The mandatory nature of the time limit for holding seized goods and the consequence of non-issuance of show cause notice under Section 110(2) of the Customs Act.

S. RAVINDRA BHAT, J.

1. The petitioner’s grievance is that pursuant to search and seizure proceedings conducted by the Department of Revenue Intelligence (DRI), gold jewellery and other like valuables were detained; they were found in the locker maintained in the Corporation Bank, Mayur Vihar Branch. The search and seizure proceedings took place on 07.07.2017. The DRI officials apparently also seized the key; the contents of the locker are jewellery etc, and continue to be in the locker. The DRI inventorized the jewellery. The petitioner has sought appropriate directions for the release of the key as well as the articles; she cites Section 110(2) of the Customs Act. The respondent/DRI in the counter affidavit alleges that the premises of the petitioner were searched on account of information gathered that there was extensive fraudulent drawback by credits on account of fictitious export of readymade garments. It is stated that the investigations on this aspect are continuing and are at an advanced stage. As far as the petitioner’s complaint with respect to jewellery and locker is concerned, the DRI alleges that she has failed to indicate the source of funds to support the purchase of jewellery inventorized in the panchnama dated 07.07.2017. On this aspect she was silent, when she made a request for release of the articles. The other allegation which has been made is with respect to the suppression of the information regarding shares in which the petitioner had stake.

2. The petitioner has relied upon the judgment of this Court in Jatin Ahuja Vs. UOI wherein the effect of Section 110 and obligation of the revenue to ensure that a show cause notice under Section 124 is issued within a stipulated time was explained. The Court cited the judgment in Asstt. Collector Of Customs vs Charan Das Malhotra 1972 AIR 689; J.K. Bardolia Mills vs M.L. Khunger,Dy.Collector (1994) 5 SCC 332 and also analyzed the provisions of Section 110 as well as Section 110A. It considered the judgment of the Bombay High Court Jayant Hansraj Shah v Union of India 2009 (1) Bom CR 474 which was relied upon by the Revenue. The Court held as follows:

“9. It can be gathered from the above discussion that the provision of Section 110 (2) in so far as the prescription of a time limit for holding seized goods, is deemed mandatory; the consequence of not issuing a show cause notice within the period or extended period specified is clearly spelt out to be that the “goods shall be returned to the person from whose possession they were seized” (apparent from a combined reading of Section 110 (2) and its proviso). The corollary is not that the Customs authorities lose jurisdiction to issue show cause notice.

10. Now, such being the case, the question is if the customs authorities accede to a request to release the goods, under Section 110-A, would such event absolve or override the operation of Section 110 (2). It is to assert such a proposition that the respondents rely on the judgment of the Bombay High Court in Jayant Hansraj Shah. There, the request for release had been made within the period; however, the extended period of six months had not expired. The Court, in that context, ruled that:

“9. Under Section 110-A there is a power to provisionally release the seized goods pending order of adjudication on taking a bond in a proper form with security and conditions as the Commissioner of Customs may require. It is, therefore, clear that from the date of seizure till the order of adjudication the Commissioner of Customs has the power to release the goods provisionally. This power was exercised. The petitioner accepted this order of provisional release but wanted variation of the said order which he was informed could not be done.

10. Section 110 speaks of no notice being given under Clause (a) of Section 124 within six months of the seizure or confiscation of the goods. The procedure for confiscation of the goods can be resorted to if the goods are not provisionall