Customs — seizure limitation and continued detention of goods · F2J-C-2916
Pranavbhai Ambalal Patel v. Additional Director General, DRI Ahmedabad & Ors.
VALIDATED · ACTUAL COURT DOCUMENTSource transparency: The local PDF is an actual court document retained from the complete public source. The official court portal is recorded separately. Verify the official record and subsequent history before reliance.
Holding (ratio)
Customs cannot avoid the statutory time limit for seizure by labelling continued control of goods as mere detention; retention requires a lawful seizure order with recorded statutory satisfaction.
Operative order (extract)
The continued detention was held unsustainable and release was directed subject to the judgment's safeguards and lawful further action.
Scope limits
The holding is confined to the issues actually decided in the retained judgment; no view is attributed to the court on questions expressly left open or remanded.
Sources and completeness
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- Complete searchable public court copy, retained unchanged
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- Extracted words
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Complete searchable judgment text
NEUTRAL CITATION
C/SCA/6295/2025(GJHC240287022025) CAV JUDGMENT DATED: 25/08/2026
2026:GUJHC:54319-DB
Reserved On : 21/08/2026
Pronounced On : 25/08/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6295 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI Sd/-
=============================================
Approved for Reporting Yes No
✔
=============================================
PRANAVBHAI AMBALAL PATEL S/O SHRI AMBALAL PATEL
Versus
ADDITIONAL DIRECTOR GENERAL DIRECTORATE OF REVENUE
INTELLIGENCE AHMEDABAD & ORS.
=============================================
Appearance:
MS ANJALI JHA MANISH WITH MR PARAS ANEJA WITH MR CHETAN K
PANDYA(1973) for the Petitioner(s) No. 1
MR UTKARSH R SHARMA(6157) for the Respondent(s) No. 1,2,3
=============================================
CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. In the present writ petition, the petitioner has assailed
the action of the respondents in detaining his car, which was
imported against Bill of Entry No.7472252 dated 26.12.2024.
BRIEF FACTS:
2. The petitioner purchased a vehicle, being a Toyota Land
Cruiser, for a total price of USD 54,000 from Japan on
13.12.2024. The car was shipped against a Sea Waybill/Bill of
Lading on 23.12.2024. Upon arrival of the goods, Bill of Entry
bearing No.7472252 dated 26.12.2024 was filed after declaring
the description of the vehicle and an assessable value of USD
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54,000. The out-of-charge was given to the petitioner on
02.01.2025, after proper assessment and examination.
3. The petitioner paid stamp duty of Rs.14,621 on the
vehicle on 30.12.2024 and also paid the applicable customs
duty amounting to Rs.99,78,795/- on 31.12.2024. The
petitioner also got the car insured. However, the registration
number was awaited.
4. On 07.02.2025, the Directorate of Revenue Intelligence
(DRI) conducted a search at the residential premises of the
petitioner, detained the imported car under a Panchnama
prepared on the said date, and further directed the petitioner
not to deal with the said car. Summons were issued by the DRI
on 14.02.2025 and 03.03.2025, asking the petitioner to appear
in connection with the inquiry conducted into the import of the
car. On 10.03.2025, the petitioner authorised his son to appear
in connection with the summons dated 03.03.2025. Another
summons dated 21.03.2025 was also issued to the petitioner.
However, the petitioner could not appear on the said date. On
04.04.2025, the petitioner supplied the documents which were
in his possession and also tendered an explanation. Thereafter,
the petitioner filed the present writ petition.
5. It appears that during the pendency of the writ petition,
the Senior Intelligence Officer, DRI, Zonal Unit, Ahmedabad,
issued a seizure memo on 17.04.2026 under Section 110(1) of
the Customs Act, 1962 (for short, “the Act”), and, on
08.05.2026, a show-cause notice under Section 124 read with
Section 28(4) of the Act was issued to the petitioner.
