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TMI Blog2023 (12) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... r short 'the Customs Act') can be said to be legal and valid. 2. The contention of the petitioners is that the impugned action of the respondents of seizure of petitioners' gold jewellery and its disposal was patently illegal being in breach of the provisions of not only the Customs Act, but the rights guaranteed to the petitioners under Article 300A read with Article 14 of the Constitution of India. 3. The prayers as made in the petition are required to be noted which read thus:- (a) This Hon'ble Court be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, order or direction, ordering and directing the Respondents themselves, its officers, subordinates, servants, and agents to forthwith provide the records of seized gold jewellery and return gold equal to 1028 grams of gold of which was disposed by the Respondents to enable the Petitioners to re-export the same in terms of the order dated 19.09.2022, passed by the Revisionary Authority, Government of India. (b) in the alternative to the Prayer Clause (a) above, this Hon'ble Court be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of without further reference to the department. Such notice is stated to be forwarded to the petitioners, as also put up on the notice board of the C.S.I. Airport. It is alleged that it was also forwarded to Mr. Prakash Singrani and Mr. Prassad Kamble, Advocate. However, it appears that there is no record with the Customs of the same being received by the petitioners. Insofar as the notice being addressed to the Advocates was concerned, at the relevant time, the said Advocates were not the petitioners' Advocate before the department. In this regard on 13 April 2018, Shri. Prakash K. Shingrani informed the Assistant Commissioner of Customs that he had no instructions from the petitioners as after released on bail, the petitioners had not contacted him. He recorded that such fact of the notice be informed to the Consulate, and if no reply is received it may be disposed off according to law. 6. It appears that the Assistant Commissioner initiated proceedings under Section 110(1B) of the Customs Act so as to obtain an order from the Court of Metropolitan Magistrate for the identity of the gold jewellery for disposal of the gold jewellery. Such an application came to be allowed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said authority letter are required to be noted which read thus:- "OFFICE OF THE COMMISSIONER OF CUSTOMS (AIRPORT) TERMINAL-2, LEVEL-II, CHHATRAPATI SHIVAJI INTERNATIONAL AIRPORT SAHAR, ANDHERI (EAST), MUMBAI - 400 099. F. No. AirCus/71-01/2018-19/Pt-I Date 13.06.2018 AUTHORITY LETTER I, J. P. Singh, Asstt. Commissioner of Customs, Gold Disposal Section, CSI Airport, Mumbai hereby authorize Shri D. P. Kshirsagar, Air Customs Superintendent-Gold Disposal Section, to withdraw the following packages, said to contain gold/gold jewellery from Strong Room for the purpose of depositing in the India Government Mint, Mumbai under escort of Shri R. M. Salvi, Head Hawaldar, under supervision of Shri D.P. Kshirsagar, ACS-Gold Disposal Section and Shri Prasad S. Pednekar, ACO-Gold disposal Section, CSI Airport, Mumbai Sr.No. File No. No. of Pkgs. Description Weight (in gms) Value (in Rs.) Remarks 1 ...... 9 SD/INT/AIU/21/2018 AP D 1 One sealed pkg stc Assorted gold jewellery totally weighing 1028 grams 1028 26,63,366.00 Action under section 110 completed on 18.05.2018. Disposal order dated 01.06.2018. (emphasis supplied) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India, the petitioners were never put to any notice whatsoever, much less, in a manner the law would mandate that the petitioners' gold jewellery as seized was disposed of / sold. Surprisingly the petitioners were kept in complete darkness either personally or through their country's consulate, in regard to the disposal of their gold jewellery. 11. On 18 January 2019 an order-in-original came to be passed by the Additional Commissioner of Customs. It clearly appears that before such orders could be passed, the petitioners were not heard, the petitioners were not furnished with the copy of the show cause notice in a manner known to law. By such order-in-original, for the reasons as recorded in such order, the Additional Commissioner of Customs ordered absolute confiscation of the gold jewellery as also imposed personal penalty of Rs. 1,75,000/- of petitioner No. 1 and personal penalty of Rs. 1,25,000/- of petitioner No. 2. 12. Significantly the order-in-original does not record that the gold jewellery belonging to the petitioner was already sold and disposed of. 13. The petitioners being aggrieved by the order-in-original dated 18 January 2019 preferred an appeal before the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o defend the proceedings of the show cause notice, which was in violation of the principles of natural justice. The respondents submitted their written reply. 