TaxTMI 
TaxTMI 
2017 (5) TMI 1747
X X X X Extracts X X X X
X X X X Extracts X X X X
....(hereinafter referred to as 'the Act') and further a penalty of Rs. 20,000/- under Section 114(iii) has been imposed. By the said order, a further enquiry has been directed to be held by the Central Board of Excise and Customs into the proprieties of the conduct of the respondents of the instant case. 2. The brief facts, from which the present writ application emanates, are as follows : (i) The petitioner is a registered trader dealing with goats and animal skins in the name and style of "M/s. Bishmillah Hide & Skin" in the district of Araria with TIN No. 10441081068. (ii) During the ordinary course of business, the petitioner purchased 13278 pieces of wet salted Goat Skin at the rate of Rs. 60/- per piece from one M/s. Rehan Enterprises, District-Darbhanga, Bihar after payment of requisite taxes on 19-9-2012. (iii) On 22-9-2012, suddenly the District Police raided the declared godown of the petitioner and seized, without any rhyme or reason, the aforementioned 2027 pieces of Goat Skin and thereafter handed over the same to the jurisdictional Customs Office at Forbesganj. (iv) Immediately thereaft....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the petitioner himself is the owner of the said M/s. Bishmillah Hide & Skin. When the petitioner having not responded to the aforesaid letter (Annexure-5), has come to know that his goods have been sold, without even following the procedure as prescribed under Section 110A of the Act. It was further contended that the goods of the petitioner could not be sold under the provisions of Section 150 of the Act for the reasons that the money which was recovered after the sale could not be used for any purpose, for which the sale is authorized under the Act. 6. Learned Counsel for the petitioner further contended that the action of the respondents also stands vitiated as no seizure memo was ever given to the petitioner nor was any ground for seizure ever communicated. It was thus stated that it being settled law that the validity of the seizure is to be ascertained on the basis of the materials available with the seizing officer at the time of the seizure, no subsequent information could be of any avail to the respondents. Thus, the loss rendered to the petitioner deserves to be compensated and injury met to him has to be remedied by refunding the sale proceeds of the seized it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ving not answered to the repeated show cause notices issued to him, which is evident from paragraph 5 of the adjudicatory order, the respondents issued the impugned orders and confiscation was made of the goods and he was also directed to pay penalty. 10. Responding to the contentions advanced by the Learned Counsel appearing on behalf of the Customs, the petitioner has categorically stated that Section 11H of the Act relates to the provisions of illegal export and contemplates what specified area is and also what is classified as specified goods. For ready reference, Section 11H of the Act is quoted hereunder : "11H. Definitions. - In this Chapter, unless the context otherwise requires, - (a) "illegal export" means the export of any goods in contravention of the provisions of this Act or any other law for the time being in force; (b) "intimated place" means a place intimated under sub-section (1), sub-section (2) or sub-section (3), as the case may be, of Section 11J; (c) "specified area" include the Indian customs water, and such inland area, not exceeding one hundred kilometres in width fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted by land or inland water through any route other than a route specified in a notification issued under clause (c) of Section 7 for the export of such goods; (c) any goods brought near the land frontier or the coast of India or near any bay, gulf, creek or tidal river for the purpose of being exported from a place other than a land customs station or a customs port appointed for the loading of such goods;" 13. Learned Counsel for the petitioner submitted that Section 110 of the Act relates to search for any goods liable to confiscation, if the proper officer has "reason to believe" that such person to whom this Section apply has apprehension that any goods are liable to confiscation. Thus, the words "reason to believe" is crucial to the application of this Section. It is useful to quote Sections 110(1) and 110(1A) of the Act, which are reproduced hereunder : "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 Act, he may seize such goods : Provided that where it is not practicable to seize any such goods, the proper officer may serve on the own....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecified goods liable for confiscation under the Act. The entire seizure and adjudication proceedings have been initiated on a presumption that Goat Skin is a notified item and place of search was a notified area, attracting the jurisdiction of the Customs authority. Thus, the entire proceeding was wholly erroneous and could not be sustained in the eyes of law. 18. The aforementioned reasoning has been supported by the Learned Counsel for the petitioner, who has relied on a Division Bench decision of this Court in the case of Angou Golmei v. Union of India, reported in 1994 (1) PLJR 800 = 1996 (81) E.L.T. 446 (Pat.), wherein this issue has been clearly explained and it has been held as follows : "21. The expression 'reasonable belief' or 'reason to believe 'occurs in several statutes. Reference may be made to Section 147(a) of the Income Tax Act, 1961; Section 178A of the Sea Customs Act, 1978; Section 66 of Gold (Control) Act, 1968 and so on. In Calcutta Discount Col. Ltd. v. Income Tax Officer (AIR 1961 Supreme Court, 372), a case under Section 34 of the Income Tax Act, 1922 corresponding to Section 147(a) of the Income Tax Act, 1961, the Apex Court held : "The expr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....irlpool Corporation v. Registrar of Trade Marks, reported in (1998) 8 SCC 1, would hold good and the petitioner can well avail the remedy under Article 226 of the Constitution. 23. Learned Counsel for the petitioner has also drawn the attention of this Court to a decision of this Court in the case of Yogendra Prasad v. Union of India, reported in 2004 (4) PLJR 675, wherein this Court has held that the allegation against the petitioner that he was a habitual offender cannot be sustained and the seizure cannot be justified referring to the fact of the earlier case. In the said case at paragraph 6, it has been held as follows : "6. On behalf of the petitioner it is alleged that the customs officials were bent upon harassing him; his goods, duly imported into the country on payment of customs duties and after observing all the legal formalities, were frequently seized and subjected to long-drawn confiscation proceedings. In support of the allegation counsel for the petitioner produced an earlier decision of this Court, dated 20-2-2001 in Cr. W.J.C. No. 464 of 2000 (Anatilal Prasad v. Union of India & Ors.) and another analogous case. In that case the Polythene carry-bags s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on and/or subject himself to the confiscation proceeding which was wholly without jurisdiction and was being conducted by the same authority, who had ordered the seizure in his case. Thus, imposition of a penalty after confiscation of the Goat Skins, which had been illegally auction sold by the authorities, could not be sustained as by no stretch of imagination the same authority, who issued the show cause notice, proceed to pass the final orders, in the present case. Such action clearly reveals the mechanical manner in which the authorities have been functioning and is indicative of the non-application of mind and also is deemed to be vested with ulterior motives. 26. This Court also holds that the goods, which had been seized by the authorities, had been sold even without following the procedure as prescribed under Section 110(1A) of the Act. It is also strange how the authority has proceeded to auction sale the property of the petitioner and coerce him into depositing security amount for release of the same under the condition that he would preserve it till disposal of the case is also arbitrary. This is more so evident because the authority was fully conscious of the fact....