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SUBMISSIONS ON BEHALF OF THE PETITIONER:
6. Learned advocate Ms.Anjali Jha Manish assisted by
learned advocate Mr.Paras Aneja and learned advocate
Mr.Chetan K. Pandya, appearing for the petitioner, at the
outset, has submitted that the action of the respondents in
detaining the car of the petitioner runs contrary to the
statutory provisions of Section 110(2) of the Act and the
decision of the Supreme Court in the case of Union of India Vs.
Jatin Ahuja, (2025) 36 Centax 301 (SC). It is submitted that
since the show-cause notice under Section 124 of the Act has
been issued beyond the period of six months, the seizure
automatically lapses. It is further submitted that no detention
order has been passed by the authorities.
7. While inviting the attention of this Court to the interim
order dated 18.09.2025 passed by the Coordinate Bench and
the subsequent orders, she has submitted that the
investigation was over on 08.05.2026. She has further
submitted that the interim order was challenged by the
petitioner before the Supreme Court by filing Special Leave to
Appeal (Civil) No.12431 of 2026, and vide order dated
10.04.2026, the Apex Court directed the department to
complete the inquiry by acting promptly, and the issue of the
legality and validity of the detention of the vehicle was kept
open. It is submitted that only after the aforesaid order of the
Supreme Court was passed, the seizure memo was issued on
17.04.2026 under Section 110 of the Act, and the show-cause
notice was issued on 08.05.2026 under the provisions of
Section 124 of the Act. She has also submitted that the order
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of provisional release was passed on 18.05.2026 by placing
reliance on Circular No. 35/2017-Customs dated 16.08.2017,
more particularly paragraph No. 2 thereof, which has been
struck down by the Delhi High Court in the case of Shanus
Impex vs. Union of India, 2024 (388) E.L.T. 78 (Del).
8. Learned advocate appearing for the petitioner has further
submitted that, in fact, an incorrect statement was made
before the Supreme Court on behalf of the DRI to the effect
that the pendency of the writ petition before the High Court
came in the way of the department initiating appropriate
proceedings under Section 110 of the Act, whereas there was
no stay on the investigation. She has further stated that the
learned ASG had admitted that there was no seizure on record.
Thus, it is urged that the respondents may be directed to
release the car of the petitioner. In this context, reliance is
placed on the decision of the Delhi High Court in case of
Worldline Tradex Pvt. Ltd. Vs. Commissioner of Customs
(Import), 2016(340) ELT 174(Del).
SUBMISSIONS ON BEHALF OF THE RESPONDENT – AUTHORITIES :
9. Opposing the aforesaid submissions and the present writ
petition, learned Senior Standing Counsel Mr.Utkarsh Sharma,
on instructions, has pointed out that this Court may order the
release of the vehicle on any of the conditions as may be
determined by this Court.
10. Learned Senior Standing Counsel Mr. Sharma has further
submitted that the respondents did not issue the seizure
memo earlier in view of the interim order dated 18.09.2025
passed by this Court.
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11. It is submitted that now the investigation is over and,
accordingly, necessary further action will be taken by the
respondent department in accordance with law.
ANALYSIS AND OPINION :
12. Heard learned advocates appearing for the respective
parties, at length.
13. The established facts from the record are as under:
(A) The petitioner purchased a Toyota Land Cruiser car on
13.12.2024 and, upon the arrival of the goods, Bill of
Entry bearing No. 7472252 was filed on 26.12.2024.
(B) The petitioner paid the total applicable duty of Rs.
99,78,795/- on 31.12.2024.
(C) The DRI conducted a search at the residential
premises of the petitioner on 07.02.2025 and prepared a
Panchnama.
(D) The Panchnama records that the DRI officers directed
the petitioner not to deal with or part with the car until
the inquiry was completed.
(E) The petitioner filed the writ petition before this Court
and, by an order dated 18.09.2025, the Coordinate
Bench, after hearing the learned advocates for the
respective parties, directed the respondent officers to
take the vehicle into custody and to keep it in a safe
place during the pendency of the petition. Further
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directions were also issued to the respondents to conduct
a thorough investigation into the transactions relating to
the purchase of the car. The statement of learned Senior
Standing Counsel Mr.Sharma was recorded that the
investigation report would be submitted before this Court
on or before 09.10.2025.
