Case Law Details
Haresh S. Bhanushali Vs Union of India and Ors. (Bombay High Court)
There is a clear distinction between the conveyance used to transport the seized goods and the action of the importer which will be the subject matter of investigation. Both the issues relate to two different parties. On perusal of the extracts of statements reproduced in the show cause cum demand notice dated 29.09.2020, it prima facie, appears that though the petitioner’s vehicle was hired for transportation of the seized goods, petitioner had no direct or indirect role in so far as the tampering and removal of goods was concerned. We may also mention that the entire tampered goods have been subsequently recovered and seized following disclosure made by Shri Kanhaiya Hurbada, employee of the clearing house agent, who owned up the mischief.
In the light of the above, the grievance of the petitioner expressing hardship on account of availing bank loan for purchase of the seized vehicle; that he is paying monthly EMI of Rs. 33,437.00 to the bank; since 04.11.2019 his vehicle is lying stationery and not in use; it was his only source of income and he has no connection with the importer needs consideration.
In view of the above discussion, we are of the opinion that the impugned action of seizure of the petitioner’s vehicle No.MH-46-H-1284 as well as the order for provisional release of the vehicle calls for interference.
Accordingly, the provisional release order dated 14.07.2020 at Exhibit ‘D’ to the writ petition for release of vehicle No.MH-46-H-1284 of the petitioner is modified as under : :-
a. The petitioner shall furnish a bond for 10% of the value of goods seized as a pre condition for release of vehicle No.MH-46-H-1284;
b. The petitioner shall furnish an undertaking that he shall cooperate with the investigation and appear before the investigating authorities as and when required.
Subject to compliance of the above two conditions, the above vehicle of the petitioner shall be released forthwith.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
Heard learned counsel for the parties.
2. By the present petition filed under the provisions of Articles 226 and 227 of the Constitution of India, petitioner has prayed for the following reliefs:-
“a. That it is just, equitable and in the interest of justice that this Hon’ble Court may be pleased to issue a Writ of Mandamus or a Writ in the nature of Mandamus or any other appropriate writ, order or direction ordering and directing the Respondents jointly / collectively and their sub-ordinate officers to forthwith:
i. the Respondents to immediately release the Vehicle No.MH-46-1284 so that the petitioner can carry on his business;
ii. provisional Release Letter dated 14.07.2020 be set aside;
iii. the Respondents to waive detention / demurrage charges if any;
b. For interim and ad-interim reliefs in terms of prayer clause (c) above.
c. For costs of this petition.
d. For such further and other reliefs be granted to the petitioner as this Hon’ble Court may deep proper and fit in the nature and circumstances of the case.”
3. Petitioner seeks release of vehicle No. MH-46-H-1284 detained by the customs authorities i.e. respondent Nos.2 and 3 since 04.11.2019 and has challenged the provisional release Order dated 14.07.2020 passed by respondent No.3 i.e. the Assistant Commissioner of Customs (Preventive), M & P Wing, Marine Drive, Mumbai in the present petition.
4. Before we advert to the submissions made by learned counsel for the parties, it will be apposite to briefly refer to the relevant facts :-
4.1. Petitioner is engaged in transport business and is proprietor of M/s. Jalaram Container Movers having its office in Mumbai. Petitioner is the owner of a transport vehicle i.e. a trailer bearing Registration No. MH-46-H-1284.
4.2. M/s. Atharv Enterprises having IEC No.BAPPG8916F was involved in illegal import of “counterfeit branded” goods by mis-describing them as “unbranded” goods. One such consignment of the importer arrived under bill of entry No.4862811 dated 11.09.2019 and was lying at M/s ICT & PL Customer Freight Station (CFS), Nhava Sheva. On verification of bill of entry it was found that the address of the importer was incorrect, hence the container bearing No.WHSU5263834 was put on hold on 16.09.2019. On examination of the consignment, it was found that the consignment not only contained the declared items, but also contained other items which were not declared. Therefore, the entire shipment was liable for confiscation. Accordingly there were seized. The seized goods alongwith the container were thereafter handed over to ULA, CFS Uran.
4.3. Request letter dated 25.09.2019 was received from the importer to shift the seized goods to a warehouse under Section 49 of the Customs Act, 1962 (hereinafter referred to as “the Customs Act”).
4.4. Importer booked the petitioner’s vehicle on 24.10.2019 through an agent for transportation of the container bearing No. WHSU5263834 containing the seized goods from ULA, CFS Uran to CWC Warehouse, Turbhe and the same was accordingly transported.
