Calcutta High Court
Bowreah Cotton Mills Co. Ltd. vs Commissioner Of Customs on 22 December, 1995
Equivalent citations: (1996)1CALLT397(HC), 1996(86)ELT28(CAL)
Author: Satyabrata Sinha
Bench: Satyabrata Sinha
JUDGMENT Satyabrata Sinha, J.
1. The petitioner No. 1 is a public Limited Company of which the petitioner No. 2 is one of the Directors. The said petitioners have, by way of this writ application, questioned an order of seizure of 158 cartoons of Velvet Fabrics and 292 cartoons of Silk yern detained/seized from the godown of the petitioner in terms of Section 110(1) of the Customs Act hereinafter called and referred to for the sake of brevity as the said Act.
2. The basic fact of the matter is not dispute.
The petitioners carry on business of manufacture of various textile materials. They obtained various export orders relating to textile materials and lady long coats wherefor they applied for advance DECC for the import of articles therefor in terms of Export-Import Policy 1992-97. It was granted three licenses which are either quantity based or value based or both quantity and value based. They have also famished bank guarantees or letters of undertaking to the Director General of Foreign Trade to Secure the excise duty in case of non-fulfilment of stipulated export obligation. The consignments were received and allegedly upon verification thereof by the proper officer an order for release of goods was passed in terms of Section 47 of the said Act whereafter they were allegedly temporarily kept with the Clearing Agent. On 22. 4. 95 the petitioners imported mulberry raw silk which were also released upon compliance of all formalities in terms of Section 47 of the said Act. Similarly another consignment was exported by them on 28.6.95. The petitioners contend that owing to some administrative problem a lock-out was declared in the mill and Factory belonging to the petitioner and they could not take delivery of the goods from the Clearing Agents whereafter they took on rent a godown on 24. 7. 95 at a fixed rental of Rs. 35,000/- per month. The goods in question were shifted in the said godown, on 13th and 14th August 1995 where after Officer Incharge of Titagar police Station put the godown under lock and key. Allegedly the petitioners supplied xerox copies of all the relevant documents but inspite of that the said godown was sealed on 18th August, 1995. An application was moved for release of the said godown before the Additional Chief Judicial Magistrate and by an order dated 19.8.95 the said application was put up for hearing on 21st August 1995, on which date the matter was again posted on 23rd August 1995. Allegedly as despite notice the Superintendent of Customs, Barasat did not take any steps relating to the petitioner's application for release of the said goods, the Officer In-charge of Dum Dum police Station was directed to remove the seal of the godown. However, on the same day the Barasat Customs Division, Preventive Unit, passed an order under Section 110(1) of the Customs Act.
3. On 24th August, 1995 a summons was issued by the Customs authorities under Section 108 of the said Act; pursuant whereto the learned Advocate of the petitioner appeared with original documents on 28th August, 1995 but as he could not answer some technical questions, he had asked for adjournment. Another summons was issued on 30th August, 1995 directing one Amit Sen, one of the Directors of the Company, to appear on 31st August, 1985. Again an adjournment was sought for. A third notice was issued by the Customs Authorities under Section 108 of the Customs Act asking shri S. K. Samani, Accountant of the petitioner No. 1 Company, to appear, pursuant whereto he allegedly appeared and explained. Another summons was issued upon Sri H. S. Parekh, the petitioner No. 2 for his appearance on 16th September, 1995 but he could not appear as allegedly he was out of Calcutta. On 13.9.95 an Officer of the petitioner appeared whereafter he was directed to appear on 19.9.95 which he complied with and the original documents were allegedly shown. On 19.9.95, however, 152 belts of Mulberry raw silk of Chinese origin as also 129 cartons of velvet fabrics made of Korea were removed leaving behind 142 bells of Mulberry raw silk and 29 cartons of velbet fabrics in the said godown. On 28. 9.95 a search was made in the office of the petitioner-company situated at 3-A Shakespeare Sarani where from various documents were seized.
