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2020 Supreme(All) 1096
IN THE HIGH COURT OF ALLAHABAD
Shashi Kant Gupta, Pankaj Bhatia, JJ.
Jaymatajee Enterprise (Seller) And Another – Petitioner
Versus
The Commissioner Of Customs (Preventive) And Others – Respondents
Writ Tax No. - 573 of 2020
Decided On : 22-10-2020
Advocate Appeared:
For the Petitioner: Shubham Agrawal
For the Respondent: Ramesh Chandra Shukla
Point of Law: SECTION 110. Seizure of goods, documents and things.-(1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods:Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with goods except with the previous permission of such officer.”
Headnote:
Seizer of vehicle – Release of - Execution of Bond for the value/estimated value of the seized goods - Challenged -
Finding of the Court:
Order of the seizure is bad in law as it has failed to follow the specific instructions contained in Instruction No. 1/2017, which are binding on the respondent authorities -Thus, the basis for forming ‘reasons to believe’ as recorded in the Panchnama are wholly without any acceptable material and there being no prima facie material to suggest that the goods in questions were of foreign origin or were smuggled into India from any Customs Station or that the goods were imported without payment of import duty, we have no hesitation in holding that no valid ‘reasons to believe’ existed for exercising the powers of seizure as was done by means of Panchnama - Consequently, the seizure order dated 17.8.2020 is quashed
Result: Writ petition is allowed
Key Points: - (!) Seizure invalid where "reasons to believe" are not based on acceptable material and do not show goods were liable for confiscation. - (!) (!) Panchnama-based reasons (naked-eye assessment, trader opinions) insufficient to establish belief of origin/import without proper evidence. - (!) Instruction No. 01/2017 requires an explicit seizure order with reasons to believe; panchnama alone is not a valid seizure order. - (!) (!) Section 110(1) permits seizure only when goods are liable to confiscation; need lawful basis and material to support belief. - (!) Provisional release under Section 110A requires adherence to statutory framework and truthful processing; release terms can include bond and bank guarantees as prescribed. - (!) (!) Writ court held that alternative remedy of appeal is not an efficacious remedy for perishable goods and that seizure/provisional release orders violated the Act and circulars. - (!) Court directed immediate release of Areca Nuts and vehicle to petitioners. - (!) Writ petition allowed; seizure quashed.
What is required to constitute valid "reasons to believe" for seizure under Section 110 of the Customs Act?
What is the propriety and enforceability of provisional release conditions under Section 110A and related circulars/instructions?
Did the High Court properly quash the seizure and direct release of Areca Nuts and the vehicle on the grounds of non-compliance with legal prerequisites?
JUDGMENT :
Pankaj Bhatia, J.
1. The amendment application filed by the petitioners is allowed.
2. The above referred writ petition has been filed challenging the seizure of goods of petitioner no. 1 and vehicle of petitioner no. 2 vide Panchnama dated 17.8.2020 and the order of provisional release dated 1.9.2020, whereby an order has been passed releasing the goods provisionally in respect of petitioner no. 1 on the following terms and conditions:-
“(i). Execution of Bond for the value/estimated value of the seized goods i.e. Rs. 53,76,000.00;
(ii). Furnishing Bank Guarantee or Security Deposit of Rs. 13440000.00;
(iii). Statement of goods owner under Section 108 of the Customs Act, 1962 before provisional release of the seized betel nuts & Compliance of other applicable laws (any other conditions, as prescribed by adjudicating authority).”
And in respect of petitioner no. 2 as follows:-
“i). Execution of Bond for the value/estimated value of the seized truck i.e. 700000.00;
(ii). Furnishing Bank Guarantee or Security Deposit of Rs. 70000.00;
(iii). Statement of the truck owner under Section 108 of the Customs Act, 1962 before provisional release of the seized truck & Compliance of other applicable laws (any other conditions, as prescribed by adjudicating authority).”
3. The contention of the counsel for the petitioners, in brief, is that the petitioners received an order from one M/s Jagdamba Enterprises for supplying 17920 K.G. of betel nuts and the petitioner purchased 24,000 K.G. of betel nuts from one Neelkamal Saha, West Bengal by means of two tax invoices dated 14.8.2020 each for 12,000 K.G. It is also stated that said Neelkamal Saha had purchased 19,884 K.G. of betel nuts in an E-auction held by the Customs Department. It is further stated that the petitioners and the purchaser Jagdamba Enterprises both are registered under the G.S.T. Act. After purchasing the said betel nuts from the said Neelkamal Saha, the petitioners transported the said goods to the consignee M/s Jagdamba Enterprises through Truck No. DL01 GC-1731 owned by the petitioner no. 2 and the goods were sent alongwith requisite E-Way Bill Invoices etc. It is further stated that the goods were valued for the total consignment value of Rs. 29,56,800/-. As soon as the Truck carrying the betel nuts entered the State of Uttar Pradesh, the respondent no. 3 intercepted the said Truck and vide Panchnama dated 17.8.2020, seized the goods as well as the vehicle i.e. Truck No. DL01 GC-1731. A copy of the Panchnama is on record as Annexure-3 to the writ petition.
4. In the Panchnama on record, the Panches made a statement that on the request of the Excise Authorities, they agreed to act as Panch and after the interception of the Truck, the driver disclosed his name as Satendra Kumar, the Officers informed the Truck driver that they have received specific information that ‘Areca Nuts’ of foreign origin was being transported. On opening of the material being transported it transpired that some bags had inscriptions in foreign language which led to a belief that the arcenuts were of foreign origin, it is also recorded that the officers informed the panches that on the basis of information prima facie the goods appeared to be of foreign origin and also that as per the opinion of the local dealers the supari appeared to be illegally imported from Bangladesh in violation of Section 11read with the provisions of Foreign Trade Regulation Act on the said basis he proceeded to seize the goods by means of the Panchnama dated 17.8.2020.
5. Counsel for the petitioners argues that as no bonafide ‘reasons to believe’ existed, the seizure of the goods was wholly arbitrary and illegal. He further argues that the goods were purchased in an E-auction held by the Customs Department itself and as such there was no question of the goods being imported. It is further stated that on 18.8.2020 and 20th August, 2020, the petitioner wrote a letter to the respondents for release of the goods and the vehicl