4.5. On 29.10.2019, Assistant Commissioner of Customs (Import Bond) informed respondent No.3 that the warehouse manager of CWC, Turbhe had telephonically informed the bond office of CWC warehouse on 26.10.2019 that the customs bottle seal of the container bearing No.WHSU5263834 was tampered with and the escort officer was not contactable.
4.6. Statement of the petitioner was recorded on 03.11.2019 wherein petitioner stated that vehicle No. MH-46-H-1284 was booked through booking agent Mr. Deepak Bhanushali on 24.10.2019; since the vehicle was parked near Nhava Sheva close by, it reached ULA, CFS Uran and was driven by driver Mr. Raj Kumar who transported the container of the seized goods to the warehouse at Turbhe.
4.7. On 04.11.2019, vehicle No.MH-46-H-1284 was seized at CWC Godown, Turbhe by respondent Nos.2 and 3 and panchnama was prepared on the same day; statement of driver Mr. Raj Kumar was recorded wherein he stated that the vehicle left ULA CFS Uran at around 12:30 a.m. on 25.10.2019 and he was asked by the CHA employee Mr. Kanhaiya Hurbada to follow him; that after reaching Bhiwandi at around 8.00 – 8:30 a.m. on 25.10.2019 he was asked to freshen up, during which time some of the goods were unloaded in the godown at Bhiwandi.
4.8. Statement of Mr. Kanhaiya Hurbada, employee of CHA (Clearing House Agent) was recorded on 06.11.2019 wherein he confessed that he was working on free-lance basis for the CHA; since there was no escort with the vehicle, he got encouraged to decamp with the goods; waylaid driver Mr. Raj Kumar and during his absence cut open the seal and decamped with small cartons in order to make a quick earning as he required the money for his son’s treatment. Subsequently he decided to surrender and return the said goods to the authority as he was unable to sell the same.
4.9. Petitioner addressed letters dated 05.11.2019 and 13.12.2019 to respondent Nos.2 and 3 seeking release of his vehicle bearing No. MH-46-H-1284 which was detained at Turbhe by the customs authorities.
4.10. On 14.07.2020, petitioner received the provisional release order allowing provisional release of the vehicle under section 15 of the Customs Act, subject to the following conditions which are extracted hereunder :-
“I. The applicant will execute a bond of Rs.75,00,000/-(Rupees Seventy Five Lakh Only) being the value of the goods that were being smuggled.
The applicant will produce a bank guarantee for 30% of the value of the goods i.e. Rs.22,50,000/-(Rupees Twenty Two Lakh Fifty Thousand only).
III. The applicant will produce a No Objection Certificate from the APMC police station in respect of release of the said vehicle.”
4.11. Being aggrieved by the seizure of the vehicle since 04.11.2019; that the conditions in the impugned order are onerous and that the petitioner had no nexus with the importer and unnecessarily being harassed; present petition has been filed.
5. Respondents in their common reply affidavit have taken the stand that the vehicle in question was found to have carried smuggled imported goods and thus was rightly seized. However, on request of the petitioner respondents have allowed provisional release of the seized vehicle, but petitioner has failed to comply with the conditions of provisional release. Since the vehicle was used to transport smuggled goods, it is liable for confiscation unless proved to the contrary by the owner of the vehicle. Because of covid-19 pandemic the limitation period for issuing show-cause notice stood extended by the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 and Notifications issued thereafter. Accordingly, the normal period of limitation got extended to 30.09.2020 and thereafter to 31.12.2020. It is stated that show-cause notice dated 29.09.2020 was issued to the importer. Thereafter corrigendum to the show-cause notice was issued on 21.12.2020 calling upon the petitioner to show-cause as to why the vehicle bearing MH-46-H-1284 seized under section 115 read with section 111 of the Customs Act should not be confiscated.
