Central Excise Circulars, DT. 02/09/2005

Delay in disposal of seized/confiscated vehicles - DAP No.59 proposed for inclusion in the C&AG’s Report on Indirect Taxes (Customs) for 2004-05-reg

An instance has recently been brought to the notice of the Board where due to inordinate delay in the disposal of a Mercedez Benz car seized in November 1986 and absolutely confiscated in November 1987, the car could be disposed of only in December 2003, resulting in significant loss of revenue. The existing instructions on the subject have not been complied with, hence the loss of revenue. In order to prevent the recurrence of such an incident, you are directed to take immediate stock of seized/confiscated vehicles in your jurisdiction and to ensure that action is taken to dispose of vehicles in terms of existing instructions.

For ease of reference, the provisions contained in various instructions on the disposal of seized/confiscated vehicles issued by the Board from time to time, beginning 1958, are reproduced below:

1. In order to ensure that motor vehicles, watercrafts and other types of machinery receive proper attention during the period they are in Departmental custody, the vehicles are to be properly garaged and particular care taken of spare parts and tools. The engines of the vehicles (and not the vehicles themselves) should be run, if possible, twice a week to keep the parts under lubrication. Wherever necessary, due to possible delay in the disposal of the vehicle, it should be jacked up. Where suitable garage facilities are not available, temporary sheds may be erected or the vehicles handed over to an Automobile Association, if such an organization exists, at a place mutually agreed upon and found to be reasonable.

2. On the maintenance of seized vehicles, the power to incur expenditure to the extent of Rs 600 per annum per vehicle has been delegated to the Heads of Department. The expenditure is to be incurred having regard to the following considerations:

i) the seized vehicles are not to be put to Departmental use during the period from the date of seizure to the date of decision;

ii) dismantling of vehicles to find out hidden articles should be carried out in accordance with the instructions issued by the Board;

iii) the seized vehicle should be properly looked after by running the engine periodically, inflating the tyres, checking the engine etc., and

iv) the services of a mechanic may be requisitioned to keep the vehicle in good order, but this is to be resorted to only in cases of absolute necessity and with the permission of an officer not below the rank of Assistant Commissioner.

3. In view of the fact that there is considerable deterioration of the vehicle as well as expenditure on garaging and maintenance if the vehicle is not quickly disposed of, it is directed by the Board that

i) Every attempt should be made to finalize the adjudication proceedings for motor vehicles and vessels within one month;

ii) Where the Adjudication order mentions fine in lieu of confiscation or reshipment, the period allowed should be only up to thirty days. If the party does not clear the motor vehicle or vessel by paying up the fine in lieu of confiscation, a final notice of a week or ten days should be given to him, after which the goods should be disposed of.

4. In respect of vehicles initially imported under a carnet/triptyque and subsequently confiscated for contravention of Customs and allied laws, it is directed that

i) where the vehicle has been confiscated absolutely, steps should be taken to dispose of the confiscated vehicle straightaway;

ii) where the order of confiscation gives the option to redeem the vehicle on payment of fine in lieu of confiscation, the period allowed should be only up to thirty days. Where the option to re-export the vehicle is given, the period allowed for re export should normally be two months. If the party does not clear the motor vehicle by paying up the fine or re-exporting the vehicle within the prescribed period, a final notice of a week or ten days should be given to him, after which the vehicle should be disposed of.

5. Confiscated vehicles which have become the property of the Government may be used for Government purposes in an exigency, particularly for working out information or conducting anti- smuggling operations. However, such use should be kept to the minimum necessary and the concerned Commissioner should personally ensure that confiscated vehicles are not run unnecessarily.

As regards seized vehicles, it is clarified that there is no authority in the Customs law for putting these vehicles to use for official purposes. Moreover, the question of the liability of the Government to pay compensation to the owners for depreciation, damage etc may also arise.

6. Confiscated vehicles should not be sold in auction unless the possibility of using them for Departmental use has been fully explored. These vehicles should, however, be used only after taking prior approval of the Board. At the time of making such a proposal, the following particulars of the vehicles should be provided:

1. Date of seizure

2. Date of the order under which it was confiscated and duty/fine/penalty imposed and realized

3. Name of the owner of the vehicle

4. Make/model of the car, its engine horsepower and seating capacity

5. General condition of the car and its mechanical condition, approximate market value and the probable period for which it can render satisfactory service with or without repairs

6. Total mileage run by the car

7. Clearance of the car

8. The area where the vehicle is proposed to be utilized and the specific purpose thereof

9. Financial implications of the proposal e.g. approximate amount of expenditure likely to be incurred on making the vehicle roadworthy, running cost and other recurring and non-recurring expenditure.

7. Regarding vehicles that are not taken up for Departmental use, such vehicles may be disposed of departmentally by auction to the best advantage of the Government. It is to be ensured that all prescribed formalities are observed and widest publicity is given to the intended sale. It is also to be ensured that the vehicles to be disposed of have no in-built secret chambers useful for smuggling and if there are such chambers, these should be completely removed. If such secret chambers cannot be removed, the orders of the Board should be taken before disposing of such vehicles. The vehicle should be sold at the best possible price so as to avoid any dispute with the owner regarding the adequacy of the price at which it was sold in case the party succeeds in appeal.

8. Conveyances have been notified vide notification No. 31/86 dated 5.2.86 under Section 110 (1A) of the Customs Act but in many cases seized conveyance are not being disposed of for a long time pending completion of adjudication proceedings/court cases etc. leading to deterioration. Continued storage of such conveyances may also result in considerable expenditure on garaging facilities and maintenance charges. Accordingly, it must be ensured that prompt action is taken in terms of Sec. 110(1B) of the Customs Act 1962 to dispose of all seized vehicles.

Any difficulties faced by the field formations in effecting expeditious disposal of seized/confiscated vehicles may be immediately brought to the notice of the Board.

Yours faithfully,

Priya V.K. Singh
Deputy Secretary
Tel 26177519

F.NO.715/7/2005 -CUS(AS)

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