TMI Blog2006 (4) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 47 of the Act and the petitioners deposited the requisite duty. As far as second consignment of goods, which are woven silk fabrics, B Grade, bills of entries were cleared on provisional assessment basis on deposit of duty and furnishing of PD bond and bank guarantee. After clearance, the goods were stored at 144, HSIDC, Kundli, Industrial Estate, Sonepat. On 8-2-2005 at 5.30 PM, the officials of the Customs Department came at the godown of the petitioners and sealed their godown. The petitioners made representation pointing out that action of the respondents was illegal. Godowns were desealed on 24-2-2005 but again the respondents seized the goods and left the same on superdari with petitioner No. 2. Undisputed allegation of the petitioners is that similar goods belonging to the petitioners as well as other parties had been cleared under similar circumstances before/ during/after the consignments of the petitioners were received. Bills of entry in respect of such goods were Annexure P.19 (collectively). The petitioners also received summons asking petitioner No. 2 and his son, to appear before the authorities. 3. Action of the respondents has been challenged on the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation for confiscation was permissible. Reliance is also placed on judgment of Calcutta High Court in Porcelain Crafts Components Exim Pvt. Ltd. v. Commr. of Cus. - 1998 (102) E.L.T. 11. It was also pointed out that show cause notice dated 6-2-2006 had since been issued to the petitioner under Section 124 of the Act, read with proviso to Section 28(1) alleging misdeclaration and undervaluation of goods and at this stage, interference under Article 226 of the Constitution was not called for. 7. It is not necessary to refer to other part of the pleadings for decision of the limited issues argued before the court. 8. We have considered the rival submissions of the parties and perused the relevant record. We are of the view that following issues arise for consideration by this court in the present petition on which arguments have been ad dressed by the counsel for the parties:- (i) Whether clearance of goods under Section 47 of the Act debars confiscation of goods under Section 111 of the Act and proceedings for further adjudication by the proper officer under Section 28 of the Act? (ii) Whether seizure of goods in the present case was illegal being in violation of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine and it is only on payment of such fine and the duly, order or endorsement under Section 47 came to be made. The exercise of power under Section 47 either way has the consequences of conferring or denying rights to a citizen and correspondingly Certain rights or obligations vest with the Department. An exercise of power with such consequences has necessarily to be viewed as a quasi-judicial exercise of power and in the absence of any specific provision or power conferred upon such officer to review or alter or cancel the said order, the proper officer empowered to exercise power under Section 47, cannot be said to possess any such power and no such power could be considered to in here in him by mere inference. (emphasis supplied). Any error in such exercise may apparently be amenable for correction by the authorities higher in the hierarchy under anyone or other provisions but it is not given to the every officer or authority to go back on the order earlier passed, particularly as noticed above, when there is not specific provision enabling him either to review the said order or alter or vary the same 10. On the other hand, the reliance of the respondents is on a judgment of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned, reference may be made to the provisions of Sections 105 and 110 of the Act, which are reproduced hereunder "105. Power to search premises. - (1) If the Assistant Commissioner of Cus toms or Deputy Commissioner of Customs, or in any area adjoining the land frontier or the coast of India an officer of customs specially empowered by name in this behalf by the Board, has reason to believe that any goods liable to confiscation, or any documents or things which in his opinion will be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise any officer of customs to search or may himself search for such goods, documents or things. (2) The provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to searches shall, so far as may be, apply to searches under this section subject to the modification that sub-section (5) of Section 165 of the said Code shall have effect as if for the word 'Magistrate', wherever it occurs, the words Commissioner of Customs were substituted." "110. Seizure of goods, documents and things. - (1) If the proper officer has reason to believe that any goods are liable to confiscation under this Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andhi v. Union of India, AIR 1978 SC 597. Referring to this aspect, in a recent decision in District Registrar and Collector, Hyderabad and another v. Canara Bank etc., AIR 2005 SC 186, it was observed in para 55 :- "55. In Smt. Maneka Gandhi v. Union of India and another (1978) 1 SCC 248 - a 7-Judges Bench decision, P.N. Bhagwati, J. (as His Lordship then was) held that the expression 'personal liberty' in Article 21 is of the widest amplitude and it covers a variety of rights which go to constitute the personal lib of man and some of them have been raised to the status distinguishing as fundamental rights and give additional protection under Article 19 (Emphasis supplied). Any law interfering with personal liberty of a person must satisfy a triple test: (i) it must prescribe a procedure (ii) the procedure must withstand the test of one or more of the fundamental rights conferred under Article 1-9 which may be applicable in a given situation; and (iii) it must also be liable to be tested with reference to Article 14. As the test propounded by Article 14 pervades Article 21 as well, the law and procedure authorizing interference with personal liberty and right of privacy must als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h exist. He must record reasons for the belief and he must issue an authorization in favour of a designated officer to search the premises and exercise the powers set out therein. The condition for entry into and making search of any building or place is the reason to believe that any books of account or other documents which will be useful for, or relevant to, any proceeding under the Act may be found. If the officer has reason to believe that any books of account or other documents would be useful for, or relevant to, any proceedings under the Act, he is authorised by law to seize those books of account or other documents, and to place marks of identification therein, to make extracts or copies therefrom and also to make a note or any inventory of any articles or other things found in the course of the search. Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the taxpayer, the power must be exercised strictly in accordance with the law and only for the purposes for which the law authorizes it to be exercised. If the action of the officer issuing the authorization or of the designated officer is challenged, the officer concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. From this, it is evident that there could not possibly be recording of any reason before search and seizure operation was conducted at the premises of the. Petitioners. The relevant part of written statement is extracted below:- The facts of the case are that an information was received by the Directorate of Revenue Intelligence, Delhi Zonal Unit (hereinafter referred to as DRI) that certain Delhi based importers were indulging in gross under valuation of imported Chinese silk fabric. On the request of the India importer, the Chinese supplier M/s. Zhejiang Cathaya International, China had issued two invoices for each consignment and that the invoices showing lesser value were presented before the Indian Customs for the purpose of assessment of duty. The information also revealed that the under- invoicing of the said silk fabrics was to the extent of about 25 to 30%. While acting on the above information, during the search operation on 8-2-2005 at the godown premises of M/s. Elegant International, located in the factory premises of M/s. Mapsa Industries at 102, HSIDC, Kundli, Sonepat, Haryana, it was transpired that huge stock of imported fabrics was stored at the premises, sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question, in the present petition a number of consignments were cleared by the respondents under Section 47 of the Act under similar circumstances. 25. We are of the view that while existence power of seizure may be justified but its exercise will be liable to be struck down unless 'reasons to believe' were duly recorded before action of search and seizure is taken, which has not been done in the present case because the respondents have not been able to satisfy the court that due process of law was followed while taking drastic step of search and seizure in the case of the petitioner. On this ground alone, we are of the view that action of search and seizure is liable to be quashed and accordingly we answer the second issue in favour of the petitioner and against the revenue. 26. Before parting with the judgment, we make it clear that we are not going into question of alleged liability for undervaluation or mis-description or any other consequence or the liability of the petitioners as a result of pending show cause notice issued to the petitioners. 27. Accordingly, we partly allow this petition and declare the search at the premises of the petitioners and consequent seizure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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