Goods Cleared For Home Consumption Cannot Be Considered Imported Goods And Hence Cannot Be Confiscated: P&H High Court

While granting significant relief to the petitioner (K.B. Tyres) by quashing the seizure of goods they had purchased from an importer for home consumption, the Punjab and Haryana High Court established that once goods are cleared for home consumption, they no longer maintain their status as imported goods and, as a result, cannot be subject to confiscation.

In this petition, the petitioner has contested the actions and behaviour of the authorities regarding the seizure of goods purchased by the petitioner from an importer, M/s Vinayak Creations. The petitioner argued that the seized goods did not fall within the classification of ‘banned goods’

The Division Bench comprising of Justice Ritu Bahri and Justice Alok Jain observed that “the goods were duly cleared in favour of the importer and were subsequently sold to the present petitioner for home consumption. Coupled with the above, the authorities have not challenged the sale made by the said importer in favour of the present petitioner. Therefore, the respondents were not within their rights to seize/ confiscate the said goods”.

Advocate Deepak Gupta appeared for the Petitioner, whereas Advocate Sourabh Goel appeared for the Respondent.

After considering the submission, the Bench referred to Section 2(25) of the Customs Act and observed that the term ‘imported goods’ undergoes a change in nature once they are cleared for home consumption.

In the present case, the Bench found that the goods had been correctly cleared in favour of the importer and were subsequently sold to the petitioner for home consumption, and therefore, the authorities did not have the legal authority to seize or confiscate these goods.

The Bench additionally observed that the authorities had not issued any notice to the petitioner before taking such action, which amounted to a violation of the principles of natural justice.

This Bench clarified that the present situation did not involve the petitioner dealing with illegal or banned goods that warranted confiscation, and the authorities were always cognizant of the identity of the importer of these goods and the subsequent sale of the goods by the petitioner.

The Bench remarked that in cases where goods are not banned or in violation of any other law, business transactions should not be ruined at the whims and fancies of the authorities.

“Merely because one of the importers was successful in clicking a deal for a lesser amount of price, cannot be a reason for such a bizarre action”, added the Bench.

Accordingly, the High Court quashed the seizure memo and directed the authorities to promptly release the goods.

Cause Title: K.B. Tyres through its Karta Vijay Kumar Baweja v. Deputy Director, Directorate of Revenue Intelligence, Ludhiana, and Ors. [Neutral Citation: 2023: PHHC: 124090]

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