4. The respondents have filed an affidavit-in-opposition wherein it was Inter-alia, contended that the petitioners neither filed the original documents nor were co-operating with the Officers of the custom authorities. It has contended that the petitioners have filed various writ applications in this court questioning summons issued to the petitioner and for release of the seized goods despite the fact that they were to appear 3 days in a week terms of an order passed by this court while granting anticipatory bail to the petitioner No 2. The respondents have denied and disputed that at any point of time any original documents, was produced or shown to the concerned officers and only pursuant to the order of this court dated 30.11.95, the respondents filed 3 original import licences, 3 corresponding BEEC books and 2 original triplicate copies of bill of entries bearing No. 69, 6 and 1 and xerox copy of triplicate bill of entry bearing No. 136 and on 16.11.95 pursuant to the said order the respondent No. 2 appeared and stated that he had nothing further to say and nor any further submissions was made. The respondents contend that the goods detained/seized are not the same goods which were imported and the petitioners are guilty of suppression of material documents and have also taken recourse to manufacture thereof.
5. It may be recorded that pursuant to the aforementioned order dated 13.11.95 a report has also been submitted by the Assistant Commissioner of Customs, Preventive Unit, a copy whereof has been served upon the learned Counsel for the petitioner wherein, inter alia, it has been stated that the petitioners have not been furnishing any document and had been evading examination by the Customs Authorities and as such Customs Authorities examined the Clearing Agent, Handling Agent and other concerned and obtained documents relating to the goods imported against the 3 bills of entry and the import licences, DEEC Books. In the report submitted to this court upon examination of the original document it is stated that goods in question are not the same goods which have been exported as well as the fact that the petitioners have not given any document to show as to how they have disposed of the goods received by them. It has been pointed out that the Handling Agent-representative of the petitioners categorically stated that they do not have any document and they had handed over the said goods to Mr. R. N. Singh of the petitioner No. 1 but the petitioner No. 2 allegedly stated that the said R.N. Singh was not his employee. It was further found that the marks most of the detained/seized goods did not tally with those mentioned in the bills of entry. It has however, been stated that in course of such search of the premises of the Handling Agent M/s. Rubi Agency Pvt. Ltd. a challan book was discovered wherein -incomplete challans sought to be prepared for movement of certain goods (silk and velvet) on 13. 8. 94 and 14. 3. 94 wherein numbers of other challans particulars of the vessels, bill of entry No. container No. had not been mentioned and on interrogation it was stated that the same were in course of preparation at the instance of petitioner No. 2, xerox copies whereof have been filed with the said report.
6. Mr. Ajit Panja, the learned Counsel appearing on behalf of the petitioner has raised three contentions in support of this application. Learned counsel submitted that the petitioners have a fundamental right to carry on business in terms of article 19(l)(g) of the Constitution of India subject of course to the reasonable restrictions imposed under the Customs Act. According to the learned Counsel the petitioners are under a contractual obligation to export the manufactured ladies coats and other textile materials within the time fixed thereunder and they have been granted licences therefor. According to the learned Counsel the Central Government even in relation to one licence has exempted the petitioner from payment of excise duty and in other cases allowed it to furnish bank guarantees which, the learned Counsel would contend goes to show the fact that the petitioner No. 1 is a reputed concern. It was submitted that in view of the fact that the imported goods were released upon compliance of all the formalities as required under Section 47 of the Customs Act, the respondents could not have seized the same. It was contended that in the instant case there is no charge of smuggling, the purported seizure by the Customs authorities in purported exercise of the jurisdiction under Section 110(1) of the Act without taking recourse to the provision of Section 129(D) is wholly illegal and without jurisdiction. In support of his aforementioned contentions reliance has been placed on Jain shudh Vanaspati Ltd. and Anr. v. Union of India and Ors. ; Union of India and Ors. v. Jain shudh Vanaspati ; Rotoflex Industries v. Collector of Customs , and Union of India and Ors. v. Popular Dyechem reported .
