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TMI Blog1982 (6) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... the seizure, adjudication and confiscation are void; (ii) that the person conducting the search had not formed a reasonable belief as contemplated by Section 105 of the Act and this reason too, the search is illegal; (iii) in this case, the goods seized are of three categories, viz. goods notified under Section 123, goods notified under Section 11, and thirdly other categories of goods. The burden of proof varies in each of these categories of goods. The respondents however, have not kept this distinction in mind, and have vitiated their orders; and (iv) that, the authorities have not determined the value, nor the duty payable, as required by Section 112, read with Section 122 of the Act, with determination was essential for assessing the penalty to be levied. For a proper appreciation of these contentions, it is necessary to set out the facts of the case clearly, which facts are found stated in the order of the Collector, I may state that no dispute has been raised with reference to the correctness of the facts as stated in the Collector's order, nor, indeed, any such dispute can be entertained in this writ petition. 3. On 26-6-1973, the Superintendent of Customs and Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 110 items of goods seized from the petitioners, items 1, 3, 7 etc., in all 48 items are goods notified under Section 11(D) of the Customs Act, while certain other items (specified in the notice) are prohibited goods under Section 123 of the Act. It was indicated that in the case of prohibited goods, the burden of proving that they are not smuggled goods lies upon the petitioner. The action proposed to be taken was also indicated, and it was stated that the show cause notice was based upon the panchanama dated 26-6-1973 and five other documents mentioned therein. 5. After receiving the show cause notice, the 1st petitioner requested for copies of the documents upon which the show cause notice was said to be based and also the statements of the witnesses examined, if any, during the course of investigation. In August 1975 copies of the documents referred to in the show cause notice were supplied whereafter the 1st petitioner submitted his explanation dated 12-9-1975. In this explanation, the 1st petitioner submitted, in the first instance, that the Superintendent of Customs & Central Excise had no legal authority to collect the amount of penalty allegedly due from the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e adjourned dated of hearing, the 1st petitioner appeared and in his presence, witnesses were examined, who were also cross-examined by the 1st petitioner and/or by his counsel, as the case may be. Eight documents were also filed by the 1st petitioner in support of his case, comparing of 7 bills issued by "Mogwa & Company, Tawai (NEFA)" and the Customs notified items register for the year 1973-74. Since the foreign origin of the goods was disputed by the petitioners the Collector decided to settle the said dispute by physical examination of seized goods. He intimated the 1st petitioner, on 20-3-1976 that the goods would be examined on 23-3-1976 at 3.00 P.M. On that day, the 1st petitioner, Sri T.N. Khambati, intimated the Collector in writing that he had no objection to the goods being inspected by the Collector in the petitioner's absence. Accordingly the Collector examined the goods, and found that all the goods except Item No. 26 (2 sarees) were unmistakenably of foreign origin. 7. After the enquiry was closed, information was received by the Collector that "Mogwa & Company, Tawai" whose bills were produced by the petitioner was a fictitious firm. Accordingly the Collector sent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs in his order : (i) the Superintendent of Customs and Central Excise found certain foreign goods exhibited and displayed in the shop. Accordingly he called upon the 1st petitioner to produce the register and the relevant documents pertaining to them. Certain documents were produced but, on comparison, the goods did not agree with these documents. Those goods which were found not to be backed by relevant documents, were seized. The Superintendent was acting under a reasonable belief that the goods on which Customs duty was not paid must be deemed to be smuggled goods. There was no ulterior motive on his part. Accordingly it cannot be said that there was no reasonable belief on the part of the officer when he seized the said goods; (ii) no attempt has been made by the petitioners in this case to establish that the seized goods are in fact covered by relevant documents. The documents produced by the petitioners at a late stage are bogus. Further, on the day of seizure, the 1st petitioners himself stated that they had not maintained the register as per Section 11E of the Act. The register produced at a later stage is clearly a belated attempt to cover up the default, and can be given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith". Section 11, which is the only Section in Chapter IV, empowers the Central Government to prohibit, by notification in the Official Gazette, either absolutely or subject to such conditions as may be specified in the notification, the import or export of goods of any specified