T.S.SAJEESH, V. UNION OF INDIA,

WP(C)/5739/2024

AI Insights

The case involves T.S. Sajeesh, a traditional goldsmith, who had gold weighing 4392.05 grams seized by customs authorities. Following an adjudication, the customs authorities were directed to release the gold, but they did not comply due to an ongoing appeal. The petitioner argued that the customs department's refusal to release the gold was unjustified, citing previous court judgments that supported immediate compliance with such orders. The customs department contended that releasing the gold without conditions could prejudice the Revenue if the gold was ultimately found liable for confiscation. The court, while agreeing with the petitioner's entitlement to the gold, imposed a condition of providing security to ensure the interests of the Revenue were protected.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 723994 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 05-03-2024
• Assessment Year: misc
• Other Referred Cases: Union of India and others v. Kamlakshi Finance Corporation Ltd., Bhopal Sugar Industries v. Income Tax Officer, Bhopal, Lombardi Engineering Limited v. Uttarakhand Jal Vidyut Nigam Limited
• Laws Referred To: Customs Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SREELAL WARRIOR; MANU S
• Assessee Lawyers: HAARIS MOOSA
• Keywords: Adjudication; Appeal; Confiscation; Customs; Gold Seizure; Security for release
• Section: 226

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. TUESDAY, THE 5TH DAY OF MARCH 2024 / 15TH PHALGUNA, 1945 WP(C) NO. 5739 OF 2024 PETITIONER/S: T.S.SAJEESH, AGED 42 YEARS, S/O.T.G.SHANKARAN, THOTTIPARAMBIL HOUSE, ALLACHIRA P.O, THRISSUR, PIN - 680562 BY ADV HAARIS MOOSA RESPONDENT/S: 1 UNION OF INDIA, MINISTRY OF FINANCE, REPRESENTED BY SECRETARY, NORTH BLOCK, NEW DELHI, PIN - 110001 2 COMMISSIONER OF CUSTOMS (PREVENTIVE), 5TH FLOOR, CATHOLIC CENTRE, BROADWAY, KOCHI, PIN - 682031 3 SUPERINTENDENT OF CUSTOMS, CUSTOMS PREVENTIVE COMMISSIONERATE COCHIN, 5TH FLOOR, CATHOLIC CENTRE, BROADWAY, KOCHI, PIN - 682031 OTHER PRESENT: SRI. SREELAL N. WARRIOR -SC, SRI. MANU S -DSGI THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P (C) No.5739/2024 -2- J U D G M E N T The petitioner claims to be a traditional Goldsmith engaged in making gold ornaments for his customers on job work basis. According to the petitioner, without any just cause or reason, gold weighing 4392.05 gms was seized from the petitioner, and a show cause notice was issued. The petitioner contested the show cause notice. Following adjudication, Ext.P1 order was issued by the adjudicating authority, finding clearly that the gold, which was the subject matter of the proceedings, cannot be confiscated. However, certain penalties were imposed on the petitioner and others for having produced certain forged documents before the customs authorities to obtain a release of the seized gold. 2. The petitioner is before this court with a grievance that the gold which was seized has not been released despite Ext.P1 order on the ground that an appeal has been filed by the Customs Department before the Commissioner of Customs (Appeals). It is submitted that going by the judgment of this court in W.P (C) No.18531/2023, when the Customs Department failed to obtain an interim order staying Ext.P1 order, it was not open to the Customs Department to refuse to implement Ext.P1 order and by refusing to release the gold seized from the petitioner. The learned counsel for the petitioner submits that the Supreme Court in Union of India and W.P (C) No.5739/2024 -3- others v. Kamlakshi Finance Corporation Ltd., : 1992 Supp (1) SCC 443 has considered that there cannot be any failure to comply the orders of the appellate or revisional authority on the premise that there may be loss of revenue. The learned counsel also placed reliance on the judgment of the Supreme Court in Bhopal Sugar Industries v. Income Tax Officer, Bhopal; (1960) 40 ITR 618 to contend that the Department was bound by the directions/findings in Ex.P1 order of adjudication. 3. The learned Standing Counsel appearing for the Customs Department would contend that the Department is aggrieved by Ext.P1 order and it has, therefore, preferred an appeal before the Commissioner of Customs (Appeals). It is submitted that though there is no specific statutory provision which prohibits filing an application for stay in appeals filed by the Department, the normal practice is that in appeals filed by the Department, applications for stay are not entertained. It is submitted that when, according to the Department, the gold that has been directed to be released in terms Ext.P1 order is liable for absolute confiscation any order by this Court directing the release of the gold in terms of Ext.P1 order without imposing any condition will cause great prejudice to the Customs Department and the Revenue. It is submitted that if the gold is released without any condition regarding the provision of security and if it is ultimately found that the gold is W.P (C) No.5739/2024 -4- liable for confiscation, it may be difficult for the Department to recover the gold from the petitioner. 