9911796707
TMI Blog2001 (10) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... export of the goods and is a merchant exporter. The petitioner's import and export code number is 099803387. The petitioner procures export orders from various countries including Libya. The petitioner negotiated with Aziz and Company, Libya for export of electroplating plant for Cadmium, Zinc, Nickel, Hardchrome and Aluminium anodisation (turn key) and etc. After negotiating with the foreign buyer, the importer had placed order dated 25-2-2001 for purchase of above plant for a CIF value of US $ 50,000. As per the agreement with the foreign buyer, the goods are to be shipped to Libya in the month of June, 2001 and the foreign buyer had agreed to make 100% payment in advance. The petitioner after receiving the purchase order, procured the goods locally and goods were carted to Inland Container Depot (ICD), Sanatnagar, Hyderabad for the purpose of export. The goods are sought to be exported under shipping bill for export of duty-free goods. Therefore, the petitioner filed free shipping bill as required under Section 50 of the Customs Act, 1962 (for short, the Act) in the office of the Deputy Commissioner of Customs, Inland Container Depot, Sanathnagar, Hyderabad, the 2nd respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner making one more representation dated 30-6-2001 to the 2nd respondent bringing to his notice the delay in clearing the consignment for export and he sought to know the reasons as to why goods were being held up. The 2nd respondent by his letter C. No. 3500/22-6-2001, dated 30-6-2001 but signed on 2-7-2001 informed the petitioner that the 1st respondent had directed him to detain the consignment of the petitioner, but he refused to disclose the reasons as to why the consignment was detained. There afterwards, the petitioner approached the 1st respondent and gave a representation dated 3-7-2001 seeking reasons for detention of the goods. No response came from the 1st respondent. The petitioner after 3-7-2001 almost everyday went to the offices of the respondents 1 and 2 asking them to give clearance for export of the goods and to give reasons for detaining the consignment and since no reasons were given by respondents 1 and 2, except stating that they are looking into the matter and goods will be cleared shortly. In those circumstances, the petitioner personally met the Commissioner of Customs on 20-7-2001 and submitted a representation to him and the Commissioner prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and he was forced to sign on some papers. He was not allowed to telephone/contact his office or his superiors. He was also not allowed to read papers and he has no idea as to what do the papers contain. The DRI officers threatened/abused and used unparliamentary/derogatory language against Mr. C.T. Sudhakar and the petitioner's concern. When the matter stood thus, the petitioner received the seizure panchanama dated 20-8-2001 by speed post on 23-8-2001. On receipt of the said panchanama, the petitioner came to know about the seizure of the goods. The petitioner so alleging has filed W.P. No. 18461 of 2001 assailing the validity and legality of the seizure effected vide panchanama, dated 20-8-2001. The prayer in the writ petition reads - "....it is prayed that the Hon'ble Court may be pleased to issue a writ of Mandamus or other appropriate writ or order - (1) declaring the seizure effected vide panchanama, dated 20-8-2001 as illegal, arbitrary, without jurisdiction, void ab initio and violative of petitioner's fundamental rights guaranteed under Arts. 14, 19(1)(g), 21 and 300A of the Constitution. (2) To direct the respondents to allow the exports of goods cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessories appear to be restricted in terms of entry 3D002 of SCOMET (equipment related to P3, P4 facilities such as protective suits and class III safety cabinets) - Appendix 3 of ITC (HS) Classification. (d) Filtering units with pump and frame also appear to be restricted as per the entry 3D001 of SCOMET (pumps made from nickel or alloy etc) - Appendix 3 of ITC (HS) Classification. (e) Catalysts - export of prepared catalysts to Libya is prohibited under Appendix 37 of the EXIM policy. 5.In the counter affidavit filed in W.P. No. 18461 of 2001, it is stated that the consignment lying at the Inland Container Depot, Hyderabad, belonging to the petitioner was seized under the panchanama, dated 20-8-2001, on a reasonable belief that it contains some items which are prohibited or restricted for export as they are covered under 'SCOMET' i.e., Export of Special Chemicals, Organisms, Materials, Equipment and Technologies as notified under the Notification No. 5 (Re-2000) 1997-2000, dated 31-3-2001 and hence they appear to be liable for confiscation under the Customs Act, 1962 read with Import-Export Policy 1997-2002. It is further stated that samples of some chemicals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t satisfaction itself would not be a justification to seize and detain the other goods. The learned Counsel would point out that the goods sought to be exported to Libya consist of as many as 114 items and each of those goods is separately packed, valued and shown in the invoice and, therefore, there could not be any justification for the respondents not to clear the consignment for export except certain goods mentioned in the counter affidavit filed in W.P. No. 18461 of 2001. Lastly, the learned counsel would conclude that there is inordinate delay in conducting and concluding the enquiry. 