Delhi High Court Slams Magistrate’s Overreach | Sets Aside Revaluation Order Over Customs Dispute | Limited Judicial Role Under Section 110(1B) of Customs Act
Sanchayita Lahkar
The High Court of Delhi, Single Bench of Justice Sanjeev Narula set aside the order of the Additional Chief Metropolitan Magistrate (ACMM) directing revaluation of seized foreign liquor under the Customs Act, 1962. The Court clarified that a Magistrate's jurisdiction under Section 110(1B) of the Act is confined to certification proceedings and does not extend to ordering revaluation of goods, particularly after the conclusion of adjudication proceedings.
The Directorate of Revenue Intelligence (DRI) filed a petition under Section 482 of the Code of Criminal Procedure, 1973, challenging the ACMM’s order dated September 27, 2012. The ACMM had directed revaluation of the seized foreign liquor, which was allegedly smuggled by Harsh Vasant (Respondent No. 2) and Moolchand Sharma, under Bill of Entry No. 795029 dated May 26, 2009, at the Inland Container Depot (ICD), Tughlakabad, New Delhi.
On June 4, 2009, the DRI arrested the respondents for offenses under Sections 132 and 135 of the Customs Act, 1962. The seizure involved 5010 bottles of foreign liquor allegedly concealed within a consignment of foodstuff and beverages. During the remand proceedings, the DRI initially valued the seized goods at over INR 1 crore, but later reduced this valuation to INR 83,94,779 during the bail hearing.
Respondent No. 2 sought revaluation of the goods, arguing that the DRI’s valuation was excessive and arbitrary. The application cited Section 14 of the Customs Act and claimed a right to seek revaluation. The ACMM allowed the application on January 12, 2010, and directed the DRI to conduct revaluation through an appraiser, using international market values.
Aggrieved by this order, the DRI filed CRL.M.C. 226/2010 before the Delhi High Court but later withdrew the petition after the adjudication proceedings concluded with the Commissioner's order dated August 29, 2010. The Commissioner upheld the valuation exceeding INR 1 crore.
Subsequently, the DRI filed an application under Section 110(1B) of the Customs Act for certification of the seized goods. The ACMM initially dismissed this application but was directed by the Revisional Court to proceed with the certification after issuing notice to the concerned parties. Despite this, the Respondents filed another application on March 24, 2012, seeking compliance with the previous order for revaluation.
On September 27, 2012, the ACMM allowed both the DRI’s application for certification and the Respondents’ application for revaluation, ordering the revaluation to be conducted in terms of international market values. The DRI challenged this decision, arguing that the ACMM lacked jurisdiction to direct such revaluation.
Justice Sanjeev Narula carefully analysed the statutory provisions and the factual matrix of the case. Addressing the preliminary objection regarding maintainability, the Court noted:
"The withdrawal of the earlier petition was predicated entirely upon the conclusion of the adjudication proceedings. In these circumstances, the DRI cannot be estopped from challenging the fresh direction for revaluation, which effectively revives a controversy that the DRI had considered concluded."
On the core issue of jurisdiction, the Court held:
"In the absence of any specific power conferred either under the Customs Act or the Code of Criminal Procedure to order revaluation during investigation, and particularly after the conclusion of quasi-judicial adjudication on the same subject, the Magistrate, in the opinion of this Court, exceeded the permissible limits of jurisdiction."
Referring to Section 110(1B) of the Customs Act, the Court observed:
"Section 110(1B) empowers a Magistrate to certify the inventory and description of the goods seized, thereby facilitating evidentiary purposes at trial. However, this provision cannot be stretched to confer upon the Magistrate the authority to order a fresh revaluation of goods at the preliminary stage."
The Court further noted that the alleged discrepancy in valuation had a reasonable explanation. The initial valuation was based on preliminary estimates, while the revised figure was based on official data from Alpha Duty Free Shop at IGI Airport. The Court recorded:
"The differential arose not from arbitrariness but from the natural progression of the investigation, from an initial estimate based on immediate inputs to a subsequent refinement on receipt of official pricing data."
Justice Narula also stated that the adjudication order conclusively determined the valuation issue. The Court stated:
"Although criminal proceedings and adjudication proceedings operate in distinct spheres, the fact remains that the adjudication proceedings have concluded, and the valuation specified in the show cause notice has been confirmed, thereby prima facie suggesting that it was made in accordance with the law."
The High Court allowed the DRI’s petition and set aside the ACMM’s direction for revaluation. The Court ordered:
"The direction for revaluation of the goods, as contained in the impugned order dated 27th September, 2012, is hereby set aside. Insofar as the certification proceedings under Section 110(1B) of the Customs Act are concerned, if the same have not yet been concluded, the Court directs that they shall now be conducted expeditiously and preferably completed within a period of three months from today."
The petition was accordingly disposed of along with any pending applications.
Advocates Representing the Parties
For the Petitioner (DRI): Mr. Satish Aggarwala, Senior Standing Counsel with Ms. Shagun Vaswani, Advocate.
For the Respondents: Mr. Ramakant Gaur, Ms. Sneha Arya, Ms. Harshi Gaur, Ms. Meenakshi Sahu, Ms. Roopini Nandan, and Ms. Sobiya Manzoor, Advocates.
Case Title: Directorate of Revenue Intelligence vs. Swaraj International & Anr.
Neutral Citation: 2025: DHC:3671
Case Number: CRL.M.C. 671/2013 & CRL.M.A. 2187/2013
Bench: Justice Sanjeev Narula
[Read/Download order]
