High Court · 2007

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 5-12-2007CORAMTHE HONOURABLE MR.JUSTICE M.CHOCKALINGAMW.P.No.6388 of 2007andMP No.1 of 2007M/s.Pro MusicalsRepresented by its ProprietorSudhin Mark Prabhakar25, Casa Major RoadEgmore, Chennai 600 008... Petitioner vs1.The Joint Commissioner ofCustoms (Preventive) Marine and Preventive Wing II Floor, Everest House 100, Marine Drive, Mumbai 400 002.2.The Commissioner of Customs(Marine – Preventive) New Custom House Ballard Estate, Mumbai 400 034.3.The Commissioner of Customs (Air) Air Cargo Complex Meenambakkam, Chennai 600 027... Respondents Writ petition filed under Article 226 of the Constitution ofIndia praying for a writ of certiorari to call for the recordspertaining to F.No.CIU/II-01/06/42 of the first respondent andquash the impugned show cause notice dated 15.1.2007.For Petitioner: Mr.M.BalagopalFor Respondents: Mr.Ramakrishna Reddy for Mr.Kalpa Reddy CGSC https://hcservices.ecourts.gov.in/hcservices/ ORDERChallenge is made to a show cause notice issued by the firstrespondent in F.No.CIU/ii-01/06/42 dated 15.1.2007, and also adirection to release the detained goods unconditionally asrequired under Sec.110(2) of the Customs Act 1962, is sought forby the petitioner.2.The affidavit in support of the petition is perused. TheCourt heard the learned Counsel on either side.3.The case of the petitioner in short is that they areengaged in the import and trading of Digital Audio and musicproduction equipments. They imported the musical equipmentsthrough the Chennai Airport and had cleared it for homeconsumption after paying the necessary duty. They sent a part ofthe legally imported duty paid goods having a market value ofRs.2,26,000/-, to the dealer Sudeep Audio at Mumbai to beexhibited in the exhibition "Palm India Expo 2006" organised byM/s.Infocast Systems Pvt. Ltd. The goods were sent with adelivery challan dated 19.5.2006. The first respondent on22.5.2006, came to the CST Mumbai Railway Station and detainedthe petitioner's goods. The representative of the petitioner andits associate in Mumbai have submitted the documents such as billof entry, copy of the delivery challan, certificate ofparticipation in the exhibition, etc., on 26.5.2006 itself, tothe respondents in Mumbai. However, the Officers of therespondents sought for written statements. Accordingly, writtenstatements of the petitioner and that of Auditya of Sudeep Audiowere given on the very day. It was clearly stated that the goodswere meant for exhibition, and Sudeep Audio is the marketingassociate of the petitioner concern. But, not satisfied withthat, the Superintendent of Customs (Preventive) working underthe first respondent, again called for relevant documents videletter dated 5.6.2006, which they have replied on 8.6.2006.However, the Superintendent continued to ask for relevantdocuments. All the letters were suitably replied. While thematter stood thus, the show cause notice was issued on 15.1.2007,after a lapse of 6 months, by the first respondent. Beyond theperiod prescribed under the Act, it has been issued. Hence, theshow cause notice which is hit by the provisions under Sec.110(2)of the Customs Act 1962, has got to be quashed. Apart from that,beyond that period, the goods could not be retained by therespondents, and it has got to be unconditionally released.Hence, the orders have got to be quashed. Thus, the petitionerhas come forward with the writ petition.4.The Court heard the learned Counsel for the petitioner whoreiterated the averments in the petition. https://hcservices.ecourts.gov.in/hcservices/