description. Chapter IVA contains several provisions relating to detection of illegally imported goods, and prevention of the disposal thereof. Chapter VIA was introduced by an amendment in 1969. Section 11A defines certain expressions used in the Chapter. "Intimated place" is defined by clause (b) to mean "a place intimated under sub-section (1), sub-section (2) or sub-section (3) as the case may be, of Section 11C". The expression "notified goods" is defined in clause (d) to mean "goods specified in the notification issued under Section 11B". Section 11B empowers the Central Government to notify the goods. It says : "If having regard to the magnitude of the illegal import of goods of any class or description, the Central Government is satisfied that it is expedient in the public interest to take special measures for purpose of checking the illegal import circulation or disposal of such goods or faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any reasonable time, enter any place intimated under Chapter IVA or Chapter IVB as the case may be and inspect the goods kept or stored therein and require any person found therein who is for the time being in charge thereof, to produce to him for his inspection the accounts maintained under the said Chapter IVA or Chapter IVB, as the case may be, and to furnish to him such other information as he may reasonably require for the purpose of ascertaining whether or not such goods have been illegally imported, exported or are likely to be illegally exported." 16. Section 110 deals with seizure of goods, documents and things. It says that if proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods. 17. Chapter XIV contains provisions relating to confiscation of goods, and imposition of penalties. Section 111 provides for confiscation of and Section 112 for imposition of penalty for improper importation of goods. Clauses (d) and (p) of Section 111 under which the goods in question have confiscated may now be set out :- "111. Confiscation of improperly imported goods etc. - The following goods brought from a place outside I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of gold or diamonds, watches and any other class of goods which the Central Government may, by notification in the Official Gazette, specify.". 20. Now in the light of the above provisions, let me deal with the contentions urged by the learned counsel for the petitioners. The first contention, as already noticed, pertains to the competency of the officer who is said to have searched the premises and seized the goods. The contention is that he was not empowered to do so under Section 105 (Searches) and Section 110 (Seizure). This contention has been raised in paragraph 6 of the writ petition. In paragraph 6 of the counter-affidavit it is stated that the Superintendent of Central Excise was vested with powers under Section 110 of the Act and further that, this was not a case of `search' within the meaning of Section 105. It is stated that since the Superintendent found that the goods exhibited in the petitioner's shop were liable to confiscation and also because the 1st petitioner was not able to produce the register to be maintained under Section 11E of the Act, nor the vouchers which he was bound to maintain under Section 11F of the Act, he seized the goods. I have alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under this Act, to seize such goods. The power of seizure is not predicated upon a valid search or inspection, as the case may be. All that is required by Section 110(1) is that the proper officer must entertain a reasonable belief that certain goods are liable to be confiscated under the Act; and thereupon the is entitled to seize the same. I am, therefore, unable to agree with Mr. V.R. Reddy, the learned counsel for the petitioners, that this is a case of search or that the seizure is invalid and/or illegal for the reason suggested by him. Further as held by the Supreme Court any invalidity affecting the search, does not vitiate the seizure and further investigation. In State of Maharashtra v. Natwarlal Damodardas Soni (1980) 4, S.C. Cases, 669 the Supreme Court held following a catena of decisions, that even if the search is illegal it does not affect the validity of the seizure and further investigation by the Customs authorities, or the validity of the trial which followed on the complaint of the Customs Officer. On the same parity of reasoning, even if the inspection is invalid or incompetent, it does not vitiate the seizure which is, undoubtedly, by a competent Officer, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he seizure was effected. (I have observed already that the power to seize is not predicated upon a valid search or inspection). It is therefore difficult to hold that the officer did not form or entertain a reasonable belief that the goods in question are liable to confiscation under the Act, when he seized the same. It should be remembered that the formation of this belief is a subjective one. Both the adjudicating authorities have found, on the above material, that the Officer did entertain a reasonable belief, as contemplated by Section 110 of the Act; and I see no reason to interfere with their finding. It should also be remembered that this Court cannot sit as an appellate authority over the decisions of the adjudicating