9911796707
TMI Blog2016 (4) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... as M/s Radhika Jewellery with Registration No. 6192 of Municipal Council at Imphal. It is in the name of the wife of the petitioner Smjti RK Sonia Devi, but the business is mainly managed by the petitioner with the help of his wife, relatives and employees. The Head Office is situated at Sagolband Bijoy Govinda near NRL Pump, Imphal-795001 and the Branch Office is at Paona Bazar, Governor Road, Imphal. The business of the petitioner, inter alia, includes sale of gold, jewellery and gold coins. The petitioner purchases gold from the bonafide sources with valid documents. Besides, the petitioner is also engaged in side business of granites, tiles and marbles. 3. The Commissioner of Customs (Preventive), NE Region, Shillong (respondent No. 1) has the jurisdiction over the entire North Eastern Region under the Customs Act, 1962 and the rules made thereunder. The Superintendent (Preventive) of Customs Shillong (Respondent No.2) is an Officer subordinate to respondent No. 1. The Inspector of Customs (Headquarters) Preventive Unit, Shillong , (respondent No. 3) is an Officer subordinate to respondent Nos. 1 and 2. Respondents No. 2 and 3, both, have some delegated powers under Section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 701.320 grams 18,55,000.00 18. 46987/13-14 dated11.07.2013 37.740 grams 1,00,000.00 19. 47747/13-14 dated20.07.2013 671.640 grams 18,00,000.00 20. 51189/13-14 dated13.12.2013 101.530 grams 2,99,000.00 21. 522191/13-14dated 17.01.2014 115.940 grams 3,38,547.00 22. 02080/14-15 dated28.07.2014 1960.780 grams 55,00,000.00 23. 02084/14-15 dated28.07.2014 2495.540 grams 70,00,000.00 24. 02083/14-15 dated28.07.2014 1781.900 grams 50,00,000.00 Total 17.340 Kg 13,05,33,419.00 5. The petitioner states that the "Ningol Chak Kouba" festival in Manipur is a very important festival and the people on that occasion buy huge amount of gold according to their financial status. The said festival fell on 28th October, 2014. The petitioner decided to get "Hallmark gold coins" made in Kolkata before the start of the festival. The petitioner, accordingly, during the course of his usual business transactions dispatched 26 (twenty six) pieces of gold bar, with gross weight 4350 grams and average purity between 99.5 to 99.9 through Smti T Santibala Devi and Smti RK Rojita Devi. The said Smti T Santibala Devi and Smti RK Rjita Devi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dover the case to the department as the accused persons seemed to have violated various provisions of the Customs Act and the rules framed thereunder. The said prayers of Customs authority was placed before the Chief Judicial Magistrate, Tinsukia. The CJM allowed the prayer of the Superintendent of Customs CPF, Tinsukia. In fact such a prayer had been made by the Inspector of Customs, Headquarters Preventive Unit, Shillong vide petition dated 27.08.2014. At about 6.00 PM on 27.08.2014, all the gold biscuits, mobiles, other belongings along with relevant documents (seizure list, arrest report/memo etc) and four accused persons were handed over to the Customs Authority (respondent No.3) by Sub Inspector of Railway Protection Force in the Customs Office, Tinsukia. However, all the four accused persons were later released on bail by the Chief Judicial Magistrate, Tinsukia, District. 7. On 29.08.2014, the Commissioner of Customs, Shillong, issued search warrant No. 04/14-15 and pursuant thereto, the Customs Officers searched the residential premises of the petitioner. However, they could not find any material except a few account records which were seized by them. 8. Upon handing over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d gold biscuits was made at Dimapur Railway Station by Railway Protection Force on 26.08.2014 at about 0330-0345 hours and the same were formally seized by respondent No. 3 at Tinsukia CPF Office on 27.08.2014 on being handed over by Sub Inspector, Railway Protection Force. The impugned seizure memo/inventory of goods seized, on the face of it, discloses that the gold biscuits were rectangular in shape and size, and bore no marking. The seizure memo does not even disclose the purity of gold. Moreover, the seizure memo also discloses that three duplicate bills issued by Magna Project Pvt. Ltd Kolkata were also seized, which according to the petitioner, shows that the