5.The learned Counsel for the respondents would submit thatan interception was made on 22.5.2006 in respect of theconsignment in question; that the representative of thepetitioner has admitted that it belonged to the petitioner; thathe produced certain documents in order to show the ownership;but, they were not in complete form, and thus, he was furtherdirected to produce the documents in complete form in order tosatisfy the ownership, but not done; that under thecircumstances, a communication was addressed; that a reply wasgiven on 8.6.2006; but, it did not contain the proper explanationor the reply or the documents; that following the same, the goodswere seized after following the procedural formalities on2.8.2006; that after the seizure, a show cause notice was issuedon 15.1.2007; that a plain reading of Sec.110(2) of the CustomsAct 1962, would reveal that the show cause notice can be issuedwithin a period of six months from the date of seizure; thatsince the seizure was made on 2.8.2006, the show cause noticecould be issued on or before 1.2.2007; that in the present case,it was issued on 15.1.2007, and thus, it was well within time;that proceedings have been initiated; that in such circumstances,it is for the petitioner to put forth its explanation, and hence,the show cause notice cannot be said to be out of time either, orit is hit by the provisions under Sec.110(2) of the Customs Act,or there is necessity for the release of the goods. 6.The learned Counsel for the petitioner relied on adecision of the Calcutta High Court reported in 2003 (156) ELT344 (CAL.) (ESI LTD. V. UNION OF INDIA) and would submit that inthe instant case, there is no specific provision speaking aboutthe detention of the goods; that the dominion over the goods waslost; that it was within the department; that the detention andseizure are one and the same thing; that the department cannotsay that it was a seizure fairly made on 2.8.2006, and thelimitation would commence only from that day; but not to be so;and that the period of limitation would commence only from22.5.2006 on which date the goods were seized by the department.7.In answer to the above, it is contended by therespondents' Counsel that the detention of the goods by thedepartment is not the seizure as contemplated under Sec.110(2) ofthe Act; that in a given case, when the goods were detained, itwas only a restraint made, and calling for the production of thedocuments; that if produced properly and the department issatisfied, the goods would be immediately released; but, if notso, seizure under Sec.110(2) of the Act would follow; that in theinstant case, originally it was detained on 22.5.2006; thatsufficient opportunity was given; that the documentary evidencewas not produced; that under the circumstances, there arose anaction for seizure as envisaged under Sec.110(2) of the Act,following which the show cause notice has been issued, and underthe circumstances, the writ petition has got to be dismissed. https://hcservices.ecourts.gov.in/hcservices/

8.The Court paid its anxious consideration on thesubmissions made by the learned Counsel on either side.9.The petitioner seeks to quash the show cause notice andalso for the return of the goods. It is not in controversy thaton 22.5.2006, the first respondent Department on interception,found the consignment. According to the petitioner, after a fewdays, its representative appeared before the Department alongwith certain documents claiming that they are the owners of thegoods. The Department was not satisfied. Then, the petitionerwas further called upon to produce documents in proof of theownership. According to the Department, it was not done, andfollowing the procedural formalities, the goods were seized on2.8.2006, and a show cause notice was served upon the petitioneron 15.1.2007. It could be seen that the petitioner rested thewhole case on the question of limitation that the impugned showcause notice has been issued after a period of six months fromthe date of the seizure as one envisaged under Sec.110(2) of theCustoms Act, 1962, since the goods were taken on 22.5.2006; but,the show cause notice was issued on 15.1.2007 which is after alapse of six months. The learned Counsel for the petitionerrelied on a decision of the Calcutta High Court referred to aboveand would submit that the legislative intent in applying theprovision could have been only that once a dominion over theproperty is lost by the party, and it came to the hands of thedepartment, it has got to be taken as seizure as found underSec.110(2) of the Customs Act, and the Department cannot comeforward to say that the custody of the goods was taken on oneday, and they were kept under detention, and subsequently, on theother day to its convenience, seizure was effected; and that bothcannot be different. Relying on the said decision, the learnedCounsel would further submit that it is only a formal seizurewhich is done; that the date of detention is the date of seizure,and thus, the show cause notice is out of time, since the saidprovision is mandatory, and hence, it has got to be struck downand the goods be returned. The learned Counsel for therespondents would contend that in order to apply or have shelterunder Sec.110(2) of the Customs Act, the first premise is thatthe goods should have been taken from the petitioner for custody;that in the instant case, it was taken neither from thepetitioner nor from the representative; but, it was one ofunclaimed goods; that subsequently, a claim was made through therepresentative of the petitioner; that it was on 26.5.2006; but,the seizure was made on 2.8.2006, and the show cause notice wasissued on 15.1.2001; and that it was well within six months'time. https://hcservices.ecourts.gov.in/hcservices/