(F) Further, an order dated 06.11.2025 passed by this
Court reflects that the investigation was not completed.
The statement was recorded that the petitioner, though
he had appeared twice before the respondent authorities
and handed over the requisite documents, and his son
had also appeared twice before the respondent
authorities, the investigation was not completed.
Accordingly, this Court directed the respondent
authorities to complete the investigation by the next date
of hearing, and the matter was posted on 27.11.2025.
Finally, the investigation was completed on 08.05.2026.
(G) The petitioner challenged the orders dated
18.09.2025 and 09.10.2025 by filing a Petition for Special
Leave to Appeal (C) No. 12431 of 2026, which was
disposed of by order dated 10.04.2026 by the Supreme
Court, inter alia, recording the statement of the learned
ASG to the effect that the pendency of the writ petition
before the High Court came in the way of the department
in initiating appropriate proceedings under Section 110 of
the Act. A further statement was recorded that there was
no seizure on record. The Supreme Court directed the
department to act promptly, as the car was a perishable
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commodity, and the issue of the legality and validity of
the detention of the vehicle was kept open.
(H) After the aforesaid order was passed, a seizure
memo under Section 110(1) of the Act was issued on
17.04.2026 and thereafter, a show-cause notice dated
08.05.2026 was issued under Section 124 read with
Section 28(4) of the Act. Finally, an order dated
18.05.2026 was issued by the respondent authorities for
the provisional release of the seized vehicle by resorting
to paragraph No.2 of Circular No.35/2017 dated
16.08.2017, which prescribes the duty/differential duty
leviable on the seized goods, the amount of fine and the
amount of penalties to be levied under the Customs Act.
14. At this stage, we may mention that paragraph No.2 of
Circular No.35/2017 dated 16.08.2027 has been set aside by
the Delhi High Court in the case of Shanus Impex (supra) to
the extent that it curtails the discretion accorded to the
adjudicating authority. Despite the setting aside of paragraph
No.2 of the said Circular, the respondent-Department has
resorted to the same and ordered the provisional release by
directing the petitioner to execute a bond for the assessable
value of Rs.85,95,860/- with an undertaking that the importer
shall pay the duty, fine and/or penalty as may be adjudged by
the adjudicating authority and also execute a bank guarantee
of Rs. 1,20,00,000/- to cover the differential duty, potential fine
and penalties. Hence, the action of the respondents is in fact
contumacious, and is strongly deprecated.
15. The aforesaid facts indicate that though the Panchnama
was prepared on 07.02.2025, whereby the petitioner was
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directed by the DRI officers not to deal with or part with the
said car till the inquiry was completed, the seizure memo
under Section 110(1) of the Act was issued on 17.04.2026, i.e.
almost after a period of more than one year. The DRI, before
the Supreme Court and this Court, has blamed the pendency of
the present writ petition for not resorting to the proceedings
under Section 110 of the Act.
16. We may clarify that this Court never prevented the
officers of the DRI from completing the investigation or
conducting the proceedings under the Customs Act. On the
contrary, the order dated 18.09.2025 reflects that this Court
directed the respondent officers to conduct a thorough
investigation and the learned Senior Standing Counsel made a
statement that the investigation report would be submitted on
or before 09.10.2025. Further, on 09.10.2025, the Coordinate
Bench passed the order directing the respondents to carry out
the investigation at the earliest and file a confidential report
before this Court on or before the next date of hearing, and the
matter was listed on 16.10.2025. A statement was recorded of
the learned advocate appearing for the petitioner that the
petitioner was ready and willing to cooperate with the
investigation.
17. Further, the order dated 16.10.2025 records the
statement of the learned Senior Standing Counsel appearing
for the DRI that the investigation was under process and would
be completed, and the Court directed that the same be
completed before the next date of hearing. The matter was
ordered to be listed on 06.11.2025. On 06.11.2025, the Court
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again recorded the statement of the learned Senior Standing
Counsel appearing for the DRI that the petitioner was not
cooperating in the inquiry, which was opposed by the learned
advocate appearing for the petitioner, who submitted that, in
fact, the petitioner, along with his son, had appeared twice
before the respondent authorities and had handed over the
requisite documents. The Court directed that the report of the
investigation be produced by the next date of hearing, and the
matter was listed on 27.11.2025. When the matter was listed
on 18.12.2025, a statement of the learned Senior Standing
Counsel appearing for the DRI was recorded that the report
dated 26.11.2025 had already been prepared and had been
handed over to the learned advocate appearing for the
petitioner.
