Legal principle

Under Section 110(2) of the Customs Act, 1962, seized goods must be returned to the person from whom they were seized if no confiscation notice under clause (a) of Section 124 is issued within six months of seizure (or a further six months under a reasoned, recorded extension by the Principal Commissioner of Customs), unless the goods were provisionally released under Section 110A.

Court decision

The petition was allowed. The court directed the respondents to return the seized cash and articles/goods to the petitioner within eight weeks, holding that failure to issue a Section 124 confiscation notice within the period prescribed by Section 110(2) required return of the seized items, while keeping open the respondents' right to initiate adjudication afresh in accordance with law, if permissible, with no order as to costs.

Facts

The petitioner, sole proprietor of JBM Textiles, Surat (textile trading and export), had his premises searched by DRI, Ahmedabad Zonal Unit on 03.04.2019 pursuant to intelligence about bogus/overvalued exports used to wrongly avail IGST refund and EPCG-related benefits by M/s. Amira Impex and connected persons. Officers seized cash of Rs.64,86,100/- (part of a total of Rs.1,00,85,100/-), two mobile phones and files of business documents, and a panchnama was drawn on 03.04.2019, with statements recorded on 04.04.2019 under Section 108 of the Customs Act, 1962. No show cause notice for confiscation of the seized cash/articles was issued within the statutory period; a show cause notice dated 27.11.2020 (served 14.12.2020) concerning the alleged illegal exports did not address the seized currency. The department contended the cash represented EPCG commission income and wrongly availed IGST refund and transferred it to DGGI, Ahmedabad, alleging total IGST refund of Rs.3,27,61,295/- wrongly availed.

Key provisions

• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Section 110(2), Customs Act, 1962 — Seizure of goods, documents and things
• Section 153, Customs Act, 1962 —  Modes for service of notice order etc
• Section 79, Customs Act, 1962 — Bona fide baggage exempted from duty
• Section 108, Customs Act, 1962 — Power to summon persons to give evidence and produce documents
• Rule 8, Customs Valuation (Determination of Value of Export Goods) Rules, 2007 — Rejection of declared value