2020 (10) TMI 902 - HC - Customs

Maintainability of petition - availability of alternative remedy of appeal - Provisional release of seized goods - Betel Nuts - petitioners argues that as no bonafide ''reasons to believe' existed, the seizure of the goods was wholly arbitrary and illegal - HELD THAT - The statute that the power of seizure of goods under Section 110 of the Customs Act can be resorted to only when the Officer exercising the said power has ''reasons to believe' that the goods are liable to confiscation - In the present case, admittedly the goods were at Gorakhpur and not seized from any port or any custom area to form a belief that the goods were being imported into India. In the Panchnama, which the counsel for the respondents submits is a seizure memo, the only reasons recorded are that on a prima facie examination, the ''Areca Nuts' loaded in the Truck and as on some of the bags inscriptions in foreign language was written as well as that the ''Areca Nuts' on being taken out from the bags appeared to be of a foreign origin. The ''Areca Nuts' were shown to the local businessman and on the basis of their experience, they said that the ''Areca Nuts' appears to be of foreign origin. Thus, on these three grounds, the action for seizure was initiated. It is well settled that the ''reasons to believe' must be based upon acceptable materials, which have to be more than a moon shine. The material on record overwhelming suggests that the ''reasons to believe' were based upon the opinion of the local dealers, prima facie examination of the goods by naked eye and inscriptions in foreign language on some bags. We are not inclined to accept the reasons given for forming a belief for exercise of power of seizure are valid in law. The said reasons even fail the test of ''wednesbury principles' as no reasonable person can reach to conclusion of the country of origin of ''Areca Nuts' by mere perusal from naked eye as well as the opinion of the traders, as the Institutes as well as the Ministry have firmly opined that the country of origin cannot be traced by any laboratory method also. The respondent authorities shall forthwith release the goods i.e. ''Areca Nuts' as well as the vehicle in question in favour of the petitioner nos. 1 and 2 respectively on the petitioners filing a copy of this order before the authority concerned - petition allowed.

Issues Involved:
1. Legality of the seizure of goods and vehicle.
2. Validity of the provisional release order.
3. Applicability of alternative remedy.
4. Compliance with procedural requirements for seizure.
5. Determination of the origin of goods.
6. Valuation of goods for provisional release.

Detailed Analysis:

1. Legality of the Seizure of Goods and Vehicle:
The petitioners challenged the seizure of goods and vehicle under Panchnama dated 17.8.2020. The seizure was based on the belief that the goods (betel nuts) were of foreign origin and possibly smuggled. The court noted that the "reasons to believe" must be based on acceptable material. It was found that the reasons recorded in the Panchnama, such as inscriptions in a foreign language and opinions of local traders, were insufficient. The court highlighted that the Ministry of Agriculture and ICAR have opined that the country of origin of betel nuts cannot be determined by naked eye examination or laboratory tests. Consequently, the court quashed the seizure order dated 17.8.2020, declaring it invalid as it lacked valid "reasons to believe."

2. Validity of the Provisional Release Order:
The provisional release order dated 1.9.2020 was challenged for requiring excessive security deposits and bank guarantees. The court noted that the valuation of goods must comply with the Customs Valuation (Determination of the Value of Imported Goods) Rules, 2007. However, the court did not delve into the specifics of the provisional release order since the seizure itself was quashed. The court left open the arguments regarding the provisional release order's legality.

3. Applicability of Alternative Remedy:
The respondents argued that the writ petition should be dismissed due to the availability of an alternative remedy of appeal before the Commissioner (Appeals). The court rejected this argument, stating:
- No appeal lies against a seizure order.
- The goods are perishable, and delaying the matter would render the goods valueless.
- The seizure memo and provisional release order violated principles of natural justice and departmental instructions.
- The order was passed without addressing the petitioners' contentions or providing a hearing.

4. Compliance with Procedural Requirements for Seizure:
The court emphasized that the seizure must comply with Section 110 of the Customs Act, which requires "reasons to believe" that the goods are liable to confiscation. The court found that the seizure was based on inadequate grounds and failed to comply with Instruction No. 01/2017, which mandates passing an appropriate order mentioning the reasons for seizure. The court held that the seizure order was contrary to the Act and departmental instructions.

5. Determination of the Origin of Goods:
The court considered the certificates from the Ministry of Agriculture and ICAR, which stated that the origin of betel nuts could not be determined by naked eye or laboratory tests. The court found it unreasonable to conclude the goods' foreign origin based on visual inspection and traders' opinions. The court noted that "Areca Nuts" are neither prohibited nor notified goods, further invalidating the seizure.

6. Valuation of Goods for Provisional Release:
The petitioners argued that the valuation of goods for provisional release was arbitrary and not in accordance with the Customs Valuation Rules. The court noted that the valuation should follow specific rules and that the respondents relied on a notification for valuation, which the court found insufficient to justify the provisional release conditions.

Conclusion:
The court quashed the seizure order dated 17.8.2020, directed the release of the seized goods and vehicle, and rejected the respondents' argument regarding the alternative remedy. The court emphasized the need for valid "reasons to believe" for seizure and compliance with procedural requirements. The provisional release order's validity was not addressed in detail due to the quashing of the seizure order.

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