18. Thus, all the aforesaid orders reflect that this Court never
restricted the respondents from carrying out the investigation
and proceedings under the Act, including the proceedings
under Section 110 of the Act. Thus, a bald statement has been
made before the Supreme Court that the pendency of the writ
petition before this Court prevented the DRI from initiating
appropriate proceedings under Section 110 of the Act, and that
there was no seizure memo which was passed. Before this
Court, the DRI never raised the objection that it had not
initiated proceedings under Section 110 of the Act and was
prevented from undertaking such proceedings because of the
pendency of the writ petition. No efforts are made by the
respondents to inform this Court in this regard, and in fact the
order sheets reflects that the time is consumed by the
respondents. The respondents have attempted to justify their
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remissness on the pendency of the writ petition. Pertinently,
after the order was passed by the Supreme Court on
10.04.2026, the seizure memo was issued on 17.04.2026
under the provisions of Section 110 of the Act, after a period of
one year, and thereafter, the notice under Section 124 of the
Act was issued on 08.05.2026.
19. Keeping in mind the aforesaid facts, we may refer to the
decision of the Supreme Court in the case of Jatin Ahuja
(supra). The Supreme Court, after examining the provisions of
Section 110(2) and Section 124(a) of the Act in the case of the
seizure of a car read with Instruction No.1/2017-Cus. dated
08.02.2017, has held thus:
“19. In the case in hand, indisputably the car was seized
under sub-section (1) and furthermore no notice in
respect of the goods seized was given under clause (a) of
section 124 of the said Act within six months of the
seizure. The consequence, therefore, in such a case is
that the goods shall be returned to the person from
whose possession they were seized. The first proviso to
sub-section (2) of section 110 of the said Act, however,
provides that the Principal Commissioner of Customs or
Commissioner of Customs may, for reasons to be
recorded in writing, extend the six months' period by a
period not exceeding six months and inform the person
from whom such goods were seized before the expiry of
the period so specified. The proviso therefore
contemplates that the period of six months mentioned in
sub-section (2) of section 110 of the said Act can be
extended by the higher authority for a further period not
exceeding six months, for reasons to be recorded in
writing. The proviso also requires the higher authority to
inform this to the person from whom such goods were
seized before the expiry of the period of six months
mentioned in sub-section (2) of section 110. We find that
in respect of the seized car, there is neither any notice
under clause (a) of section 124 issued to the respondent
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within six months of the seizure nor the period of six
months ever came to be extended for a further period of
six months. In the absence of there being any notice as
required by the first proviso even within the extended
period upto one year, the consequence that ought to
follow is release of the seized car.”
20. Thus, as per the decision of the Supreme Court, if the
goods are seized under sub-section (1) of Section 110 of the
Act, the notice is required to be issued within a period of six
months under Section 124(a) of the Act, which can be
extended to a further period of six months by resorting to first
proviso under Section 110(2) of the Act, and if, in the absence
of there being any notice as required by the first proviso even
within the extended period of up to one year, the consequence
that ought to follow is the release of the seized car.
