High Court of KeralaSingle Judge2023-04-13Disposed of

J K Traders v. The Commissioner of Customs (Preventive) and Others

Case / Petition Number:W.P.(C)No.1382 of 2023

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: T.R.RAVI
Judgment Date: 2023-04-13
Court Decision / Holding: The writ petition is disposed of with directions. The competent authority is to examine whether any seized articles were procured locally; if so, steps shall be taken to release such articles. This examination must be completed within six weeks. The court rejects the prayer to set aside the provisional release conditions on merits in this writ petition, but notes that the petitioner may appeal against the orders that are impugned. The pendency period shall not count toward the limitation for filing an appeal. The court also reiterates that the ultimate determination of whether seized goods are liable for confiscation is to be decided in accordance with the statute, and not via this writ petition.
Final Disposition: Disposed of

Parties to the Case

Appellants / Petitioners

J K Traders

Respondents

The Commissioner of Customs (Preventive)
The Assistant Commissioner of Customs (SIIB)
The Superintendent of Customs (Preventive)
The Superintendent of Customs (SIIB)
The Assistant Commissioner of Customs (Import)

Legal Representation & Advocates

Counsels for Petitioners

• JAZIL DEV FERDINANTO
• JOSE JACOB
• M. RISHIKESH SHENOY

Counsels for Respondents

• Shri Sreelal N. Warrier, SC, GST Intelligence (Directorate General - DGGI)
• Shri P.T. Dinesh

Case Synopsis & Summary

J K Traders, a dealer in face veneer, plywood, machinery and related spares, imports from China through a local agent and maintains a stock of goods in a warehouse. A departmental enquiry led to the seizure of goods under Section 110 of the Customs Act, 1962, including face veneer, conveyor belts, plywood, imported machinery and spare parts. The petitioner contends that Section 110 can be invoked only for goods liable to confiscation under Section 111 and that a blanket seizure of all goods is not legally sustainable, particularly since some items (like locally procured conveyor belts and plywood) are not imported and thus not within the purview of Section 110/111. The petition highlights an undervalued goods value of Rs. 88,34,124, of which Rs. 78 lakhs had already been paid as duties, arguing that the bond and Rs. 50 lakh bank guarantee for provisional release are unjustified. Respondents contend Rs. 78 lakhs is voluntary, that there is a presumption of undervaluation in other cases, and that the adjudicating authority was not a party to the petition; they also submit that an appeal under Section 128 is available. The court notes the factual dispute regarding the Rs.78 lakhs and that the petitioner has an appellate remedy, declining to decide merits under Article 226. It directs examination of whether any seized articles were locally procured, with six weeks for action, and preserves the right to appeal for any challenged orders.

Provisions of Law Cited

Section 110 of the Customs Act, 1962Section 110A of the Customs Act, 1962Section 111 of the Customs Act, 1962Section 128 of the Customs Act, 1962Article 226 of the Constitution of India

Legal Doctrines & Maxims

Doctrine of alternate remedy (exhaustion of statutory remedies via Section 128)
Writ jurisdiction under Article 226 should not substitute a statutory remedy when an adequate alternative exists

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that seizure under Section 110 is permissible only for goods liable to confiscation; a blanket seizure of goods including locally procured items (e.g., conveyor belts and plywood) cannot be sustained since such items are not imported and thus not covered by Sections 110/111. The value of undervalued seized goods is Rs. 88,34,124; Rs. 78 lakhs has already been paid towards duties, suggesting that the bond and Rs. 50 lakh bank guarantee for provisional release are unjustified. The petitioner argues that Section 110A provides for provisional release on a bond, and questions the necessity of the bank guarantee. It asserts that the matter should be resolved through the statutory appeal under Section 128 rather than a writ under Article 226, and that the availability of an appellate remedy renders the writ inappropriate. The petitioner also argues that the adjudicating authority should determine whether the seized goods include locally procured items before any release.

