Magistrate Has No Power to Order Revaluation of Seized Goods During Investigation: Delhi High Court Quashes Direction in DRI Case

“Certification under Section 110(1B) of Customs Act cannot be expanded to include revaluation—Magistrate overstepped jurisdiction” – Delhi High Court delivered a crucial judgment clarifying the limits of magisterial powers under the Customs Act, 1962. The Court held that a Magistrate cannot order revaluation of seized goods during the investigation stage, especially when the valuation issue has already been adjudicated by a competent authority. Justice Sanjeev Narula categorically observed:

“The direction for revaluation of the goods is unsustainable in law… Section 110(1B) of the Customs Act empowers certification of inventory, not revaluation.”

The High Court quashed the impugned order passed by the ACMM dated 27 September 2012, which had directed the Directorate of Revenue Intelligence (DRI) to revalue seized goods (foreign liquor) on the basis of “international market value,” even after adjudication proceedings had concluded.

The dispute began in 2009 when the DRI arrested Harsh Vasant and another person for allegedly smuggling 5,010 bottles of foreign liquor concealed in a consignment of food and beverages imported through ICD Tughlakabad, New Delhi. The liquor was initially valued at over ₹1 crore during remand, but later revised to ₹83.94 lakh during bail proceedings, based on duty-free shop rates.

Respondent No. 2, Harsh Vasant, applied before the ACMM for revaluation, claiming the DRI’s valuation was arbitrary. The ACMM allowed the application in January 2010, directing revaluation of the goods. Although the DRI challenged this initially through CRL.M.C. 226/2010, it later withdrew the petition on the basis that adjudication had been completed by the Commissioner of Customs on 29 August 2010, confirming a valuation exceeding ₹1 crore.

Despite this, Harsh Vasant filed another application in 2012, seeking revaluation based on the earlier order. The ACMM revived and allowed the plea, reiterating that the DRI must get the goods revalued by an appraiser “in terms of international market value.” The DRI then approached the High Court again through CRL.M.C. 671/2013, challenging this revived direction.

Justice Sanjeev Narula examined whether the Magistrate could lawfully direct revaluation after the conclusion of adjudication under customs law. The Court noted that valuation had already been adjudicated in a quasi-judicial proceeding, where the customs authority upheld the original estimate.

“Despite the adjudication proceedings having concluded, Respondent No. 2 revived the valuation controversy through a fresh application… The DRI cannot be estopped from challenging the fresh direction.”

On the issue of the ACMM’s jurisdiction, the Court made it clear that: “Section 110(1B) of the Customs Act empowers a Magistrate to certify the inventory and the description of the goods seized… However, this provision cannot be stretched to confer upon the Magistrate the authority to order a fresh revaluation of goods at the preliminary stage.”

The Court rejected the argument that revaluation could be deemed a part of certification proceedings. Referring to the discrepancy in DRI’s initial and revised valuation, the Court held:

“The so-called ‘anomaly’ in valuation… had a reasonable explanation… it arose from the natural progression of investigation, from initial estimates to refined figures based on official pricing.”

Moreover, the High Court accepted the DRI’s clarification that the initial figure included duties and charges, whereas the revised ₹83.94 lakh was duty-free retail value. With duties, the total still exceeded ₹1 crore, preserving the offence's severity under Section 135 of the Customs Act.

The Court firmly ruled that: “In the absence of any specific power under the Customs Act or CrPC to order revaluation during investigation… the Magistrate exceeded the permissible limits of jurisdiction.”

Allowing the DRI’s petition, the Delhi High Court set aside the direction for revaluation. However, it clarified that certification of the seizure panchnama under Section 110(1B) may proceed, if not already concluded.

“The direction for revaluation of the goods, as contained in the impugned order… is hereby set aside. Certification proceedings under Section 110(1B)… shall now be conducted expeditiously.”

This decision serves as a key precedent limiting judicial interference in executive investigations, particularly within the customs enforcement framework.

Date of Decision: May 13, 2025