2024 (12) TMI 619 - HC - Customs

Quashing of seizure order - violation of Section 7, 11, 46 and 47 of the Customs Act, 1962; Section 3 (2) of Foreign Trade (Development and Regulation) Act, 1992 - Locus standi of the second petitioner - alternative remedy under Section 128 of the Act, 1962 - reasons to believe - contents of Panchnama are the reasons for drawing up seizure memo. Whether second petitioner has locus in filing the writ petition or not? - HELD THAT - The second petitioner has a locus to assail the seizure memo dated 14.08.2020 along with the first petitioner for the reasons that there were transactions among the petitioners as is evident from Tax Invoice, Transportation Note and Way Bill. There is minute error committed by the first petitioner in his affidavit supporting writ petition to the extent in not mentioning in the affidavit that supporting affidavit is on behalf of second petitioner, first petitioner is swearing the affidavit on his own behalf. Such error crept-in inadvertently, therefore, the contention of the respondents that the second petitioner has no locus is too technical. Thus, second petitioner has locus to file the present petition along with first petitioner. Whether petitioners were required to exhaust alternative remedy under Section 128 of the Act, 1962 or not? - HELD THAT - For the purpose of present case, violation of statutory provision like Section 110 of the Act, 1962 has not been complied in the manner known to the law to the extent of not writing the reasons in support of impugned seizure memo dated 14.08.2020 whereby petitioners have been denied opportunity of availing alternative remedy of appeal ineffectively - contention of the respondents that petitioners are required to be relegated to appellate authority stands turndown. Whether seizure memo is to be read with Panchnama to draw inference that contents of Panchnama are the reasons for drawing up seizure memo or not? - HELD THAT - The seizure of the memo is to be read with Panchnama as contended by the learned senior counsel for respondents. It is submitted that contents of the Panchnama reveals that certain discrepancies in which material information, in particularly, Invoice, Way Bill and Marudhar Assam Road Lines Private Limited, it was submitted that there is variation in mentioning the places like Paschim Salkumar/Badaitari/Falakata/Alipurduar, West Bengal. These are the places where the Krishna Kali Traders is trading. In the Invoice, GSTIN number of the petitioners are reflected and also Bill to Party and Ship to Party - There are every chances of re-using of bags. Therefore, these material information reflected in Panchnama was required to be taken into consideration while reading seizure memo may not be correct in the light of the fact that whatever contents of the Panchnama cannot be read into seizure memo in the light of Notification dated 08.02.2017. Whether reasons to believe under Section 110 of the Act, 1962 is complied by the Seizing Officer or not? - HELD THAT - Panchnama cannot be read into seizure memo as held by the Delhi High Court. After taking note of Delhi High Court decision, the aforementioned Notification has been issued. That apart reading of both the seizure memo and Panchnama, one can draw inference that firstly seizure memo has been prepared and secondly Panchnama has been drawn, therefore, at the time of writing seizure memo, Panchnama was not written or existed. This is evident from reading of Panchnama - Seizing Officer cannot keep reasons in his mind and he has to disclose minimal reasons in the seizure memo - the contention of the respondents that seizure memo is to be read with Panchnama is wholly incorrect and contrary to Customs Department Notification dated 08.12.2017. Whether Section 110 (1A), (1B), (1C) of the Act, 1962 is mandatory insofar as seizing the truck bearing No. UP 31 AT 1107 or not? - HELD THAT - In the Assam Supari Traders 2024 (9) TMI 1617 - PATNA HIGH COURT , the Co-ordinate Bench has distinguished on factual aspect of the matter to the extent that the cited decision of this Court are distinguishable on facts of the case for the reasons that there is no analysis of Section 110. Further in The Commissioner of Customs (Preventive) Patna 2024 (3) TMI 1194 - PATNA HIGH COURT and Santosh Kumar Murarka 2024 (8) TMI 1161 - PATNA HIGH COURT , there was no occasion to consider Section 110 (1A) (1B) (1C) of the Act 1962 read with Section 128, therefore, two decisions of this Court by the learned senior counsel for respondents that they are binding in the present case has already been noticed in Assam Supari Traders case. The impugned seizure memo dated 14.08.2020 vide Annexure 6 is unsustainable and the same deserves to be quashed and set aside and is, accordingly, quashed and set aside - Application allowed.

Summary

Issues Involved:

1. Locus standi of the second petitioner.
2. Requirement to exhaust alternative remedy under Section 128 of the Customs Act, 1962.
3. Whether the seizure memo should be read with the Panchnama.
4. Compliance with "reasons to believe" under Section 110 of the Customs Act, 1962.
5. Applicability of Section 110 (1A), (1B), (1C) of the Customs Act, 1962 regarding the seizure of the truck.

Issue-wise Analysis:

1. Locus Standi of the Second Petitioner:

The court held that the second petitioner has locus standi to challenge the seizure memo dated 14.08.2020 along with the first petitioner. This is because there were evident transactions between the petitioners, as shown in the Tax Invoice, Transportation Note, and Way Bill. The court dismissed the respondents' argument against the second petitioner's locus as overly technical, noting that the affidavit's omission was a minor error.

2. Requirement to Exhaust Alternative Remedy:

The court addressed the contention that the petitioners should have pursued an alternative remedy under Section 128 of the Customs Act, 1962. It was noted that the seizure memo lacked minimal reasons, thus denying the petitioners an effective opportunity to appeal. The court referred to precedents that allow bypassing alternative remedies when statutory provisions are violated or principles of natural justice are breached. The court concluded that the petitioners were not required to exhaust the alternative remedy due to the procedural deficiencies in the seizure memo.

3. Seizure Memo and Panchnama:

The court examined whether the Panchnama could be read into the seizure memo. It was determined that the Panchnama, a statement by witnesses, cannot substitute for reasons in the seizure memo, as per a notification dated 08.02.2017. The court found that the seizure memo was prepared before the Panchnama, and hence, the latter could not be used to justify the former. The court rejected the respondents' argument that the Panchnama sufficed as a reason for the seizure.

4. Compliance with "Reasons to Believe":

The court scrutinized whether the Seizing Officer complied with the "reasons to believe" requirement under Section 110 of the Customs Act, 1962. It was concluded that merely citing sections in the seizure memo without specific reasons does not fulfill the statutory requirement. The court emphasized that the Seizing Officer must disclose minimal reasons in the seizure memo to enable an effective appeal.

5. Applicability of Section 110 (1A), (1B), (1C):

The court evaluated the applicability of Section 110 (1A), (1B), (1C) regarding the seizure of the truck. It was determined that these provisions were not complied with, particularly concerning the truck, which falls under "Conveyance" in the Notification dated 05.02.1986. The court held that the Customs Officials should have followed the required procedures for the seizure of the truck.

Conclusion:

The court quashed the seizure memo dated 14.08.2020, finding it unsustainable due to procedural deficiencies and non-compliance with statutory requirements. The writ petition (CWJC No. 7682 of 2020) was allowed, and pending applications were disposed of. Other related cases were directed to be de-linked and relisted for a later date.