant. Further, no document was submitted with respect to the jewelry found and detained. Thus, the appellant again requested the department to accept the licit ownership of the goods and jewelry, in absence of any document to the contrary in support of the said case.
2.8 As regards the allegation of colourable exercise of power based on the facts that further investigation were taken up prior to extension of time for show-cause notice in question, the ld. Commissioner observed that the show-cause notice clearly states that notice in respect of the detained goods was almost ready and as the appellant have submitted large number of documents, time is required for going through the same. It was further observed that it is not clear why the appellant have not submitted the documents, which are now submitted at the earlier stage of the investigation.
2.9 As regards the issue raised that the DRI failed to include detained goods in the show-cause notice dated 13.01.2014, it was observed that the search was conducted on 6.12.2013 about a month earlier from the date of issue of the show-cause notice and further appellant was arrested on 7.12.2013 in the alleged acts of the smuggling of Red Sanders and was in the judicial custody till 20.2.2014, thus, there is reasonable reason for not including the detained/seized goods vide Panchanama dated 6.12.2013 in the show-cause notice dated 13.01.2014, as the investigation was pending and proposal to confiscate the same without affording an opportunity to the assessee to produce evidence in support of his legitimate claim, as that would have been allegation of violation of principles of natural justice. Accordingly, it was further held that further investigation into the seized assets needs to be methodically conducted and further inquiry was made to verify the claims made by the appellant, so as to reach the logical conclusion in the matter and accordingly, it was ordered that the time limit to issue of show-cause notice with respect to detained goods vide Panchanama dated 6.12.2013 is extended for period of six months, under Section 110(2) of the Customs Act.
3. The question arising for decision by this Tribunal is whether the impugned order extending the time limit under Section 110(2) is legal and proper and whether the officers of DRI had sufficient time and opportunity for investigating into the details of the assets detained vide Panchanama dated 6.12.2013, and further investigation only a few days before the issue of show-cause notice for extension of further time for issue of show-cause notice, vide notice dated 2.6.2014.
4. The ld. Counsel for the appellant, Mr. Rizwan G. Merchant has raised several grounds in support of the appeal, namely: -
(i) The impugned order is in violation of principles of natural justice and fair play.
(ii) The jewelry found during the search at the residence and also in the Bank Locker No. 229 of Corporation Bank were only taken charge of and not seized and the provisions of Section 105 and 110 of the Customs Act did not apply to the said articles. Further, jewelry taken charge of under the Panchanama, without recording the reasonable belief that under which provisions the jewelries have been taken charge of, is illegal.
(iii) The ld Commissioner of Customs further failed to appreciate that the passport of the appellant was seized and taken charge of by the officers of DRI, which amounts to impounding and such right is vested only on the Passport Officers under the Passport Act. As such, the seizure of passport is ab initio void and is against the ruling of the Honble Supreme Court as held by the Honble Bombay High Court in the case of Avinash Bhonsale Vs. Enforcement Directorate. The detention of the two cars in question owned by M/s Acer Logistics Pvt. Ltd. in which the appellant is Director, and the said cars are admittedly financed by the Bank, the detention is bad and without application of mind. Further, the 20 wrist watches found and detained during the course of search is also bad as no reasonable belief have been recorded that same are required for further investigation under the Customs Act.
(iv) That the ld. Commissioner failed to appreciate that no nexus of any nature, direct or indirect have been established or even remotely averred by the DRI neither in the Panchanama in respect of the detention/retention of these articles nor in the show-cause notice dated 13.1.2014.
(v) Ld. Commissioner also failed to appreciate that neither during the course of judicial custody of the appellant from 7.12.2013 to 10.2.2014 nor after the release any attempt has been made by the DRI to establish any link between articles found and detained vide Panchanama dated 6/7.12.2013 while the appellant regularly attending in the office of the DRI under directions of the Honble High Court.
(vi) That the appellant and its family members have on or about 24.2.2014 filed written representation, with respect to the source of acquisition of the assets in question, found and detained vide panchanama dated 6.12.2013. That the DRI failed to make further inquiries in spite of there being sufficient time available to them and by way of colourable exercise of power, the DRI resorted to further inquiry into the detained assets only a few days before the expiry of time limit and have issued the show-cause notice for further extension of time for issue of show-cause notice in respect of the detained assets.
(vii) The ld Commissioner has further failed to appreciate that since the request of release the detained items was turned down, the appellant had preferred application for release of the detained items before the Additional Chief Metropolitan Magistrate, Mumbai and the show cause in the matter was served on by DRI on 28.3.2014 and the DRI have nowhere explained what inquiry was made during the month of January to May, 2014 and as such there being no delay and non-cooperation on part of the appellants, the extension of time by the impugned order is bad and fit to be set aside.
