Bombay High Court Rebukes DRI for Illegal Recall of Cleared Goods

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 01.11.2025

Bombay High Court Rebukes DRI for Illegal Recall of Cleared Goods

The High Court of Bombay recently delivered a significant judgment in the case of Make India Impex vs. Union of India & Ors. ​ (Writ Petition No. 11099 of 2025). This case revolved around the alleged arbitrary and high-handed actions of a Senior Intelligence Officer (Respondent No. ​ 6) from the Department of Revenue Intelligence (DRI), Mumbai Zonal Unit, concerning the import of dry dates by the Petitioner, Make India Impex.

Background of the Case

The Petitioner, Make India Impex, filed a writ petition seeking the release of approximately 56 tons of dry dates imported under Bill of Entry No. ​ 3375923, dated 19 July 2025. ​ The goods were cleared by the Customs Authorities under Section 47 of the Customs Act, 1962, after due verification and payment of assessed customs duty amounting to Rs. ​ 6,30,361.7. The goods were physically transported out of the jurisdiction of the Customs Authorities on 24 July 2025. ​

However, the sixth Respondent allegedly acted on intelligence suggesting that the goods originated from Karachi, Pakistan, and were routed through Dubai, UAE, to circumvent the prohibition on importing goods from Pakistan under DGFT Notification No. ​ 06/2025-26 dated 2 May 2025. ​ The sixth Respondent allegedly coerced the Customs Broker and Transporter to return the cleared goods to the Container Freight Station (CFS) without following due legal procedures. ​

Key Issues Raised

1. Allegations of Arbitrary Actions by Respondent No. ​ 6: The Petitioner alleged that the sixth Respondent acted without lawful authority, using threats and coercion to force the return of the cleared goods to the CFS. ​ This action resulted in the cancellation of the Petitioner’s supply contract and financial losses. ​
2. Violation of Legal Procedures: The sixth Respondent’s actions were challenged for ignoring the statutory clearance order under Section 47 of the Customs Act and failing to comply with principles of natural justice. ​
3. Country of Origin Dispute: The sixth Respondent claimed that the dry dates were of Pakistani origin, which would make them prohibited under the DGFT notification. ​ However, the Petitioner provided documentation, including certificates from UAE authorities, to prove the goods originated from Dubai.
4. Lack of Evidence and Procedural Compliance: The Court noted that the sixth Respondent failed to provide contemporaneous records or notations to justify his actions under Section 106 of the Customs Act, which governs the power to stop and search conveyances.

Court’s Observations

The Court made several critical observations:

1. Prima Facie Merit in Petitioner’s Allegations: The Court found merit in the Petitioner’s claims of arbitrary and high-handed actions by the sixth Respondent. ​ It noted that the goods were cleared after thorough verification by the Customs Authorities, and the sixth Respondent’s actions disregarded the statutory clearance order. ​
2. Non-Compliance with Legal Procedures: The Court emphasized that the sixth Respondent’s actions were not backed by any legal provisions or procedures. ​ The absence of contemporaneous records or a formal “reason to believe” undermined the legitimacy of the Respondent’s actions. ​
3. Principles of Natural Justice: The Court reiterated that any action with civil consequences must comply with principles of natural justice and fairness. ​ The sixth Respondent failed to provide the Petitioner with an opportunity to respond or justify his actions through proper legal channels. ​
4. Discretion in Releasing Prohibited Goods: The Court acknowledged that even if the goods were found to be prohibited, the Customs Authorities have the discretion to release them upon payment of a redemption fine or penalty. ​ The Court emphasized that this discretion must be exercised judicially and not arbitrarily. ​

Court’s Decision

The High Court issued the following directions:

1. Issuance of Show Cause Notice: The Respondents were granted four weeks to issue a show cause notice to the Petitioner regarding the status of the imported goods. ​ The notice must include all adverse material and provide the Petitioner an opportunity to respond. ​
2. Timely Disposal of the Notice: The Respondents were directed to dispose of the show cause notice within six weeks of receiving the Petitioner’s response. ​
3. Release of Goods: If the Respondents fail to issue or dispose of the show cause notice within the stipulated timeline, they must release the detained goods. ​ The release may be conditional upon the payment of a redemption fine or provision of a bank guarantee.
4. Contentions on Prohibited Goods: The Court left the determination of whether the goods were prohibited to the Proper Officer, who would decide based on the show cause notice. ​

Similar Connected Article from the past: Can DRI hold an Out of Charge (OOC) Shipment

Conclusion

This judgment underscores the importance of adhering to legal procedures and principles of natural justice in administrative actions. ​ It highlights the need for statutory functionaries to act within the bounds of the law and avoid arbitrary or high-handed actions. ​ The Court’s decision strikes a balance between upholding the rule of law and protecting the interests of both the Petitioner and the revenue authorities. ​ This case serves as a reminder that while government officials are empowered to enforce laws, their actions must be backed by legal provisions and comply with established procedures. ​ The judgment also emphasizes the need for timely resolution of disputes to prevent undue hardship, especially when dealing with perishable goods.

Source: Bombay High Court

Disclaimer

Handy Download:

Write to us at office@aadrikaalaw.com

Tel: +91-11-4999 2707 I +91-9999005379

www.aadrikaalaw.com