6. Mr. Mohit Prabhakar, learned counsel appearing for the petitioner submitted that the petitioner’s vehicle was engaged merely for the purpose of transportation of the container from ULA CFS, Uran to CWC Warehouse, Turbhe; Petitioner was not involved in any act of smuggling or dealing with counterfeit / branded goods nor had any nexus with the importer M/s. Atharv Enterprises; Petitioner was a small time transporter providing transport / transit / movement of goods services from one place to another and had no role to play either in the import of the goods or even in removal of the goods from the container. Petitioner’s role was confined only to provide his vehicle for hire and transportation of the container along with the driver of the vehicle. He submitted that the cost of the vehicle which was detained by the customs authorities was merely Rs.9,50,000/- only. Though the petitioner is conscious of the fact that the order of provisional release dated 14.07.2020 is an appealable order, petitioner has approached this Court as the alternate remedy is cumbersome and not at all efficacious in the facts and circumstances of the case. Petitioner is out of business for more than one year due to the seizure of his vehicle though paying EMIs on the auto loan availed by the petitioner for purchase of the vehicle.
6.1. He submitted that the act of the importer of committing breach and violation of the Customs Act is required to be viewed separately from the act of the petitioner who had merely provided his vehicle for transportation of the container containing the seized goods without having any knowledge about the nature and status of the goods. Petitioner is innocent and no mala fides can be attributed to the petitioner. Order dated 14.07.2020 for provisional release of his vehicle is onerous for several reasons; Petitioner is not in a position to execute a bond for Rs.75,00,000/- as called upon by respondent No.3 as he is a person of small means; the goods never belonged to the petitioner nor were imported by the petitioner and therefore the condition for execution of bond by the petitioner is not only onerous but arbitrary and high handed. That apart, petitioner has been called upon to produce bank guarantee to the tune of Rs.22,50,000/- which is again highly onerous in as much as the cost of the detained vehicle itself is Rs.9,50,000/- for which the petitioner had availed auto loan. In view of the petitioner’s status he is not in a position to meet the preconditions stated in the order of provisional release of vehicle and therefore has approached this Hon’ble Court to seek release of his vehicle by setting aside the provisional release order.
7. PER-CONTRA, Mr. Pradeep Jetly, learned Senior Counsel appearing for respondent No.3 has drawn our attention to the affidavit in reply dated 13.01.2021. According to him petitioner has an alternate and efficacious remedy available in law to file an appeal against the order dated 14.07.2020 for provisional release of vehicle; further show cause notice has been issued to the importer and corrigendum to the show cause notice has been issued to the petitioner. Petitioner will be given adequate opportunity of presenting his case during the proceeding. Petitioner’s vehicle has been detained under the provisions of Customs Act after following the due process of law as the goods which were being transported were seized. Therefore, the petition should not be entertained and the petitioner should be relegated to the forum of alternate remedy.
8. Submissions made by learned counsel for the parties have received the due consideration of the Court. Also examined the materials on record.
9. Before we advert to the submissions made by the learned counsel, it will be apposite to state and consider the relevant provisions of the Customs Act.
10. Section 115 of the Customs Act relates to confiscation of conveyances. It reads thus :
“115. Confiscation of conveyances. (1) The following conveyances shall be liable to confiscation :
(a) …
(b)……..
(c) ….
(d) ….
(e) any conveyance carrying imported goods which has entered India and is afterwards found with the whole or substantial portion of such goods missing, unless the master of the vessel or aircraft is able to account for the loss of, or deficiency in, the goods.
(2) Any conveyance or animal used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be liable to confiscation, unless the owner of the conveyance or animal proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance or animal.
Provided that where any such conveyance is used for the carriage of goods or passengers for hire, the owner of any conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine not exceeding the market price of the goods which are sought to be smuggled or the smuggled goods, as the case may be.”
10.1. Section 115(1)(e) provides that any conveyance carrying imported goods which is later on found missing in whole or in substantial portion shall be liable to confiscation unless the master is able to account for the loss of, or deficiency in, the goods. Section 115(2) states that any conveyance used as a means of transport in the smuggling of any goods shall be liable to confiscation unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent and the person in charge of the conveyance. Proviso to the above section states that where any such conveyance is used for the carriage of goods or passengers for hire the owner of any such conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine not exceeding the market price of the goods which are sought to be smuggled or the smuggled goods, as the case may be.
11. Section 110(2) of the Customs Act provides for return of the seized goods when no notice is given under clause (a) of Section 124 within six months of seizure of the goods though as per the proviso the period of six months can be extended for a further period not exceeding six months. At this stage, we may also mention that under sub-section (1), if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. Section 110 (2) reads thus:-
“(2) 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;
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 the person from whom such goods were sized before the expiry of the period so specified;
Provided further that where any order for provisional release of the seized goods has been passed under section 110A, the specified period of six months shall not apply.”
