2020 (1) TMI 113 - HC - Customs

Import of prohibited goods - Betel nuts - Confiscation - Interpretation of statute - meaning of the expression reason to believe and liable to confiscation under Section 110 of the Customs Act, 1962 - inter-state transfer - belief of the officer seizing the goods of forming an opinion in terms of the statutory expression reason to believe of such goods being liable to confiscation - Record reveals that 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 goods as per invoice (page 25-29) originated from the State of Assam on 1st of February, 2019. They were to be transported to the State of Karnataka. Both the places are in India not in any specified/notified area under the Act but are the National Highways in the State of Bihar. On 6th of February, 2019, Inspector/S.O., Customs (P), Forbesganj seized the said goods and the vehicle by assigning the reasons reproduced supra. After drawing samples, vide punchnama dated 6th of February, 2019, Annexure-A to the counter affidavit, they were sent to the laboratory for analysis - The customs authorities sent the samples for analysis to two laboratories. The Expert as per the report used the word suspect . Based thereupon, petitioners request for release of the seized goods was rejected. The Single Judge have heavily relied upon the contents of the affidavit filed by the Revenue, wherein it stood averred that the Areca Nuts of Indian origin are normally oval in shape and it is this which made the Customs Officer forms a reasonable belief that cut dried Areca were illegally smuggled into India. As we have already observed that supplementation of reasons is impermissible in law, more so in the attending facts - the learned Singe Judge to have been swayed with five notifications/circulars/memorandum placed on record by the Revenue. And not having gone into the relevancy of each one of them, without assigning any reason with regard thereto, germane to the issue, by presuming the same to be ipso facto applicable, the learned Judge concluded the Department to have lawfully seized the goods and the vehicle. 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 - the writ petitioners prayer of quashing the seizure memo dated 6th of February, 2019, as also all consequential actions seizing the goods and vehicle in question are allowed, for such action to be without any basis having no mandate of law. Petition allowed.

Issues Involved:
1. Meaning 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 (betel nuts) and the vehicle by the Customs authorities.
3. Applicability of various circulars and memoranda issued by the government in relation to the seizure.
4. Judicial consistency and the relevance of past judgments in similar cases.

Issue-wise Detailed Analysis:

1. Meaning of the expressions "reason to believe" and "liable to confiscation" under Section 110 of the Customs Act, 1962:
The judgment clarifies that the expressions "reason to believe" and "liable to confiscation" are not defined in Section 2 of the Customs Act. The court explains that the belief of the officer seizing the goods must be based on objective material and not on mere suspicion. The officer's belief must be that of an honest and reasonable person based upon reasonable grounds, as established in various precedents like Tata Chemicals Limited v. Commissioner of Customs (Preventive), Jamnagar and Assistant Collector of Customs v. Charan Das Malhotra. The court emphasizes that public orders must be construed objectively with reference to the language used in the order itself.

2. Legality of the seizure of goods and the vehicle by the Customs authorities:
The court found that the goods (betel nuts) were not seized from any notified customs zone or area and that there was no material indicating that the goods had passed through or originated from outside India. The customs authorities' belief that the goods were of foreign origin was based on visual inspection and suspicion, which is insufficient to form a "reason to believe." The court held that the seizure notice was without any basis and quashed it, directing the authorities to release the goods and the vehicle.

3. Applicability of various circulars and memoranda issued by the government in relation to the seizure:
The court analyzed several circulars and memoranda cited by the Revenue, including Circular No.3 of 2011, Circular No.35 of 2017, Circular dated 20th November 2018, Circular No.30 of 2017, and Memorandum dated 4th June 2019. The court found that these circulars were either irrelevant to the issue at hand or did not confer any jurisdiction upon the Customs Officer under the Customs Act. The court emphasized that mere suspicion or general practice in trade cannot be grounds for seizure without concrete evidence.

4. Judicial consistency and the relevance of past judgments in similar cases:
The court criticized the learned Single Judge for distinguishing the judgment in M/s Ayesha Exports v. Union of India, where similar facts led to the release of goods. The court highlighted the importance of maintaining judicial consistency and found that the learned Single Judge had misconstrued the material on record. The court referred to past judgments, including Bawa Gopal Das Bedi & Sons v. Union of India and others, where similar proceedings were quashed in writ jurisdiction.

Conclusion:
The court set aside the judgment of the learned Single Judge and allowed the writ petitioners' prayer to quash the seizure memo and all consequential actions. The court directed the authorities to forthwith release the goods and the vehicle, emphasizing that the seizure was without any legal basis. The appeal was allowed, and no order as to costs was made.

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