9911796707🚨 Important Update for Our Users
We are transitioning to our new and improved portal - www.taxtmi.com - for a better experience.
Follow us:
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (7) TMI 164 - HC - CustomsSeizure of 17085 Kgs of Betel Nuts and truck - alleged violation of Section 7 11 46 and 47 of the Customs Act 1962 read with Section 3(2) of the Foreign Trade (Development and Regulation) Act 1992 and Government of India Ministry of Finance N/N 9/96 (NT) CUS dated 22.01.1996 issued u/s 110 of the Customs Act 1962 - HELD THAT - This writ application is being disposed of in similar terms as has been done by this Court in the case of M/s Ashoke Das 2025 (2) TMI 1123 - PATNA HIGH COURT where it was held that The proper officer has to record his reasons to believe that the goods that he proposes to seize are liable to confiscation. The said reasons for exercise of the power have to be recorded prior to the seizure. The subsequent instruction issued by the Department clearly says that in addition to panchnama reason to believe should be indicated in the seizure memo/order. This writ application is being disposed of in similar terms as has been done by this Court in the case of M/s Ashoke Das. The Seizure Memo as contained in Annexure 5 is quashed however in terms of the observations in paragraphs 44 and 45 in the case of M/s Ashoke Das it is once again held that quashing of Seizure Memo would not mean that the Department cannot investigate and proceed in accordance with law under the provisions of the Customs Act 1962. Other observations shall also apply in the present case - the application disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this writ application are: (a) Whether the Seizure Memo issued under Section 110 of the Customs Act, 1962, in respect of the goods and vehicle seized, complies with the mandatory requirements of the statute, particularly the requirement to record the "reason to believe" that the goods are liable to confiscation prior to seizure. (b) Whether mere mention of the statutory provisions under which seizure is effected, without stating specific material facts or reasons constituting the "reason to believe," is sufficient to sustain the legality of the seizure. (c) The effect of quashing the seizure memo on the Department's power to continue investigation and proceed under the Customs Act, 1962. (d) Whether the principles established in the judgment of this Court in the case of M/s Ashoke Das and Another versus Union of India and Others, and the related precedents, apply to the present case. (e) Whether the petitioner is entitled to provisional release of the seized goods and vehicle during pendency of the writ petition and protection from coercive action. 2. ISSUE-WISE DETAILED ANALYSIS Issue (a) and (b): Compliance with Section 110 of the Customs Act, 1962 and sufficiency of reasons in the Seizure Memo The relevant legal framework includes Section 110 of the Customs Act, 1962, which empowers a proper officer to seize goods if he has reason to believe that they are liable to confiscation. The statute mandates that the officer must record the reasons for such belief prior to the seizure. The procedural safeguards embedded in this provision ensure that seizure is not arbitrary and is based on material facts. Precedents relied upon include the judgment in M/s Ashoke Das (supra), which extensively examined the requirements of Section 110 and the necessity for the Seizing Officer to record specific reasons constituting the "reason to believe." The Court also referred to the decisions of learned coordinate Benches in Assam Supari Traders and Krishna Kali Traders, which held that mere citation of statutory provisions without material facts does not satisfy the mandate of Section 110. The Court noted that in the present case, the Seizure Memo (Annexure '5') merely stated the statutory provisions allegedly violated without any elaboration or recording of the material facts or reasons leading to the belief that the goods were liable to confiscation. This was found to be insufficient and non-compliant with the statutory mandate. The Court further referred to the judgment of the Hon'ble Delhi High Court in Worldline Tradex Private Limited, which emphasized the need for valid reasons to be recorded prior to seizure and for these reasons to be reflected in the seizure memo or order. The Court's interpretation is that the statutory scheme requires a reasoned order or memo, and the absence of such a reasoned recording results in invalidity of the seizure memo. The mere mention of sections of the Customs Act and related notifications without factual basis or reasoning is inadequate. The Department's argument that the seizure was valid under the cited provisions was considered but rejected due to lack of compliance with the procedural requirement of recording reasons. The Court treated the petitioner's reliance on M/s Ashoke Das (supra) as fully applicable and persuasive. Conclusion: The seizure memo is quashed for non-compliance with Section 110 of the Customs Act, 1962, specifically for failure to record the requisite reasons constituting the "reason to believe" prior to seizure. Issue (c): Effect of quashing the seizure memo on the Department's power to investigate and proceed The Court examined the impact of quashing the seizure memo on the Department's continuing authority to investigate and adjudicate the matter under the Customs Act. The judgment in M/s Ashoke Das (supra) was pivotal, wherein it was held that quashing the seizure memo does not preclude the Department from continuing its investigation or proceeding under the Act. The Court quoted paragraph 41 of the Ashoke Das judgment, highlighting the principle of 'merger' and clarifying that invalidation of the seizure memo does not amount to a bar on further lawful action by the Department. The Court applied this principle to the present case, holding