Valbaux Minetech vs. Union Of INDIA

Held

The Court held that the continued detention of the goods for approximately two years without seizure proceedings or a show cause notice was not permissible under the Customs Act, 1962. The Court noted that Section 110(2) of the Act provides a time limit for investigation, which can be extended for a further period, but such extension requires a reasoned order based on bona fide reasons. The Court found no record to indicate that the timelines stipulated in the Customs Act or the Customs (Administration of Rule of Origin under Trade Agreements) Rules, 2020, were observed by the concerned officer. The Court emphasized that in the absence of seizure, goods detained beyond the statutory period without confiscatory proceedings should be returned. Consequently, the Court directed the release of the goods provisionally. The petitioners were directed to furnish a Bank Guarantee of Rs. 2,00,000/- for a period of eight weeks. The authority was directed to complete the inquiry within eight weeks from the receipt of the order. The petitioners also undertook to furnish a bond to fulfill their legal obligations if the Country-of-Origin was found to be Pakistan.

Facts

The petitioners, Valbaux Minetech, sought the release of imported goods (Magnesium Carbonate) under Bill of Entry No. 7015597 dated 25.02.2020. The goods arrived at Mundra Port on 26.02.2020. The Deputy Commissioner of Customs permitted storage in a bonded warehouse. The primary issue arose from the Country-of-Origin certificate, issued by the Dubai Chamber of Commerce, stating the origin as Turkey, which the customs authorities doubted, suspecting it to be Pakistan. The authorities demanded movement documents submitted to Turkey Customs, which the petitioners could not provide, citing the Dubai Chamber's authority to issue such certificates and COVID-19 related difficulties. The goods have been detained for approximately two years. The petitioners filed a writ petition seeking release of the goods, alternatively, provisional release.

Key Issues

1. Whether the continued detention of the imported goods for approximately two years without seizure proceedings or a show cause notice is permissible under the Customs Act, 1962, particularly in light of Section 110(2) which prescribes time limits for investigation and extension. Petitioner's argument: The petitioners contended that the detention of goods without seizure and without issuing a show cause notice within the statutory period of six months (extendable) is illegal. They argued that Section 110(2) mandates inquiry completion within a specified time, and its extension requires a reasoned order based on satisfactory and bona fide reasons. They also referred to the Customs (Administration of Rule of Origin under Trade Agreements) Rules, 2020, highlighting timelines for verification. Revenue's argument: The respondents argued that the petitioners had not submitted all original and requisite documents, including movement documents submitted to Turkey Customs, which were necessary for further investigation regarding the origin of the goods. They stated that the petitioners were offered provisional release twice but did not comply.