21. The relevant part of Section 110 is as under:
“SECTION 110 : Seizure of goods, documents and things
(1) If the proper officer has reason to believe that any goods
are liable to confiscation under this Act, he may seize such
goods:
[PROVIDED that where it is not practicable to remove, transport,
store or take physical possession of the seized goods for any
reason, the proper officer may give custody of the seized goods
to the owner of the goods or the beneficial owner or any person
holding himself out to be the importer, or any other person from
whose custody such goods have been seized, on execution of an
undertaking by such person that he shall not remove, part with,
or otherwise deal with the goods except with the previous
permission of such officer:
PROVIDED FURTHER that where it is not practicable to seize any
such goods, the proper officer may serve an order on the owner
of the goods or the beneficial owner or any person holding
himself out to be importer, or any other person from whose
custody such goods have been found, directing that such person
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shall not remove, part with, or otherwise deal with such goods
except with the previous permission of such officer.]
xxxxx
(2) Where any goods are seized under sub-section (1) and no
notice in respect thereof is given under clause (a) of
section 124 within six months of the seizure of the goods,
the goods shall be returned to the person from whose
possession they were seized:
[PROVIDED that the Principal Commissioner of Customs or
Commissioner of Customs may, for reasons to be recorded
in writing, extend such period to a further period not
exceeding six months and inform the person from whom
such goods were seized before the expiry of the period so
specified.”
22. In the present case, the panchnama was prepared on
07.02.2025, through which the petitioner was directed not to
deal or part away with the car. The Act does not define either
detention or seizure. The Law Dictionary states “detention” is
the act of keeping back or withholding, either accidentally or
by design, a person or thing. Thus, by a panchnama, the car of
the petitioner was detained. The proviso to Section 110(1) of
the Act prescribes the process to be undertaken by the proper
officer in the eventuality where where it is not practicable to
remove, transport, store or take physical possession of the
seized goods for any reason. In such cases, the proper officer
may give custody of the seized goods to the persons as
mentioned therein, on execution of an undertaking by such
person that he shall not remove, part with, or otherwise deal
with the goods except with the previous permission of such
officer. The second proviso further stipulates that where it is
not practicable to seize any such goods, the proper officer may
serve an order on such person, directing that such person shall
not remove, part with, or otherwise deal with such goods
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except with the previous permission of such officer. In the
instant case, it is not the case of the respondent-department
that the car which was ordered to be detained would fall within
the categories of the goods as mentioned in the first proviso.
Thus, the proper officer was required to pass an order under
second proviso, which is not done. In this context, we rely upon
the judgement of Delhi High Court in the case of Worldline
Tradex Pvt. Ltd. (supra).
“17. Mr Agarwala drew the attention of the Court to the
proviso to Section 110(1) of the Act which envisages a
situation where it is not practical to seize imported goods. The
proviso states that in such instance "the proper officer may
serve on the owner of the goods an order that he shall not
remove, part with, or otherwise deal with the goods except
with the previous permission of such officer".
18. In the present case, as already noted, no order was served
on the owner of the goods in terms of proviso to Section
110(1) of the Act. What the panchnama talks of is the
custodian being told by the DRI not to remove, part with or
otherwise deal with the goods. Clearly, therefore, no action
was proposed and, in fact, taken in terms of the proviso
to Section 110(1) of the Act, which is the only exception to not
immediately seizing the goods. It appears to be imperative
that if the proper officer decides to seize the goods, then he
must record first reasons to believe that such goods are liable
to be confiscation under the Act.
19. In R.S. Seth Gopikisan Agarwal (supra) the Supreme Court
discussed Section 105 of the Act dealing with search and
not Section 110 of the Act which deals with seizure. In any
event, even the Supreme Court did not suggest that no
reasons at all are required to be given for a search
undertaken under Section 105 of the Act. In para 7 the
Supreme Court observed that the Customs Officer "doubtless"
has to indicate "broadly the nature of the documents and the
goods in regard to which the officer authorized by him should
make a search, for without that his mandate cannot be
obeyed". While the Supreme Court observed that the specific
particulars need not be mentioned, it did not dispense with
the recording of reasons for the action taken under Section
105 of the Act.
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20. Even the decision in S.J. Fabrics Pvt. Ltd. v. Union of
India (supra) does not suggest that the proceedings
under Section 110(1) of the Act is not to be followed. The
above observations in para 6 of the decision are relevant in
the context of the computation of the period of limitation for
the purposes of issuance of the show cause notice
under Section 124(a) of the Act. The said decision does not
suggest that for effecting a seizure under Section 110(1) of
the Act, no order is required to be passed by the proper
officer.