7.On the other hand, Sri C.V. Ramulu, learned Senior Standing Counsel for Central Government would point out that the sole Proprietor of the petitioner-Proprietary concern Mr. B.J. Jawahar, is not available in India for examination and is still in Libya; that the intelligence report received from the Ministry of Foreign Affairs relates to the security and defence of the country; that several items sought to be exported to Libya are prohibited goods and even other goods are also accessory goods in production of defence materials. The learned Senior Standing Counsel would maintain that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer." 9.The condition precedent to invoke the power of seizure under sub-section (1) of Section 110 is that the appropriate officer should have reason to believe that goods sought to be seized are liable to confiscation under the provisions of the Act. The phrase "reason to believe" occurring in sub-section (1) of Section 110 of the Act fell for consideration in large number of cases. In Narayanappa and Others v. Commissioner of Income-tax, Bangalore, AIR 1967 SC 523 the Supreme Court dealing with the power of Income-tax Officer in initiating proceedings under Section 34(1)(a) of the Income-tax, Act, 1922, and interpreting the phrase "reason to believe" occurring in the section opined that formation of the belief is a condition precedent to exercise the power. At the same time, the Supreme Court was pleased to observe - "……but the legal position is that if there are in fact some reasonable grounds for the Income-tax officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of under-assessment, that would be sufficient to give jurisdiction to the Income-tax officer to issue the notice under Section 34. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The standard of reasonableness to which the administrative body is required to conform may range from the courts' own opinion of what is reasonable to the criterion of what a reasonable body might have decided. The courts will find out whether conditions precedent to the formation of the opinion have a factual basis." 10.In Rohtas Industries v. S.D. Agarwal and Others, AIR 1969 SC 707, an order under Section 237(b)(i) and (ii) of the Companies Act for investigation of the affairs of the company was challenged on the ground that though the opinion of the Government is subjective, the existence of the circumstances is a condition precedent to the formation of the opinion. It was contended that the Court was not precluded from going behind the recitals of the existence of such circumstances in the order, but could determine whether the circumstances did in fact exist. The Supreme Court held that if the opinion of an administrative agency is the condition precedent to the exercise of the power, the relevant matter is the opinion of the agency and not the grounds on which the opinion is founded. If it is established that there were no materials at all upon which the authority could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether they are covered under the SCOMET is yet to be finally determined and decided after conclusion of the enquiry and investigation under the Act. At the time of hearing, the learned Senior Standing Counsel for Government of India would tell us that samples from certain seized goods could not be drawn for examination, because they are hazardous and samples could be drawn only by expert technical persons and such experts from Defence Ministry, New Delhi are likely to visit Hyderabad within a week or two to take up that job. According to the DRI, the material, collected by them including the samples would show that some of the goods sought to be exported to Libya are prohibited/restricted for export. Therefore, it cannot be said that in forming the belief that the seized good are liable to confiscation under the Act, the Deputy Director, DRI, had no relevant materials before him. There existed relevant materials on the basis of which he formed the opinion to seize the goods by virtue of the power granted under sub-section (1) of Section 110 of the Act and, therefore, it cannot be said that the belief formed by the Deputy Director, DRI, is based on extraneous considerations or irrel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Counsel for the parties for a considerable time and perusing the entire records placed before us, we are satisfied that the belief formed by the Deputy Director, DRI in seizing the goods is bona fide and is intended to subserve the statutory objectives for which the power is granted to him under sub-section (1) of Section 110 of the Act. However, the DRI authorities cannot take their own sweet time to conduct and complete the enquiry. It is expected of them to conduct and complete the enquiry with diligence and promptitude. The learned Senior Standing Counsel for Government of India, drawing our attention to sub-section (2) of Section 110 of the Act, would maintain that the Department has time to conduct and complete the enquiry within a period of six months from the date of seizure of the goods and that period is not yet expired in the instant case. The learned Senior Standing Counsel would submit that since the goods involved are hazardous in nature, samples from them could be drawn only by experts in the field and a considerable cost and since the said course of action requires administrative sanction at a higher level, considerable time is required for completing the inve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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