TMI Blog1995 (11) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... ng bills and/or bills of entry were prepared being No. EF-787 for 200 bags of refuse for joss sticks for Tirupati and Bill of Entry No. EF-784 for 140 bags machine finished knife handle of sandal wood, bill of entry No. EF-785 dated 14.2.94 for 200 bags machine finished knife handle of sandal wood and bill of entry No. EF-786 dated 1.4.2.94 for 200 bags machine finished paper weight of sandal wood were prepared so far as India Sales is concerned. Both the aforementioned consignments reached Howrah Station on 16.2.94. The said consignment allegedly were delivered in a mixed condition. The handling agent of India Sales and partner of Tirupati took delivery of the said 740 bags through the local clearing agent. Commercial Tax Officer at Howrah allegedly gave clearance for the paid consignment and necessary endorsements on the railway receipts were made. 4. The said consignments were loaded in 5 trucks. However. 50 bags refuse for joss sticks of Tirupati were allegedly mixed up with the consignment of India Sales. One truck containing 150 bags on account of India Sales was seized arid it is now stated that out of the said 150 bags, 50 bags containing refuse for joss sticks belonged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On 11.3.94, the customs authorities by a letter detained the remaining 190 bags in the private warehouse on the allegation that the said goods are contraband foreign articles. On 7.4.94, 190 bags which were detained in the private warehouse were seized by the customs authority on the allegation of mis-declaration and the goods are liable to be confiscated under the Customs Act. Two supplementary affidavits have been filed in these writ applications wherewith notices dated 18.8.94 had been annexed. The said notices were issued to India Sales, M/s. Sk. Pandit, Chandra Prakash Bharrech, Md. Ikhlaque Waris. it may be recorded that in the meanwhile Chandra Prakash Bharech, partner of Tirupati and Md. Ikhlaque Waris, partner of India Sales were detained under COFEPOSA and the said notices were served upon them in the Presidency Jail. On 18.8.94 attempt was made to serve the said show cause notice at the office of Tirupati, but the same could not be served as the office was found closed. Again, on 20.8.94, attempt was made to serve the said notice upon Tirupati, but again the said service could not be effected owing to closure of the office. The said notice was, therefore, hung up in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he knife. With regard to service of notice, it is submitted that the petitioner has failed to discharge the onus of proof upon it in this regard. It is submitted that the notices have been served upon the partners and agents of the firms, and as such, the same would also be a valid service within the meaning of Section 124 read with section 153 of the Act. Learned counsel contends that in terms of sub-section (3) of Section 147 of the Act, a legal fiction has been created in terms whereof the agents were deemed to be the owners of the goods. Learned counsel contends that for the purpose off effecting a service, only sending the registered cover by post would meet the statutory requirement. It was next contended that show cause notice having been issued, the seizures cannot be challenged indirectly as the petitioners are entitled to raise all contentions before the competent authority. Learned counsel, however, conceded that joss sticks being not a sandal wood product, the same is not a prohibited item for the purpose of export. 9. Learned Counsel has also urged that in view of definition of 'smuggling' as contained in Section 239, the petitioners may be found to be guilt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of Goods for exportation. (1) The exporter of any goods shall make entry thereof by presenting to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form. (2) The exporter of any goods, while presenting a shipping bill or bill of export shall at the foot thereof make or subscribe to a declaration as to the truth of its contents. 18. Section 51. Clearance of goods for exportation. Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation. 19. Section 110 empowers the authorities to seize goods in the event the Proper Officer has reason to believe that any goods are liable to confiscation under the said Act. Proviso appended to sub-section (1) deals with a situation where it is not practicable to seize any such goods, the-proper officer may serve on the owner of the goods an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner, importer or exporter of any goods shall, unless the contrary is proved, be deemed to have been done with the knowledge and consent of such owner, importer or exporter of the goods shall also be liable as if the thing had been done by himself. (3) When any person is expressly or impliedly authorised by the owner, importer or exporter of any goods to be his agent in respect of such goods for all or any of the purpose of this Act, such person shall, without prejudice to the liability of owner, importer or exporter, be deemed to be the owner, importer or exporter of such goods for such purposes : 26. Provided that where any duty is not levied or is short-levied or erroneously refunded on account of any reason other than any willful act, negligence of default of the agent, such duty shall not be recovered from the agent unless in the opinion of Assistant Collector of Customs the same cannot be recovered from the owner, importer or exporter. 