15. The Revisional Authority passed final orders on the petitioners' Revision Application dated 19 September, 2022 inter alia observing that the quantity of the gold jewellery was not large and that the petitioners were wearing the gold jewellery as seized. It was observed that there were no allegations that the petitioners were habitual offenders and of being involved in similar offences earlier. It was also observed that the quantity and facts of the case indicated that it was a case of non-declaration of gold jewellery and not smuggling. The Revisional Authority hence observed that in the facts and circumstances, the misdemeanour would be required to be kept in mind, while using discretion under Section 125 of the Customs Act and while imposing quantum of penalty. The prayer of the petitioners that they, being foreign nationals, be allowed to reexport the gold jewellery, was also considered. The revisional authority observed that considering the individual case of the petitioners, the quantum of gold jewellery being small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs passed on the revision application. However, as no reply was received, a detailed reminder dated 02 November, 2022 was addressed inter alia recording that Consulate General of Islamic Republic of Iran, Mumbai was following up the matter, and the correct position was required to be informed to the Embassy Officials, as no information in regard to the availability of the confiscated gold was being furnished. It was, therefore, requested that the authorities ought to look into the matter and inform whether the confiscated goods were available. As no reply was received, another letter dated 24 November, 2023 came to be addressed by the petitioners' Advocate to the Principal Commissioner of Customs. Making a reference to the earlier letters, it was requested that no sooner it is confirmed that the gold jewellery was available for re-export, the petitioners would deposit the redemption fine and the penalties failing which the petitioners would have no alternative, but to approach the High Court. As no response was received to such letter, the petitioners have filed the present petition making the prayers as noted above. (C) Reply Affidavits 17. The respondents have filed two reply a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to dispose of the gold jewellery belonging to the petitioners, which was justified and legal. It is stated that the ownership of the seized gold had stood vested with the Central Government post confiscation. Hence, there was no question of depriving the petitioners of their own property. 19. In paragraph 7 of the affidavit, it is contended that Section 110 of the Customs Act provides for a notice, such notice dated 04 April, 2018 was issued to both the petitioners and their Advocates Mr. Prakash Shingrani and Mr. Prasad Kamble, as also the same was put on the notice board at the airport. It is further contended that as per the provisions of Section 110(1B), an application was made before the Court of the learned Metropolitan Magistrate, for identification of the petitioners' gold jewellery, the same was allowed and Certificate of verification was issued by the learned Metropolitan Magistrate on 18 May, 2018. It is stated that the jewellery was sold in auction through State Bank of India as per the procedure, and to that effect a letter dated 01 August, of State Bank of India was issued informing auction of the gold which contained the gold seized from the petitioners. In so fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a statutory obligation on the respondents to return the goods to the owner. It is next submitted that once it was decided in favour of the petitioners who are the owners of the gold jewellery that the same be returned either for re-export or otherwise and the said order is not stayed by any Court, it becomes an absolute liability of the respondents to return the goods to the petitioners. In such case, the petitioners being the owners of the goods, have the right to demand the seized jewellery. It is submitted that the respondents would not have any legal right to dispose of the goods without following due procedure in law. It is further submitted that an order for its disposal passed by the Magistrate would not in any manner extinguish the right of the owner to demand the return of the property and the obligation of the respondents to return the gold jewellery to the petitioner and in its absence, the respondents are liable to pay the market value of the seized gold jewellery to the petitioner. It is submitted that applying the provisions of Section 110(1A) of the Customs Act was illegal as gold does not fall within the meaning of perishable or hazardous goods. Therefore, any act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt from serious harassment. Such actions on the part of respondents is violative of the petitioners right guaranteed under Article 300A of the Constitution. 24. It is next submitted that the Circular dated 6 September 2022 is misconceived as the said circular is not binding on the petitioner. It is submitted that such circular cannot override the statutory provisions. In support of such contentions, reliance is placed on the decision of the Madras High Court in the case Carista Herbal Products (P) Ltd. vs. Commissioner of Central Excise, Pondicherry 2019 (370) ELT 223 (Mad.); Union of India Vs. Amalgamated Plantations (P) Ltd. 2016 (340) ELT 310 (Gau.); Kalyani Packaging Industry Vs. Union of India 2004(168) ELT 145 (S.C.). 