2023 (12) TMI 967 - HC - Customs

Seizure of petitioners gold jewellery and its disposal - Violation of Customs Act and the rights guaranteed to the petitioners under Article 300A read with Article 14 of the Constitution of India - legality of action of the respondents to sell / dispose of the gold jewellery of the ownership of the petitioners, as seized from them, without notice to the petitioners, and before an order of confiscation under Section 111 of the Customs Act, 1962 - HELD THAT - It is not in dispute that on 14 January 2018 the petitioners arrived in India and were apprehended at the Mumbai Airport. The jewellery belonging to the petitioners which were gold bangles came to be seized by the Customs officials - The power of the Customs Authorities to seize the goods is conferred by Section 110 of the Customs Act and its application was subject matter of debate in the present proceedings - On a plain reading of Section 110 of the Customs Act, it is quite clear that it is a provision in relation to seizure of goods, documents and things. It provides that if the proper officer has a reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. What manner Section 110 of the Customs Act would be applicable to the seizure of the petitioners gold jewellery as seized on 14 January 2018? - HELD THAT - There is something more fundamental in the present proceedings inasmuch as on 14 January, 2018 the gold jewellery in question was seized from the petitioners. Sub-section (2) of Section 110 provides that where any goods are seized under sub-section (1) and no notice in respect thereof is issued under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. Thus, the seizure having taken place on 14 January, 2018, six months period was to end on 14 July, 2018, however, what is significant is that a show cause notice for confiscation of such gold came to be issued to the petitioners on 6 July, 2018, however, the same was never served on the petitioners in a manner known to law - On a plain reading of Section 124 what would be implicit is that an order confiscating any goods or imposing any penalty can be passed only after the owner of the goods is issued a notice in terms of the said provisions interalia informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty and an opportunity of making a representation in writing is given to him within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty and a reaonsable opportunity of being heard. Sub-section (1A) of Section 110 cannot be read as absolute entitlement or authority with the proper officer to dispose of the items like gold in the absence of any cogent reasons, which would attract the ingredients of sub-section (1A) of Section 110. Such reasons as falling under sub-section (1A) are required to be intimated to the owner of the goods for the reason that ultimately the disposal of the goods would entail serious consequences of affecting the constitutional rights of the owner of the goods guaranteed under Article 300A of the Constitution, as the owner would be deprived of his property. This would be the basic requirement of law the proper officer dealing with any goods, which are merely seized and not confiscated would be required to be followed. It is well settled that the provisions of Article 300A of the Constitution are available to any person including a juristic person and not confine to only citizen and that the illegal seizure would amount to the owner being deprived of his right of property as contained under Article 300A of the Constitution of India. In the present case the gold jewellery belonging to the petitioners has been dealt, disposed of and sold in patent disregard to the basic principles of law as Articles 14 and 300A of the Constitution would ordain. This apart, even the provisions of the Customs Act stand violated not only in taking away the substantial statutory rights as the law would guarantee to the petitioners, on seizure of the petitioners gold jewellery but also in the manner in which the gold jewellery has been disposed of. In the present case, it is difficult to imagine as to what could be the reason for the Customs Officers to dispose of the goods hurriedly and with such lightening speed and by throwing to the wind the norms of fairness and reasonableness. This is not acceptable even from the reading of the provisions of Section 110. Any reading of Section 110 otherwise than what has been discussed, would amount to foisting draconian, reckless and/or unfettered authority on the Customs Officers conferring a licence to commit illegality - such substantive provisions of the Customs Act cannot be rendered nugatory, by recognizing unguided and unfettered powers being conferred under Section 110 on the Customs Officers, to dispose of the seized property, till the orders of any confiscation attains finality, unless there are strong reasons which would justify any such action when tested on such constitutional and legal parameters, and that too on the satisfaction of the officers to be reached only after hearing the owner of the property. There are no manner of doubt that the petition needs to succeed. The question, however, is as to what can be the relief which can be granted to the petitioners in these circumstances, when there is no iota of doubt, in regard to illegality which has been committed by the respondents in depriving the petitioners of their valuable rights to property - the principles of law which would be required to be applied, is that once the action of the respondents is held to be void, ab initio, illegal and unconstitutional, there can be no second opinion that the rights of the petitioners in regard to illegal seizure would be required to be restituted. It is declared that the action on the part of the Assistant Commissioner of Customs in disposing of / selling the gold jewellery belonging to the petitioners subject matter of the present proceedings, is illegal and unconstitutional - The respondents are directed, to restore to the petitioners, equivalent amount of gold namely 1028 gms. and / or to compensate the petitioners by making payment of amounts equivalent to the market value of the said gold, as on date. Petition disposed off.

Summary

Issues Involved:

1. Legality of the seizure and disposal of the petitioners' gold jewellery without notice.
2. Violation of petitioners' rights under Article 300A and Article 14 of the Constitution of India.
3. Compliance with the provisions of the Customs Act, 1962, particularly Sections 110 and 124.
4. Entitlement of the petitioners to the return of gold jewellery or compensation equivalent to its market value.

Summary:

Issue 1: Legality of the seizure and disposal of the petitioners' gold jewellery without notice

The petitioners, Iranian nationals, had their gold jewellery seized by Customs officials at Mumbai Airport on 14 January 2018. The respondents initiated disposal proceedings without proper notice to the petitioners. The Assistant Commissioner of Customs issued a notice on 4 April 2018, but there was no record of it being received by the petitioners. The gold jewellery was disposed of on 1 June 2018, before a show cause notice was issued on 6 July 2018. The Court held that the disposal of the gold jewellery without proper notice and before the issuance of a show cause notice was illegal and violated the principles of natural justice.

Issue 2: Violation of petitioners' rights under Article 300A and Article 14 of the Constitution of India

The Court found that the disposal of the petitioners' gold jewellery without notice and proper procedure violated their rights under Article 300A (right to property) and Article 14 (right to equality) of the Constitution of India. The Court emphasized that any action depriving a person of their property must be supported by cogent reasons and follow due process.

Issue 3: Compliance with the provisions of the Customs Act, 1962, particularly Sections 110 and 124

The Court analyzed Sections 110 and 124 of the Customs Act, 1962, which pertain to the seizure and confiscation of goods. It held that mere issuance of a notification under Section 110(1A) does not suffice to dispose of goods without recording reasons and notifying the owner. The Court found that the Customs officials failed to follow the procedure prescribed under the Act, including issuing a show cause notice and providing an opportunity for representation before confiscation.

Issue 4: Entitlement of the petitioners to the return of gold jewellery or compensation equivalent to its market value

The Revisional Authority had allowed the petitioners to re-export the gold jewellery on payment of a redemption fine. However, since the gold jewellery was already disposed of, the Court directed the respondents to restore the equivalent amount of gold (1028 grams) or compensate the petitioners with the market value of the gold as on the date of the judgment. The Court also directed that the amount of redemption fine and penalty be deducted from the compensation.

Order:

1. The action of the Assistant Commissioner of Customs in disposing of the petitioners' gold jewellery was declared illegal and unconstitutional.
2. The respondents were directed to restore the equivalent amount of gold (1028 grams) or compensate the petitioners with the market value of the gold as on the date of the judgment.
3. The above directions were to be complied with within three weeks.
4. The amount of redemption fine and penalty as directed by the Revisional Authority was to be deducted from the compensation.

The petition was disposed of in the above terms with no costs.