2020 (1) TMI 114 - HC - Customs

Interpretation of statute - meaning of the expression reason to believe and liable to confiscation under Section 110 of the Customs Act, 1962 - inter-state transfer - Import of prohibited goods - Betel nuts - Confiscation - belief of the officer seizing the goods of forming an opinion in terms of the statutory expression reason to believe of such goods being liable to confiscation - Record reveals that petitioners application for release of the goods stood rejected for the reason that the prescribed authority had got the seized sample of the product tested from the laboratories which was classified as unsafe food. HELD THAT - The goods as per invoice (page 25-29) originated from the State of Assam on 1st of February, 2019. They were to be transported to the State of Karnataka. Both the places are in India not in any specified/notified area under the Act but are the National Highways in the State of Bihar. On 6th of February, 2019, Inspector/S.O., Customs (P), Forbesganj seized the said goods and the vehicle by assigning the reasons reproduced supra. After drawing samples, vide punchnama dated 6th of February, 2019, Annexure-A to the counter affidavit, they were sent to the laboratory for analysis - The customs authorities sent the samples for analysis to two laboratories. The Expert as per the report used the word suspect . Based thereupon, petitioners request for release of the seized goods was rejected. The Single Judge have heavily relied upon the contents of the affidavit filed by the Revenue, wherein it stood averred that the Areca Nuts of Indian origin are normally oval in shape and it is this which made the Customs Officer forms a reasonable belief that cut dried Areca were illegally smuggled into India. As we have already observed that supplementation of reasons is impermissible in law, more so in the attending facts - the learned Singe Judge to have been swayed with five notifications/circulars/memorandum placed on record by the Revenue. And not having gone into the relevancy of each one of them, without assigning any reason with regard thereto, germane to the issue, by presuming the same to be ipso facto applicable, the learned Judge concluded the Department to have lawfully seized the goods and the vehicle. The goods in question are yet raw, as an unfinished product, meant to be transported to another State for it to be processed and packaged, whereafter, only, eventually sold in an open market and if the goods are actually unsafe food then it is not the provision of the Customs Act which can be invoked, for not falling within its purview - the writ petitioners prayer of quashing the seizure memo dated 6th of February, 2019, as also all consequential actions seizing the goods and vehicle in question are allowed, for such action to be without any basis having no mandate of law. Petition allowed.

Issues Involved:
1. Interpretation of "reason to believe" and "liable to confiscation" under Section 110 of the Customs Act, 1962.
2. Legitimacy of the seizure of goods based on the belief that they were imported illegally.
3. Relevance and application of various circulars and memoranda cited by the Customs authorities.
4. Judicial consistency and the applicability of previous judgments to the current case.
5. Authority and jurisdiction of Customs officers under the Customs Act and other relevant statutes.

Detailed Analysis:

Interpretation of "Reason to Believe" and "Liable to Confiscation":
The core issue addressed was the interpretation of the expressions "reason to believe" and "liable to confiscation" under Section 110 of the Customs Act, 1962. The court noted that these terms are not defined in the Act. It emphasized that the belief of the officer seizing the goods must be based on reasonable grounds and not mere suspicion. The court cited various precedents, including Tata Chemicals Limited v. Commissioner of Customs and Assistant Collector of Customs v. Charan Das Malhotra, to underline that the officer's belief must be honest, reasonable, and based on objective material.

Legitimacy of the Seizure:
The court scrutinized the seizure of betel nuts, which were alleged to be of foreign origin and thus liable for confiscation under Section 111 of the Customs Act. The goods were seized at a toll collection point within Indian territory, not at a notified customs zone. The court found no material evidence indicating that the goods had passed through or originated from outside India. The documents showed that both the consignor and consignee were within India, and the goods had traveled through Indian states. The court concluded that the seizure was based on mere suspicion and not on any concrete evidence.

Relevance and Application of Circulars and Memoranda:
The court examined several circulars and memoranda cited by the Customs authorities to justify the seizure. It found that Circular No.3 of 2011, Circular No.35 of 2017, Circular dated 20th November 2018, Circular No.30 of 2017, and Memorandum dated 4th June 2019 were either irrelevant or inapplicable to the case. The court noted that these circulars did not provide any authority to the Customs officers to act under the provisions of the Prevention of Food Adulteration Act or the Food Safety and Standards Act.

Judicial Consistency and Previous Judgments:
The court criticized the learned Single Judge for distinguishing the current case from a similar case (M/s Ayesha Exports v. Union of India) without maintaining judicial consistency. The court emphasized the importance of comity of judicial consistency and noted that the Single Judge had misconstrued the material on record. The court also referred to previous decisions, including Bawa Gopal Das Bedi & Sons v. Union of India, where similar proceedings were quashed.

Authority and Jurisdiction of Customs Officers:
The court reiterated that the Customs officers' authority to seize goods must be based on statutory provisions and reasonable grounds. It highlighted that the officers could not supplement their reasons for seizure through affidavits or otherwise. The court cited Mohinder Singh Gill v. Chief Election Commissioner to emphasize that public orders must be judged by the reasons mentioned in the order itself. The court also noted that if the goods were deemed "unsafe food," it was for the relevant authorities under the appropriate Act to take action, not the Customs officers under the Customs Act.

Conclusion:
The court set aside the judgment of the learned Single Judge and quashed the seizure memo dated 6th February 2019, along with all consequential actions seizing the goods and vehicle. The court directed the authorities to release the goods forthwith, concluding that the seizure was without any legal basis. The appeal was allowed with no order as to costs.

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