7. The learned counsel contends that the seizures have been made on surmises and conjectures. It was submitted that the various documents annexed to the writ application would show that the petitioners are in possession of all the requisite documents and continuance of seizure of the goods in question would amount to deprivation of the petitioner's right to possess the said goods which in turn would deprive the petitioner to fulfil its commitment to the exporter and the same may result in violation of the undertakings given by the petitioners to the Central Government in terms of the said licences. According to the learned Counsel that in the event of the petitioners failure to export the goods to their foreign buyers they would suffer heavy pecuniary losses. The learned counsel contends that the seizure lists do not contain any reason and thus it is not permissible for the respondents to support such seizure by way of an Affidavit. Reliance in this connection has been placed on Mohinder singh Gill and Anr. v. The Chief Election Commissioner .
8. It was further submitted that the Union of India and others having not filed any affidavit, allegations made in the writ application must be held to be correct. According to the learned Counsel in view of the documents shown by the petitioner it was obligatory on the part of the Barasat Customs Department, Preventive Unit to make enquiries with Collector of Customs as regards identity of the goods and failure to do so has resulted in failure of justice. It was urged that as the goods have been cleared by the Collector of Customs, Barasat Preventive Unit had no jurisdiction thereover and in support of this aforementioned contention reliance has been placed upon a decision of the Customs Excise and Gold Control Appellate Tribunal and Sharad Himatlal Daftary v. Collector of Customs . It was further submitted that in any event the Affidavits in Opposition should not be relied upon as the same has not been properly verified and in support of the aforementioned contention reliance has been placed on Sukhwinder Pal Bipan Kumar and Ors. v. State of Punjab and Ors. ; Shivajirao Nilangekar Patil v. Dr. Mahesh Madhav Gosavi and Ors. ; Pritam Singh v. Ranjit Singh ; A.K.K. Nambiar v. Union of India and Anr. and Narmada Charan Banerji v. Maharaj Bahadur Singh Dugar reported in ILR 1937 (II) Calcutta, 259,
9. It has, further been submitted that no reason to believe for such has been stated in the seizure list.
10. Mr. Bajoria, the learned Counsel, appearing on behalf of the respondents, however, submitted that there is nothing to establish that the detained/seized goods are those in respect of which the petitioners have annexed xerox copies of import licences, bills of entry with the writ application. According to the learned counsel documents which have been annexed to the writ application had never been submitted before the Customs Authorities and they have obstructed the investigation as also are avoiding examination and manipulating documents.
11. The learned counsel has produced before me two notifications to show that the said Officer has the requisite jurisdiction.
12. It was submitted that at the investigation stage no order for the release of the goods should be made and in support of his aforementioned submission the learned Counsel has relied upon I.T.C. Ltd. v. Union of India . It was urged that Assistant Collector has the same jurisdiction as that of the Collector.
13. The learned Counsel further contends that once the goods have been changed, Section 47 will have no application. The learned Counsel further submits that 'belief must be that of the seizing authority and not that of the Court. It has been pointed out that a very vital document being Bill of Entry No. 1380 dated 3.4.95 has not been annexed to the writ petition. The learned Counsel also contended that the goods should not be released at the stage before adjudication on confiscation proceedings and in support of his aforementioned contention he has relied upon in Union of India v. Lexus Exports Private Limited reported in 1995 (58) ECR. 238. He has further submitted that this Court in exercise of his jurisdiction under Article 226 of the Constitution of India should not interfere as the investigation is still going on. Reliance in this connection has been placed on Godrej & Boyce Manufacturing Co. Pvt. Ltd. v. Union of India reported in 1992 (38) ECR, 136; I.T.C. Limited v. Union of India and Crystal Impex Pvt. Ltd. v. Collector of Customs, Calcutta . It was further submitted that in any event, in view of the conduct of the petitioners, no relief can be granted to them.
14. Although the learned Counsel for the parties have raised various contentions in this writ application and have relied upon a large number of decisions, in my view the following issues arise for determination in this application:--
A. Whether the Customs Authorities have jurisdiction to detain/seize the goods in question ?
B. Whether the Respondents No. 4 and 5 had objective materials to form reasonable belief at the time of seizure and/or detention ?