12. Section 110A of the Customs Act relates to provisional release of goods, documents and things seized [or bank account provisionally attached] pending adjudication. Section 110A reads as under :
“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 [adjudication 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 be require”
13. Central Board of Indirect Taxes and Customs has issued Instruction No.01/2017-Cus dated 08.02.2017 wherein paragraph Nos. 4 and 5 are relevant and are quoted hereunder :-
“4. In view of the above, in all future cases, the following may be adhered to :
Whenever goods are being seized, in addition to panchnama, the proper officer must also pass an appropriate order (siezure memo/order/etc.) clearly mentioning the reasons to believe that the goods are liable for confiscation.
Where it is not practicable to seize any 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. In such cases, investigations should be fast-tracked to expeditiously decide whether to place the goods under seizure or to release the same to their owner.
5. Further, it has been brought to the notice of the Board that cases where Provisional Release of seized goods is allowed under Section 110A of the Act ibid, show cause notices are not being issued within the stipulated time period on the ground that the goods have been released to the owner of the goods. The provisions of the Customs Act, 1962 are clear that irrespective of the fact whether goods remain seized or are provisionally released, once goods are seized, the time period (including extended time period) stipulated under Section 110(2) of the Act shall remain applicable and has to be strictly followed.”
14. A conjoint reading of the above provisions along with the above instructions dated 08.02.2017 issued by the Central Board of Indirect Taxes and Customs would go to show that the concerned authority is required to issue show cause notice within six months of seizure failing which the seized goods shall be returned to the person from whose possession those were seized. In the instant case vehicle of the petitioner was seized on 04.11.2019. Respondents issued show cause notice dated 29.09.2020 to the importer and Clearing House Agent (CHA) but failed to issue show cause notice to the petitioner. Petitioner has been issued letter dated 21.12.2020 being corrigendum to the show cause notice issued to the importer, calling upon the petitioner to show cause as to why the vehicle should not be confiscated. Therefore, the show-cause notice was not only not issued to the petitioner within six months but also within the extended period of six months.
15. Petition was filed on 02.11.2020 and was moved on 02.12.2020 on which date the following order was passed :
” Heard Mr. Prabhakar, learned Counsel for the petitioner.
2. Issue Notice.
3. Since there is no representation on behalf of the respondents, petitioner to serve the respondents afresh and file affidavit of service.
4. Contention of the petitioner is that his vehicle bearing no. MH-46-H-1284 was seized by the customs authorities on 4th November, 2019. More than one year has elapsed. Till date no show cause notice has been issued. Therefore, under sub-section (2) of Section 110 of the Customs Act, 1962, the seized vehicle is required to be released forthwith.
5. Respondents to file affidavit or apprise the Court on the next date.
6. Stand over to 15th December, 2020.”
16. However, respondents have contended that the limitation period of six months under section 110(2) or the extended period of further six months would not be applicable because of general extension of the limitation period due to the pandemic and the resultant lockdown.
17. We have perused carefully the show cause cause cum demand notice dated 29.09.2020 issued under Sections 28 and 124 of the Customs Act to the importer which is at Exhibit ‘E’ to the writ petition. The contents of this show cause notice state that on 03.11.2019 statement of Mr. Haresh Bhanushali i.e. petitioner was recorded under Section 108 of the Customs Act, wherein it was stated that the seized vehicle was booked through booking agent Mr. Deepak Bhanushali and the same was immediately allotted for transport of the container from ULS CFS as the said vehicle was parked nearby; on 04.11.2019 statement of Mr. Deepak Bhanushali booking agent was recorded under Section 108 of the Customs Act, wherein the movement of the vehicle was detailed; on 05.11.2019 statement of the driver of the vehicle Mr. Raj Kumar was recorded; on 06.11.2019 statement of Mr. Kanhaiya Hurbada the principal accused employee of the CHA was recorded under Section 108 of the Customs Act, wherein he stated as under :
i. He works on free-lance basis for CHA or major clearing agents as they are not able to reach Nhava Sheva on regular basis and thus they assign him small work such as clearing and forwarding.
ii. The clearing / dispatch work of M/s Atharv enterprises was given to him by Shri Jayesh Bhanushali whose mobile number is 9820281973. He was asked to transport the container to CWC Godown, Turbhe from ULA CFS.
iii. Since there was no escort with the Vehicle he got encouraged to try and decamp some goods in order to earn fast money as he needed money for his son’s treatment.