21. None of the above decisions is an authority for the
proposition sought to be advanced by Mr. Agarwala that
detention and seizure is one and the same thing. On the
contrary, the decisions of the Punjab & Haryana High Court
referred to by learned counsel for the Petitioner hold to the
contrary. Both in Mapsa Tapes Pvt. Ltd. v. Union of
India (supra) and Om Udyog v. Union of India (supra) the High
Court was concerned with the similar situation of detention of
the goods without recording reasons to believe that seizure of
the goods was warranted under Section 110(1) of the Act. The
following discussion in Mapsa Tapes Pvt. Ltd. v. Union of
India (supra) supports the case of the Petitioner that, for there
to be a valid seizure of the goods it is incumbent on the
proper officer to record reasons to believe, under Section
110(1) of the Act, that the goods are liable to be confiscated:
"23. The case in hand, in our opinion, will fall within the
four corners of Section 105 of the Act as in the present
case the seizure of the goods was preceded by search. It
is even evident from panchnama dated 8-2-2005
(Annexure P. 3) attached with the writ petition.
24. In the present case, what to talk of respondents
themselves producing the records to show recording of
reasons, even in spite of specific query by the court,
nothing has been produced before us to show as to
whether reasons were recorded or not before the search
was authorised or the seizure took place. All what has
been relied upon is the report of Directorate of
Revenue Intelligence, Delhi Zonal Unit (DRI) which is
much prior to the date of seizure and important aspect of
the matter is that the goods were cleared under Section
47 of the Act after the above report was available with
DRI. Further, undisputed allegations of the petitioners are
that even after the clearance of the consignment, seizure
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of which is in question, in the present petition a number
of consignments were cleared by the respondents
under Section 47 of the Act under similar circumstances.
25. We are of the view that while existence power of
seizure may be justified but its exercise will be liable to
be struck down unless 'reasons to believe' were duly
recorded before action of search and seizure is taken,
which has not been done in the present case because the
respondents have not been able to satisfy the court that
due process of law was followed while taking drastic step
of search and seizure in the case of the petitioner. On this
ground alone, we are of the view that action of search
and seizure is liable to be quashed and accordingly we
answer the second issue in favour of the petitioner and
against the revenue.
26. Before parting with the judgment, we make it clear
that we are not going into question of alleged liability for
undervaluation or mis-description or any other
consequence or the liability of the petitioners as a result
of pending show cause notice issued to the petitioners...."
22. In Om Udyog v. Union of India (supra), in similar
circumstances, the Court directed immediate release of the
goods since "the Department had not shown prima facie case
for exercise of powers of confiscation and has only relied upon
existence of power". The Gujarat High Court in Baboo Ram
Hari Chand v. Union of India (supra) negatived the plea of the
Department that seizure and confiscation were one and same
thing. In that case the panchnama was projected as the
seizure order. The Court observed that "such composite order
is unheard of". It further observed:
"27. Technically, asking the party to submit fresh PD
Bonds for a period of six months on one hand and
proceeding to seize the goods on the other hand may not
perhaps be faulted with, however, burden lies on the
authority to explain rationale to rush into seizure/
confiscation of the goods in such circumstances, the
reason is the „proper officer‟ cannot proceed to seize the
goods under Section 110 of the Act unless he has reason
to believe. The authority would exercise drastic powers to
seize the goods only in case wherein it has reason to
believe that the goods is liable to be confiscated. The
powers to seize and the power to confiscate are quite
drastic powers. Little elaboration would show apparent
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inconsistency in the conduct of the respondent, from
which it can be said that formation of belief for seizure by
the respondent is vitiated...."
23. The power of seizure under Section 110 of the Act has to
obviously be exercised for valid reasons. The proper officer
has to record his reasons to believe that the goods that he
proposes to seize are liable to confiscation. The said reasons
for exercise of the power have to be recorded prior to the
seizure. In the present case, as already noticed, apart from
the panchnama, there is no separate order passed
under Section 110(1) of the Act by the proper officer recording
the reasons to believe that the goods are liable for
confiscation. Since till date no other order exists and no such
order has been communicated to the Petitioner, it is not
possible to accept the plea of Mr Agarwala, learned counsel
for the DRI, that the 'detention' of the goods by the DRI was
with the authority of law and in any event should be
treated as a seizure in terms of Section 110(1) of the Act.”