gold items were validly purchased from Magna Project Pvt. Ltd. Kolkata and were carried under the transit challan dated 25.08.2014. Thus, there was no ground for the Customs Inspector to come to the conclusion that the seized gold biscuits are believed to be gold of foreign origin and are illegally imported into India. The action of the Customs Authority itself speaks that the power under Section 110(1) of the Customs Act, 1962 has been exercised for extraneous or irrelevant considerations or reasons. According to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use if such an interpretation was given, then no citizen would be safe and property of any person could be seized. "Reason to believe" must exist prior to seizure and it is not a thing that is acquired after the seizure i.e. when the explanation of the person is not found to be correct. Such views have been taken by the Courts in (i) Angou Golmei vs. Smti Vizovolie Chakhsang and another reported in 1994(1)PLJR 800; (ii) Bawa Gopal Das Bedi & Sons and others vs. Union of India and others, reported in AIR 1982, Patna 152; (iii) Yogendra Prasad vs. The Union of India, 2004(4)PLJR 675 and (iv) RG Holdings Pvt. Ltd. Vs. State of Bihar, reported in 2008(2)PLJR 538). 13. The petitioner further states that the power to seize the goods under Section 110(1) of the Customs act, 1962 by the Customs Authority is for the purpose of the enforcement of the Act. The said power cannot be used in an indiscriminate manner or in any manner a Customs Authority would like to use. In this context, reference has been made to the decision of the Apex Court in the case of the Collector (District Magistrate) Allahabad & others vs. Rajaram Jaiswal, reported in AIR 1985 SC 1622, wherein their Lordships in para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Customs Authority, therefore, onus to prove that the gold in question is smuggled is on the seizing officer and in such an eventuality the provisions of Section 123 of Customs Act, 1962 would not be attracted. Besides, the petitioner, has otherwise, discharged the burden of proving that the seized gold biscuits are not smuggled gold and are also not illegally imported into India, by producing the related invoices etc. In this context, the petitioner refers to and relies on the judgment of the Constitution Bench of the Hon ble Apex Court in the case of Gian Chand & others vs. State of Punjab, reported in 1983 (13) ELT 1365(SC). The Hon ble Court has held that if the goods are seized by the police and delivered to the Customs Authorities under Section 180 of the Sea Customs Act, 1978, it is not seizure by the Customs within the meaning of Section 178A of the Sea Customs Act, 1878. This is because when the police officer seized the goods under some other law, such as Code of Criminal procedure, the accused lost possession of the goods, which then vested in the police and when that possession was transferred to Customs Authorities under Section 110, there was no fresh seizure u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gold sold under the three Tax Invoices of M/s Magna Projects Pvt. Ltd., Kolkata, could be established, nor could the same be explained by the carriers. According to respondents, when any commercial quantity of goods/gold moves from one State to another State, proper declarations/documentation under the Sales Tax laws of the States passing through, is required to be followed, till it reaches the destination of a State. One Mr. RK Templer arrested by the Railway Protection Force in this case, was found to be the same person who was earlier arrested for smuggling of gold from Myanmar through Moreh to Imphal and prosecuted vide Case No. 10 / CL / IMP / CUS / DPF/DCI/2014-15 dated 20.06.2014. In the earlier case dated 20.06.2014, this RK Templer had given his name as RK Swami. Thus a serious doubt was raised in the mind of officers that the same person with different name is the carrier of this huge consignment of gold. On being questioned the carriers, however, stated that the said gold belonged to Rajkumar Angangbi Singh, Imphal and he will proceed to Kolkata by Flight and receive the gold from them at Howrah, Kolkata. There was a suspicion as to why one will take the risk of sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y explaining circumstances from which a reasonable man, acting prudently, may infer that in all probabilities the gold items were smuggled goods. The officer has sufficient materials before him to entertain a reasonable belief that the gold seized was smuggled from a foreign country. Further another judgment of Hon ble the Apex Court in State of Gujarat v. Mohanlal, reported in AIR 1987(SC)1321, has also been referred to explain the reasonable belief as required under Section 123 of the Customs Act. In order to argue that the Court will not sit in appeal on the question of reasonable belief, the Court has to accept the Officers belief regardless of fact whether the Court, of its own, might not have entertained the same belief. 