[Section 110A Customs Act] Seized goods can be released only in favour of owner and not importer: Bombay High Court

The Bombay High Court on Thursday ruled that goods seized under Section 110 of Customs Act can be provisionally released under Section 110A only in favour of the owner of the goods and no one else. [Commissioner of Customs (Imports) vs Dinesh Bhabootmal Salecha].A bench of Justices Dhiraj Singh Thakur and Abhay Ahuja observed that Section 110A of the Act did not envisage release of goods in favour of any person other than the owner of the goods."A reading of Section 110 A makes it abundantly clear that goods seized may be released to the owner. 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..The Court was hearing a challenge to an order of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) that allowed provisional release of seized goods in favour of the respondent, an importer..By way of background, in November 2021, two consignments from Hong Kong were seized by the Directorate of Revenue Intelligence after finding that they contained 3,800 iPhones valued at about ₹42 Crores as opposed to Memory Modules valued at about ₹80 lakh, as declared by the sender..The importer filed an application for release of the goods but it was rejected as the adjudicating authority observed that there was no evidence to show that the importer was the owner of the goods. .However, on appeal to CESTAT, the importer's plea was allowed with the reasoning that the ownership could be claimed by the importer as ownership was merely a matter of claim along with all the liabilities and consequences attached to it..Before the High Court, advocate Advait Sethna for the Commissioner of Customs (Import), submitted that the respondent had denied ownership of the seized goods and he could not, therefore, seek the release of goods and they could be released only to the owner.He also claimed that the respondent was a mastermind at smuggling iPhones into India and allowing release of the smuggled phones in its favour would amount to placing a premium on illegal activities conducted by it..Advocate Prakash Shah, for the respondent, contended that a show cause notice issued under Section 124 of the Act to the importer was enough to demonstrate that the authorities considered him to be the owner of the goods .However, the Court observed that issuance of a show cause notice in no way established the recipient as the owner of the seized goods. "On a perusal of the provision (supra) it can be seen that issuance of a show cause notice in terms of Section 124 does not necessarily establish that the person in whose name it is issued, is necessarily 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 stated..It further noted that the legislature could have entitled a person besides an owner to seek provisional release of the goods, but it did not. "Nothing could prevent the legislature from specifically incorporating a provision in Section 110A, which would also entitle, besides an owner, an importer, a beneficial owner or any person holding himself to be an importer to claim a right to seek provisional release of goods in terms of Section 110A of the Act," it said.To clarify, it underlined that under Section 125 of the Act, when confiscation of any goods is authorized by the Act, the officer adjudging may give to the owner of the goods or where such owner is not known, the person from whose custody such goods have been seized, an option to pay in lieu of such goods, such fine as the officer deems appropriate. "It thus goes to show that goods can be got released by a person other than an owner, in the circumstances as envisaged in Section 125 of the Act at a time when confiscation is authorised, which right of release of goods is not available to any other person except an owner as envisaged under Section 110A of the Act at any preliminary or intermediate stage," the Court stated..It, therefore, ruled that the CESTAT order was unsustainable as the goods could have been released provisionally under Section 110A of the Act, only in favour of the owner. It, therefore, allowed the appeal and set aside the order..[Read Judgment]