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2019 Supreme(Pat) 877
IN THE HIGH COURT OF JUDICATURE AT PATNA
Sanjay Karol, Anil Kumar Upadhyay, JJ.
M/s. Om Sai Trading Company & Anr. – Appellants
Versus
The Union of India through Chief Commissioner of Customs & Ors. – Respondents
LPA No. 1153 of 2019 In CWJC No. 10109 of 2019
Decided On : 20-12-2019
For the Appellant : M/s Prabhat Ranjan, Chandan Kumar
For the Respondent: M/s S.D. Sanjay, Anshuman Singh, Mohit Agrawal
Headnote:
Customs Act, 1962 – Section 110 – Meaning of expression 'reason to believe' and 'liable to confiscation' – When a statutory functionary makes an order based on certain grounds, its validity must be judged by reasons so mentioned and cannot be supplemented by fresh reasons in shape of an affidavit or otherwise, for a bad order, with passage of time, and supplementing reasons would become good, which is not how authorities are required to function, more so, in a case of confiscatory legislation – Public orders made by authorities are meant to have public effect and must be construed objectively with reference to language used in order itself. (Paras 18 and 19)
Customs Act, 1962 – Section 110 – Meaning of expression 'reason to believe' and 'liable to confiscation' – Reason to believe cannot be basis on mere suspicion, gossip or rumour though belief on an honest basis and on reasonable grounds and officer may act on direct or circumstantial evidence – However, if officer were to act without any material or irrelevant, extraneous material, it would constitute an act without jurisdiction – If goods are "unsafe food" it is for authorities under relevant Act to proceed and take appropriate action, for mere report in that regard would not confer any jurisdiction upon Customs Officer under Customs Act – Mere suspicion cannot be a reason sufficient enough to derive such a conclusion forming a belief 'for reason to believe' – When goods in question are yet raw, as an unfinished product, meant to be transported to another State for it to be processed and packaged, whereafter, only, eventually sold in an open market and if the goods are actually unsafe food then it is not the provision of Customs Act which can be invoked, for not falling within its purview – authorities concerned to forthwith release the goods. (Paras 31, 43, 44, 49 and 51)
(CWJC No.7589 of 2018) – Referred.
AIR 1990 SC 261; AIR 1978 SC 851; (2015) 11SCC 628; 1971 (1) SCC 697; AIR 1967 SC 737; AIR 1965 SC 476; (2008) 14 SCC 186;(1976) 2 SCC 291; AIR 1967 SC 523; AIR 1961 SC 372; (1976) 3 SCC 757 ;(2008) 4 SCC 144;(1994) 4 SCC 269;(1972) 3 SCC 234; (1988) 4 SCC 1; (1994) 5 SCC 332; AIR 1982 Patna 152 – Relied.
JUDGMENT :
Sanjay Karol, J.
What is the meaning of the expression 'reason to believe' and 'liable to confiscation' under Section 110 of the Customs Act, 1962 (hereinafter referred to as 'the Act') is the question which we are called upon to answer.
2. Section 2 of the Act dealing with the definitions does not define either of the expressions 'reason to believe' and 'liable to confiscation'.
3. Chapter XIII (Sections 100 to 110A) inter alia deals with the provisions of search, seizure and arrest. Chapter XIV (Sections 111 to 127) deals with the confiscation of goods and imposition of penalty. Section 111 throws some light with regard to the nature of goods which are liable for confiscation.
4. Section 2(25) of the Act defines "imported goods" to mean any goods brought into India from a place outside India but does not include goods cleared for home consumption. Section 2(11) defines "customs area" to mean any area of a customs station or a warehouse and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities and "smuggling" in relating to any goods as per subsection (39) of Section 2 means an act or omission which will render such goods liable to confiscation under section 111 or section 113.
5. Chapter IV of the Act empowers the Central Government to prohibit importation and exportation of any goods and Chapter IV-A and IV-B deal with the detection of illegally imported goods and prevention of the disposal thereof.
6. Section 111 defines the category of goods brought from a place outside India liable to be confiscated.
7. We are dealing with a case where betel nuts having its origin from a country other than India, are prohibited to be imported in India, and as such by virtue of Section 111, liable to be confiscated, i.e. the meaning of the expression "liable to confiscation". But what is important and a condition precedent, sine qua non, is the belief of the officer seizing the goods of forming an opinion in terms of the statutory expression "reason to believe" of such goods being liable to confiscation.
8. In the instant case, goods having description 'cut dried Areca Nuts (dark pink in colour)' weighing 15,865 Kgs of a total estimated value of Rs. 45,14,862/- along with the vehicle were seized by the Inspector-cum- S.O., Customs (P), Forbesganj for the reason that "Violation of provision of Notification No.9/96 (NT)-Cus, Dt. 22/01/96, issued under Section 11 of the Customs Act, 1962 read with Section 3(2) of Foreign Trade (Development and Regulation) Act, 1992 and Notifications, order etc. issued thereunder."
9. Record reveals that petitioners' application for release of the goods stood rejected for the reason that the prescribed authority had got the seized sample of the product tested from the laboratories which was classified as unsafe food.
10. Undisputedly, the goods are owned by the petitioners.
11. Significantly, they were not seized from any of the zones identified and ear-marked as a Warehouse or a Check post notified under the Customs Act. The vehicle was checked on the Toll Collection Point set up on the High-way in Bihar, within the Indian territory.
12. Before us, despite repeated queries, no material stands produced, even ex-facie, indicating that the vehicle carrying goods or the goods, at any point in time, passed through or had its origin outside the territory of India and, more specifically Nepal.
13. The documents produced by the owner indicated the name of the consignor and consignee, both within the territory of India and the vehicle travelled all through the States of Indian Union.
14. The consignors, M/s. Om Sai Trading Company and M/s. Maa Kamakhya Traders, who are appellants, are registered dealers under the provisions of GST Act and the consignee is M/s. Mahaveer Traders, 158G, Sri Kaliki Nawas, Coimbatore (Tamilnadu) is also a registered dealer under GST Act.
15. With these undisputed facts, before us, learned Additional Solicitor General of the India,