19. In rejoinder affidavit sworn by the petitioner Shri RK Anganbi Singh, he has tried to clarify the position that there were no grounds of reasonable belief as claimed to have been arrived at by the Department under Section 110(1) of the Customs Act, 1962. According to the petitioner, the reasonable belief was said to be based on some reasons and circumstances as detailed in the rejoinder affidavit which are reproduced in verbatim as under: "(a) The large ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received the gold and documents from the RPF. The gold was accompanied by the purchase documents issued by M/s Magna Projects Pvt. Ltd, Kolkata. Thus, it was not justified for the Customs Authorities to hold a view that the gold was being carried without any covering documents. It is also clarified by the petitioner that the belief of Customs Authorities that the gold with 100% purity is generally soft and is not suitable for coinage is also not correct. The gold with utmost purity is usually mixed with an alloy to make a gold coin or they are mixed with other metals to make them more durable. Thus, the gold bars which were initially purchased by the petitioner from M/s Magna Projects Pvt. Ltd, Kolkata were melted by mixing other substances so as to make the same suitable for making gold coins. That is why the gold in question did not retain its original shape, size and weight as it was at the time of purchase, and that is the precise reason for having difference in description of the gold seized and the gold purchased, and on that basis, it cannot be said to be a smuggled item and thus, liable to confiscation. The gold was seized by the RPF at Dimapur. The RPF had no expert knowl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the persons from whom the gold was seized by the RPF, there could and should not have been any ground to believe that the gold was smuggled and that the said RK Templer Singh was accomplice in this case, rather an accomplice is one who actively participates in the commission of the crime. The petitioner has asserted that, in the instant case, the gold was being transported in a bonafide manner from one place to another alongwith supporting documents by two other persons. Thus, there was no question of Shri R.K Templer Singh being an active participant in the commission of any offence. The case referred to by the Customs Department against Shri R.K.Templer Singh is subjudice and that cannot be a ground to justify the statement that the goods seized are smuggled goods. It is necessary that the Customs Department should have a reasonable belief as a pre-requisite for seizure of gold under Section 110(1) of the Customs Act, 1962. The affidavit of the Customs Department is nothing but a post-seizure analysis and is also hypothetical in nature. It cannot constitute a reason or circumstance to formulate a reasonable belief under Section 110(1) of the Customs Act, 1962. Subsequent deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eizure under Section 110 of the Customs Act, 1962. The petitioner has also placed reliance on a judgment of Hon ble the Supreme Court in this regard rendered in the case of State of Gujarat v. Mohanlal Porwal, reported in 1987 (29) ELT 483 (SC). The Supreme Court has held as under: "The reasonable belief should not be based on mere presumption and there must be a prima facie material. Without a properly formed reasonable belief it becomes a fishing expedition." 