In the case of S.B International, the Delhi High Court recently held that there is no sanction in the Customs Act, 1962 which allows freezing the bank account of the Assessee.
The assessee in the instant case is a sole proprietorship concern. During the relevant period, a search was conducted by the Directorate of Revenue Intelligence (DRI) under the Customs Act in the warehouse of the Assessee regarding the illegal import of tyres. The Assessee was also called upon to produce the bank statements of the concern. After analyzing the documents, the DRI concluded that the said statement was recorded under duress and coercion. Accordingly, the DRI passed an order to freeze the bank account of the concern.
The counsel for the Assessee, Advocate Randhir Singh and Advocate D.K. Devesh submitted that the Assessee is not an importer in respect of the transactions being investigated by the DRI and the tyres were imported by another concern and the Assessee used to purchase goods from the Enterprises as he knew the proprietor of the said concern. It is also asserted by the counsel that even though the Assessee had assisted the importers in identifying the items of import as well as the source from where the goods could be imported, the petitioner was not an importer and, therefore, cannot be held liable for any irregularity in import of the products in question. Assessee sent a letter to the DRI for requesting to de-freeze the bank account maintained by him with Axis Bank.
However, the DRI refused to accept the submissions of the Assessee and continued with his earlier action.
After considering the rival submissions of both the parties High Court Justice Vibhu Bhakru observed that “Freezing a bank account is not the same as seizing an asset; it interdicts operation of a bank account and it deprives the account holder of banking facilities. Indisputably, there is no sanction in the Customs Act for such action”.
The Court further observed that “DRI was undoubtedly entitled to proceed with the investigation and take appropriate action against the petitioner in accordance with law; however, there was no provision where the DRI could prevent banking operations pending investigations”. Consequently, the Court directed the Officer that freezing of accounts of the Assessee is unsustainable and the same was set aside.
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