2024 (8) TMI 1003 - HC - Customs

Invocation of the extraordinary remedy under Article 226 of the Constitution of India - Seizure of goods and the adjudication order - Reasons to believe - denial of cross-examination - violation of provisions of N/N. 9/96 (N.T)-Cus dated 22.01.1996, issued under Section 11 of the Customs Act - violation of principles of natural justice - HELD THAT - The reason to believe is the foundational aspect which enables seizure and initiation of an adjudication proceeding. In the present case it is seen that the reason to believe is illegal import while the adjudication has proceeded on the allegation of illegal export. Even the counter affidavit speaks of export of sugar having been regulated by licence. It is found that the foundational aspect to be absent in the above proceedings; which would enable invocation of the extraordinary remedy under Article 226, as has been held in STATE OF HP. AND OTHERS VERSUS GUJARAT AMBUJA CEMENT LTD. AND ANOTHER (AND OTHER APPEALS) 2005 (7) TMI 353 - SUPREME COURT - the Hon ble Supreme Court has held that if an assessee approaches the High Court without availing the alternate remedy, it should be ensured that the assessee has made out a strong case or that there exists good grounds to invoke the extraordinary jurisdiction. While reiterating that Article 226 of the Constitution confers very wide powers on the High Court, it was clarified that nonetheless the remedy of writ is an absolutely discretionary remedy. There is clear lack of jurisdiction in so far as the adjudication proceedings initiated on the ground of illegal export when the seizure was on the belief that there is illegal import . The request for cross-examination of the seizing officer hence assumes relevance and the denial to summon the officer is a clear violation of principles of natural justice. Both these aspects justify the invocation of the extraordinary remedy under Article 226 of the Constitution of India. The writ petition hence stands allowed setting aside the impugned order.

Summary

Issues:
Seizure of goods based on incorrect grounds; Violation of principles of natural justice by denying cross-examination; Lack of jurisdiction in adjudication proceedings.

Analysis:
The petitioners challenged the seizure of goods and the adjudication order, arguing that the reason for seizure did not align with the adjudication proceedings initiated, which violated Section 100 of the Customs Act, 1962 requiring 'reasons to believe' for seizure. The seizure was purportedly for violating a customs notification regarding import from Nepal, but the show-cause notice and adjudication order focused on illegal export, specifically sugar not notified under the Act. The petitioners' request for cross-examination of the seizing officer was not permitted, contrary to principles of natural justice as highlighted in legal precedents.

The Department's Standing Counsel noted the petitioners' failure to appeal the matter through statutory remedies and emphasized the export policy's requirement for a release order for exporting sugar. The seizure receipt indicated a violation of a specific customs notification related to goods imported into India from Nepal, not illegal export as alleged in the show-cause notice and adjudication order. The foundational aspect of 'reason to believe' for seizure was found to be absent, rendering the invocation of Article 226 necessary, as established in legal precedents.

The High Court referred to legal precedents emphasizing the discretionary nature of writ jurisdiction, highlighting the need for strong grounds to invoke extraordinary remedies. The denial of cross-examination of the seizing officer and the jurisdictional discrepancy between illegal import and illegal export allegations justified the court's intervention under Article 226. The court allowed the writ petition, setting aside the impugned order and directing the release of any security provided or refund of paid amounts.

In a concurring opinion, Justice Partha Sarthy agreed with the decision to allow the writ petition, emphasizing the importance of upholding principles of natural justice and jurisdictional integrity in adjudication proceedings.