4. The learned counsel appearing for the petitioner would submit in reply that the contention taken by the learned Standing Counsel cannot be accepted. It is submitted that in a recent judgment in Lombardi Engineering Limited v. Uttarakhand Jal Vidyut Nigam Limited; 2023 SCC OnLine SC 1422 the Supreme Court had occasion to consider whether an arbitration clause which requires pre-deposit would be valid in the light of Article 14 of the Constitution of India. It is submitted that while considering the above issue, the Supreme Court also considered the question as to whether the validity of such a clause would be examined in proceedings for the appointment of an arbitrator in an international arbitration under Section 11(6) of the Arbitration and Conciliation Act, 1996. It is submitted that the Supreme Court, upon a consideration of the matter, came to the conclusion that the validity of such a clause can be gone into in proceedings for appointment of an arbitrator and also found that the said clause requiring pre-deposit without the sanctity of law as being arbitrary and unsustainable in view of the provisions contained in Article 14 of the Constitution of India. It is submitted that the said decision is, therefore, authority for the proposition that in the absence of any law requiring the provision of security to obtain the W.P (C) No.5739/2024 -5- release of goods directed to be released in an adjudication under the provisions of the Customs Act, the submission of the learned counsel appearing for the Customs Department that the goods can be released only upon the provision of security cannot be sustained. 5. Having heard the learned counsel for the petitioner and the learned counsel appearing for the Customs Department, I believe that the petitioner is entitled to an order directing the release of the seized gold in terms of Ext.P1 order. However, this cannot happen in the absence of security. The relief under Article 226 of the Constitution of India is discretionary. Therefore, even in the absence of an interim order by the appellate authority in the facts and circumstances of this case, this Court, while granting relief to the petitioner, can subject such relief to the compliance of certain conditions, including conditions to protect the interest of the Revenue. Though the judgment of this Court in W.P(C)No.18531 of 2023 has directed the release of gold in almost similar circumstances without imposing any condition, it does not compel me to take a similar view as the contention now taken on behalf of the Customs Authorities was not considered by this Court while disposing of W.P(C) No.18531 of 2023. The learned counsel for the petitioner is right in contending on the authority of Bhopal Sugar Industries Ltd. (supra) that the order of the adjudicating W.P (C) No.5739/2024 -6- authority is equally binding on the Customs Department. However, I cannot agree with the contention of the learned counsel for the petitioner on the basis of the judgment of the Supreme Court in Lombardi Engineering Limited (supra) that any condition for the release of the gold ornaments directed to be released in terms of Ext.P1 order would be arbitrary and violative of Article 14 of the Constitution of India. In the facts and circumstances of this case, proceedings were initiated against the petitioner under the provisions of the Customs Act for confiscation of the gold in question. The adjudicating authority has no doubt on a consideration of the matter directed the release of the gold without imposing any condition. The Customs Department is in appeal against the said order before the Commissioner of Customs (Appeals). Since no stay has been obtained by the Customs Department, it is incumbent on the Customs Department to comply with the directions contained in Ext.P1 order. However, that cannot be at the cost of the Revenue on the basis of a writ issued by this Court under Article 226 of the Constitution of India. The issue considered by the Supreme Court in Lombardi Engineering Limited (supra) was different from the issue arising for consideration herein. That was a case where the Supreme Court considered the validity of a pre-deposit as a condition for invoking an arbitration clause. The Supreme Court found that clause arbitrary and W.P (C) No.5739/2024 -7- violative of Article 14 of the Constitution of India. In the facts and circumstances of this case, directing the petitioner to provide security as a condition for the release of the gold directed to be released in terms of Ext.P1 order cannot be termed violative of Article 14 of the Constitution of India. Therefore, this writ petition is allowed directing the 2nd respondent to release the seized gold, which has been directed to be released, in terms of Ext.P1 order, subject to the condition that the petitioner produces adequate security covering the value of the gold before the 2nd respondent. Sd/- GOPINATH P. JUDGE AMG W.P (C) No.5739/2024 -8- APPENDIX OF WP(C) 5739/2024 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ADJUDICATION ORDER DATED 7- 12-2023 IN ORDER (ORIGINAL) O.147/2023-24 CUSTOMS (PREV) Exhibit P2 TRUE COPY OF THE LETTER DATED 15-12-2023 WRITTEN BY THE PETITIONER TO THE COMMISSIONER OF CUSTOMS THE 2ND RESPONDENT HEREIN Exhibit P3 TRUE COPIES OF THE CHALLANS DATED 18-12-23 EVIDENCING PAYMENT OF PENALTIES AS PER PARAS (V), (VI) AND (VIII) OF THE EXT P1 ORDER Exhibit P4 TRUE COPY OF THE ORDER DATED 21-9-2023 IN WP(C).30820/2023 BY THE HON'BLE HIGH COURT OF KERALA Exhibit P5 TRUE COPY OF THE ORDER DATED 25-9-23 IN WP(C).31224/2023 BY THE HON'BLE HIGH COURT OF KERALA Exhibit P6 TRUE COPY OF THE ORDER DATED 20-9-23 IN WP(C).30811/2023 BY THE HON'BLE HIGH COURT OF KERALA "