25. In support of the submissions on illegal disposal of the gold and that the petitioners have become entitled to return of the jewellery and / or for payment of market value of the goods, reliance is placed on the decisions in Union of India Vs. Shambhunath Karmakar 1986(26) ELT 719 (Cal.); State of Gujarat Vs. M.M. Hazi Hasan AIR 1967 SC 1885. E. Submissions on behalf of the respondents:- 26. On the other hand Mr. Devang Vyas, learned ASG has made the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Mumbai Airport. The jewellery belonging to the petitioners which were gold bangles came to be seized by the Customs officials. 29. The power of the Customs Authorities to seize the goods is conferred by Section 110 of the Customs Act and its application was subject matter of debate in the present proceedings. We thus note the said provision which reads thus:- "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 remove, transport, store or take physical possession of the seized goods for any reason, the proper officer may give custody of the seized goods to the owner of the goods or the beneficial owner or any person holding himself out to be the importer, or any other person from whose custody such goods have been seized, on execution of an undertaking by such person that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer: Provided further that where it is not practicable to seize any such goods, the proper officer may serve an order on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend such period to a further period not exceeding six months and inform the person from whom such goods were seized before the expiry of the period so specified: Provided further that where any order for provisional release of the seized goods has been passed under section 110A, the specified period of six months shall not apply. (3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act. (4) The person from whose custody any documents are seized under sub-section (3) shall be entitled to make copies thereof or take extracts therefrom in the presence of an officer of customs. (5) Where the proper officer, during any proceedings under the Act, is of the opinion that for the purposes of protecting the interest of revenue or preventing smuggling, it is necessary so to do, he may, with the approval of the Principal Commissioner of Customs or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agistrate shall, as soon as may be, allow the application. Sub-section (1D) provides that when the goods seized under subsection (1) is gold in any form as notified under sub-section (1A), then, the proper officer shall, instead of making an application (1B) to the Magistrate, make such application to the Commissioner (Appeals) having jurisdiction, who shall, as soon as may be, allow the application and thereafter, the proper officer shall dispose of such goods in such manner as the Central Government may determine. 31. The question is as to how and in what manner Section 110 of the Customs Act would be applicable to the seizure of the petitioners' gold jewellery as seized on 14 January 2018. 32. Considering the effect of the provisions of sub-section (1A) to (1C) of Section 110 of the Customs Act, even assuming that such provisions apply to the seizure in question, we may observe that there is no reason available on record which would justify that there was a need to dispose of/sell the gold jewellery of the petitioners, merely because a Notification dated 22 December, 1997 under sub-section (1A) of Section 110 of the Customs Act was issued to include gold. Section 110 when perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under sub-section (1A) of Section 110 would suffice and enable the proper officer to dispose of the goods, would be a difficult proposition to be accepted, in as much as, it would certainly lead to patent arbitrariness as also may defeat the other provisions of the Act. We are thus, of the opinion that even after recourse to the provisions of subsections (1A) to (1D) is to be taken, the same would be required to be taken only after a subjective satisfaction is reached by the Customs officers and the same is brought to the knowledge of the owners of the goods that the goods are required to be disposed of. Failing this, the action to dispose of the goods would be unilateral action leading to an unguided and arbitrary exercise of powers by the customs officials. Such is not intention of Section 110 read with its subsections. It is well settled that any action of the government officials is required to be supported by cogent reasons as borne out by record, failing which it would be arbitrary and illegal and more so when it deals with the property of persons. 34. Now applying such legitimate requirements to the facts of the present case, we find that no reasons whatsoever are placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person- (a) is given a notice in writing with the prior approval of the officer of Customs not below the rank of an Assistant Commissioner of Customs, informing] him of the grounds on which it is proposed to confiscate the goods or to impose a penalty; (b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c) is given a reasonable opportunity of being heard in the matter: Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the person concerned be oral. Provided further that notwithstanding issue of notice under this section, the proper officer may issue a supplementary notice under such circumstances and in such manner as may be prescribed." 