(viii) The ld. Commissioner failed to appreciate that during the period of judicial custody of almost 60 days of the appellant, at no point of time any application was moved by the DRI before the Court, for obtaining order to record the statement of the applicant and to investigate with respect to the item detained or charge taken of. That the ld. Commissioner have further erred in not appreciating that the necessary information regarding the seized assets have already been disclosed to the investigating agency as early as in Feb, 2014 and for slackness on part of the DRI to investigate, no further extension of time could have been allowed by the impugned order. The ld. Commissioner failed to appreciate that failure on part of the investigation agency to investigate in spite of sufficient time being available, cannot be a ground for extension of time as allowed by the impugned order.
(ix) The ld. Commissioner failed to appreciate that the investigation has failed to give cogent reason for not proposing to confiscate the goods found and detained, in the earlier show-cause notice issued on 13.1.2014.
(x) The ld. Commissioner further failed to appreciate that there is no allegation of non-cooperation on part of the appellant in investigation and as such timely completion was the duty of the investigating officers and failure to do so without any reasonable cause cannot be a ground for extension of time, as held in the impugned order. Ordinarily, the extension of time for issue of show-cause notice is to be considered only when there are certain issues which unknowingly have prevented the investigating officers for issuing show-cause notice, but it is not the case in the instant appeal.
(xi) The ld. Commissioner further failed to appreciate that in the facts and circumstances, the prayer for extension by the investigating officer is only by way of colourable exercise of power amounting to harassment of the appellant and further in absence of any reasonable belief available on record either detention of the seized goods or for extension of time for issue of show-cause notice, the impugned order is bad in law and fit to be set aside.
(xii) The ld. Counsel further urges that subsequent to the passing of the impugned order, further investigation continued and show-cause notice dated 2.12.2014 have been issued to the appellant, his wife Mrs. Dolly Sabharwal, his son Shri Pavneesh Sabharwal, daughter-in-law Smt. Gureen Kaur and father-in-law of his son Shri Amarjeet Singh Sethi, wherein the parties have been asked to show cause as to why BMW car having purchase value of Rs.40.04 lakhs and a Jaguar Car having purchase value of Rs.94.95 lakhs, the jewelry found in the course of search weighing 3101 gms (gross weight) having ascertained value of about Rs.80.42 lakhs, Gold jewelry weighing 1097 gms and 1 kg silver bar having value of Rs.27.64 lakhs and 20 wrist watches having ascertained value of Rs.35.65 lakhs, which have been recovered and detained on 6.12.2013 and currency of Rs.9,76,500/- which is also recovered from the residential premised on 6.12.2013, appeared to be part of the sale proceeds of smuggled goods (Red Sanders) should not be confiscated under the provisions of Section 121 of the Customs Act, 1962. It is further pointed out by the Counsel that it is admitted fact as recorded in para 5 of SCN dated 2.12.2014, that BMW cars invoice, value of which is Rs.44.04 lakhs, out of which Rs.30 lakhs was financed by HDFC Bank. For purchase of Jaguar car as per detail invoice, the price of which is Rs.94.95 lakhs purchased by M/s Acer Logistics Pvt. Ltd., out of which Rs.50 lakhs was financed by HDFC Bank and the appellant have been repaying the loan installment to the Bank as per agreement. It is alleged by the Revenue that neither the details/invoice for the BMW car nor for Jaguar car bears any mentioned as to the mode of down payment for the purchase of the cars in question.
(xiii) In para 7.1 of the SCN dated 2.12.2014, the details of the wrist watches found and detained under the Panchanama along with the procurement value and the source of the watches have also been explained. It is further urged that the Metropolitan Magistrate has only rejected the application of the appellant for return of the detained goods only on the ground of jurisdiction, as the Magistrate observed that power to release of detained goods is with the Commissioner of Customs. It is further urged that in para 10 of the show-cause notice dated 2.12.2014, it is admitted by the Revenue that the appellant had applied for provisional release, filed on 7.10.2014 and in response, the Commissioner of Customs (Export) vide his letter dated 17.10.2014 granted provisional release of the two cars subject to the condition of furnishing PD Bond for Rs.1,34,99,370/- and a cash security vide Bank Guarantee of Rs.99,89,206/- and the same was not availed by the appellant. The Counsel urges that the condition for release of the cars is un-reasonable and accordingly could not be accepted. It is further admitted fact as it is evident from para 12.4 of the SCN dated 2.12.2014 that an amount of Rs.10 lakhs was down payment/booking amount for purchase of Jaguar car. Rs.10 lakhs was paid to Tata Motors by way of RTGS payment on 25.3.2013 and further Rs.37,23,446/- was paid by cheque dated 7.5.2013 to Tata Motors issued from the Bank Account of the M/s Acer Logistics. The Revenue has further admitted in para 11.6 of the show-cause notice dated 2.12.2014 that analysis of the current account of M/s Acer Logistics Pvt. Ltd. maintained with Axis Bank, Gurgaon Branch, pertains to day-to-day business activity.