23. The Delhi High Court in a similar issue, wherein the owner
of the goods was directed not to remove or part with the goods
through a panchanama, has held that it is imperative for the
proper officer to pass a separate order as stipulated in the
proviso of Section 110(1) of the Act, and record that the goods,
which he/she proposes to seize are liable to be confiscated. It
is held that the “detention” of goods by the DRI cannot be
treated as “seizure” in terms of Section 110(1) of the Act. In
the instant case, after the order dated 10.04.2026 was passed
by the Supreme court , the seizure order has been issued on
17.04.2026 under Section 110(1) of the Act, which means that
the car was under detention bereft of any order passed under
the provisos under Section 110(1) of the Act, and thereafter,
the show-cause notice was issued on 08.05.2026 under the
provisions of Section 124 of the Act for confiscation, which is
within the limitation period of six months as prescribed under
the provisions of Section 110(2) read with Section 124(a) of the
Act.
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24. We may, at this stage, incorporate the relevant extract of
Instruction No.1/2017-Cus. [F. No. 591/04/2016-Cus. (AS)],
dated 08.02.2017, which has been considered by the Supreme
Court in the case of Jatin Ahuja(supra). The Circular is as
under :-
“Instruction No.01/2017-Cus. (F. No. 591/04/2016-Cus.
(AS)) dated 8.2.2017
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject: Passing of order under Section 110 of the Customs
Act, 1962 – reg.
Attention is invited to Section 110 of the Customs Act, 1962
and Para 1.1 of Chapter 15 of the Customs Manual 2015.
2. It has been brought to the notice of the Board that in
several cases, goods arc being held-up/seized by the field
formations only under panchnama and separate orders for
seizure of goods are not being passed. The Hon’ble Delhi High
Court, in a recent order, has held that a panchnama is a
statement by panchas (witnesses) and cannot be taken to be
an order passed by the proper officer under Section 110 of the
Customs Act, 1962.
3. Though Section 110 of the Act ibid does not specify passing
an order for seizure of goods, it says that where it is not
practicable to seize any such goods, the proper officer may
serve on the owner of the goods an order that he shall not
remove, part with, or otherwise deal with the goods except
with the previous permission of such officer.
4. In view of the above, in all future cases, the following may
be adhered to:
Whenever goods are being seized, in addition to
panchnama, the proper officer must also pass an
appropriate order (seizure memo/order/etc.) clearly
mentioning the reasons to believe that the goods are
liable for confiscation.
Where it is not practicable to seize any such goods, the
proper officer may serve on the owner of the goods an
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order that he shall nor remove, part with, or otherwise
deal with the goods except with the previous permission
of such officer. In such cases, investigations should be
fast-tracked to expeditiously decide whether to place
the goods under seizure or to release the same to their
owner.
5. Further, it has been brought to the notice of the Board that
in cases where provisional release of seized goods is allowed
under Section 110A of the Act ibid, show cause notices are not
being issued within the stipulated time period on the ground
that the goods have been released to the owner of the goods.
The provisions of the Customs Act, 1962 are clear that
irrespective of the fact whether goods remain seized or are
provisionally released, once goods are seized, the time period
(including extended time period) stipulated under Section
110(2) of the Act shall remain applicable and has to be strictly
adhered to.
6. The Chief Commissioners/Director Generals are requested
to circulate the present guidelines to all the formations under
their charge. Difficulties, if any, in implementation of the
aforesaid guidelines may be brought to the notice of the
Board. Hindi version follows.”
25. The Ministry of Finance, in the context of passing an
order under Section 110 of the Act, has taken cognizance of
those cases where the goods are being held up or seized under
the Panchnama and no separate orders for seizure of goods
are passed by the authority.
