1985 (2) TMI 41 - HC - Customs

Summary

Issues Involved:
1. Legality of the seizure of the consignment.
2. Validity of the show cause notice and subsequent adjudication proceedings.
3. Determination of whether the consignment contained banned items.
4. Jurisdiction of the respondents to initiate proceedings based on the belief that the consignment contained banned items.

Detailed Analysis:

1. Legality of the Seizure of the Consignment:
The petitioner, a registered partnership firm dealing in Indian Medicinal plants, dispatched 52 bales of Vinca Rosea from Madras to Cochin for export. The consignment was accompanied by necessary certificates and was initially cleared by the Customs authorities. However, the 'Let Export Order' was later seized, and the petitioner was informed that the goods could not be exported. The respondents justified the seizure under Section 110 of the Customs Act, 1962, based on a technical opinion that the consignment contained Rauwolfia serpentina roots, a banned item. The petitioner argued that the seizure was without jurisdiction as the consignment did not contain any banned items.

2. Validity of the Show Cause Notice and Subsequent Adjudication Proceedings:
The second respondent issued a show cause notice under Section 174 of the Customs Act, 1962, alleging that the consignment contained banned items and should be confiscated under Section 113(d) for contravention of Section 3 of the Import and Export Control Act, 1947. The petitioner contended that the respondents did not have a reasonable belief that the consignment contained banned items at the time of seizure or issuance of the show cause notice. The petitioner also requested that samples be sent to recognized institutes for testing, which the respondents initially ignored.

3. Determination of Whether the Consignment Contained Banned Items:
The samples were eventually sent to the Central Research Institute for Siddha, which reported that the consignment contained Vinca Rosea roots and stems and stems of Rauwolfia canescens, but no Rauwolfia serpentina roots. This contradicted the initial opinion from the Ayurveda Research Institute, Trivandrum, which had later revised its findings to exclude Rauwolfia serpentina. The court accepted the report from the Central Research Institute for Siddha, as it provided a detailed scientific basis for its conclusions, unlike the reports from the Ayurveda Research Institute.

4. Jurisdiction of the Respondents to Initiate Proceedings:
The court found that the respondents could not have entertained a reasonable belief that the consignment contained banned items merely by visual inspection. The conflicting expert opinions further undermined the respondents' position. The court concluded that the basic requirements for initiating proceedings were absent, making the actions of the respondents without jurisdiction. The court also noted that even if the petitioner had purchased Rauwolfia serpentina for other purposes, it was irrelevant since the consignment intended for export did not contain this banned item.

Conclusion:
The court quashed the show cause notices and the adjudication proceedings initiated by the respondents and directed the release of the seized goods. The court held that the seizure and subsequent actions were without jurisdiction, as the consignment did not contain any banned items. The writ petition was allowed, and the rule nisi was made absolute, with no order as to costs.