Advocates:
MUKESH KUMAR MARORIA

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.

9597-9599

OF 2011

UNION OF INDIA & ORS. ETC.

.....Appellant(s)

Vs.

M/S. MAGNUM STEEL LTD. ETC.

....Respondent(s)

O R D E R

The revenue is aggrieved by the impugned judgment

of the Madhya Pradesh High Court which had quashed the

initiation of search and seizure proceedings and all

consequential

proceedings,

launched

against

the

respondent/assessee. The respondent’s premises were subject

to search and seizure proceedings conducted on 20^th August,

2009 which had drawn up a Panchnama listing out materials and

documents seized in the course of the proceedings. The

assessee had impugned the action contending that there were

“no reasons to believe” in terms of Section 110 of the

Central Excise Act, 1944 read with Section 123 of the Customs

Act, 1962”.

1

Digitally signed by

NEETA SAPRA

Date: 2023.03.03

18:30:08 IST

Reason:

Signature Not Verified

The High Court had, in its impugned judgment relied

upon “State of Rajasthan vs. Rehman” reported in AIR 1960

(SC) 210 and “Durga Prasad Etc. vs. H.R. Gomes,

Superintendent (Prevention) Central Excise, Nagpur and

Another etc.” reported in AIR 1966 (SC) 1209. In those

judgments, the Court had ruled that although the power to

search is wide, to do so validly, it is necessary that the

conditions required by law i.e. officer concerned is to

satisfy himself that there are reasons to believe, that the

assessee was evading tax, to authorize a legal search should

be available on the record.

On an application of the principles spelt out in

the two decisions, the High Court had called for the original

record. The revenue had produced the warrant of seizure which

had mentioned about some information, placed before the

concerned officer leading the officer to conclude the goods

were liable to confiscation existed. He, therefore, had

authorized the search. However, the file itself did not

contain any material to disclose what was placed before the

officer – nor was there any noting on it to link the nature

of the materials (however briefly) with the decision to

search to legitimize the search proceedings.

Learned senior counsel appearing for the appellant

urged that there were intelligence reports which resulted in

the authorized official concluding that a search was

essential. He relied upon the pleadings in these proceedings

2

by way of grounds to urge that such intelligence report

existed as a matter of fact.

The power of search which in this case was resorted

to, can be gathered from Section 105 of the Customs Act.

Section 105 confers power to search premises if the Assistant

Commissioner of Customs or Deputy Commissioner of Customs

“has reasons to believe” that goods liable to confiscation or

documents relevant for such proceedings are secreted in any

place. In such event, the search proceedings can be

authorized by the Assistant Commissioner or other official.

Section 123 on the other hand enacts a burden of proof which

is that where any goods to which that provision applies are

seized under the Act on the reasonable relief that they are

smuggled goods, the burden of proof would then shift to the

person in possession of such goods to prove that they were

not smuggled goods.

The basic premise of Section 105, and indeed search

proceedings is the reasonable belief that some objective

material exists on the official record to trigger searches.

The person authorizing the search must express his

satisfaction that the material is sufficient for him to

conclude that search is necessary; further there should exist

something to show what is such material. The mere recording

that the person concerned is satisfied, without the

supportive materials, therefore, is insufficient to trigger a

lawful search.

3

In the present case