Contentions of Respondents

The respondents submit that the seizure under Section 110 is valid where the officer has reason to believe goods are liable for confiscation, and that provisional release can be conditioned by bond and security under Section 110A. They contend that the Rs. 78 lakhs payment is not necessarily for the seized goods and that there is a presumption of undervaluation in other cases. They emphasize that the adjudicating authority is a necessary party to the proceedings and that Section 128 provides an adequate remedy through appeals. They argue that the writ petition challenges the merits of the seizure and the valuation, which is inappropriate where an appellate remedy exists, and that the court should not substitute its view on whether the goods were smuggled goods when it would require a reappraisal of facts. They maintain that there is a factual dispute about the Rs. 78 lakhs and that the petitioner must pursue available remedies under the statute.

Cited Precedents (5)

Case Name	Citation	Treatment	Explanation
State of Gujarat v Mohanlal Jitamalji Porwal & Anr.	AIR 1987 SC 1321	Positive	Cited to support the proposition that a court should not re-examine the merits of seizure, i.e., not sit in appeal over seizure decisions; reinforces non-interference in seizure on merits.
Pukhraj v. D.R.Kohli, Collector of Central Excise & Anr.	AIR 1962 SC 1559	Positive	Also cited for the principle that a writ cannot be used to re-litigate decisions on seizure where an adequate statutory remedy exists.
ALM Enterprises v. The Commissioner of Customs	WPC 30789 of 2015	Positive	Madras High Court decision cited to emphasize that an alternate remedy via appeal under Section 128 should be pursued rather than invoking Article 226.
Rajesh Garg v. Assistant Commissioner of Customs	WP No.16376 of 2020	Positive	MP High Court precedent cited to support the availability of an appellate remedy and the appropriateness of not deciding merits in a writ petition.
Giriraj Spintex Private Limited v. Director General of Revenue Intelligence & Ors.	WP No.4955 of 2012	Positive	Rajasthan High Court decision cited to reinforce the alternate remedy principle and to discourage entertaining a writ where an appellate remedy exists.

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Extracted Judgment Text

Exact text extracted from official judgment records.

