Allahabad HC Permits Shifting of SEZ Goods to Bonded Warehouse Amid DRI Adjudication [Read Order]

The Allahabad High Court allowed the shifting of its warehoused goods from the SEZ facility to a bonded warehouse during the pendency of adjudication proceedings initiated by the Directorate of Revenue Intelligence (DRI).

The petitioners, Margo Impex Private Limited and another, approached the High Court seeking a writ of mandamus directing authorities to allow clearance of Warehouse situated at Arshiya Northern Free Trade Warehousing Zone (ANFTWZ) at the ICD Khurja, Bulandshahr.

The case originated from a show-cause notice dated 29.10.2024 issued by the DRI, particularly paragraphs 43-54, on the basis of which the authorities withheld clearance of the goods. While adjudication on issues of alleged violations and possible confiscation was still pending, the petitioners required permission to move the goods to another bonded warehouse for operational reasons.

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Represented by Anurag Mishra with Ms. Pragya Pandey, the petitioners argued that since the adjudication pursuant to the DRI show-cause notice had not been concluded, the continued holding of goods in the SEZ warehouse was unjustified. They submitted that shifting the goods to another bonded warehouse, under customs supervision, would not compromise the interests of the Revenue and was necessary to prevent business losses.

Appearing for the Revenue, Krishna Agarawal, submitted written instructions received from the DRI, informing the Court that they had no objection to the transfer of the goods during the adjudication process, subject to compliance with five specific conditions designed to safeguard the movement, verification, and re-warehousing of the goods.

These conditions included: i. Filing of a Yellow Bill of Entry (YBE) with requisite documents and a space availability certificate, ii. Movement of goods based on the 5th copy of the YBE approved by SEZ Customs, iii. Issuance of a re-warehousing certificate by the bonded warehouse officer, iv. Submission of the certificate to SEZ Customs immediately, and v. Initiation of duty-recovery measures if the certificate is not submitted within 45 days.

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The Bench comprising Justice Saumitra Dayal Singh and Justice Vivek Saran observed that since the Revenue itself permitted shifting of the goods under specified safeguards, no further adjudication by the Court was warranted at this stage.

The Court disposed of the writ petition with the direction that the petitioners may shift the subject goods to the bonded warehouse upon full compliance with conditions (i) to (v) stated by the DRI.

The Bench clarified that it would not make any observations on the merits of the ongoing confiscation proceedings to avoid prejudice to the adjudication process.

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