2011 (7) TMI 1301 - HC - Customs

Summary

Issues involved: Seizure and confiscation of goods, validity of search and seizure, onus of proof in customs proceedings, judicial review of seizure order.

Seizure and Confiscation of Goods:
The case involved the seizure of 27420 kgs. betel nuts and other items by the Directorate of Revenue Intelligence from a godown. Confiscation proceedings were initiated following a show cause notice issued to the respondent. The respondent claimed to be an authorized agent licensed to purchase the goods from a specific entity. The respondent challenged the seizure on the grounds that the goods were not prohibited and were purchased legitimately.

Validity of Search and Seizure:
The appellants conducted the search and seizure based on information that prohibited goods were stored in the respondent's godown. The respondent contested that the seized goods were purchased earlier from a legitimate source. The learned Single Judge accepted the respondent's plea, stating that the onus to prove foreign origin goods lay with the customs authorities. The Judge set aside the seizure but allowed confiscation proceedings to continue.

Onus of Proof in Customs Proceedings:
The appellants argued that they had sufficient evidence to believe that smuggled goods were stored in the godown. They contended that the respondent's claim required further investigation. The Court held that the onus of proof lies with the person from whom the goods are seized or who claims ownership, contrary to the Single Judge's ruling. The Court emphasized that a valid seizure is necessary for confiscation proceedings to proceed.

Judicial Review of Seizure Order:
The Court allowed the appeal, setting aside the Single Judge's order and dismissing the respondent's petition. The appellants were directed to release the seized goods upon the respondent furnishing a bank guarantee. The Court highlighted the limited scope of judicial review in such matters, focusing on whether there was sufficient material for the seizure. The Court emphasized that the Single Judge erred in considering the evidence and shifting the burden of proof onto the customs authorities.