W.P.(C)No.1382 of 2023 1 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **THURSDAY, THE 13[TH] DAY OF APRIL 2023 / 23RD CHAITHRA, 1945 WP(C) NO. 1382 OF 2023** ## **PETITIONER:** J K TRADERS, X/662, PALLIKAVALA, MUDICKAL PO, PERUMBAVOOR, ERNAKULAM REPRESENTED BY ITS PROPRIETOR MR. JAFAR KHAN K M, PIN - 683547 BY ADVS. SRI JAZIL DEV FERDINANTO SRI JOSE JACOB SRI M.RISHIKESH SHENOY ## **RESPONDENTS:** 1 THE COMMISSIONER OF CUSTOMS (PREVENTIVE) OFFICE OF THE COMMISSIONER OF CUSTOMS (PREVENTIVE) 5TH FLOOR, CATHOLIC CENTER, BROADWAY, COCHIN, PIN – 682 031 2 THE ASSISTANT COMMISSIONER OF CUSTOMS (SIIB) OFFICE OF THE COMMISSIONER OF CUSTOMS (PREVENTIVE) 5TH FLOOR, CATHOLIC CENTER, BROADWAY, COCHIN, PIN - 682031 3 THE SUPERINTENDENT OF CUSTOMS OFFICE OF THE COMMISSIONER OF CUSTOMS (PREVENTIVE) 5TH FLOOR, CATHOLIC CENTER, BROADWAY, COCHIN, PIN - 682031 4 THE SUPERINTENDENT OF CUSTOMS (SIIB) OFFICE OF THE COMMISSIONER OF CUSTOMS (PREVENTIVE) 5TH FLOOR, CATHOLIC CENTER, BROADWAY, COCHIN, PIN - 682031 W.P.(C)No.1382 of 2023 2 5 THE ASSISTANT COMMISSIONER OF CUSTOMS (IMPORT) OFFICE OF THE COMMISSIONER OF CUSTOMS, CUSTOMS HOUSE, WILLINGDON ISLAND, COCHIN, PIN - 682009 BY ADVS. SHRI.SREELAL N.WARRIER, SC, GST INTELLIGENCE ( DIRECTORATE GENERAL -DGGI) SRI P.T.DINESH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 13.04.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)No.1382 of 2023 3 **T.R. RAVI, J. -------------------------------------------W.P.(C)No.1382 of 2023 -------------------------------------------Dated this the 13th day of April, 2023** ## **JUDGMENT** The petitioner is a trader of Face Veneer, plywood and machinery and spare parts relating to the same. The petitioner submits that for the purpose of local sale, they import machinery and spare parts from China with the assistance of a local agent, while face veneer is imported directly by the petitioner. The 3[rd] respondent conducted an enquiry in the premises of the petitioner and thereafter issued Ext.P7 restraint order invoking Section 110 of the Customs Act,1962 (hereinafter referred to as the Act). The goods lying in the warehouse of the petitioner which included face veneer, conveyor belt, plywood, imported machinery, and spare parts were seized. According to the petitioner, the seized goods included conveyor belt and plywood which were procured locally. It is contended that Section 110 of the Act can be invoked only in case of imported goods which are liable for confiscation as provided under Section 111 of the Act and hence a blanket order seizing all the goods cannot be sustained in law. The petitioner also submits that the total value of the undervalued goods seized as per Ext.P7 amounts to W.P.(C)No.1382 of 2023 4 Rs.88,34,124/-, out of which an amount of Rs.78 lakhs has already been discharged by the petitioner by way of Exts.P9 and P10 demand drafts. It is hence submitted that the condition for execution of a bond for the full value of the goods and bank guarantee for Rs.50 lakhs, for provisional release of the seized goods, is unjustified. 2. A counter-affidavit has been filed on behalf of the respondents. It is submitted that Rs.78 lakhs is a payment made voluntarily and not a payment for the purpose of the release of the seized goods. It is also stated that there is a presumption that there are more cases of undervaluation. It is submitted that the Adjudicating Authority is not made a party to the writ petition. It is also submitted that the petitioner has a remedy of appeal under Section 128 of the Act and hence cannot maintain the writ petition. The petitioner justifies the filing of the writ petition stating that even though an appeal is provided for, the same is not an efficacious remedy, since the hearing and disposal of the appeal would take a long time and all the while, goods that are not liable to be seized, will remain with the Department. 3. Reliance is placed on the judgment of the Hon'ble Supreme Court in **State of Gujarat v Mohanlal Jitamalji Porwal & Anr. [AIR 1987 SC 1321]** , wherein it was held that the Court would not sit in appeal on the question whether the articles were W.P.