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1986 Supreme(Mad) 100
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE MOHAN
K. Srinivasan - Appellant
Versus
Collector of Customs - Respondent
Case No : Writ Petition Nos. 11373 and 11392/85
Decided On : 20 February 1986
The court's decision in this case highlights the importance of following the proper procedures for the seizure and confiscation of goods under the Customs Act. The court held that the Customs Department's failure to issue a show cause notice within six months of the seizure of the goods in the second case was fatal to its case and that the petitioner was therefore entitled to the return of the goods. The court also held that the Department's failure to issue a notice under Section 124 of the Act prevented it from relying on Section 119 to retain the seized goods.
Headnote:
CUSTOMS ACT - SEIZURE OF GOODS - RETURN OF GOODS - DISCLAIMER OF OWNERSHIP - SECTION 110(2) - SECTION 119 - SECTION 124 - SECTION 50 - SECTION 52 - SECTION 111 - SECTION 112 - SECTION 113 - SECTION 8 - SECTION 51 - SECTION 114 - SECTION 108 - IMPORTS AND EXPORTS (CONTROL) ACT, 1947 - SECTION 3 - EXPORTS (CONTROL) ORDER, 1977 - PART B OF SCHEDULE I - SNAKE SKINS - HANDLOOM COTTON COLOURED TOWELS - PAPER ELEPHANTS (PANEL BOARDS) - CONFISCATION OF GOODS - NOTICE - SHOW CAUSE NOTICE - PENALTY - DETENTION OF GOODS - CUSTOMS HOUSE AGENTS - SHIPPING BILLS - DECLARATION - EXAMINATION OF GOODS - INTERROGATION - LEGAL ASSISTANCE - RIGHT TO COUNSEL - ARTICLE 20(3) - ARTICLE 22(1) - CONSTITUTION OF INDIA - SUPREME COURT JUDGMENTS - INTERPRETATION OF STATUTORY PROVISIONS - LEGAL FRAMEWORK FOR SEIZURE, CONFISCATION, AND RETURN OF GOODS UNDER THE CUSTOMS ACT - APPLICABILITY OF SECTION 119 - MANDAMUS FOR RETURN OF GOODS.
Fact of the Case:
The petitioner, a customs house agent, was involved in two cases of attempted illegal export of snake skins and paper elephants (panel boards). In the first case, the petitioner's firm filed shipping bills for the export of handloom cotton coloured towels, but upon examination, the goods were found to be snake skins. In the second case, the petitioner's firm filed a shipping bill for the export of paper elephants, but upon examination, the goods were found to contain snake skins as well. The petitioner disclaimed ownership of the snake skins in the first case and claimed that someone had tampered with the packages after they were entrusted to the clearing agents. The petitioner did not disclaim ownership of the snake skins in the second case. The Customs Department seized the goods in both cases and issued show cause notices to the petitioner. The petitioner filed writ petitions challenging the seizure of the goods and seeking their return.
Finding of the Court:
The court held that the petitioner was not entitled to the return of the snake skins in the first case because he had disclaimed ownership of them and suggested that someone else had introduced them into the packages. The court also held that the petitioner was entitled to the return of the handloom cotton coloured towels and the paper elephants (panel boards) because the Customs Department had failed to issue a show cause notice within six months of the seizure of the goods, as required by Section 110(2) of the Customs Act. The court further held that Section 119 of the Customs Act, which allows the Customs Department to retain seized goods for a period of time, was not applicable in this case because the Department had not issued a notice under Section 124 of the Act.
Issues: 1. Whether the petitioner was entitled to the return of the snake skins in the first case, given his disclaimer of ownership. 2. Whether the petitioner was entitled to the return of the handloom cotton coloured towels and the paper elephants (panel boards) in the second case, given the failure of the Customs Department to issue a show cause notice within six months of the seizure of the goods. 3. Whether Section 119 of the Customs Act was applicable in this case.