iv.He took the driver to Godown no./10, building no.K-3, Jay Shree Ram Complex, Dapoda Road, Bhiwandi and asked him to relax and have tea as he had driven the whole night.
v. Once the driver left he cut open to seal and decamped small cartons. He thereafter sealed the customs seal with feviquick. Since the cut could be seen he applied some candle wax thereon to hide the same.
vi. He did not expect it to be checked thoroughly at CWC Godown but due to rains the glue did not hold properly and the seal came out when the officials checked the same. Sensing trouble, he ran away.
vii. Having realized that he could not sell the goods during Diwali break and mounting pressure, he decided to surrender the goods to the authorities.
viii. He did the same as he was under financial stress due to his son’s medical condition of Cerebral Palsy and he needed money. He offered to surrender the stolen goods.”
17.1. The show cause notice further records that Mr. Kanhaiya Hurbada thereafter took the customs officers to godown No.9/10 building No.K-3, Jay Shree Ram Complex, Dapoda Road, Bhiwandi and the entire goods which were removed by him were recovered and seized. Thereafter on 08.11.2019 in continuation to his statement dated 06.11.2019 further statement of Mr. Kanhaiya Hurbada was recorded.
17.2. In this regard, contents of paragraph 15 of the show cause notice is relevant and it reads thus :-
“15. On 08.11.19, statement of Shri Kanaiya Hurbada (RUD – 16) was recorded in continuation to his statement dated 06.11.19. He admitted that the clearance work pertaining to M/s Atharv Enterprises was given to him by Jayesh Bhanushali. He stated that he had booked the vehicle no MH-46-H-1284 for transporting container No.WHSU5263834 from ULA CFS, Uran to CWC Warehouse, Turbhe. The Vehicle left Uran around 1.00 AM on 25.10.19 from CFS and on his direction the same was taken by driver to Bhiwandi Godown. He thereafter asked the driver to rest for some time as he had driven the whole night. When the Godown keeper went for lunch he had cut open the seal and removed the cartons and thereafter put the seal back by applying feviquick. The vehicle thereafter was taken to Turbhe CWC but the broken seal was noticed by them and they sent a report accordingly. He admitted that during the Panchnama the goods in the cartons were replaced with fake goods and branded goods were missing but he was aware of the same”
18. Petitioner has been belatedly issued the corrigendum to the show cause notice on 21.12.2020 that too after this Hon’ble Court was seized of the matter. This Court had issued notice on 02.12.2020 noting the grievance of the petitioner that his vehicle continued to remain under seizure without any show-cause notice being issued for more than one year thus being violative of section 110(2) of the Customs Act. Therefore action of issuing corrigendum to the petitioner after the High Court had taken cognizance of the grievance of the petitioner has rendered such action highly questionable.
19. That apart it is clearly discernible that there is a clear distinction between the conveyance used to transport the seized goods and the action of the importer which will be the subject matter of investigation. Both the issues relate to two different parties. On perusal of the extracts of statements reproduced in the show cause cum demand notice dated 29.09.2020, it prima facie, appears that though the petitioner’s vehicle was hired for transportation of the seized goods, petitioner had no direct or indirect role in so far as the tampering and removal of goods was concerned. We may also mention that the entire tampered goods have been subsequently recovered and seized following disclosure made by Shri Kanhaiya Hurbada, employee of the clearing house agent, who owned up the mischief.
20. In the light of the above, the grievance of the petitioner expressing hardship on account of availing bank loan for purchase of the seized vehicle; that he is paying monthly EMI of Rs. 33,437.00 to the bank; since 04.11.2019 his vehicle is lying stationery and not in use; it was his only source of income and he has no connection with the importer needs consideration.
21. In view of the above discussion, we are of the opinion that the impugned action of seizure of the petitioner’s vehicle No.MH-46-H-1284 as well as the order for provisional release of the vehicle calls for interference.
22. Accordingly, the provisional release order dated 14.07.2020 at Exhibit ‘D’ to the writ petition for release of vehicle No.MH-46-H-1284 of the petitioner is modified as under : :-
a. The petitioner shall furnish a bond for 10% of the value of goods seized as a pre condition for release of vehicle No.MH-46-H-1284;
b. The petitioner shall furnish an undertaking that he shall cooperate with the investigation and appear before the investigating authorities as and when required.
23. Subject to compliance of the above two conditions, the above vehicle of the petitioner shall be released forthwith.
24. Writ Petition is allowed in the above terms. However, there shall be no order as to costs.