(C)No.1382 of 2023 5 seized on a reasonable belief that the goods were smuggled goods. The judgment of the Hon'ble Supreme Court in **Pukhraj v. D.R.Kohli, Collector of Central Excise & Anr. [AIR 1962 SC 1559]** is also to the same effect. The decision of the Madras High Court in **ALM Enterprises v. The Commissioner of Customs (WPC No.30789 of 2015)** and the judgment of the Madhya Pradesh High Court in **Rajesh Garg v. Assistant Commissioner of Customs (WP No.16376 of 2020)** and the decision of the Rajasthan High Court in **Giriraj Spintex Private Limited v. Director General of Revenue Intelligence & Ors. (WP No.4955** **of 2012)** are relied on to submit that when the petitioner has an alternate remedy of an appeal, they cannot be permitted to approach this Court under Article 226 of the Constitution. Sections 110, 110A, 111 and 128 of the Customs Act are extracted below. ## **“Section 110. Seizure of goods, documents and things** .— (1)If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods: Provided that where it is not practicable to seize any such 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. (1A) The Central Government may, having regard to the W.P.(C)No.1382 of 2023 6 perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification in the Official Gazette, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (1), be disposed of by the proper officer in such manner as the Central Government may, from time to time, determine after following the procedure hereinafter specified. xxxxxxxxx xxxxxxxxx xxxxxxxxx **110A. Provisional release of goods, documents and things seized pending adjudication** .— Any goods, documents or things seized under section 110, may, pending the order of the adjudicating authority, be released to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require. **111. Confiscation of improperly imported goods, etc.** —The following goods brought from a place outside India shall be liable to confiscation:— xxxxxxxxx xxxxxxxxx xxxxxxxxx (m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54. **128. Appeals to Commissioner (Appeals). –** (1) Any person aggrieved by any decision or order passed under this Act by an officer of customs lower in rank than a W.P.(C)No.1382 of 2023 7 Principal Commissioner or Commissioner of Customs may appeal to the Commissioner (Appeals) within sixty days from the date of the communication to him of such decision or order : Provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days. (1A) The Commissioner (Appeals) may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing: Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal. (2) Every appeal under this section shall be in such form and shall be verified in such manner as may be specified by rules made in this behalf.“ 4. The prayer in this writ petition is for quashing the restraint order and the order whereby conditions were imposed for provisional release of the seized goods. As far as the seizure is concerned, if the proper officer has reason to believe that any goods are liable to confiscation under the Act, he may seize such goods. It cannot hence be said that the action of seizure is without authority. Whether the goods are liable for confiscation and whether the seizure is proper are all matters which are to be decided in appropriate W.P.(C)No.1382 of 2023 8 proceedings under the Statute. The Statute itself provides for provisional release of seized goods on taking a bond from the owner in the proper form with such security and conditions as the Commissioner of Customs may require. It is invoking the said power that Ext.P11 has been issued to the petitioner calling upon them to execute a bond on the value of the seized goods and the bank guarantee for Rs.50 lakhs. It is apparent that the bank guarantee is directed to be furnished as security, which the Officer is entitled to require under Section 110A. The only grievance of the petitioner is that the petitioner has already paid a substantial amount towards the differential duty and hence it is unfair to impose such conditions. Ext.P12 letter, which is an official communication specifically says that the petitioner has paid an amount of Rs.78 lakhs towards differential duty in two instalments, and in the light of the same, a question is posed whether the prescribed condition of bank guarantee for an amount of Rs.50 lakhs for the provisional release of seized goods can be waived. The said letter is issued after Ext.P11. 5. On 16.2.2023, this Court had directed the adjudicating authority to consider whether the condition regarding furnishing of bank guarantee for Rs.50 lakhs can be reconsidered based on information submitted regarding the payment of Rs.78 lakhs by the W.P.