27. Section 143 deals with mode and manner service of order; decision; the manner of service of decision, summons or notice etc. which may be effected i.e. :- (a) by tendering the order, decision, summons or notice or sending i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or permit one's imagination to boogie when it comes to the inevitable corollaries of that state of affairs. 34. It may be true the partners of the petitioners' firm were not described as such in the show cause notice. But it is neither denied nor disputed that they are partners. As partners they are the agents of their firms in terms of Section 18 of the Indian Partnership Act. In fact, a partner of one firm is the clearing agent of the other firm. 35. Moreover, it is not disputed that the copies have been served upon the clearing agent and/or their representatives who had been representing such clearing agents. In law, it is not necessary to serve notice upon the agent stating as to in what capacity he is acting if the facts are not disputed. In the instant case, the basic fact namely, the partners of petitioners firm were detained under COFEPOSA in connection with seizure and they had been served with the notices is not in dispute which raises a presumption that they have been so detained as having been committed an offence on behalf of the partnership firm either as their partners and/or as agents. Such act of the partners and agents of the partnership firm are b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision or order under the Act. 40. In Jain Sudh Vanaspati Limited v. Union of India reported in 1982 Excise Law Times, page 43 upon which reliance was placed by Mr. Sen, a division bench of the Delhi High Court while considering the provision of Section 47 of the Act stated the law thus : Considering Section 47 of the Customs Act in the light of the legislative history, we are clear that the section attaches finality to the satisfaction of the officer that the goods are not prohibited. The finality cannot be disturbed unless the Department successfully shows that there was fraud or deliberate suppression. The respondents have alleged that the containers were painted and thus the original identity of the drums was suppressed by the petitioners. This allegation is on the assumption that stainless steel drums was a prohibited item. We do not agree. The law as it then stood, did not require of an importer to disclose the nature of the material or the price of the containers. A new requirement in this regard was introduced for the first time by public notice dated September, 6, 1979 i.e. after the importation of oil by the petitioner. We, therefore, hold that the proper officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 of the Act and saying accordingly that unless that order was set aside, no proceeding for confiscation should have been taken. It is difficult, however; to accept this as a law as once there is a clearance under Section 47 and/or Section 51 of the Act is ordered, unless that order is set aside, the proper officer cannot act on his reasonable belief under Sections 110, 111 or 113 of the Act. The Calcutta Full Bench judgement in the case of Euresian Equipments Chemicals v. Collector of Customs (AIR 1980 Cal 188 :1980(6)ELT 138 Cal.) has, in substance, pronounced that such proper officer's satisfaction for confiscation proceedings shall remain unaffected by the order of the proper officer permitting the clearance of goods under Section 51 of the Act. That view is in consonance with the basis of the belief that goods have been improperly imported or exported and such belief being in relation to the goods and in rem, it will not be correct to read in the orders under Section 47 or Section 51 of the Act any inhibition upon the jurisdiction of the proper officer to act under Sections 110, 111 and 113 of the Act. The petitioner appellant came to this Court challenging the seizu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent to the stage of the attempt, is not indeed of any material consequence. 49. However, I must notice that a division bench of the Madras High Court in M/s. Lucus T.V.S. Padi vs. The Assitt Collector of Customs, reported to 1987(12) E.C.R. 1213 took a contrary view holding that when the goods for export are loaded aboard a vessel, no further notice can be issued on the ground that territorial waters (concept) does not fit in with the scheme of the Customs Act. The division bench observed : Section 51, in our view, is an important provision. Under that provision, if the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under the Act, in respect of the same, he may make an order permitting clearance and loading of the goods for exportation. Once the exporter has complied with the provisions of these sections, so far as he concerned, whatever is required to be done for the purpose of exportation of the goods has been done by him. As a matter of fact, section 51 deals with the last stage upto which the exporter has control over the goods, and once the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned paragraph it cannot be said that the Decision of the Delhi High Court in Jain Shudh Vanaspati on the said point has been affirmed by the Supreme Court. 53. This court is bound by the decision of the Division Bench and Full bench of this Court. 54. In any event the respondents in their affidavit-in-oppositions have made out a sufficient case for having reasons to believe that the seizure was justified. Section 51 of the said Act does not countenance either fraud or an honest mistake. 