Legal principle

Provisional attachment of bank accounts under Section 110(5) of the Customs Act, 1962 can be imposed only during the pendency of proceedings under Sections 28, 28AAA or 28B — that is, after issuance of a Show Cause Notice — and not during a mere investigation, being otherwise without jurisdiction.

Court decision

The High Court (Dharmadhikari and Gajendra Singh, JJ.) allowed the petition, holding that Section 110(5) authorizes provisional attachment only during pendency of proceedings under Sections 28, 28AAA or 28B, and since no such proceedings existed, the impugned intimation dated 03.12.2024 was without jurisdiction. It was quashed, and the respondents were directed to defreeze the petitioners' bank accounts with immediate effect; the court held Section 110A remedy was unavailable at the investigation stage, so the petition was maintainable, while leaving the colourable-exercise and Section 28 limitation questions open.

Facts

Mundhra Exim Pvt Ltd and related entities imported Sri Lankan-origin areca nuts claiming duty exemption under the Indo-Sri Lanka Free Trade Agreement, and DRI verification revealed that one Certificate of Origin (CO/ISFTA/2022/20614 for Bill of Entry No. 3540232 dated 30.11.2022) was fake. Earlier intimations dated 07.12.2023 and 03.06.2024 under Section 110(5) had provisionally frozen the petitioners' bank accounts for two successive six-month periods in an investigation (ENQ-52), expiring on 03.12.2024. On the basis of a note-sheet dated 02.12.2024 approved by the Additional Director General, DRI, a further intimation dated 03.12.2024 in a fresh investigation (ENQ-25) again froze the bank accounts for six months. It was admitted that no Show Cause Notice under Sections 28, 28AAA or 28B had been issued and the matter was only at the investigation stage.

Key provisions

• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 110(5), Customs Act, 1962 — Seizure of goods, documents and things
• Section 110A, Customs Act, 1962 — Provisional release of goods, documents and things seized
• Section 28AAA, Customs Act, 1962 — Recovery of duties in certain cases
• Section 28B, Customs Act, 1962 — Duties collected from the buyer to be deposited with the Central Government
• Section 28BA, Customs Act, 1962 — Provisional attachment to protect revenue in certain cases
• Section 100(5), Customs Act, 1962 — Power to search suspected persons entering or leaving India etc