1999 (9) TMI 97 - HC - Customs

Summary

Issues Involved:
1. Legality of the seizure of 220 bags of betel-nut and a Tata truck.
2. Validity of the Customs authorities' reasonable belief for seizure.
3. Application of Section 110 of the Customs Act, 1962.
4. Prohibition of import from Nepal under Notification No. 9/96.
5. Court's jurisdiction in interfering with the Customs authorities' decision.

Detailed Analysis:

1. Legality of the Seizure:
The petitioners challenged the seizure memo dated 12-7-1999, issued by the Superintendent (Technical), Customs (P) Division Motihari, under the authority of the Assistant Commissioner of Customs (P) Division, Motihari. The seizure involved 220 bags of betel-nut and a Tata truck for alleged violation of Government of India, Ministry of Finance, Notification No. 9/91, dated 22-1-1991, under Section 11 of the Customs Act, 1962, read with Section 3(1) of the Import & Export (Control) Act, 1947. The petitioners claimed that the betel-nut was procured from local markets in Assam and sold to registered dealers in Varanasi, and thus, the seizure was illegal.

2. Validity of the Customs Authorities' Reasonable Belief:
The Customs Department received information about the transportation of third-country betel-nut. A preventive party was formed, and the truck was found parked with no one claiming ownership. The truck was searched, and betel-nut was found. Market opinions confirmed the foreign origin of the betel-nut. The seizure was effected under Section 110 of the Customs Act for violation of Section 11. The petitioners argued that there was no material to form a reasonable belief for confiscation, asserting that betel-nut is produced in Assam and not of third-country origin.

3. Application of Section 110 of the Customs Act, 1962:
Section 110 empowers the proper officer to seize goods if there is a reasonable belief that they are liable for confiscation. The Court noted that the seizure cannot be based on suspicion alone; there must be credible information. The belief must be of an honest and reasonable man on reasonable grounds. However, detailed inquiry before seizure is neither permissible nor practicable. The Court referred to the Supreme Court's interpretation in cases like Pukhraj v. D.R. Kohli and State of Gujarat v. Mohanlal, emphasizing that the Court does not sit as an appellate authority over the Customs officer's decision.

4. Prohibition of Import from Nepal under Notification No. 9/96:
The Customs authorities argued that the betel-nut was of third-country origin, smuggled through Nepal, and prohibited under Notification No. 9/96. The inquiry was ongoing to determine the contravention of the Act. The Court held that it was not proper to give a definite finding on whether the betel-nuts were smuggled, as it was for the authorities to decide based on the materials produced.

5. Court's Jurisdiction in Interfering with the Customs Authorities' Decision:
The Court emphasized that intervention at the initial stage of confiscation and seizure is deprecated by the Supreme Court. Referring to Union of India v. Lexus Exports Pvt. Ltd., the Court held that the High Court should not have intervened in the matter at the initial stage. The Court directed the Customs authorities to complete the inquiry within four months and allowed the petitioners to present their case.

Conclusion:
The writ application was partially allowed. The Court did not order the release of the betel-nuts, leaving it to the authorities to decide on confiscation. However, the truck was ordered to be released to the owner during the pendency of adjudication, upon furnishing security, subject to the final decision of the confiscation proceeding.