2019 (12) TMI 1027 - HC - Customs

Interpretation of statute - meaning of the expression reason to believe and liable to confiscation under Section 110 of the Customs Act, 1962 - import of prohibited goods - betel nuts - cut dried Areca Nuts (dark pink in colour) - petitioners application for release of the goods stood rejected for the reason that the prescribed authority had got the seized sample of the product tested from the laboratories which was classified as unsafe food. HELD THAT - The consignor and the consignee are recorded and are identified. The goods are not seized at any notified custom zone or area. Save and except for what is recorded in the seizure memo, there is no other material available on record. The learned Additional Solicitor General has tried to supplement the reasons for formation of reason to believe , which also are on mere suspicion, through the affidavit of the authority - A general practice in trade cannot be, ipso facto, applied and adopted to the instant case, for unless it is shown that the act and the conduct of the petitioner makes him to be a part and parcel of the trading community, based in the area or dealing with the illegal activities of such like nature. There is no track record of past history of the instant petitioners. While dealing with the expression reason to believe in relation to another confiscatory statute, i.e. Narcotic Drugs and Psychotropic Substances Act, 1985, S. B. Sinha J., in Aslam Mohammad Merchant Versus Competent Authority and others, (2008) 14 SCC 186 2008 (7) TMI 852 - SUPREME COURT , opined that proper application of mind on the part of the competent authority is imperative prior to issuance of a show cause notice, intending to confiscate the goods. Also there has to be some material leading to formation of some opinion or reason to believe for such action cannot be taken on mere ipse dixit and roving enquiry is not contemplated in law - In the Bar Council of Maharashtra versus M. V. Dabholkar and others, (1976) 2 SCC 291, Krishna Iyer J., has observed that reason to believe cannot be converted into a formalised procedural roadblock, it being essentially a barrier against frivolous enquiries. We find no reason to take a contrary view, more so, when the goods in question are yet raw, as an unfinished product, meant to be transported to another State for it to be processed and packaged, whereafter, only, eventually sold in an open market and if the goods are actually unsafe food then it is not the provision of the Customs Act which can be invoked, for not falling within its purview. Petition allowed.

Issues Involved:

1. Interpretation of the expressions "reason to believe" and "liable to confiscation" under Section 110 of the Customs Act, 1962.
2. Legality of the seizure of goods based on suspicion and without substantial evidence.
3. Validity of the actions taken by the Customs Authorities under various circulars and notifications.
4. Applicability of Food Safety and Standards Regulations to the seized goods.
5. Judicial consistency and adherence to precedents.

Detailed Analysis:

1. Interpretation of "Reason to Believe" and "Liable to Confiscation":

The judgment primarily addresses the meaning of "reason to believe" and "liable to confiscation" under Section 110 of the Customs Act, 1962. It is noted that Section 2 of the Act does not define these terms. The court references multiple precedents, including Tata Chemicals Limited vs. Commissioner of Customs, which clarify that "reason to believe" is not a subjective satisfaction but must be based on reasonable grounds and honest belief. The court emphasizes that such belief must be based on objective material and not mere suspicion or extraneous factors.

2. Legality of the Seizure of Goods:

The court scrutinizes the seizure of betel nuts weighing 15,865 Kgs, valued at ?45,14,862/-, by the Customs Inspector. The seizure was based on the suspicion that the goods were of foreign origin and thus liable to confiscation. However, the court finds no substantial evidence indicating that the goods or the vehicle had passed through or originated outside India. The documents provided by the owner showed the consignor and consignee were within India, and the vehicle traveled through Indian states. The court concludes that the seizure was based on mere suspicion without any material evidence, thus failing to meet the statutory requirement of "reason to believe."

3. Validity of Actions Taken by Customs Authorities:

The court examines the actions taken by the Customs Authorities, including the rejection of the petitioners' application for the release of goods based on laboratory reports classifying the goods as unsafe food. The court finds that the authorities relied on suspicion rather than concrete evidence. Additionally, the court highlights that the reasons for forming the belief of illegality were supplemented by affidavits, which is impermissible as per the precedent set in Mohinder Singh Gill vs. The Chief Election Commissioner.

4. Applicability of Food Safety and Standards Regulations:

The judgment addresses the applicability of various circulars and regulations, including those under the Food Safety and Standards Act, 2006. The court finds that these regulations are not relevant to the case at hand, as they pertain to imported goods and not goods transported within India. The court also notes that the seized goods were raw and unfinished, meant for further processing, and thus not subject to the provisions invoked by the Customs Authorities.

5. Judicial Consistency and Adherence to Precedents:

The court criticizes the learned Single Judge for distinguishing the present case from a similar precedent (M/s Ayesha Exports vs. The Union of India) without maintaining judicial consistency. The court emphasizes the importance of adhering to established precedents to ensure consistency in judicial decisions. The court finds that the Single Judge misconstrued the material on record and failed to appreciate the facts and legal principles correctly.

Conclusion:

The court sets aside the judgment of the learned Single Judge, quashes the seizure memo dated 6th February 2019, and all consequential actions taken by the Customs Authorities. The court directs the authorities to release the seized goods forthwith, concluding that the actions taken were without any legal basis and did not adhere to the statutory requirements. The appeal is allowed with no order as to costs.

← Previous Next →