Ratio Decidendi: 1. The court held that the petitioner was not entitled to the return of the snake skins in the first case because he had disclaimed ownership of them and suggested that someone else had introduced them into the packages. The court found that this disclaimer was sufficient to deprive the petitioner of his right to the return of the goods under Section 110(2) of the Customs Act. 2. The court held that the petitioner was entitled to the return of the handloom cotton coloured towels and the paper elephants (panel boards) in the second case because the Customs Department had failed to issue a show cause notice within six months of the seizure of the goods, as required by Section 110(2) of the Customs Act. The court found that this failure was fatal to the Department's case and that the petitioner was therefore entitled to the return of the goods. 3. The court held that Section 119 of the Customs Act was not applicable in this case because the Department had not issued a notice under Section 124 of the Act. The court found that this notice was a prerequisite for the application of Section 119 and that, in its absence, the Department could not retain the seized goods.
Final Decision: The court allowed the writ petitions to the extent that it ordered the Customs Department to return the handloom cotton coloured towels, the paper elephants (panel boards), and the snake skins in the second case. The court also directed the Department to pay the costs of the proceedings.
In both these writ peritions, the petitioner is one and the same. However, the facts slightly differ. Therefore, I will first deal with W.P. No. 11392 of 1985.
2.On an information received on 11th May, 1983 by the Special Investigation Department of the Customs Department that M/s T.G. Elumalai & Co., the Customs House Agents were carting into harbour 79 packages for shipment and these packages contained snake skins. The same were packed and loaded in lorries in Triplicane and were moved to harbour at W.Q. III. On this information, a careful watch was arranged at the place of harbour for the arrival of the goods. In the meanwhile, the Customs House Agents filed Shipping Bill Nos. 9346 and 0343 both dated 9th May, 1983 in the case of the petitioner's firm Jaival Tex. It was declared in the same bills that the goods were handloom cotton coloured towels. Both the Exporters and the Customs House Agents have signed the declarations under Section 59(2) of the Customs Act, 1962. The shipping bills were presented in the Customs Export Documentation Counter on 9th May, 1983. The said bills were assessed on condition that the goods for shipment should be allowed after opening and inspection of selected two packages weighing the nett contents and ripping open and inspection of 8 more selected cases and after verifying the description of the goods with that of the declarations made in the shipping bills.
3.After assessment, the relative documents in original along with other documents were handed over to the Customs House Agents for effecting shipment of the goods on completion of the inspection. The Customs House Agents on behalf of the exporters applied for posting of officers on overtime for inspection of the goods on 11th May, 1983. Till 9 p.m. on 11th May, 1983, the shipping bills were not presented for examination. The vessel was to sail on 13th May, 1983. Till 4 p.m. on 12th May, 1983 the shipping bills were not at all presented. It was then decided to open and examine all the packages for verification of the contents thereof. The examination was conducted in the presence of the Customs House Agent's representative. The examination revealed that 38 cases were packed with 84, 000 pieces of snake skins of various sizes.
4.Exports of all forms of wild life - dead or alive or part thereof or produced therefrom - are completely banned except those mentioned in Part B of Schedule I to the Exports (Control) Order, 1977, issued under Section 3 of the Imports and Exports (Control) Act, 1947. Therefore, the attempted export of snake skins is completely prohibited and consequently the goods were liable to confiscation under Section 113(d) of the Customs Act, 1962. It would also attract penalty under Section 114 of the said Act.
5.In view of the illicit export attempted to, summons were issued to the petitioner under Section 108 of the Customs Act whereupon the petitioner filed W.P. No. 4447 of 1983 before this Court. Pending that writ petition, in W.M.P. No. 6671 of 1983, the petitioner prayed for permission to allow his Counsel at the time of interrogation by the Department. That petition was dismissed. The appeal also suffered the same fate. Against these, the petitioner filed a special leave petition before the Supreme Court in S.L.P. (Civil) No. 8835/83. In addition, another independent Special Leave Petition was filed. Both these special leave petitions are now pending in the Supreme Court. The Supreme Court, in S.L.P. (Civil) No. 8835 of 1983 ordered as under on 23rd June, 1983:
"It has been stated by learned Counsel for the respondents that the interrogation will be stopped till the disposal of these petitions. Counter-affidavit will be filed on or before 21-7-1983 and rejoinder, if any, be filed one week thereafter. The matters are adjourned and will be listed on 1-8-1983." *
In view of this, the show cause notice could not be issued.
6.It is under these circumstances, the writ petition for mandamus is filed for the return of 44