26. The guidelines issued by the Ministry of Finance
specifically direct that whenever goods are being seized, in
addition to the Panchnama, the proper officer must also pass
an appropriate order (seizure memo/order/etc.) clearly
mentioning the reasons to believe that the goods are liable for
confiscation.
27. The expression used in the guidelines, that “the proper
officer must also pass an appropriate order in addition to
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Panchnama”, has to be construed to mean that such orders of
seizure should be coterminous and are required to be passed
along with or after the Panchnama is prepared, clearly
mentioning the reasons to believe that the goods are liable for
confiscation.
28. Thus, the respondents have detained the car vide
panchanama dated 07.02.2025, and in fact the seizure order
under Section 110(1) has been passed after a period of one
year on 17.04.2026, and in order to escape the limitation of six
months, the Notice for confiscation under Section 124(a) of
the Act has been issued on 08.05.2026. The customs authority
cannot indefinitely seize the goods in the garb of detention,
without passing any order under the provisos to Section 110(1)
of the Act. In absence of any order, when there is actual
detention of goods, the time will start running from detention
of goods vide panchanama dated 07.02.2025, more
particularly, when the DRI has issued summons to the
petitioner on 14.02.2025 and 03.03.2025 under Section 108 of
the Act directing him to remain present. Section 110(1) of the
Act uses the expression “reason to believe” that any goods are
liable to confiscation, the proper officer may seize the goods.
The first proviso uses the expression “where it is not
practicable to remove, transport…, he may give custody of the
goods on execution of an undertaking”. The second proviso
further mentions “where it is not practicable to seize the
goods”. In either scenario, the proper officer is legally bound to
satisfy a two-fold statutory obligation before passing a seizure
order, a) he/she must explicitly record reasons that the goods
are liable for confiscation, and b) he must record clear
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satisfaction by passing the order regarding the nature of the
goods under the respective provisos, which strictly restricts,
the removal, transport, storage, or physical possession and the
physical seizure. The panchanama cannot satisfy the
ingredients of the Section 110 of the Act, and an order is
mandatory under the proviso to Section 110 of the Act for
paving the way for issuance of notice under Section 124(a)
within a period of 6 months unless extended.
29. As a necessary corollary, the proper officer or the DRI
officers cannot consume a considerable period, such as, in the
present case, over a period of one year, to pass the seizure
order under Section 110(1) after the Panchnama was prepared
on 07.02.2025, by continuing the detention of the vehicle. The
consequential effect is that, when the seizure memo travels
beyond the period of one year, the time limit of six months as
mentioned in the provisions of Section 110(2) and the further
period of six months as envisaged under the proviso to sub-
section (2) of Section 110[6] will get consumed, and the DRI
thereafter cannot be allowed to reap the fruits of its inaction.
Thus, after consuming a considerable period of more than one
year, the proper officer has passed an order under Section
110(1) and thereafter has issued the show-cause notice under
Section 124(a) of the Act. The respondents have sprung into
action by passing the order and show-cause notice only after
the order dated 10.04.2026 passed by the Supreme Court. We
have already deprecated the stance of the Respondents, who
have sought to use the pendency of the present writ petition
as a shield to justify their persistent inaction in failing to pass
appropriate orders.
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30. As held above, the order of provisional release dated
18.05.2026 is also illegal, as the conditions mentioned in the
said order are premised on paragraph No.2 of Circular
No.35/2017 dated 16.08.2017, which has been struck down by
the Delhi High Court in the decision rendered in the case of
Shanus Impex (supra).
31. On an overall analysis of the facts and the scheme of the
statutory provisions, we direct the respondents to release the
Toyota Land Cruiser, shipped against the Sea Waybill/Bill of
Lading dated 23.12.2024 and covered by Bill of Entry bearing
No.7472252 dated 26.12.2024. The directions shall be
complied with within a period of two weeks. We also impose
costs of Rs.10,000/- on the Respondents, which shall be
deposited with the Registry of this Court within a period of two
weeks.
Sd/-
(A. S. SUPEHIA, J)
Sd/-
(VAIBHAVI D. NANAVATI,J)
MAHESH/Supp.Board/01
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