38. On a plain reading of Section 124 what would be implicit is that an order confiscating any goods or imposing any penalty can be passed only after the owner of the goods is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fine imposed under sub-section (1) is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending. Explanation.-For removal of doubts, it is hereby declared that in cases where an order under sub-section (1) has been passed before the date on which the Finance Bill, 2018 receives the assent of the President and no appeal is pending against such order as on that date, the option under said sub-section may be exercised within a period of one hundred and twenty days from the date on which such assent is received." 39. Now applying such provision to the facts of the case, the situation is quite alarming, inasmuch as, on one hand, the Assistant Commissioner had already disposed of the gold jewellery of the petitioners before the period of six months as contemplated under sub-section (2) of Section 110 would come into play, that is, almost at the fag end of such period of six months would come to an end (8 days before such period would expire), the petitioners were purportedly issued a show cause notice under section 124 as to why the gold jewellery of the petitioners ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, fairness and transparency as enshrined under Article 14 of the Constitution coupled with safeguarding the valuable rights of property recognized by the Constitution, under Article 300A. It cannot be otherwise, as Section 110(1A) would be required to be read, interpreted and applied only in a manner the basic law of land under the provisions of Articles 14 and 300A of the Constitution of India, would permit the department to so apply. 43. As noted above sub-section (1A) of Section 110 cannot be read as absolute entitlement or authority with the proper officer to dispose of the items like gold in the absence of any cogent reasons, which would attract the ingredients of sub-section (1A) of Section 110. Such reasons as falling under sub-section (1A) are required to be intimated to the owner of the goods for the reason that ultimately the disposal of the goods would entail serious consequences of affecting the constitutional rights of the owner of the goods guaranteed under Article 300A of the Constitution, as the owner would be deprived of his property. This would be the basic requirement of law the proper officer dealing with any goods, which are merely seized and not confiscated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners was being disposed of and / or sold, in our opinion, certainly the provisions of Article 300A of the Constitution would stand attracted. Article 300A of the Constitution reads thus:- "300A Persons not to be deprived of property save by authority of law - No person shall be deprived of his property save by authority of law." 46. It is well settled that the provisions of Article 300A of the Constitution are available to any person including a juristic person and not confine to only citizen and that the illegal seizure would amount to the owner being deprived of his right of property as contained under Article 300A of the Constitution of India. (See: Paragraph 55 of Dharam Dutt & Ors vs Union Of India & Ors. (2004)1 SCC 712; paragraph 25 of State Of West Bengal And Ors vs Sujit Kumar Rana (2004) 4 SCC 129). 47. In the present case the gold jewellery belonging to the petitioners has been dealt, disposed of and sold in patent disregard to the basic principles of law as Articles 14 and 300A of the Constitution would ordain. This apart, even the provisions of the Customs Act, which we have discussed, stand violated not only in taking away the substantial statutory rights as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power under the Customs Act. But the power to seize and confiscate was dependent upon a customs offence having been committed or a suspicion that such offence had been committed. The order of the Customs Officer was not final as it was subject to an appeal and if the appellate authority found that there was no good ground for the exercise of that power, the property could no longer be retained and had under the Act to be returned to the owner. That being the position and the property being liable to be returned there was not only a statutory obligation to return but until the order of confiscation became final an implied obligation to preserve the property intact and for that purpose to take such care of it as a reasonable person in like circumstances is expected to take. Just as a finder of property has to return it when its owner is found and demands it, so the State Government was bound to return the said vehicles once it was found that the seizure and confiscation were not sustainable. There being thus a legal obligation to preserve the property intact and also the obligation to take reasonable care of it so as to enable the Government to return it in the same condition in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted to appropriation of the gold by another department of the Government. It was also observed that if the gold and gold ornaments were melted, the same resulted only in the change of form. The Court observed the Government would continue to hold the melted gold in some form or other and therefore, the Government was bound to return the said gold or the value. It was also observed that at the time when the confiscation order was set aside, both in equity and law status quo ante prior to the passing of the confiscation order ought to be restored. 