Whether Importer can be treated as the original owner of Goods for Provisional Release of Seized Goods under Customs Act

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The Hon’ble Bombay High Court in Commissioner of Customs (Import) v. Dinesh Bhabootmal Salecha [CUSTOM APPEAL (L) NO. 20820 OF 2022 dated September 8, 2022] held that for the interim release of goods under Section 110A of the Customs Act, 1962 (“the Customs Act”) the importer of the goods cannot be regarded as the “owner” of the commodities.

Facts:

 The Commissioner of Customs (“the Appellant”) appealed in this matter where, the Directorate of revenue put on hold two consignments under the bills of entry, which were imported in the name of M/s. Salecha Electronics Inc. (“the Respondent”). On inspection by the Directorate of Revenue Intelligence, the consignment was found to be mis declared. So, the goods were seized under Section 110A of the Customs Act.

An application for the release of goods was filed under Section 110A of the Customs Act, which was rejected because the Respondent failed to bring any evidence on record regarding ownership of the goods in question.

The Respondent filed an appeal in the Customs Excise and Service Tax Appellate Tribunal (“the CESTAT”) which was allowed in the order dated June 23, 2022The Tribunal held that even when an ‘owner’ had not been defined in the Customs Act yet, the term owner was deployed in the definition of an importer under Section 2(26) of the Customs Act, and by default, ownership could be claimed by an importer.

Aggrieved by this order, an appeal was made by the Appellant.

Issue:

Whether or not the importer can be treated as the original owner of the goods?

Held:

The Hon’ble Bombay High Court inCUSTOM APPEAL (L) NO. 20820 OF 2022 dated September 8, 2022 held as under:

  • The Hon’ble court held that according to the specific and clear mandate of Section 110A of the Customs Act, goods could have been permitted to be released only in favor of the owner. Since the Respondent had failed to prove ownership over the goods in question, as held by the adjudicating authority and no evidence had been submitted to prove such ownership, which finding of fact has not been unsettled by the Tribunal, except to the extent that the Respondent has been held to be the owner by an erroneous legal interpretative of the provisions of the Act.
  • The Court also observed 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 Customs Act, only in favor of an owner and here, the Respondent failed to establish his ownership.
  • Therefore, the appeal filed by the Appellant was allowed.

Relevant Provision:

Section 110A of the Customs Act

“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 attachedunder section 110, may, pending the order of the adjudicating 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 require.”

(Author can be reached at info@a2ztaxcorp.com)

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CA Bimal Jain
A2Z Taxcorp LLP is a boutique Indirect Tax firm having its offices at New Delhi and Guwahati specializing in GST, Central Excise, Custom, Service Tax, VAT, DGFT, Foreign Trade Policy, SEZ, EOU, Export – Import Laws, Free Trade Policy, etc. It is a professionally managed firm having a team of experienced and distinguished Chartered Accountants, Company Secretary, Lawyers, Corporate Financial Advisors and Tax consultants to provide various services like litigation and representation, transaction advisory, diagnostic reviews/ health checks, audit defense & protection, retainership & compliance, configuration of tax efficient business model etc. Its clientele consists mainly of Foreign MNC, large/mid-sized Indian companies which includes exporters, FMCG, consumer durables, automobiles, aerated beverages, ceramic tiles, real-estate, hospitality, etc. Our clients include Varun Beverages Limited, Kajaria Ceramics Limited, L.G. Electronics India Private Limited, Shipra Hotel Limited, Multani Pharmaceuticals Limited, Shangri-La Eros Hotel etc. Flat No. 34B, Ground Floor, Pocket - 1, Mayur Vihar, Phase–I, Delhi – 110091 India Desktel:+91-11-42427056 Mobile:+91 8076563802 info@a2ztaxcorp.com www.a2ztaxcorp.com
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