2019 (4) TMI 539 - HC - Customs

Re-import of Export goods - Floating Crane - liability of Customs Duty - seizure of goods - petitioners contend that, since the vessel is reimported after the export, Notification No.94/96 dated 16.12.1996 has applicability and the case is covered by Entry Sr. No.3 which does not call for payment of duty - Held that - In the instant matter, there is absolutely no material placed, nor is there any indication in the seizure memo as regards the reason to believe that the material collected or relied upon is available for taking such drastic action. It is true that sufficiency of the grounds is not a justiciable issue, however, there must exist a ground basically which needs to be reflected in the order. Judicial review is not against the decision as such, but against the decision making. The Court cannot dis-set each and every materials which has gone into decision making, and in the reported matter, exactly such approach was adopted. It is canvassed by the petitioners that there is no material before the officer for forming an opinion and the question is not being raised as regards adequacy of such material. The terms 'the reason to believe' appearing in section 110 does not mean the subjective satisfaction of the officer concerned. The officer has to act in a reasonable manner and the exercise of power shall not be arbitrary and the powers are liable to be used in accordance with the restraints imposed by law. Drawing parallel inference in the instant matter, it does appear that the proper officer has not indicated any reason to believe that the goods are liable to confiscation. It is not a matter of controversy that by application of Exemption Notification, no duty was levied and 'out of charge' order was issued two years back. Even otherwise, it was open for the respondent authorities to initiate proceedings under section 28 of the Customs Act, however, without taking the steps permissible in law, the extreme action of seizure of goods has been resorted to which appears to be high handed and arbitrary. The vessel has been cleared and 'out of charge' order has also been issued. As such, the issuance of order of seizure is bad in law. The contention that, it is a case of misrepresentation or fraud also does not deserve consideration. The vessel has been released after issuance of due permission. Even in case of mere non payment of duty, it cannot be treated and read as collusion or willful misrepresentation or suppression of facts. By no stretch of imagination, it can be contended in the instant matter that the petitioners have acted willfully with an intent to evade the duty or they are guilty of misstatement or suppression of facts - Also, it cannot be contended that the petitioners have misstated or suppressed the material facts. The extreme action taken by the respondents of the seizure of vessel after lapse of about two years from the date of issuance of 'out of charge' order is arbitrary. The petitioners are directed to keep alive the bank guarantee of ₹ 6 crore furnished to this Court up to 29.5.2019 - petition disposed off.

Issues Involved:
1. Legality of the seizure of the vessel FC Maria Laura.
2. Applicability of Exemption Notification No. 94/96-Customs dated 16.12.1996.
3. Compliance with the principles of natural justice.
4. Availability of alternative remedies under the Customs Act, 1962.
5. The proper officer's "reason to believe" for seizure under Section 110 of the Customs Act, 1962.

Detailed Analysis:

1. Legality of the Seizure of the Vessel FC Maria Laura:
The petitioners challenged the seizure of the vessel FC Maria Laura under a Seizure Memorandum dated 12.1.2018. They argued that the vessel was re-imported following proper procedures and was cleared for home consumption by the customs authorities. The seizure, executed two years after the vessel's re-importation, was deemed arbitrary, illegal, and unauthorized. The court found that the seizure memo did not record any "reason to believe" that the import of the vessel contravened the Customs Act, 1962. The court held that the drastic action of seizure was taken without proper justification and without observing the principles of natural justice.

2. Applicability of Exemption Notification No. 94/96-Customs dated 16.12.1996:
The petitioners contended that the vessel FC Maria Laura was covered under the Exemption Notification No. 94/96-Customs, which exempts re-imported goods from customs duty under certain conditions. The court agreed that the vessel was re-imported within three years of its exportation and that it was the same vessel without any re-manufacturing or reprocessing. The court concluded that the exemption notification was applicable, and no duty was payable on the re-importation of the vessel.

3. Compliance with the Principles of Natural Justice:
The petitioners argued that the seizure of the vessel was executed without issuing a show-cause notice, without providing an opportunity to file a reply, and without a hearing, violating the principles of natural justice. The court agreed, stating that the seizure was executed without extending a proper opportunity of hearing to the petitioners and without recording any reasons for the seizure, thus violating the principles of natural justice, fair play, and equity.

4. Availability of Alternative Remedies under the Customs Act, 1962:
The respondents contended that the petition was not maintainable as there were alternative remedies available under the Customs Act, 1962, which the petitioners had not availed. The court acknowledged that while alternative remedies were available, the issue at hand was the correctness of the extreme action of seizure, which warranted judicial review. The court emphasized that the proceedings for recovery of dues could continue, but the action of seizure was found to be unjustified.

5. The Proper Officer's "Reason to Believe" for Seizure under Section 110 of the Customs Act, 1962:
The court examined whether the proper officer had a "reason to believe" that the goods were liable for confiscation under Section 110 of the Customs Act, 1962. The court found that the seizure memo lacked any indication that the proper officer had reasonable grounds to believe that the goods were liable for confiscation. The court emphasized that the phrase "reason to believe" implies objective reasons supported by material evidence, not subjective satisfaction. The court concluded that the seizure was executed without proper grounds, making it arbitrary and high-handed.

Conclusion:
The court quashed the seizure memo dated 12.1.2018, declaring the seizure of the vessel FC Maria Laura as arbitrary and illegal. The court directed the petitioners to keep the bank guarantee of ?6 crore alive and allowed the respondents to continue proceedings for computation of duty and penalty, if any, in accordance with the law. The court emphasized that the order should not be construed as an impediment to the ongoing proceedings for recovery of dues.

← Previous Next →