1985 (11) TMI 167 - HC - Customs

Issues Involved:
1. Validity of Notifications No. 101-Customs dated 1-7-1964 and G.S.R. 37 dated 3-1-1969.
2. Legality of the seizure of silver bars and subsequent proceedings.
3. Validity of the order passed by the Collector of Central Excise.
4. Imposition of penalty under Section 114 of the Customs Act, 1962.
5. Jurisdiction and authority of Customs Preventive Officers in conducting search and seizure.
6. Reasonableness of the belief held by Preventive Officers regarding the liability of confiscation of goods.

Issue-wise Detailed Analysis:

1. Validity of Notifications No. 101-Customs dated 1-7-1964 and G.S.R. 37 dated 3-1-1969:
The petitioner challenged the notifications on the grounds that they conferred absolute and excessive powers of revision without safeguards against misuse. The court observed that the power of revision was exercised under Section 130 of the Customs Act, 1962, which included checks and balances, thus preventing arbitrary or unbridled use of power. The court further noted that Notification No. 101-Customs was no longer in force due to amendments introduced by the Finance Act 2 of 1980, rendering the challenge to this notification redundant. Regarding Notification G.S.R. 37, the court upheld its validity, stating that the restrictions imposed under Sections 11-J, K, L, and M of the Act were reasonable and aimed at preventing illegal export of silver bullion and coins, thus serving public interest.

2. Legality of the Seizure of Silver Bars and Subsequent Proceedings:
The petitioner claimed ownership of the seized silver bars, contending that they were purchased in 1971 and thus did not contravene Sections 11-J, K, and L of the Act. The court found that the value of the silver at the time of seizure in 1974 was Rs. 19,948.82, and the petitioner failed to provide evidence to support a lower valuation. The court also held that the seizure was valid as the Customs Preventive Officers were designated as proper officers under Section 110 of the Act, and the seizure was conducted in compliance with the law.

3. Validity of the Order Passed by the Collector of Central Excise:
The petitioner challenged the order of the Collector of Central Excise, which maintained the confiscation of the seized silver and imposed a penalty. The court found that the Collector acted within his jurisdiction and that the order was based on available materials. The court rejected the petitioner's contention that the order was void and based on conjectures and surmises.

4. Imposition of Penalty under Section 114 of the Customs Act, 1962:
The petitioner argued that the penalty under Section 114 was not sustainable as it required an overt act. The court held that the petitioner's failure to comply with Sections 11-J, K, and L, such as not obtaining a transfer voucher and not maintaining accounts, constituted sufficient grounds for imposing a penalty. The court noted that the value of the seized silver exceeded Rs. 15,000, making it subject to the specified goods regulations under the Act.

5. Jurisdiction and Authority of Customs Preventive Officers in Conducting Search and Seizure:
The petitioner argued that the Customs Preventive Officers were not proper officers for conducting the search and seizure. The court referred to Section 2(34) and Section 110 of the Act, along with the relevant standing orders, and concluded that the Preventive Officers were duly designated as proper officers for the purpose of seizure under Section 110. Therefore, the search and seizure conducted by them were valid.

6. Reasonableness of the Belief Held by Preventive Officers Regarding the Liability of Confiscation of Goods:
The petitioner contended that the Preventive Officers did not have a reasonable belief that the silver was liable to confiscation. The court examined the circumstances of the seizure, including the lack of ownership documents and the storage of silver in an unnotified place. The court concluded that the Preventive Officers had bona fide and honestly entertained a reasonable belief that the silver was liable to confiscation, thus justifying the seizure.

Conclusion:
The court dismissed the writ petitions, upholding the validity of the notifications, the legality of the seizure, the order of the Collector of Central Excise, and the imposition of penalty. The court found that the Preventive Officers acted within their jurisdiction and had reasonable grounds for the seizure. The rule nisi was discharged, and the writ petitions were dismissed with costs.

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