21. Thus, the intelligence report of spur in smuggling activities cannot be a prima facie material to hold that the gold was smuggled. Moreover, the report of smuggling cannot be used as a tool by the Customs officers to interfere with the genuine business transaction supported by purchase documents and challan. It is widely known that there is huge quantity of illicit import of gold into India. Based on intelligence report that there was spur in gold smuggling, the Customs authorities had no right or statutory power to obstruct bonafide trading of gold. The petitioner has also placed reliance on another judgment in the case of Union of India v. Kasambhai Umerbhai Kureshi, 1979 Criminal Law Journal 1173, rendered by the Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 110(1) of the Customs Act, 1962 without having any reasons to believe that the items that were seized were gold and the same were smuggled and thus liable to confiscation under the Customs Act, 1962. The Customs Inspector, Shillong, while making seizure inventory, recorded "yellow rectangular metal biscuits believed to be gold of foreign origin" and he also recorded that the gold bore no markings. Thus, the Customs Inspector, at the time of seizure was not even certain that the items seized were gold, and that is why, in his seizure, he has stated, "yellow rectangular metal biscuits." It is submitted that the respondents only entertained suspicion instead of reasonable belief to exercise power of seizure under Section 110 of the Customs Act, 1962. The petitioner has also taken objection to defamatory statement made against him that he was a big time smuggler, an accusation which according to him is not at all supported by material facts. Rather the Customs Department has exceeded its jurisdiction in making personal allegations against the petitioner who claims to be a law abiding and respectable citizen of the country. He being a genuine businessman also pays a substantial am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the Commissioner of Customs (Preventive), North Eastern Region, Shillong, filed a detailed affidavit and tried to clarify and reiterate the position further. The affidavit reads as: "1.That I am conversant with the fact and circumstances of the case based on records. 2. That on 26.8.2014 at about 0330-0345 hrs, the officials of Railway Protection Force (RPF) Dimapur intercepted four persons namely, Shri RK Templer Singh, Male, aged 45 years, S/o (L) Ketuki Singh, Village-Sagolband, Bijoy Govinda Leikai, P.O/P.S Imphal West, Dist: Imphal West, Manipur. Shri RK Semson Singh, aged 22 years, S/o RK Boysama Singh, Village-Sagolband, Bijoy Govinda Leikai, PO/PS Imphal West Dist: Imphal West, Manipur. Smti T Santibala Devi, aged 26 years, W/o RK Semson Singh, Village- Sagolband, Bijoy Govinda Leikai, PO/PS Imphal West, Dist: Imphal West, Manipur. Smti RK Rojita Devi, aged 32 years, W/o RK Ranjit Singh, Village-Sagolband, Bijoy Govinda Leikai, PO/PS Imphal West, Dist: Imphal West, Manipur from 15960 DN Kamrup Express (destined to Howrah from Dibrugardh), standing/stationed at Dimapur Railway Station. The four passengers had reservation bearing PNR No. A6133126565 dated 26.8.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Chief Judicial Magistrate, Tinsukia, Assam and the prayer of the Superintendent Customs, CPF Tinsukia was allowed. 5. That in Customs CPF (Custom Preventive Force) Office, Tinsukia all the Gold Biscuits, mobiles phones, other belongings along with the relevant documents (seizure list, arrest report, personal search list, arrest memo, statements etc) along with the 4 accused were handed over to the Customs by Shri PR Meena, Sub- Inspector, Railway Protection Force, Dimapur at 6 pm on 27.8.2014. Then, in the presence of the witnesses, the officers on a reasonable belief that the recovered Gold Biscuits were without any supportive documents and were smuggled from Myanmar, seized the said 26 gold biscuits. Then, a registered goldsmith was called in the Customs CPF Office, Tinsukia by the officers and the weighment of the seized gold biscuits were taken with the help of digital weighing scale and are serially numbered as 1 to 26. The weights of the Gold bars are (1) 166.82 gm, (2) 166.62 gm, (3) 167.02 gm, (4) 167.00 gm, (5) 166.55 gm, (6) 166.74 gm, (7) 166.58 gm, (8) 166.65 gm, (9) 166.77 gm, (10) 166.82 gm, (11) 166.69 gm, (12) 167.04 gm, (13) 166.57 gm, (14) 166.66 gm, (15) 166 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be taken strictly: a) Strong room storing valuables such as Gold, Silver, Dimamonds,Gems & Jewellery and precious/semi-precious stones, should invariably have a double lock system, b) Two keys for operating the Strong Room should be entrusted to two separate