that while the seizure memo is quashed, the Department retains the right to investigate and issue show cause notices, and the petitioner is entitled to respond to such notices within the prescribed time frame. Conclusion: Quashing the seizure memo does not extinguish the Department's statutory powers to investigate and proceed under the Customs Act, 1962. Issue (d): Applicability of the judgment in M/s Ashoke Das and related precedents The petitioner's counsel argued that the present case is squarely covered by the Ashoke Das judgment. The Court noted that the Department has not challenged the Ashoke Das judgment by filing a special leave petition, and it has been acted upon by the Department. The Court found that the issues in the present writ petition are identical to those considered in Ashoke Das, particularly concerning the insufficiency of the seizure memo and the requirement of recording reasons. The Court therefore followed the Ashoke Das precedent and disposed of the writ petition in similar terms. Conclusion: The principles and findings in the Ashoke Das case apply fully to the present case and guide the Court's decision. Issue (e): Provisional release of goods and protection from coercive action Although the petitioner sought provisional release of the seized goods and vehicle and protection from coercive action during pendency of the writ petition, the Court did not expressly grant these interim reliefs in the operative order. Instead, the Court disposed of the writ petition by quashing the seizure memo but allowed the Department to proceed with investigation and adjudication. The Court's approach implicitly provides some protection to the petitioner by invalidating the seizure memo, but the petitioner remains subject to lawful proceedings under the Act. Conclusion: No specific directions for provisional release or protection from coercive action were issued; however, the quashing of the seizure memo limits the Department's immediate coercive powers. 3. SIGNIFICANT HOLDINGS The Court's crucial legal reasoning is preserved verbatim from the Ashoke Das judgment as follows: "41. It is apparent from a bare reading of the order of the Hon'ble Supreme Court that it was passed after granting leave against the Division Bench judgments of this Court and the effect of the order of the Hon'ble Supreme Court may be clearly seen. The principle of 'merger' will apply. Despite quashing of the seizure memo, it cannot be said that the appellants cannot investigate and proceed in accordance with law under the provisions of the Act of 1962. 42. In the light of the aforementioned discussions, when we examine the seizure memo (Annexure P1), it is found that the Seizing Officer has not complied with the mandate of sub-section (1) of Section 110 of the Act of 1962. The Hon'ble Delhi High Court has, in Worldline Tradex Private Limited (supra) categorically held that the power of seizure under Section 110 of the Act has to obviously be exercised for valid reasons. The proper officer has to record his reasons to believe that the goods that he proposes to seize are liable to confiscation. The said reasons for exercise of the power have to be recorded prior to the seizure. The subsequent instruction issued by the Department clearly says that in addition to panchnama reason to believe should be indicated in the seizure memo/order. 43. We find from the records that in the present case, apart from the seizure list, there is no other order of the Seizing Officer showing his reason to believe. The learned co-ordinate Bench of this Court in the case of Assam Supari Traders (supra) and Krishna Kali Traders (supra) has held that mere mentioning of the sections of the Act of 1962 in the seizure memo would not be sufficient in absence of material information relating to 'reason to believe.' We are in agreement with the said view of the learned co-ordinate Bench. We have been told at the Bar that Assam Supari Traders (supra) and Krishna Kali Traders (supra) have attained finality as no challenge to these judgments have been taken to the Hon'ble Supreme Court. 44. In result, the seizure memo (Annexure P1) is quashed. So far as the notice to show cause as contained in Annexure P7 to the writ petition is concerned, we refrain from interfering with the show cause notice. We have already recorded the order of the Hon'ble Supreme Court hereinabove in which it has been held that quashing of the seizure memo does not mean the appellants cannot investigate and proceed in accordance with law under the provisions of the Act of 1962. The petitioner, if so advised, may submit his reply to the show cause notice. It is open to the petitioner to file a reply to the show cause notice within six weeks from today whereafter the adjudicating officer shall proceed to pass appropriate order under the provisions of the Act of 1962. 45. All questions with regard to the issuance of show cause notice and impact of quashing of the seizure memo (Annexure P1) shall remain open." Core principles established include: - The mandatory requirement under Section 110(1) of the Customs Act, 1962, that the Seizing Officer must record specific reasons constituting the "reason to believe" prior to seizure. - Mere citation of statutory provisions without factual basis is insufficient to sustain seizure. - Quashing of seizure memo does not bar the Department from continuing investigation and adjudication under the Customs Act. - The principle of merger applies whereby invalid procedural steps do not preclude lawful substantive action. Final determinations on each issue are: - The seizure memo in the present case is quashed for non-compliance with Section 110 of the Customs Act, 1962. - The Department is not barred from investigating or proceeding further under the Act. - The petitioner may respond to any show cause notice issued and the adjudicating authority shall pass orders in accordance with law.
|