(C)No.1382 of 2023 9 importer. Ext.R1(1) produced along with the application for accepting additional documents is the communication dated 7.3.2023 informing that the payment of Rs.78 lakhs was towards duty evaded in imports of the previous years and not towards the seized goods in the stock. It is hence stated that no reconsideration is required. However, the question whether all the goods seized are goods which are liable for confiscation has not been considered. A reading of Section 111 shows that it applies to goods brought from outside India. Since seizure under Section 110 relates to articles liable for confiscation, necessarily articles procured locally fall out of the ambit to Sections 110 and 111. 6. It is evident that there is a factual dispute regarding the payment of Rs.78 lakhs and it is this demand which is stated as a reason for reconsidering the direction to furnish bank guarantee. In the light of the specific appellate remedy available to the petitioner and the factual dispute which would go to the root of the order which is impugned, it is not proper for this Court to consider the said issue on merits in a proceeding under Article 226 of the Constitution. The law laid down in the judgments referred to above are also to the said effect. In the above circumstances, the reliefs as prayed for in the writ petition cannot be granted. 7. The writ petition is hence disposed of directing the W.P.(C)No.1382 of 2023 10 competent authority to examine whether any of the articles seized are articles that were procured locally. If the competent authority finds that any of the seized articles are articles procured locally, steps shall be taken to release such articles. Necessary action in this regard shall be taken within 6 weeks from the date of receipt of a copy of this judgment. As regards the prayer for setting aside the condition imposed for provisional release, the rejection of the said prayer in these proceedings will not in any manner affect the right of the petitioner to prefer an appeal against the orders impugned, if so advised, and the period during which this writ petition was pending before this Court shall not be taken into account for the purpose of limitation. Sd/- **T.R.RAVI JUDGE** dsn W.P.(C)No.1382 of 2023 11 ## **APPENDIX OF WP(C) 1382/2023** |PETITIONER EXHIBITS|| |---|---| |Exhibit P1|TRUE COPY OF FORM GSTR-9 ANNUAL RETURNS OF| ||THE PETITIONER FILED FOR THE PERIOD 2018-19| ||TO 2021-22| |Exhibit P2|TRUE COPY OF FORM GSTR-9C RECONCILIATION| ||STATEMENTS OF THE PETITIONER FILED FOR THE| ||PERIOD 2018-19 TO 2021-22| |Exhibit P3|TRUE COPY OF GST FILING STATUS OF THE| ||PETITIONER AVAILABLE ON THE GST PORTAL AS| ||ON 10.01.2023| |Exhibit P4|TRUE COPY OF SAMPLE IMPORT DOCUMENTS IN| ||RELATION TO IMPORT OF FACE VENEER INVOICES| ||DATED 29.03.2022| |Exhibit P5|TRUE COPY OF SAMPLE IMPORT DOCUMENTS IN| ||RELATION TO IMPORT OF MACHINERY INVOICES| ||DATED 14.06.2022| |Exhibit P6|TRUE COPY OF SAMPLE IMPORT DOCUMENTS IN| ||RELATION TO IMPORT OF SPARE PARTS INVOICES| ||DATED 21.06.2021| |Exhibit P7|TRUE COPY OF RESTRAINT ORDER DATED| ||15.09.2022| |Exhibit P8|TRUE COPY OF SEIZURE MEMO DATED 15.09.2022| |Exhibit P9|TRUE COPY OF DEMAND DRAFT DATED 15.09.2022| ||FOR RS. 48,00,000/-| |Exhibit P10|TRUE COPY OF DEMAND DRAFT DATED 26.09.2022| ||FOR RS. 30,00,000/-| |Exhibit P11|TRUE COPY OF LETTER F.NO.| ||CCP/SIIB/INT/16/2022/2581/M DATED| ||15.11.2022| |Exhibit P12|TRUE COPY OF LETTER F.NO.| ||CCP/CUS/INT/16/2022 DATED 23.11.2022| |Exhibit P13|TRUE COPY OF SUMMONS IN CBIC-DIN-| ||20220958MB000000D63F DATED 20.09.2022| |Exhibit P14|TRUE COPY OF SUMMONS IN CBIC-DIN-| ||20221258MC0000167381/2747/22 DATED| ||09.12.2022| |Exhibit P15|TRUE COPY OF THE BILL OF ENTRY RELATING TO| W.P.(C)No.1382 of 2023 12 THE FACE VENEER IN QUESTION DATED 08.07.2022 Exhibit P16 TRUE COPY OF DEMAND DRAFT DATED 03.01.2023 FOR RS. 3,56,871/Exhibit P17 TRUE COPY OF INVOICE NO. ROMINV/21-22/107 DATED 30.04.2021 Exhibit P18 TRUE COPY OF INVOICE NO. A 202 DATED 25.03.2022 Exhibit P19 TRUE COPY OF THE LETTER DATED 20.02.2023 Exhibit P20 TRUE COPY OF THE POSTAGE ACKNOWLEDGEMENT EVIDENCING DISPATCH OF LETTER DATED 20.02.2023 Exhibit P21 TRUE COPY LETTER NO. CUS/AG/MISC/1823/2022A/GR DATED 07.03.2023 RESPONDENT EXHIBITS Exhibit R1(1) TRUE COPY OF THE ORDER NO.CUS/AG/MISC/1823/2022-A/GR DATED 07.03.2023 BY THE JOINT COMMISSIONER OF CUSTOMS (IMPORTS) TO THE ADDITIONAL COMMISSIONER, O/O. THE COMMISSIONER OF CUSTOMS (PREVENTIVE)