50. In Zhinet Banu Nazir Dadany (supra) a Division Bench of the Delhi High Court was dealing with a similar situation, as in the present case, wherein the gold as seized by the respondent was disposed of when the same was neither perishable nor hazardous. In such context, the Division Bench held that the gold could not have been hurriedly disposed of and in the absence of a show cause notice being served on the petitioners. It was held that there was no reason to proceed to the disposal of the seized gold without notice, and that too without passing any order on adjudication and accordingly set aside the seizure of the gold with a direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . .. ... ..." 51. In our opinion, the petitioners would also be correct in contending that the impugned action of the respondents in the present case was in the teeth of the CBEC instructions dated 14 February 2006. The relevant extract as relied on behalf of the petitioners reads thus: "8. As per CBEC instructions vide letter F. No. 711/4/2006-Cus. (AS), dated 14.02.2006, before selling the goods Notice must be given to the owner/importer. The text of the circular is reproduced herewith- As instance has recently been brought to the notice of the Board where seized goods were disposed of without issuing notice to the owner of the goods. The seizure having been set aside by the adjudicating authority, the owner of the goods sought their return but was advised to obtain the sale proceeds, which were significantly lower than the seizure value. In subsequent proceedings, the High Court has directed the refund of an amount higher than the sale proceeds, as well as payment of interest. The loss to the exchequer has resulted from a failure to comply with the requirements of Section 150 of the Customs Act, 1962. It is impressed upon filed formations that where any goods, not being c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w as applicable and discussed by us hereinabove, is sought to be taken, the same would be rendered illegal. 54. In other words, the scheme as envisaged under Section 110 cannot be read to mean that mere seizure of the gold by the Customs Officer can be construed to confer any power, authority to sell the goods without following the due procedure in law namely of a prior notice of hearing being granted to the owner of the goods, or to the person from whom the goods are seized, when the property of the ownership of a person is sought to be deprived to him by sale or disposal of the goods. It would be fallacious to read into the scheme of Section 110(1) read with (1A) to (1D) any power to be exercised by the Customs officials which is not based on cogent reasons and which can be exercised without due procedure being not followed, apart from such action satisfying the test of lack of any illegal motives, non-arbitrariness, reasonableness and fairness, on the part of the Customs Officials. 55. In the present case, it is difficult to imagine as to what could be the reason for the Customs Officers to dispose of the goods hurriedly and with such lightening speed and by throwing to the wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such contention that the value of the gold is falling. Lastly the said decision did not decide on the petitioners entitlement to the return of the gold, but decided the claim with respect to market value of the gold when prices were going down. In the case before us there is specific prayer for return of gold. 57. For the aforesaid reasons, we have no manner of doubt that the petition needs to succeed. The question, however, is as to what can be the relief which can be granted to the petitioners in these circumstances, when there is no iota of doubt, in regard to illegality which has been committed by the respondents in depriving the petitioners of their valuable rights to property. In such circumstances, in our considered opinion, the principles of law which would be required to be applied, is that once the action of the respondents is held to be void, ab initio, illegal and unconstitutional, there can be no second opinion that the rights of the petitioners in regard to illegal seizure would be required to be restituted. In such context, we also cannot be oblivious to the directions as issued by the Central Government in passing the orders dated 19 September 2022 on the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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