2023 (7) TMI 776 - AT - Customs

Seeking provisional release of goods - Gold - Denial of access to the property - determination of actual ownership - exclusion of presumptive adjudicatory jurisdiction over the impugned goods - burden to prove u/s 123 of Customs Act 1962 - HELD THAT - A plain reading of the provision for inversion of onus makes it abundantly clear that there is only one stage of verification; the shifting of onus is specific to the person from whose possession the goods were seized as well as if there be any other person claiming ownership thereto and if these had been seized from possession of none on any claimant of ownership. The target of the trigger for invoking this presumption of smuggling and only in relation to goods specified in the provision or under the notifying authority of the Central Government is the person from whom it was seized and/or any claimant of ownership. It is a principle in jurisprudence that possession is nine-tenths of the law and (quite ironically in the same numeral) section 110 of Indian Evidence Act 1872 has transplanted that into law binding on customs authorities too. It is apparent that in circumstances of there being no other claimant and even if there was the failure to ensure strict fulfillment of section 123 of Customs Act 1962 cannot be overcome by adjudicatory restraint self-imposed or externally prescribed on withholding such process from the appellant. Consequently the appellant is either the principal noticee in proceedings initiated under section 124 of Customs Act 1962 till conclusion or the goods are not liable for confiscation and cannot be retained any longer the two contingencies cannot exist to the contrary simultaneously. Even if show cause notice for confiscation of the impugned goods is warranted by failure to discharge onus the owner must be placed on notice; it is not the claim in the impugned order that some other claimant has surfaced and nor does entertainment of that claim fall within adjudicatory jurisdiction under Customs Act 1962. Every deprivation of property by presumption of illegal possession is a deviation from the presumption in Indian Evidence Act 1962 supra and is empowered by specific law to the contrary; even these statutes exist to relieve possession in favour of the State and not to determine ownership - An investigation that is supposedly to culminate with establishing of facts to which known law is to be applied cannot be allowed to be perverted for the convenience of investigators to apply known law to contrived facts. Greater good may doubtlessly be a pure motive but such affirmation of motives doing violence to the law is an insinuating weed that will ultimately overwhelm rule of law. It is the law that should be applied to established facts and the established fact is that the owner even if only ostensible has not been issued with notice of intent to confiscate goods seized from their possession. Many moons beyond the stipulated period under section 110(2) of Customs Act 1962 for issue of such notice have come and gone without even a single notice proposing delayed issue of notice. Section 110(2) which is not contingent upon discretionary or even administrative exercise of any empowerment but absolute in intent must prevail in the absence of a constructive show cause notice recognizable by law. The seized goods are to be released forthwith to the appellant. Appeal disposed off.

Summary

Issues Involved:
1. Authority of Customs Officers for Seizure and Confiscation
2. Provisional Release and Unconditional Release of Seized Goods
3. Compliance with Section 110(2) of the Customs Act, 1962
4. Burden of Proof under Section 123 of the Customs Act, 1962

Summary:

Authority of Customs Officers for Seizure and Confiscation
The dispute involves the denial of access to property seized under the Customs Act, 1962. The appellant argued that the seizure did not occur at the frontiers, and the officers lacked the essential elements in the notice for adjudication to be credible enough to survive appellate scrutiny. The Tribunal noted that the seizure of 31.906 kg of gold and Rs. 73,23,400 in Indian currency by the Directorate of Revenue Intelligence (DRI) from the appellant's premises was not followed by proper show cause notices, which is a significant procedural lapse.

Provisional Release and Unconditional Release of Seized Goods
The appellant sought provisional release under section 110A and unconditional release under section 110 of the Customs Act, 1962, but faced no response from the authorities. The Principal Additional Director General, DRI, denied these requests, leading to a writ petition in the High Court of Bombay. The Tribunal found that the seizing agency failed to comply with the directions of the High Court and the provisions of the Customs Act, 1962, regarding the provisional release and retention of seized goods.

Compliance with Section 110(2) of the Customs Act, 1962
The appellant contended that the impugned goods should not have been proceeded against under section 124 of the Customs Act, 1962, without notice to them. The Tribunal noted that the show cause notice was issued but did not comply with section 110(2) of the Customs Act, 1962, as it was not issued within the stipulated timeline. The Tribunal emphasized that the statute does not permit alienation of the owner from seized goods without proper notice and adjudication.

Burden of Proof under Section 123 of the Customs Act, 1962
The Tribunal highlighted that under section 123 of the Customs Act, 1962, the burden of proving that the seized goods are not smuggled lies on the person from whose possession the goods were seized. The appellant argued that no other claimants to the ownership of the impugned goods were mentioned, and the Customs Act, 1962, does not empower officers to fasten ownership of goods without proper adjudication. The Tribunal agreed, stating that the failure to ensure strict fulfillment of section 123 cannot be overcome by adjudicatory restraint.

Conclusion
The Tribunal concluded that the Principal Additional Director General, DRI, exceeded his jurisdiction by denying provisional release and that the impugned order failed to comply with the legal provisions. The Tribunal ordered the release of the seized goods to the appellant, emphasizing the importance of adhering to the statutory requirements of the Customs Act, 1962.

Order:
The appeal is disposed of, and the seized goods are to be released forthwith to the appellant. (Order pronounced in the open court on 13/07/2023)