2017 (5) TMI 1747 - HC - Customs

Smuggling - illegal sale of Goat Skin - absolute confiscation - penalty - presence of reasonable belief and the reason for formation of such belief - It was contended that there was an error apparent on the face of Annexure-5 as the same officer while noting that the goods are highly perishable in nature was directing the petitioner to deposit 100% cash security but also at the same time, asking him to execute a bond - HELD THAT - The contention of the petitioner that the goods were not notified goods form the basis of his challenge to the action of the respondents. This Court had issued a specific query to the Customs authorities to justify as to whether the goods, so seized by its authorities, were specified goods and had been seized from specified routes. The counter-affidavit filed by the respondents does not, in any way, substantiate this fact and a perusal of the adjudicatory order indicates that it was seized from the godown. There is also no satisfaction expressed by the authorities at the time of seizure that they had reason to believe that the goods so seized were liable for confiscation. Thus, the very initiation of the proceedings against the petitioner seems to be without jurisdiction. Penalty - HELD THAT - The petitioner has categorically submitted that he could not be forced to participate in the proceedings, which was without jurisdiction and was liable to be refunded the amount, which was the cost of his goods, which had been taken in hot haste by the authority without following the due process of law - imposition of a penalty after confiscation of the Goat Skins, which had been illegally auction sold by the authorities, could not be sustained as by no stretch of imagination the same authority, who issued the show cause notice, proceed to pass the final orders, in the present case. Such action clearly reveals the mechanical manner in which the authorities have been functioning and is indicative of the non-application of mind and also is deemed to be vested with ulterior motives. The entire proceedings against the petitioner having been conducted in gross violation of the statutory provisions of the Act stands vitiated, more so because the petitioner has been subjected not only to irreparable loss and injury but has also been denied the basic principle of audi alteram partem, leading to much harassment and injury by the illegal acts of the respondents. This Court, considering the facts that the whole proceedings against the petitioner stands vitiated as being without jurisdiction, also allows the prayer of the petitioner for refund of ₹ 1,21,620/-, being the price of 2027 pieces of Goat Skins, which has been illegally sold by the respondent-authorities - Application allowed.

Issues Involved:
1. Legality of the seizure and confiscation of 2027 pieces of Goat Skin.
2. Validity of the adjudicatory order dated 22-11-2013.
3. Jurisdiction of the Customs authorities.
4. Compliance with statutory provisions and principles of natural justice.
5. Entitlement of the petitioner to a refund of ?1,21,620/-.

Detailed Analysis:

1. Legality of the Seizure and Confiscation:
The petitioner contended that the seizure of 2027 pieces of Goat Skin by the Customs authorities was illegal as the goods were not specified under Section 11H of the Customs Act, 1962, and were not seized from a specified area. The petitioner argued that the goods were seized without any valid reason or seizure memo, and the subsequent sale of the goods did not follow the procedure prescribed under Section 110A of the Act. The court found that the seizure and confiscation were based on presumptions rather than actualities, and there was no evidence to prove that the goods were liable for confiscation under the Act.

2. Validity of the Adjudicatory Order:
The petitioner challenged the adjudicatory order dated 22-11-2013, arguing that it was issued by the same authority who had issued the show cause notice, which is against the principle that "No man can be a judge in his own cause." The court agreed with the petitioner, stating that the adjudicatory order was vitiated and fit to be set aside due to the conflict of interest and lack of impartiality.

3. Jurisdiction of the Customs Authorities:
The petitioner argued that the Customs authorities did not have jurisdiction to seize the Goat Skins as they were not specified goods and the place of seizure was not a specified area. The court noted that the respondents failed to justify that the goods were specified and seized from specified routes. Therefore, the initiation of proceedings against the petitioner was without jurisdiction.

4. Compliance with Statutory Provisions and Principles of Natural Justice:
The petitioner contended that the authorities did not follow the due process of law, including issuing a valid seizure memo, providing reasons for the seizure, and adhering to the prescribed procedures for the sale of the seized goods. The court found that the authorities acted in a mechanical manner, with non-application of mind, and violated the principles of natural justice, including the principle of audi alteram partem (the right to be heard).

5. Entitlement to Refund:
The petitioner sought a refund of ?1,21,620/-, the price of the 2027 pieces of Goat Skin that were illegally sold by the Customs authorities. The court held that the entire proceedings against the petitioner were conducted in gross violation of statutory provisions and principles of natural justice, leading to irreparable loss and injury to the petitioner. Consequently, the court allowed the petitioner's prayer for a refund of ?1,21,620/-.

Conclusion:
The court set aside the impugned orders dated 23-9-2012 and 22-11-2013, declared the proceedings against the petitioner as without jurisdiction, and directed the respondents to refund ?1,21,620/- to the petitioner. The writ application was allowed, but no order as to costs was made.

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