2015 (11) TMI 683 - HC - Customs

Seizure of goods - on a suspicion that the consignment of betel nuts transported by the petitioner was of third country origin brought in through Nepal, the consignment was seized by the customs authorities - Held that - Customs officer did have reason to believe that the transporter of the consignment in question was trying to avoid the Customs authorities. In the circumstances, the seizure could not have been set aside. The events subsequent to the seizure are not relevant for the purpose of examining whether the seizure was proper or not. - Impugned order is set aside - Decided in favour of revenue.

Summary

Issues:
Seizure of consignment of betel nuts, Authority of customs to seize goods, Prohibition of betel nuts under Customs Act, 1962, Reasonable belief for confiscation, Third country origin attracting higher customs duty, Proper adjudication process.

Seizure of Consignment of Betel Nuts:
The case involved the seizure of a consignment of betel nuts by customs authorities while passing through Bihar. The consignment was suspected to be of third country origin brought in through Nepal, leading to its seizure based on a suspicion. The petitioner challenged this seizure of 15,960 kgs of betel nuts and the vehicle in the High Court under Article 226 of the Constitution.

Authority of Customs to Seize Goods:
The petitioner argued that betel nuts were not prohibited goods under the Customs Act, 1962, and hence, the customs authorities did not have the authority to seize the consignment. The Union of India contended that if the betel nuts were of third country origin, they would attract a higher rate of customs duty, justifying the seizure.

Prohibition of Betel Nuts under Customs Act, 1962:
The Customs Act empowers officers to produce orders for clearance and seize goods if there is a reasonable belief of confiscation under the Act. While the Act refers to dutiable or prohibited goods, the appellants did not claim betel nuts to be prohibited. The issue focused on whether betel nuts, not being prohibited goods, were liable to confiscation.

Reasonable Belief for Confiscation:
The Court analyzed the events post-seizure and noted that the customs authorities failed to prove the consignment was of third country origin. The learned single Judge set aside the seizure order, directing the release of the seized consignment and the vehicle, emphasizing the need for a reasonable belief for confiscation under the Act.

Third Country Origin Attracting Higher Customs Duty:
The judges considered arguments citing relevant judgments, including cases from the Supreme Court and previous High Court decisions. The contention revolved around the customs duty implications if the betel nuts were indeed of third country origin, warranting a higher rate of customs duty.

Proper Adjudication Process:
After extensive arguments, the Court allowed the appeal, setting aside the single Judge's order and dismissing the petition. The Court directed completion of the adjudication process within three months, subject to the petitioners' cooperation. The order was made contingent upon the outcome of another writ petition challenging the initiation of adjudication proceedings, which was stayed by the single Judge pending resolution.