In a recent ruling, the Delhi High Court held that a Magistrate does not have the authority to direct the Directorate of Revenue Intelligence (DRI) to revalue seized goods during the preliminary stage of investigation under the Customs Act.
The case arose from proceedings initiated by the DRI against Swaraj International and its representative Harsh Vasant, who was arrested in June 2009 for allegedly smuggling 5,010 bottles of foreign liquor through the Inland Container Depot, Tughlakabad.
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The DRI initially valued the goods at over Rs. 1 crore, but this was later revised to Rs. 83.94 lakhs during a bail hearing, prompting the accused to seek revaluation of the goods. On January 12, 2010, the trial court directed revaluation based on international market value and certification of the seizure under Section 110(1B) of the Customs Act.
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The DRI withdrew its earlier petition challenging the revaluation direction, stating that the valuation had already been confirmed through adjudication proceedings. But in 2012, the trial court revived the issue and again directed revaluation, despite the DRI’s objection that the matter had already been settled. The DRI then approached the High Court seeking to set aside the trial court’s renewed directive.
The DRI’s counsel argued that the Magistrate had overstepped jurisdiction by ordering a revaluation after the conclusion of adjudication proceedings, which had confirmed the seized goods’ value above Rs. 1 crore. It further contended that Section 110(1B) of the Customs Act only permits certification of inventories, not a fresh assessment of market value. The DRI’s counsel argued that revaluation was unnecessary and that any variation in estimated figures stemmed from updated pricing data, not procedural arbitrariness.
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In response, the accused’s counsel defended the trial court’s decision, citing discrepancies in the valuation figures and arguing that revaluation was necessary to ensure a fair judicial process. They argued that the valuation originally recorded by the DRI was inflated and inconsistent with independent data, including National Import Database figures, which allegedly pegged the goods’ value around Rs. 23 lakhs. The defence also invoked the doctrine of implied powers, arguing that the Magistrate’s order was a necessary step to ensure evidentiary reliability.
The single-judge bench comprising Justice Sanjeev Narula rejected the respondent’s arguments and held that once the customs adjudication authority had determined the value of the seized goods, it was not open to a Magistrate to revisit that valuation during investigation.
The court observed that the valuation discrepancy raised by the trial court had a reasonable explanation and arose from the natural progression of the investigation. The court explained that criminal courts cannot usurp the functions of quasi-judicial bodies under the Customs Act.
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The court further held that Section 110(1B) authorizes certification of inventories for evidentiary purposes but does not permit Magistrates to direct fresh valuation of seized goods. Since the DRI had acted under procedure and the valuation was confirmed in adjudication, the Court ruled that the Magistrate’s revaluation order lacked legal basis.
The court allowed the DRI’s petition and set aside the trial court’s direction for revaluation. But the court permitted the certification of the goods under Section 110(1B) to proceed and directed that such certification be completed within three months. The petition was disposed of.
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