55. An Officer may bona fide believe that the contents of the shipping bill are correct. He might have made a superficial verification and might not have held a detailed enquiry. Subsequent information reaching him may, however, be enough either to rectify his mistake or come to a conclusion that a fraud has been committed. It is now well known that fraud vitiates all solemn acts. When a fraud is committed even compliance of the principles of natural justice are not required to be complied with. Even in Jain Shudh Vanaspati, the Delhi High Court has laid down the said law. In the instant case sandal wood was a prohibited item. 50 bags of sandal wood powder were sought to be exported by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners in view of Section 147 of the said Act It is admitted that the show-cause notices have been issued to the partners of the firm, the clearing agent as also Shri S.K. Jha personally. But apart from their personal liabilities, their actions were also binding upon the principal. 59. In view of the aforementioned provisions, however, the contention of Mr. Ghosh to the effect that as the office of M/s. Tirupati was found locked and no service could be effected on them, a purported service were made by hanging the said notice on the Notice Board of the Customs Authorities in view of clause (b) of Section 153 of the said Act appears to be correct. However, notices were also sent by registered post to M/s. India Sales. 60. Section 27 of the General Clauses Act reads thus : Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post whether the expression serve or either of the expressions give or send or any other expression is use, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority to make up its mind within 6 months as to whether to proceed with the confiscation. Proceedings. It may be noticed that admittedly for the purpose of initiation of the confiscation proceeding no period of limitation has been prescribed. In the case reported in AIR 1966 SC 330 the Apex Court has interpreted the word 'given' in a different context. 64. However, it appears that in the case of Oyatape Fibres Pvt. Ltd. vs. Collector of Customs, Calcutta reported in 1994(74) ELT 509, Tarun Chatterjee, J. relying upon decision in the case of K. Nrasimhiah vs. H.C. Singri Gowda , reported in AIR 1966 SC 330 and other decisions held as follows : For the reasons aforesaid, it must be held that the notice is given contemplated by section 110(2) of the Act is not the same thing as sending the notice and the notice is given as occurring in Section 110(2) of the Act would mean that either the show cause notice was received by the importer or at least it had reached him. Admittedly, in this case, the show cause notice was received by the writ petitioner after the period of six months from the date of seizure a prescribed in Section 110(2) of the Act. It is not the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by tendering the same or sending it by registered post to the person for whom it is intended or to his agent. The Parliament in its wisdom while prescribing the manner of service of notice has used a terminology of sending and not served. In this situation there cannot be any doubt that a notice can be served either by tendering the same to the owner or sending it by registered post or to his agent. 70. The views I have taken find support from a Division Bench Judgment of this Court in F.M.A.T. No. 923 of 1994; Union of India Ors. vs. Sri Kanti Tarafder Ors., disposed of on 7-9-1995 wherein Barin Ghosh, J speaking for the Division Bench taking into consideration the decisions relied upon by the counsels for the parties held : We, therefore, conclude that Section 153 of the Act controls Section 10(2) of the Act and a notice which is required to be given under Section 110(2) should be given in the manner provided in Section 153 and by no other means. The word 'serve' in legal connotation means to make regal delivery (a process or writ) on or upon (a person) or to present (a person) with a writ. (See the Shorter Oxford English Dictionary re print of 1988 at pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egally. It is not necessary to state such reasons in the seizure memo themselves. However, when such a question is raised sufficient materials must be placed on record so as to enable the Court to arrive at a finding as to whether such seizure has been effected on reasonable ground. Reference in this connection may be made to the decisions reported in A.I.R. 1967 SC, 1298 R.S. Seth Gopikisan Agarwal v. R.N. Sen. Asstt. Collector of Customs Central Excise Ors ., A.I.R. 1976 Cal 1/8 New Central Jute Mills Co. Ltd. v. T.N. Kaul and Others and 77 OWN 14 Assistant Collector of Customs for Preventive Ors. v The New Central Jute Mills Co. Ltd . upon which reliance has been placed by Mr. Sen. 77. Mr. Sen, learned Counsel, in this connection also relied upon a case reported in 1994(74) ELT 509 Oyatape Fibres Pot. Ltd. v. Collector of Customs. Calcutta and 1992(59) ELT 201 Indu Ramchand Bharvani. v. Union of India . 78. However, it is pertinent to note that recently the Supreme Court in the case of Union of India v. Shyamsundar reported in 1994(74) ELT, 197 has quoted with approval its earlier decision in the case of State of Gujrat v. Mohanlal Jitamalji Porwal reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined by this Court. In fact, it is admitted by the petitioner that owing to curfew imposed at Kanpur, at the relevant time, the said goods were brought to Calcutta in a semi finished condition. Such determination has to be made in the confiscation proceedings by the appropriate authority. However, it is admitted that upon chemical examination some goods had been found to be sandal wood just which admittedly cannot be exported. 