10.After going through the relevant provision under Sec.110(2) of the Act, this Court is unable to agree with thecontentions put forth by the petitioner's side. In the case onhand, the show cause notice cannot be found to be out of timei.e., after six months from the date of seizure. When the goodswere found, on interception, they were all taken for custody bythe Department on 22.5.2006. It can, at no stretch ofimagination, be considered to be one as seizure as understoodunder Sec.110(2) of the Act. Further, assuming for a moment thatthe representative had produced all the documentary proof inorder to establish the ownership of the property, naturally onewould expect the Department to return the same. But, such asituation did not arise in this case. An opportunity was givenfor production of the documentary proof; but, it was not done. 11.One other circumstance is that a necessity arose for thedepartment to issue a show cause notice initiating proceedings,which is after making a seizure as one contemplated under Sec.110(2) of the Act. The "seizure" what is provided under Sec.110(2)of the Act, cannot connote the simple and mere detention of thegoods. The detention of goods is actually taking the custody ofthe goods and keeping it under restraint from being taken by theparties; but, the party is entitled to produce sufficientdocumentary evidence, and if he shows proof, he can take it. Atthat juncture, no question of seizure would arise. Once theproperty is detained by the department, unless and until theadjudication proceedings are over, and an order is passed for thereturn of the property, the Officials cannot return the goods.Thus, the detaining of goods is for the purpose of enquiry, andif not sufficient proof coming forward, question of seizure ofthe property would arise. 12.The contention put forth by the petitioner's Counsel thatthe detention and seizure are one and the same cannot beaccepted. At this juncture, it would be more apt and appropriateto reproduce the relevant portion of the decision of the SupremeCourt reported in 1983 E.L.T. 1365 (GIAN CHAND AND OTHERS V.STATE OF PUNJAB). In that case, the Supreme Court has taken theview that seizure means to take possession of the propertycontrary to the wishes of the owner of the goods in pursuance ofa demand under legal right, and seizure involves a deprivation ofpossession and not merely of custody of goods. Hence, in a caseof detention, the custody of the goods is taken; but, it will notinvolve the deprivation of goods. In such circumstances, the word"seizure" employed in Sec.110(2) of the Customs Act cannot besaid to be one of detention as put forth by the learned Counselfor the petitioner. In this case, the seizure was made only on2.8.2006, and the show cause notice was issued on 15.1.2007. Assuch, it was within the period of six months' time, and hence, itis not hit by that provision. https://hcservices.ecourts.gov.in/hcservices/

13.For the reasons stated above, this Court is of theconsidered opinion that the show cause notice is in order. Thatapart, it is not a fit case where the goods should be ordered tobe returned since the adjudication proceedings are pending beforethe department. Hence, the writ petition has to necessarilyfail. Accordingly, it fails and is dismissed. No costs.Consequently, connected MP is also dismissed.Nsv/Sd/Asst.Registrar/true copy/Sub Asst.RegistrarTo:1.The Joint Commissioner ofCustoms (Preventive) Marine and Preventive Wing II Floor, Everest House 100, Marine Drive, Mumbai 400 002.2.The Commissioner of Customs(Marine – Preventive) New Custom House Ballard Estate, Mumbai 400 034.3.The Commissioner of Customs (Air) Air Cargo Complex Meenambakkam, Chennai 600 027.+ 1 cc to Mr. S. S. Radhakrishnan, Advocate, SR No.72023+ 1 cc to Mrs. P. Kalpa Reddy, Advocate, SR No.71707SKV(CO)SR/7.12.2007WP No.6388 of 2007