[Section 110A Customs Act] Owner Does Not Include Importer Of Goods: Bombay High Court

"The said section does not include or envisage release of goods provisionally in favour of an importer of goods much less does it envisage, a release in favour of 'any person', in addition to the owner as mentioned in Section 124 of the Act, who has been served a notice under the said section", the court held.

Justices Dhiraj Singh Thakur and Abhay Ahuja were dealing with a custom appeal challenging an order of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) provisionally releasing the seized goods in favour of the importer.

The court allowed the appeal stating that the CESTAT committed an error in reading the term importer in Section 110A of the Act.

The Directorate of Revenue Intelligence seized two consignments under Section 110A of the Act arriving from Hong Kong after they were found to be mis-declared. The consignments were purportedly containing Memory Module of 4GB, 8GB and 32GB D-RAM valuing about 80 lakh rupees. On inspection it was found to contain 3800 iPhones valuing about 42 Crore Rs.

The respondent filed an application for release of goods under Section 110A of the Act. The adjudicating authority rejected the application stating that there was no evidence to show that the respondent was the owner of the goods. Respondent appealed before the CESTAT which allowed the appeal reasoning that ownership could be claimed by an importer. The Commissioner of Customs (Import) appealed the decision of CESTAT before the High Court.

Counsel for the appellant submitted that the respondent denied ownership of the seized goods and hence could not seek the provisional release of the seized goods, which could only be released to the owner. Further, the respondent was a master mind and had created a syndicate for smuggling iPhones through imports. Allowing the release of smuggled iPhones in favour of the respondent would amount to placing a premium on the organized and systematic illegal activities of the respondent.

Counsel for the respondent submitted that show cause notice was issued to him under Section 124 of the Act only because the authorities considered him to be an owner.

The court perused Section 124 and concluded that issuance of a show cause notice does not necessarily establish that the person in whose name it is issued is the owner. "The phrases 'penalty on any person' and 'the owner of goods or such person' suggests that before an order of confiscation is passed, an owner or any other person shall have to be given a notice of the proposed confiscation of goods", the court observed in the judgment per Justice Thakur.

The court observed that Section 110A clearly provides that goods seized may be released to the owner. It doesn't include or envisage release of goods provisionally in favour of an importer of goods. Nothing prevented the legislature from specifically providing in Section 110A that an importer, a beneficial owner or any person holding himself to be an importer could claim a right to seek provisional release of goods.

The court referred to Section 125 of the Act which explicitly provides that in absence of the owner, adjudging officer can give the person from whose custody goods have been seized an option to pay fine in lieu of such goods. Such a right is not available under section 110A of the Act.

"We, therefore, are of the opinion that the order passed by the Tribunal is unsustainable in law and hold that the goods could have been released provisionally under Section 110A of the Act, only in favour of an owner, which status the Respondent had failed to establish", the court held.

Case no – Custom Appeal (L) No. 20820 of 2022

Case title – Commissioner of Customs (Import) v. Dinesh Bhabootmal Salecha

Counsels for the appellant – Mr. Advait Sethna a/w Mr. Rangan Majumdar i/b Ms. Ruju Thakker

Counsels for the respondent – Mr. Prakash Shah a/w Mr. Jas Sanghavi i/b PDS Legal

Coram – Justice Dhiraj Singh Thakur and Justice Abhay Ahuja

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