(xiv) As regards the cash found in the residence premises on 6.12.2013 vide para 12.1 of the show-cause notice dated 2.12.2014, it has been explained that the same belongs to the appellants family members and their company namely, Acer Logistics Pvt. Ltd and the firms Superior International and Superior Overseas. It is further urged that the appellants family members, company and firm are all assessee under Income Tax and they filed regularly return of their income and assets and as such the allegation in the show-cause notice dated 2.12.2014, all the assets not properly explained, is bad in law.
(xv) As per para 15 of the show-cause notice dated 2.12.2014, Mrs. Dolly Sabharwal, wife of the appellant in her statement recorded on 12.5.2014 has stated that articles of jewelry found and detained, major part of its is very old and received in gift from her mother-in-law and father-in-law and that part of it were re-designed from time to time. Some articles of gold jewelry were gifted to their daughter-in-law by her parents as Stree Dhan, whereas the Revenue have alleged that Mrs. Sabharwal have not given the item-wise details purchased by her and her daughter-in-law. In support of the claim that jewelry being acquired several years earlier as it is evident from para 3 of the show-cause notice that the appellant also submitted letters of her mother-in-law and her father-in-law in support of they have been gifted and has also submitted old valuation report dated 20.3.1986 and 22.6.1986, issued by the Govt. Approved valuer.
(xvi) Further from para 16.1 of the show-cause notice, it is on record that the letter dated 30.5.2014 was received from Mr. Amarjeet Singh Sethi, who claimed that he had given various items of jewelry as gift to his daughter Gureen Kaur at the wedding and have also submitted invoice, detail for the purchase thereof.
(xvii) It is further urged in para 19.4 of the SCN that the Income declared by M/s Acer Logistics Pvt. Ltd. is not commensurate with the cash deposit in the Bank account of the appellant and the family members and their firm. In response to this allegation, the Counsel for the appellant submits that Book of Account of the appellant are regularly audited and filed regular returns and as regards the financial transaction, it is jurisdiction of the Income Tax Department and the officers of the investigation have only made wild allegation without any reasonable basis. It is also recorded in para 19 of the show-cause notice as per statement of the appellant, that all of the cash received during the period in consideration, by the Customs department, about 90% of the turn-over is received through Banking transaction and only 8 to 10% are received in cash, being received from walk-in customers. Further the appellant has turn-over around Rs.25 crores per annum during the period in question under the investigation.
(xvii) In para 20 of the show-cause notice dated 2.12.2014, the Revenue have recorded that although the time limit for issue of show-cause notice in respect of the goods found and detained on 6.12.2013 was getting over on 5.6.2013, but as the appellant and his family members were not forthcoming with the plausible explanation regarding various infirmity in the documents submitted by them including invoice of goods under detention and further the appellant have been seeking time for providing details and to file detail of large amount of cash deposits in various accounts operated by him and his family members. Accordingly, the show-cause notice dated 2.6.2014 was issued with proposal for extension of time limit, which was allowed by the impugned order. Accordingly, the Counsel for the appellant urges that the impugned order is against provisions of law and is a colourable exercise of power and the same is fit to be set aside and further by way of consequential relief, the detained goods be ordered to be released to the appellant and his family members.
5. The learned AR for the Revenue relies on the impugned order and also states that the present application have become infructuous as the show-cause notice dated 2.12.2014 have been issued on the appellant and his family members, wherein it is proposed that the assets found and detained on 6.12.2013 appeared to be part of the sale proceeds of the smuggled goods (Red Sanders) with proposal to confiscate under provisions of Section 112 of the Customs Act. Further, the learned AR relies on the impugned order and states that the impugned order is legal and in accordance with law and fit to be upheld.
6. Considering the question in issue, we take notice of the relevant provisions of the Customs Act being Sections 105, 110, 110A, 111, 121 and 122.
6.1 Section 105 of the Act provides that competent officers of Customs, or in any area adjoining the land frontier or the coast of India, has reason to believe that any goods are liable to confiscation, or any documents or things, which in his opinion will be useful or relevant to any proceedings under this Act, are secreted in any place, he may himself or through other officers search for such documents, goods or things. The provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to searches shall, so far as may be, apply to searches under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word Magistrate, wherever it occurs, the words Commissioner of Customs were substituted.