officers; one of the in-charge of the Strong Room or godown and the other to a superior/supervisory officer of gazette rank; In the instant case, the seized goods has been kept in the strong room having double lock system and one of the key is with the Assistant Commissioner and another key with the Superintendent 9Disposal). The Strong Room can be accessed only when both the keys are inserted. Moreover, as per clause (viii) of the said manual instruction, no officer, including custodian-in charge of the Strong Room/godown should be allowed to open the strong room/godown on any holiday (including Saturday/Sunday) without a prior specific written permission of the Additional Commissioner/Commissioner concerned. Hence, it is stated that the seized goods are in proper custody of the Commissioner on behalf of President of India. (Copy of disposal manual is annexed as Annexure A). 9. That the said seized gold along with ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 5 - 995.3 No.6 - 995.0 No. 7 -995.3 048606 148.14 045607 801.86 2 38757/ 13-14dt 11.06. 13 Goldbar fineness 99.5 3200 SO- B37928 1000.00 SO- B37928 1000.00 SO- B37928 1000.00 SO- B37928 200.00 3 47709/ 13-14dtd 19.07. 13 Goldbar fineness 99.5 1172.35 All the recovered 26 gold biscuits weighed in between 166.5 gm to 167.05 gm No. 8 - 995.3 No. 9 - 996.0 No. 10 - 996.1 No. 11 - 995.9 No. 12 - 995.6 No. 13 - 996.9 No. 14 - 995.5 No. 15 - 995.3 No. 16 - 996.1 No. 17 - 996.2 No. 18 - 996.1 No. 19 - 995.7 No. 20 - 995.3 No. 21 - 995.2 No. 22 - 995.5 No. 23 - 996.1 No. 24 - 995.8 No. 25 - 995.1 No. 26 - 996.5 055605 172.35 055606 1000.00 Goldbar fineness 99.5 1000.00 L-06976 1000.00 Goldbar fineness 99.5 801.63 SO-B45576 801.63 Total 7123.98 4334.79 It is clearly evident from the above that gold biscuits physically recovered from the carriers do not match with the description written in the recovered invoices. 2. Further, the assay report of the seized gold furnished by the Government of India Mint, Kolkata has shown higher purity, then what is mentioned in the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encing from 1st April 2013 to 17th April 2014 he purchased a huge quantity of gold bars as entered into sales invoices with dates and numbers. He has also submitted that the "Ningol Chak Kouba festival" is a very important festival in the State of Manipur and the people over there spend huge amount in purchasing gold according to their financial status. That festival was being celebrated on 28th October, 2014. Thus, the petitioner being the owner of a famous jewellery shop at Imphal decided to get "Hallmark gold coins" made in Kolkata before the start of the festival. The petitioner, accordingly, during the course of his usual business transactions dispatched 26 (twenty six) pieces of gold bar, with gross weight 4350 grams and purity average 99.5 to 99.9 through Smti T Santibala Devi and Smti RK Rojita Devi. The said Smti T Santibala Devi and Smti RK Rjita Devi are the wives of the cousin brothers of the petitioner namely Shri RK Semsong Singh and RK Ranjit Singh respectively, who, also accompanied the two ladies. They decided to travel by bus from Imphal to Dimapur on 25.08.2014 and then by 15960 DN Kamrup Express Train from Dimapur to Howrah on 26.08.2014. The reservation and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms that they did not find any mention about the transit challan dated 25.08.2014 issued by the petitioner to the carriers of the gold. Thereafter, the petitioner was summoned by the Superintendent of Customs under Section 108 of the Customs Act, 1962 to appear before him on 09.09.2014. The petitioner thus appeared before the authority at Imphal on the said date 09.09.2014 where respondent No. 3 Customs Inspector had also gone from Shillong. He recorded the statement of the petitioner at 1600 hours on 09.09.2014, at 1030 hours, on 11.09.2014 and also on 12.09.2014. However, according to the petitioner, the interrogation could not reveal any incriminating information. The petitioner has also claimed to have produced the documents required in support of the possession and ownership of 26 gold biscuits, and explained the circumstances whereunder the said gold biscuits had been purchased and sent through the carriers. 