Seizure of goods under the Customs Act requires objective evidence to establish 'reason to believe' that goods are of foreign origin; mere suspicion or subjective opinions are insufficient.

JUDGMENT

Heard Sri. Shubham Agrawal, learned counsel for the petitioner and Sri. Dhananjay Awasthi & Sri. Gaurav Mahajan, learned counsel for the revenue.

2. Present writ petition has been filed by the petitioner to challenge the seizure order dated 04.01.2024 (passed during pendency of the writ petition), the detention-memo dated 25.10.2023 whereby 49,210 Kgs. of Arecanuts being transported by the petitioner on two trucks bearing Registration Nos. UP-35-T-3671 and UP-71-T-9095 have been seized. The confiscation proceedings have not arisen yet.

3. Pleadings have been exchanged.

4. Besides the main Counter Affidavit and Rejoinder Affidavits filed, parties have also exchanged Supplementary Counter Affidavit & Supplementary Rejoinder Affidavit. Sri. Awasthi has filed another Supplementary Counter Affidavit in reply to the Supplementary Rejoinder Affidavit.

5. Primary submission of learned counsel for the petitioner is, under the Customs Act, 1962 (hereinafter referred to as "the Act"), seizure of goods is an action preceding confiscation of prohibited goods. Thus, goods liable to confiscation under Section 111 of the Act may be seized under Section 110 of the Act. However, before seizure of goods may arise, the Proper Officer must have "reason to believe" that such goods are liable to be confiscated under the Act. Unless such "reason to believe" exists, no seizure may arise.

6. For "reason to believe" to be recorded, the goods (here Arecanuts), must be such as may have been imported from outside the country without valid customs clearance. Failing valid import, they would remain prohibited goods liable to be confiscated and therefore exposed to seizure proceedings.

7. On the contrary, if the Arecanuts are of Indian origin, no reason to believe may ever arise to confiscate such goods under the Act. Therefore, they may never be subjected to seizure proceedings under the Act.

8. On that test, it has been submitted, existence of "reason to believe" that the goods are liable to be confiscated is a sine qua non to uphold the seizure. While sufficiency of reason may never be an issue to be examined in a writ proceeding, it has been vehemently urged that for a "reason to believe" to exist, the belief that the goods were of foreign origin must be based on reasons arising from objective material.

9. Here, at the stage of detention and even at the stage of seizure the Customs Authority only considered: two trade opinions allegedly expressed by persons involved in the trade of Arecanuts; a report of the Arecanuts Research and Development Foundation, Mangalore (hereinafter referred to as "ARDF") dated 17.11.2023; alleged discrepancy of the total quantity and weight of Arecanuts purchased by the petitioner from its supplier, Sri. Karni Traders, Guwahati and, doubts expressed as to valuation of goods disclosed by the petitioner.

10. Reliance has been placed on the decision of the Hon'ble Supreme Court in State of Uttar Pradesh & Others v. M/s Aryaverth Chawl Udyoug and Others 2017 U.P.T.C. 262 to submit, no material exists to form any "reason to believe" and no "reason" exists to support the "belief" that the goods were of foreign origin. Reliance has also been placed on the decision of a coordinate bench of this Court passed in Jaymatajee Enterprise (Seller) and Another v. The Commissioner of Customs (Preventive) And 2 Others in Writ Tax No. 573 of 2020 (Neutral Citation No. - 2020:AHC:91647-DB).

11. Then relying upon the decision of the Meghalaya High Court in C.C. (Preventive), NER Region, Shillong v. Laltanpuii 2022 (382) ELT 592 (Meghalaya), as affirmed by Hon'ble Supreme Court in Commissioner of Customs (Preventive) v. Laltanpuii 2022 (382) ELT 588 (S.C.), it has been urged that the ARDF is not an accredited laboratory and no reliance could have been placed on its report to draw up any "reason to believe".

12. Relying on another decision of a coordinate bench of this Court passed in Commissioner Customs, (Preventive) v. M/S Maa Gauri Trade