6.2 Section 110 (1) provides that If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods:
Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer.
6.3 Sub-section (2) of Section 110 provides that where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. It is further provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Commissioner of Customs for a period not exceeding six months.
6.4 Sub-section (3) of Section 110 provides the proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act.
6.5 Section 110A of the Act empowers the adjudicating authority to release any goods seized under Section 110 to the owner on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require.
6.6 Section 111 of the Act provides for confiscation of improperly imported goods, etc., which have improperly been brought from outside India are liable to confiscation.
6.7 Section 113 provides for confiscation of goods attempted to be improperly exported, the conditions in which the goods shall be liable to confiscation.
6.8 Section 121 of the Act makes even the sale proceeds of smuggled goods liable to confiscation. The condition for invoking Section121 of the Act are : -
(i) that the sale proceeds should be related to the smuggled goods,
(ii) that the sale should have been made by a person having knowledge or reason to believe that the goods are smuggled goods.
7. It is evident from perusal of the panchanama dated 6.12.2013 that no condition precedent as required under Section 110 of the Act, is recorded at the time of detaining the goods/assets found to the effect that subject goods are liable for confiscation under the provisions of the Customs Act. Further no satisfaction have been recorded as required under sub-section 3 of the Section 110 to the effect that the documents or things detained will be useful or relevant to any proceeding for detaining seized assets under the Customs Act.
7.1 We further find that the Revenue had sufficient time for conducting inquiry and or issue of show-cause notice under Section 124 within a period of six months from the date of detention of the goods. It is evident on the face of record that the investigation officers have done practically very little or nothing in spite of the appellant being available for the purpose of inquiry right from 7.12.2013 till 10.2.2014 being the period of judicial custody. Further, during the said custody, the DRI have never sought permission to interrogate the appellant. Even after the release from the judicial custody, the appellant was attending the office of the DRI every week particularly on Monday and such other days as he may have been advised. Further, the appellant and his family members had approached the Revenue authority for release of the goods by filing a detailed representation as to the nature and their source on 24.2.2014, but no inquiry seems to be made in the matter and the investigating authority chose about two weeks prior to the end of time limit of six months, have ventured to make further inquiry about the detained assets by recording statement and asking for further details like Bank statement and other documents.
7.2 We further find that the learned Commissioner of Customs have ignored the facts and facts on record and have failed to appreciate that there is no sufficient reason shown by the investigation officers for extension of the period for six months for issue of show-cause notice. The observation of the learned Commissioner that pursuant to recording of the statement of the appellant on 26.5.2014, wherein the appellant was asked about explanation for various cash deposit and the appellant had sought time to provide the requisite details and as such the Revenue was justified in seeking extension of time for issuing show-cause notice. It is writ large on face of the record that the investigation in spite of claiming that the proposed show cause was almost ready, while seeking extension of time vide notice dated 2.6.2014, for issue of show-cause, have issued notice for confiscation of the detained goods only on 2.12.2014, which speaks for itself. We further hold that the detention of the goods/assets in question is bad under the provisions of Section 110 as the goods/assets have only been detained and not seized as required under the scheme of the Act. We further take notice of this fact that so far the two cars in question is concerned, major part of the purchase price have been funded through Banking finance and further the other payments made by the appellant and/or his company are through the Banking channel.
7.3 We further hold that the order for provisional release of the cars asking for 100% Bank Guarantee of the invoice value is also bad in law and on the facts. Thus, in the facts and circumstances, we hold that impugned order is bad in law and in facts and accordingly, the same is set aside. We further direct the learned Commissioner and/or the DRI to release the detained goods of the appellant and their family members after obtaining PD Bond and/or Indemnity Bond, that the appellant and other persons will not alienate the assets returned to them and/or any way deal with them without prior permission of the Commissioner of Customs. The goods are to be returned forthwith, within a maximum period of 20 days from receipt of a copy of this order.
8. In the facts and circumstances, as the appellant is a noticee in the show-cause notice dated 13.1.2014 in the case of alleged smuggling of Red Sanders, we permit the Revenue to retain the cash seized on 6.12.2013 from the residence/premises of the appellant and his relatives, which shall be liable to appropriation upon adjudication of the said notice dated 13.1.2014. We further direct the Revenue to keep the said amount detained in a separate Bank account/PD account bearing interest pending adjudication.
9. Thus, the appeal is allowed in part.
(Pronounced in Court on .)
(P.S. Pruthi) (Anil Choudhary)
Member (Technical) Member (Judicial)
Sinha
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