The Bombay High Court has criticised the Directorate of Revenue Intelligence (DRI) Officer for illegally recalling cleared dry dates by threatening customs brokers and the transporter.
The bench of Justice M.S. Sonak and Justice Advait M. Sethna observed that the DRI officer, Sumit Kataria telephonically contacted the Customs Broker, the CHA, or the Transporters and ensured that the cleared goods were brought back within the jurisdictional bounds of the Customs Authorities.
The DRI officer, Sumit Kataria in his affidavit, has not denied the telephone calls pursuant to which the cleared goods were required to be brought back to the CFS. However, the DRI officer has, quite lamely, denied the allegations of threats or coercion. In his affidavit, the DRI officer has stated that he merely “requested” the Customs Brokers and Transporters to bring back the cleared goods into the CFS at the earliest.
The bench noted that at least prima facie, it is hard to believe that the goods were returned to the CFS solely based on a “request” of the DRI officer. As noted earlier, the goods remained with the Customs Authorities for nearly 6 to 7 days and were prima facie cleared after completing all required procedures. The DRI officer completely ignored the statutory orders of clearance, and telephonic “requests” were allegedly made to CHA and the transporters to bring back the cleared goods, i.e. dry dates.
The bench stated that the DRI officer is a government official conferred with certain statutory powers and corresponding duties. The powers must be exercised in accordance with law. Even if it is assumed that the DRI officer was not acting out of ulterior motives or for any extraneous considerations, still, the ends cannot always justify the means. Particularly, when exercising writ jurisdiction, this Court is concerned with the decision-making process rather than the ultimate decision. Any alleged absence of malafides is no substitute for acting contrary to the law or legal procedures.
The bench while emphasising the importance of issuing the show cause notice observed that Even the Petitioner does not contend that clearance of the goods by an order made under Section 47 prevents the Customs Authorities from issuing any show cause notice. However, in this case, no show-cause notice was ever issued. Instead, the DRI officer, without making any order or recording any satisfaction, based on some intelligence suggesting that the goods had originated in Karachi (Pakistan), made phone calls to the Customs Broker and Transporters, allegedly “requesting” them to bring back such cleared goods within the CFS. This officer completely ignored the statutory clearance order and the out-of-charge order, and exercised powers that, prima facie, did not authorise him to act in the manner in which he did in this case.
The bench stated that the DRI officer, who is a senior intelligence officer, by completely ignoring the statutory order under section 47 of the Customs Act, and without compliance with any legal provisions, has virtually forced the Petitioner or rather the Customs Brokers and the Transporters, to bring back such goods, even though the custody of such goods was lawfully handed over by the customs authorities to the Petitioner vide the out of charge order and the gate pass cum custodian order.
The bench held that the divesting of goods from the custody of the petitioner or his agents was not shown to be backed by any law or lawful procedures. There was no minimum compliance with the principles of natural justice and fair play. It is well settled that any action which visits a party with such civil consequences must be preceded by at least a minimum compliance with principles of natural justice and fair play. Furthermore, such action must be authorised by law and must not be merely backed by the colour of office.
The bench while criticising the actions of the DRI officer held that the actions of the DRI officer do not fall within the scope of Section 106 of the Customs Act. In this case, the goods had already been cleared by the customs authorities themselves. Their clearance orders have not been revoked, either through legal procedures or otherwise. The petitioner, as the supplier, had transported the cleared goods. After this, the DRI officer, by making calls to customs brokers and transporters, has effectively coerced them into returning the supplied goods. This is not the authority granted to the DRI officer under Section 106 of the Customs Act.
“In any event, even if we assume that Section 106 was attracted, still, the powers under Section 106 cannot be exercised without the conditions specified therein for the exercise of such power. Such powers can be exercised only when the proper officer ‘has reason to believe’. Such a reason to believe must be reflected either in some order or at least through notes in the file. Otherwise, judicial review could always be avoided by such means,” the court said.
The bench inquired with the counsel appearing on behalf of the department whether there was any contemporaneous note in the file regarding this action. Initially, the court was informed that such a note existed and that it could be produced for our review, although it could not be shown to the Petitioner or the learned counsel for the Petitioner. Then the court was informed that no such notation was made before the impugned action, but that such notation was made sometime after. Ultimately, the noting shown was also not concerning any exercise of powers under Section 106 of the Customs Act.
