Md. Kitab Ali vs. The Union Of INDIA And 2 Ors

Held

The Court held that the goods in question, being damaged human hair, are neither prohibited nor specified goods. Consequently, the Customs authorities could not confiscate them under Section 113 of the Customs Act, 1962, and the exercise of powers under Section 110 of the Act for seizure did not arise. The Court acknowledged the revenue's concern about potential claims from an actual owner and the perishable nature of the goods. To balance competing equities, the Court directed the release of the seized goods to the petitioner upon furnishing a Bank Guarantee of Rs. 16,37,600/-. This guarantee would be valid for six months, during which the Customs authorities could investigate ownership. The bank guarantee could only be invoked if a third party proved a better title to the goods than the petitioner, and only after issuing notice to the petitioner. If no third party proved ownership within six months, no further action would be taken regarding the goods.

Facts

The petitioner, Md. Kitab Ali, proprietor of Indian Hair, is challenging the seizure of 16 bags of damaged human hair by Customs officials at Guwahati Railway Station on May 27, 2022. The petitioner claims to be a registered GST dealer in the business of buying and selling damaged human hair. The consignment was sent from Sealdah Railway Station to Guwahati Railway Station on May 25, 2022, with a declared value of Rs. 16,37,600/-. Upon learning of the seizure, the petitioner provided documents to the Customs officials, including ownership documents, transport agent details, and GST payment records. The Customs officials interrogated the petitioner, a prospective buyer Lalchand Shekh, and a trader Rabiul Chand. The petitioner contends that the goods were seized without proper documentation and that the authorities are harassing him.

Key Issues

1. Whether the Customs authorities were justified in seizing the 16 bags of damaged human hair under Section 110 of the Customs Act, 1962, given that the goods are not prohibited or specified goods? Petitioner's argument: The petitioner contended that the goods in question are not prohibited or specified goods, and therefore, their seizure under Section 110 of the Customs Act, 1962, is not permissible. They argued that they had provided all necessary documents evidencing ownership and compliance with GST regulations. Revenue's argument: The revenue argued that the goods were found "UNCLAIMED" on the railway platform and seized based on an intelligence report. They further submitted that the petitioner failed to produce proper documents evidencing ownership, and releasing the goods might prejudice the rights of the actual owner if they appear later. They sought liberty to decide on the ownership of the goods.