Customs -Order of Provisional Release under Section 110A -Appeal lies to the Tribunal - CESTAT Five Member LB
ON Friday, a Larger Bench of Five Members of the CESTAT delivered a landmark judgement on an issue that was doubtful for the last 33 years.
And this time, the judgement was unanimous -all five members agreed.
When goods are seized under the Customs Act, there is a provision for provisional release of goods. Normally even the vehicles carrying the offending goods are seized and if they are not released, they will certainly be damaged.
The issue before the Larger Bench was regarding the right to appeal against an order (of provisional release) passed under Section 110A of the Customs Act which reads as:
Section 110A: Provisional release of goods, documents and things seized pending adjudication - Any goods, documents or things seized under Section 110, may, pending the order of the adjudicating authority, be released to the owner on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require .
The Department can, for releasing the goods provisionally demand huge bonds and securities or even cash deposits. Many in the department have a feeling that for certain powers, they have higher authority than the Supreme Court. One such power is the power to release seized goods provisionally. They believe that against such an order, however unreasonable it is, there is no provision for appeal to the Tribunal. If a Commissioner orders provisional release, it is for the party to obey that order and comply with its conditions. The party is not supposed to go round the Tribunal appealing against such a sacrosanct order.
The Revenue argued before the Five-Member Bench:-
1. Section 110A does not provide for any vested right for the owner of the seized goods to get them released prior to issue of show cause notice. It is a discretion to be exercised by the adjudicating authority depending on many things;
2. a decision/order to release or not to release seized goods provisionally, by the Commissioner as an Adjudicating Authority, is subject to judicial review by courts only but is not subject to a statutory appeal to CESTAT;
3. simple communication of a decision by an Adjudicating Authority or not granting provisional release on simply intimating the person who has requested for provisional release cannot be a subject matter of an appeal before CESTAT. It is an administrative discretion by the Adjudicating Authority, pending the final order of adjudication.
The Larger Bench was not impressed and observed,
1. An order for provisional release of seized goods is not to be issued mechanically. The same is issued after due consideration of various factors like the nature of goods, the seriousness of the offence etc. When the order has civil consequences, remedy against any adverse order is by way of appeal. Judicial review by the courts in exercise of constitutional powers cannot be the only automatic recourse as argued by Revenue. Here, the provisions of Section 129A (1) (a) cannot be restrictively interpreted to mean that only final adjudication orders are covered under the terms “a decision or order passed by Commissioner of Customs as adjudicating authority”. There is neither a textual or normative warrant for such interpretation.
2. Another submission by Revenue is that an order under Section 110A is an interim order of the Adjudicating Authority and hence no appeal is available under Section 129A. Such argument apart from being fallacious also presumes that in all cases of seizure of goods, there will be a “final” adjudication order. It may not be so. There may be situations where on completion of investigation no offence is made out against the owner of the seized goods. There will not be any “final” adjudication in such cases. The case is closed.
3. Revenue contended that the appealability of an order for provisional release of goods will impede timely and proper completion of investigation. This argument apart from being ex-facie without foundation reveals a desperation for restrictive interpretation of the meaning of indeterminate expressions or generally worded legislation. However, rule of law demands that legislative text should be given its full and appropriate meaning and force. Possible administrative inconvenience cannot provide valid jurisdiction for not following certain procedures and to eclipse the remedy mandated by legislation.
The Larger Bench held,
(a) the contention that an order or decision by the Adjudicating Authority under Section 110A is administrative or interim in nature is misconceived.
(b) provisions of Section 129A (1) (a) clearly authorize an appeal against an order or decision by the Adjudicating Authority issued under Section 110A. There is no legal basis to restrict the scope of such appeal in the absence of any restrictive conditions in the provision.
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