82. Mr. Sen, submits that the question as to whether the goods which was sought to be exported were sandal wood dust or refuse for joss sticks should have been found out upon smelling the same. 83. According to the respondents 50 sandal wood pieces bags were load in the container covered by 150 bags of dust material. Again 100 bags of sandal wood pieces along with 50 bags of sandal wood dust materials were loaded covered by Shipping Bill No. EF-784 dt. 14.2.94. It is relevant to note the following chart as has been supplied by the learned Counsel. Mr. Roy Chowdhury where is it is stated as follows :- Shipping Bill No. and Exporter's name Date of seizure Place container No. Sandal wood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy 1992-97 exporters had been adopting all sorts of devices to export sandal woods either misdeclaring them to be permitted product or simply concealing the same inside other items thereby frustrating the very efforts of the government to preserve this natural wealth from being extinct in this land of one flora and fauna. It is further stated that small pieces of woods with coarse surface and uneven shape and size declared as machine finished knife handle of sandal wood was nothing but an effort to hoodwink the customs authority. It has been noticed that such types of activities were being made for quite sometime. To locate the consignment in the docks for giving an information from Eagle Moon to Nicholison was itself a direct job. It further appears that the aforementioned operation was originated from the feed back from town section. 88. As regards the seizure list of India Sales dated 10.3.94 it appears that the goods were taken over from the West Bengal Commercial Tax Authorities at Beliaghata as those are reasonably believed to be prohibited goods under Negative List of Exports of Import and Export-Policy, 1992-97 under Item No. 9 of para 158 of the said goods have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of such goods for which shipping bills were obtained from Customs Authorities. 93. It is admitted that the bill of entry were presented to the proper officer. Export does not commence unless the steps are taken therefor in terms of Section 51 of the Act. It has not been disputed by the petitioners that the said goods were meant for export and shipping bills have been obtained only for the said purpose. 94. Section 29(6) defines entries in relation to goods as meaning an entry made in a bill of entry, shipping bill or bill of export and includes in the case of goods imported or to be exported by post, the entry referred to in Section 82 or the entry made under regulation made under Section 84. 95. The Shipping Bill and the Bill of Export (Form) Regulations, 1976 prescribed different forms in which different shipping bills have to be prepared. No goods can be exported unless such shipping bill and bill of export are to be prepared in terms of Regulation 2. The Regulations 2 and 3 require that the bill of export on shipping bill is to be presented by exporter of the goods. A shipping bill and bill of export have been presented by the exporter of the goods on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opikishan Agarwals case reported in 1967 SC.1298 upon which strong reliance has been placed by Mr. Sen, the Apex Court repelled the contention that Section 105 of the Act confers unbriddled and arbitrary power on the Assistant Collector of Customs to make a search, only condition being that he has reasons to believe in the existence of the facts mentioned therein. The Supreme Court noticed that the object of the Section is to make a search for the goods liable to be confiscated of the documents created in any place which are relevant to any provisions under the Act. It further noticed that the legislative policy recorded in the Section is that search must be with regard to 2 categories mentioned therein. 99. The Supreme Court further observed : that apart from under Section 165(5) of the Code of Criminal Procedure read with Section 105(2) of the Act, he has to send forthwith to the Collector of Customs copy of any record made by him. The Collector would certainly give necessary directions if the Assistant Collector went wrong or an act is guided by malafide. It further observed that an effective control had also been laid down under Section 136(2) of the Act. 100. In the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be invalid and in that context it was held that the goods should be returned to the persons from whose custody they were seized. 102. In Board of Revenue, Madras vs. R.S. Jhaver reported in 1968 SC 59 the Supreme Court while considering the provisions of Section 41(2) held that Section 165 of the Code of Criminal Procedure apply to such searches and seizures also. No exception can be taken to the aforementioned proposition. 103. The starting point of a search is Section 105 of the Customs Act and it is completed under Section 110. In the instant case the respondents in their affidavit-in-opposition have disclosed the reasons. The entire records have also been produced before me and on perusal whereof it appears that such seizure had been effected upon obtaining an information that large scale smuggling of sandalwood is being rode from India which was a prohibited item. In fact Shri S.K. Jha the authorised representative of the clearing accent of M/s. Sk. Pandit Hearty stated that such goods have been exported out of India in large quantity. The respondents, thus, have a right, nay a duty to unearth such racket, if any and if in this process they have seized the goods in que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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