Order date – 08 September 2022

Facts – 

• The Respondent, Dinesh Bhabootmal Salecha, imported two consignments under the bills of entry, in the name of M/s. Salecha Electronics Inc. and M/s. 2000 Semiconductor, which arrived from Hong Kong at Air Cargo Complex (ACC), International Airport, Mumbai, which were otherwise supposed to contain Memory Module of 4GB, 8GB and 32GB D-RAM valuing Rs.80 Lakhs approximately.
• On inspection by the Directorate of Revenue Intelligence the consignment was found to contain 3800 iPhones valuing approximately Rs.42 Crores. Since the goods were found to be mis-declared, the goods were seized under Section 110A of the Act.
• The respondent filed an application for release of goods under Section 110A of the Act, which was rejected by the by the adjudicating authority, which held that the Respondent had not brought any evidence on record regarding ownership of the goods in question.
• The appellant authorities held that it was not open to the customs authorities to hold that there was lack of ownership for the purposes of provisional release under Section 110A of the Act.
• Aggrieved, the appellant filed an appeal.

Issue –

• Whether the Hon’ble CESTAT has erred in allowing the provisional release of the goods in favour of the Respondent in contravention of Section 110 A of the Customs Act, 1962 when the Respondent’s ownership of such goods itself is seriously disputed?

Order – 

• The Court observed 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. 
• Therefore, the mere fact that a show cause notice has been issued in the name of the Respondent does not necessarily imply that he is to be treated as an owner of the goods seized, which are sought to be confiscated.
• In view of the specific and clear mandate of Section 110A, goods could have been permitted to be released only in favour of an owner and since the Respondent had failed to prove ownership over the goods in question, as held by the adjudicating authority inasmuch as 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 process of the provisions of the Act.
• Therefore the court observed that 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.
• Appeal allowed.