Background
The petitioner, Make India Impex sought the release of 56 tons of imported dry dates and action against a DRI officer.
The goods were duly cleared by Customs under Section 47 of the Customs Act on 24 July 2025 after verification, issuance of a release order by the Agriculture Ministry, and an NOC from FSSAI. The importer paid full duty of ₹6,30,361.70, obtained a gate pass, and moved the goods out of the CFS at 8:30 p.m. the same day.
However, the petitioner alleges that on 25 July 2025, DRI officer Sumit Kataria threatened the customs broker and transporter to bring back the already cleared goods, claiming they were of Pakistani origin. Under pressure, the goods were returned to the CFS, where they remain detained.
The officer, in his affidavit, denied any coercion, stating that he acted on intelligence received late on 24 July 2025 that the goods had been misdeclared as originating from Dubai instead of Karachi to evade import restrictions on Pakistani goods. He claimed the containers were brought back for verification under Sections 47 and 106 of the Customs Act, following due communication with the CFS, customs broker, and transporter.
Arguments
Anil C. Singh, Additional Solicitor General on behalf of the Department contended that since some intelligence was received, reason to believe must be presumed, whether any writing or noting was made or not. Such a blanket proposition cannot be accepted as justification for the exercise of statutory powers by a statutory functionary, given the circumstances in this case. Ultimately, the rule of law requires that statutory functionaries act in accordance with the law and within the bounds placed upon the exercise of their power by the law.
Mr. Singh, Additional Solicitor General contended that there are several legislations,
such as the Prevention of Money Laundering Act, 2002 (PMLA), which require the Proper Officer to record their reasons in writing before undertaking a search or seizure. He submitted that Section 106 of the Customs Act does not require reasons to be recorded in writing. Such a blanket proposition cannot be readily accepted. The action of the DRI officer does not fall within the scope of Section 106 of the Customs Act. Even if Section 106 were applicable to the DRI officer’s actions, the section clearly pertains to the Proper Officer having reason to believe. Such reasons, at most, do not need to be documented in the form of a formal order. However, the fundamental safeguard of having such reasons cannot be disregarded based on the argument now presented. There are no writings, file notings, or any other contemporaneous records.
Dr. Sujay Kantawala on behalf of the petitioner contended that within hardly two weeks of the clearance of the goods under the Bill of Entry dated 19 July 2025, this very Petitioner filed two further Bills of Entry for import of identical goods i.e. dry dates, by involving the same suppliers and by following the same route i.e. from Dubai (UAE) to Mumbai, and, such goods were cleared by the Customs Authorities without any demur. Possibly, this time, the DRI officer was not involved. If experience were the criterion, we would fail to appreciate how these goods were cleared within two to three weeks of the clearance of the disputed dry dates.
Conclusion
The court held that the DRI Officer, by ignoring this entire exercise, and without following any lawful procedures or complying with principles of natural justice, proceeded on the firm belief that the goods in question were of Pakistani origin and were consequently prohibited goods. Apart from all this, the DRI Officer’ acts did not appear to have any legal backing or were not undertaken in accordance with the prescribed legal procedures. An equitable order, upholding the rule of law, protecting, to the extent possible, the interests of the revenue and the petitioner, will therefore have to be made.
The court granted the department an opportunity to issue the Petitioner a show cause notice within four weeks and dispose of such show cause notice within six weeks of the receipt of the response from the Petitioner on the issue of the status of the imported goods. An opportunity to hear must be given to the Petitioner, and any adverse material proposed to be relied upon must be shared with the Petitioner along with the show cause notice, so that the Petitioner can file an effective response. The release of the goods, if it occurs, may be conditional upon the payment of a redemption fine or the provision of a bank guarantee to secure the payment of the redemption fine.
Case Details
Case Title: Make India Impex Versus UOI
Case No.: Writ Petition No. 11099 Of 2025
Date: 08 OCTOBER 2025
Counsel For Petitioner: Dr. Sujay Kantawala
Counsel For Respondent: ASG Anil C. Singh, Senior Advocate R. S. Apte
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