DRI Cannot Hold Goods Indefinitely In Garb Of Detention Without Seizure Order: Gujarat HC

Customs authorities cannot indefinitely withhold imported goods under a panchnama without passing a formal order under Section 110 of the Customs Act, 1962. The Gujarat High Court ruled that taking over custody without fulfilling mandatory statutory requirements vitiates the timeline for issuing confiscation notices.

A Division Bench comprising Justice A.S. Supehia and Justice Vaibhavi D. Nanavati delivered the judgment while dealing with a writ petition challenging the year-long detention of an imported luxury vehicle by the Directorate of Revenue Intelligence (DRI).

Key Takeaways

Strict Limits on Customs Detention

Panchnama-based withholding cannot substitute a formal seizure order under Section 110, ensuring customs officers cannot bypass statutory timelines.

Mandatory Two-Fold Statutory Obligation

Proper officers must explicitly record 'reasons to believe' for confiscation and issue a separate order restricting physical movement alongside a panchnama.

Lapse of Seizure Timelines

Indefinite delays in issuing seizure orders consume the statutory six-month period provided under Section 110(2), preventing authorities from reaping benefits of their own inaction.

Invalidity of Invalid Circular Conditions

Imposing heavy bank guarantees for provisional release based on struck-down administrative circulars is impermissible and contumacious.

Court's Rationale on Section 110

The High Court carefully examined the scope of Section 110 and Section 124 of the Customs Act, 1962. The Court observed that detention and seizure are distinct, and authorities cannot keep goods in legal limbo without issuing a clear order recording reasons to believe the goods are liable for confiscation.

Aligning with principles established in Union of India Vs. Jatin Ahuja, the Bench noted that failure to issue a Section 124 notice within six months or within an extended period of up to one year mandates the immediate release of the property.

Furthermore, the Bench addressed the misuse of administrative guidelines, relying on Shanus Impex vs. Union of India to hold that paragraph 2 of Circular No. 35/2017-Customs could not be invoked to demand onerous conditions for provisional release after being invalidated by judicial precedent. The Court also drew support from Worldline Tradex Pvt. Ltd. Vs. Commissioner of Customs (Import) ( "2016(340) ELT 174(Del)": 2016 CaseBase(DEL) 4128) to emphasize that reasons to believe must precede any drastic step of search and seizure.

The Court, in its reasoning, observed: "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 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."

The Court has following directions:

"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."

Ratio

Detention of goods via a panchnama without a coterminous order explicitly recording 'reasons to believe' under the provisos to Section 110(1) of the Customs Act, 1962 is impermissible. Where actual detention continues without a statutory order, the limitation period of six months prescribed under Section 110(2) read with Section 124(a) begins from the initial date of detention, and statutory authorities cannot extend limitation by belatedly issuing a formal seizure memo.

Background

The petitioner imported a Toyota Land Cruiser from Japan in December 2024, paying an assessable customs duty of Rs. 99,78,795/- along with applicable stamp duty. Out-of-charge was granted on January 2, 2025. However, on February 7, 2025, the DRI searched the petitioner's premises and detained the car via a panchnama, instructing him not to deal with it.

Despite multiple summonses and cooperation by the petitioner, no formal seizure memo was issued for over a year. The petitioner approached the High Court, which initially directed the vehicle to be kept in safe custody. The petitioner subsequently filed an SLP before the Supreme Court, where the apex court directed the department to complete the inquiry expeditiously.

Following the Supreme Court's order, the DRI issued a seizure memo on April 17, 2026, under Section 110(1) and a show-cause notice on May 8, 2026, under Section 124 read with Section 28(4) of the Customs Act, 1962. The DRI then offered provisional release under Circular No. 35/2017, requiring a bank guarantee of Rs. 1.20 crore.

The High Court rejected the department's argument that the pendency of the writ petition had prevented them from initiating proceedings, calling it a bald statement to justify remissness. Concluding that the prolonged detention without a statutory order violated the law and consumed the statutory limitation period, the Court allowed the writ petition with costs.

Case Details:
Case No.: R/Special Civil Application No. 6295 of 2025
Neutral Citation: 2026:GUJHC:54319-DB
Case Title: Pranavbhai Ambalal Patel S/o Shri Ambalal Patel Versus Additional Director General Directorate of Revenue Intelligence Ahmedabad & Ors.
Appearances:
For the Petitioner(s): Ms. Anjali Jha Manish with Mr. Paras Aneja with Mr. Chetan K. Pandya
For the Respondent(s): Mr. Utkarsh R. Sharma

Source: 2026 CaseBase(GUJ) 16440