27. On the other hand, the Department of Customs while taking a divergent stand has contended that there was no marking or inscription on any of the gold bars/biscuits and the 3 Tax Invoices contained different descriptions than the actual shape; size and weight of the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : for, why one will take the risk of sending gold biscuits worth more than Rs. 1.22 crores through carriers by bus/train while he himself would travel by air to receive the gold only at the destination point. If the gold biscuits were legally acquired and possessed, then the owner should have carried the gold with him by air to Kolkata, after making a full declaration to the security/enforcement agencies. That apart, the Department was also alert having received prior information about the spurring in smuggling of gold mainly of Myanmars origin from across the border along Manipur. The seizure of the gold in this case was not an exception, but on earlier occasions also, such seizure of smuggled gold while being transported by air or train had been carried out. Moreover, the gold items in the instant case were being carried stealthily by the accused persons. Thus, according to Customs authorities, there was a reasonable belief that the instant goods have been smuggled into India without payment of customs duty in violation of Section 7(1)(c) and Section 11 of the Customs Act, 1962 and were liable for confiscation under Section 111 of the Act after seizure under Section 110 of the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders have been passed are good provisions and the orders passed are with jurisdiction, whether they be right or wrong on facts, there is really no question of the infraction of a fundamental right. If a particular decision is erroneous on facts or merits, the proper remedy is by way of an appeal." 30. This is not a case where despite existence of an efficacious alternative remedy in the nature of substantive right this Court has to exercise its discretionary jurisdiction. There is no violation of the principle of natural justice or a fundamental right or there is impugnment of vires of the Act by way of any challenge. Moreover, we also do not find that the proceedings of the case are pending at a stage which could foreclose the right to avail the alternative remedy of filing appeal. In the case like the one in hand, the petitioner cannot be allowed to take recourse to prerogative writ under Article 226 of the Constitution of India otherwise it may amount to enabling and empowering a litigant to defeat the provisions of the statute providing for certain conditions for filing the appeal, like limitation, payment of Court fee, or deposit of some amount for entertaining the appeal. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the party affected" (emphasis is ours). The Hon ble Court has also placed reliance on its earlier judgments in Rashid Ahmed v. Municipal Board, Kairana, reported in [1950] SCR 566 and Union of India v. VTR Varma, reported in [1958]SCR 499 and held as: "We see considerable force in the argument of the learned Solicitor-General. We must, however, point out that the rule that the party who applies for the issue of a high prerogative writ should, before he approaches the Court, have exhausted other remedies open to him under-the law, is not one which bars the jurisdiction of the High Court to entertain the petition or to deal with it, but is rather a rule which Courts have laid down for the exercise of their discretion. The law on this matter has been enunciated in several decisions of this Court but it is sufficient to refer to two cases: In Union of India v. TR Varma (1), Venkatarama Ayyar, J, speaking for the Court said: Ït is well-settled that when an alternative and equally efficacious remedy is open to a litigant, he should be required to pursue that remedy and not invoke the special jurisdiction of the High Court to issue a prerogative writ. It is true that the exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertiorari as there is with mandamus, that it will like only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute (Halsburys Laws of England, 3rd Ed., Vol. II, p. 130 and the cases cited there). The fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any. But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies. In the King v. Postmaster General Ex parte Carmichael (1928)1)K 291) a certiorari was issued although ..... X X X X Extracts X X X X X X X X Extracts X X X X
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