authorities, nor can it go into the adequacy of material upon which the reasonable belief was formed. In any event, the material in this case is certainly sufficient for any reasonable person to form the reasonable belief. The panchanama recites that the 1st petitioner admitted not maintaining the register as contemplated by Section 11E. The register subsequently produced by him has been rejected by the adjudicating authority (Collector) as a fabrication. More ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessary to mention here). Having so held, the Supreme Court directed that the goods confiscated have got to be returned inasmuch as sub-section (4) was struck down in its entirety. With respect to the accounts books etc., which were seized from the dealer, the Court directed them to be returned to the dealer inasmuch as the safeguards provided by the Code of Criminal Procedure were not followed when the search was made. I am unable to see any relevance between the principles of the said decision and the contention which I am now dealing with. 23. Mr. V.R. Reddy next relied upon the decision of the Allahabad High Court in Collector, Central Excise v. L.K.N. Jewellers, A.I.R. 1972, Allahabad, 231 the facts of which case, according to the learned counsel bear a close approximation to the facts of the present case. It must, however, be remembered that, that was a case where the seizure was challenged by way of a writ petition. It was not a case where the matter came up before the Court after adjudication. The matter arose under the Gold (Control) Act, 1968, Section 66 whereof empowered any Gold Control Officer, if he has reason to believe that in respect of gold any provision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the such enquiry to cross-examine the witnesses, if he so desired. He was also told that if he failed to be present at the enquiry the matter will be proceeded with exparte. At that time, it appears an order of detention was issued against the 1st petitioner and was in force, and he was absconding. Be that it may, the notice sent to him was returned with an endorsement that the 1st petitioner was absent at the said address for continuous period of seven days. The notice sent to Mogwa & Company at the address mentioned by the petitioner on the bills was also returned with the endorsement "not known". Then there was information received by the adjudicating officer with reference to the place where the said firm was said to be located, its inaccessibility, and the absence of any merchant at that place. These circumstances led the adjudicating officer to the conclusion is not open to interference in this writ petition. Mr. V.R. Reddy however, contended that no proper or sufficient opportunity was given to the petitioner to meet, or disprove the allegation that Mogwa & Company is a non-existent firm. In the facts stated above, this contention cannot be acceded to. 25. It was then argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y notified goods : (i) unless such goods are accompanied by (a) the voucher referred to in Section 11F or the memorandum referred to in sub-section (2) of Section 11G as the case may be, or (b) * * * [Sub-clause (b) omitted as unnecessary] (ii) unless he has taken, before acquiring such goods from a person other than a dealer having a fixed place of business such reasonable steps as may be specified by rules made in this behalf, to ensure that the goods so acquired by him are not goods which have been illegally imported." While Section 11F deals with sale of notified goods except under a voucher in the prescribed form, Section 11D deals with purchase or acquisition of notified goods. It says that no person shall acquire notified goods unless they are accompanied by the voucher referred to in Section 11F, and unless he has taken, before acquiring such goods from a person other than a dealer having a fixed place of business, such reasonable steps as may be specified by the Rules in this behalf, to ensure th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary to the relevant provisions of the Act. In this case, the department has led no such evidence. The adjudicating officer has merely chosen to sustain the confiscation of this category of goods on the basis of a presumption drawn from the facts relating to other category of goods which, in my opinion, is not warranted or justified. It is therefore, directed that in so far as the third category of goods are concerned, the confiscation is bad and they are liable to be released and returned forthwith to the petitioner. It is for the adjudicating officer to determine after notice to the first petitioner, which of the seized goods fall within the third category and implement the above direction. 30. With respect to the fourth and the last contention, it is undoubtedly true that for leving the penalty it may be necessary to assess the value of the goods seized and confiscated, inasmuch as the penalty to be levied should not exceed five times, the value of the goods of Rs. 1,000/- whichever is greater, in the case of prohibited goods, while in the case of other dutiable goods, the penalty should not exceed five times the duty sought to be evaded on such goods, or Rs. 1,000/- whichever ..... X X X X Extracts X X X X X X X X Extracts X X X X
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