CBEC Clarifies Disposal of Confiscated Goods, Follow E-Auction Route

[CBEC Circular No. 11 dated 12^th April 2012]

Subject: Disposal of confiscated goods – clarification on existing instructions.

I am directed to invite your attention to the Board’s Circular No. 12/2006-Customs dated 20.2.2006 and the earlier instructions issued to the field formations vide Board’s letters F. No. 711(7)/53-Cus. (AS) dated 27.5.1993, F. No.30/33/67-LC.I dated 19.1.68 and F.No.30/3/64-LC.I dated 10.2.1964 in the matter of disposal of confiscated/seized goods. In this regard, certain representations have been received in the Board from the trade as well as the field formations seeking clarification on the manner of disposal of confiscated/seized goods.

2. Recently, the Department of Consumer Affairs had forwarded the request of National Cooperative Consumers’ Federation (NCCF), wherein they have claimed that the confiscated goods should be offered only to NCCF, based on the then existing guidelines that confiscated goods in bulk may first be offered to NCCF and if they do not respond within a reasonable period, the goods may be offered to other agencies [Instructions in F.No.711/(70)/93/Cus(AS) dated 27.5.1993]. On the other hand, Kendriya Bhandar (KB) had been requesting to offer same treatment as at par with NCCF in the matter of disposal of confiscated consumer goods. The grounds for their claim is that it is a Multistate Consumer Cooperative Society of Central Government employees under the Ministry of Personnel, Public Grievances & Pension, wherein Govt. of India has majority shareholding and purchase preference policy for local purchase of stationery and other articles by the DOPT treat KB/NCCF and other Multi-State Cooperative Societies (MSCS) on same footing (DOPT’s O.M. No.14/1/2009-Welfare dated 5.3.2012). Further, Board had also received a number of requests from the trade for equitable and wider participation of cooperative societies which are duly registered with the State/Central Government authorities and not to make a particular body monopolistic, in sourcing the confiscated goods being disposed of by the department.

3.1. In this regard, practices followed by the field formations and the instructions issued from time to time by the Board were also examined in detail. The judgement of the Hon’ble High Court of Patna in Civil Writ case No.12672 of 2010 dated 9.9.2011 was also taken into account. Considering the various factors involved in the process of disposal of seized/confiscated goods, the following clarification are offered in disposal of confiscated/ seized goods by the department.

3.2. Sale through Army canteen/ CSD: It is reiterated that the requirements of Army authorities/Military Canteens/ Canteen Stores Department (CSD) for purchase of confiscated/seized goods may be allowed since they provide consumer goods of high quality to the troops wherever they are situated. The earlier instructions dated 10.2.64 issued in this regard, provide that confiscated goods, as much as can conveniently be made available, after meeting the earlier demands of Army authorities/Military Canteens/ CSD and/or the consumer’s cooperative stores, are to be offered to the Central Government Employees Consumer cooperative society Ltd.

3.3. Sale through NCCF/KB/consumer cooperatives: Any lot of confiscated/seized consumer goods of value not exceeding Rs. Five lakhs which are ripe for disposal shall be offered to NCCF/KB/Other Central Government Employees Consumer Cooperative Society/ Multi-State Consumer Cooperative Societies/ State Consumer Cooperatives, subject to the following conditions. Most of these conditions had been prescribed in various instructions of the Board issued earlier and have been reiterated here:

(a) They should be functional for at least 10 preceding years and should submit Income-Tax returns and VAT/ST returns showing their activities in sale of goods to the consumers and that appropriate taxes have been duly paid and relevant laws/rules and regulations are complied with.

(b) Only those Co-operative Societies or National/State level Cooperative Federations that are duly verified and certified as genuine, every year by an officer not below the rank of AC/DC, and those that have been duly registered under Multi-State Cooperative Societies Act, 2002 or concerned State Cooperatives Act, should be permitted to purchase the confiscated/seized goods. The genuineness of co-operative societies/federation may also be verified through concerned Commissionerates or other field formations of this department, wherever required.

(d) No pick and choose of items would be allowed.

(e) Seized/confiscated consumer goods shall be offered on first come first served basis.

(f) Any lot of confiscated/seized consumer goods of value exceeding Rs. Five lakhs shall not be sold directly to the aforesaid cooperative societies/federation and shall be sold by E-auction or auction-cum-tender basis.

(g) Complete accounts may be called for scrutiny by the department as and when necessary, to ensure that the seized/confiscated goods, which are sensitive to smuggling are not misused; or to verify that their disposal has not been made to a single party/ individual; or to ensure that sale has not been made to any persons where in purchase vouchers etc. had been misused by unscrupulous elements in legitimizing smuggling.

4. Sale through e-auction/auction cum tender: In respect of confiscated/seized goods of all types and confiscated/seized consumer goods exceeding value of Rs. Five lakhs in single lot, may be disposed through e-auction or auction-cum-tender, since it offers enhanced transparency and accountability for quick disposal of goods. In such e-auction or auction-cum-tender process, all persons including NCCF, KB, other CG employee’s consumer cooperatives, Multi-State/State cooperatives or National/State level Cooperative Federations can also participate. If the NCCF/KB/other Consumer Cooperative societies are found to be successful bidder, then the goods may be sold to them with the eligible rebate/discount as prescribed, subject to fulfillment of other conditions of e-auction/auction-cum-tender. Instructions for use of E-auction or auction-cum-tender have already been prescribed vide Board’s Circular No.50/2005-Customs dated 1.12.2005 and No.12/2006-Customs dated 20.2.2006.

5.1. CVC has been emphasizing on e-commerce/e-procurement/e-sales for enhancing transparency, giving equal opportunities to all. Accordingly, CVC vide Office Order No.46/9/03 dated 11th September 2003 (No.98/ORD/1) has stated that the departments/ organizations may themselves decide on e-procurement/reverse auction for purchases or sales and work out the detailed procedure in this regard. It has, however, to be ensured that the entire process is conducted in a transparent and fair manner.

5.2. Board had earlier appointed a Task Force to examine the various issues arising out of the audit review, and to suggest effective measures to put in place a permanent mechanism for expeditious disposal of cargo including confiscated/seized goods. Based on the recommendations of a Task Force, Board had streamlined the procedure for disposal of goods which interalia include its approval for setting up of a centralized e-auction portal by engaging the services of M/s. MSTC Ltd. Mumbai, a PSU under the Ministry of Steel. This e-auction procedure had been in force for quite some time and it had facilitated expeditious disposal of goods by the field formations. Detailed instructions and guidelines on this procedure are already available in MSTC website, which specifically hosts e-auctions for Customs and Central Excise department regularly. It is hereby reiterated that E-auction or auction-cum-tender prescribed vide Board’s Circular No.50/2005-Customs dated 1.12.2005 and No.12/2006-Customs dated 20.2.2006 may continue to be utilised in respect of confiscated/seized goods.

6. The above instructions may be brought to the notice of all concerned immediately through appropriate Public Notice.

F. No. 711/01/2006-Cus.(AS)/Pt.