C. Whether the petitioners are entitled to ask for release of the goods before completion of the investigation and finalisation of the adjudication proceedings ?
D. Whether the conduct of the petitioners disentitles them from claiming any relief under the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India ?
15. Re: Question: A In view of the stand taken by the Respondents that there exists reasonable apprehension that the goods which are seized/detained are not the same which had been imported by the petitioners, it might not have been necessary for this court to consider the effect of Section 47 vis-a-vis section 129D of the Customs Act. However, in fairness to the learned Counsel the said question may be considered. Section 47 of the Act provides for clearance of goods for home consumption empowering the proper officer to make an order permitting clearing of the goods when he is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under the said Act in respect of the same has been paid. It may be true that an order under Section 47 is passed by a proper officer but that does that mean that in no circumstances such goods cannot be seized. Section 110 of the Act empowers the authorities to seize goods in the event the proper officer has reasons to believe that any goods are liable to confiscation under the said Act. Proviso appended thereto 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 order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. In the instant case a period of six months has not elapsed from the date of seizure of such goods. No notice under Section 124 of the said Act has been yet served upon the petitioners.
16. In Jain Sudh Vanaspati Limited v. Union of India reported in 1982(10) Excise Law Times, page 43 upon which reliance was placed, 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 said decision has been rendered in a different fact situation.
17. The aforementioned decision has been followed by a Division Bench of Bombay High Court in Union of India and Ors. v. Popular Dyechem, reported in 28 Excise law Time, page 63. The Bombay High Court held that an order under Section 47 of the Act attached finality upon the satisfaction of the officers that the imports in question are not prohibited.
18. In those cases no seizure was effected, but a show-cause notice was issued and issue was decided by the concerned authority as an original adjudicating authority instead of exercising the power of revision or review in terms of Section 129 of the said Act.
19. However, in Madan Lal Steel Industries Ltd. v. Union of India reported in 1991(56) E.L.T. 55, a Division Bench of the Madras High Court noticed the decision by Kanak Raj, J. wherein it was observed:
"The argument that such mistakes can be corrected only by resorting to Section 129D of the Customs Act does not appeal to us because we are only concerned with seizure of goods."
20. The Division Bench considered the decisions of Delhi High Court in Jain Sudh Banaspati Ltd. (supra) and Popular Dyechem (supra) and noticed that in the Bombay High Court judgment the Assistant Collector who had cleared the goods under Section 47 of the Act had done so after physical verification of the goods and yet a certain proceedings to confiscate the goods had been started. In the case before the Delhi High Court notices under Sections 28 and 124 of the Act had been issued and they were under challenge, which shows that proceeding for confiscation had already been initiated and along with the proceedings for confiscation, notice for payment of duty short-levied had also been issued. The Division Bench of Madras High Court also noticed a full bench decision of this Court in Eurasian Equipment and Chemical v. Collector of Customs reported in AIR 1980 Calcutta, page 888 and followed the same. The Division bench held:--
"Both the Bombay Court judgment in the case of Union of India v. Popular Dyechem and the Delhi Court judgment in the case of Jain Sudh Vanaspati Ltd. and Ors. v. Union of India and Ors. , on their peculiar facts, are good for taking notice of the order under Section 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 judgment in the case of Euresian Equipment & Chemicals v. Collector of Customs 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 seizure without waiting for the notice under Section 124 of the Act. Such materials upon which it will be possible to predicate whether there are reasons for misrepresentation or fraud in importing or exporting of any prohibited goods or dutiable goods in violation of the conditions under which such import or export is permissible, will be available only in the notice, which, as we have already noticed, has to contain the grounds on which the proposal to confliscate is based, to afford an opportunity to the importer or the exporter or any other person from whose custody such goods are seized, to make a representation in writing and thereafter heard. We thus find that It is not a fit case in which this Court can declare the seizure invalid."
The Division Bench thereafter considered the merit of the seizure and held that the same was not illegal.
21. It is worthwhile noting that a Division Bench of this Court in Collector of Customs and Central Excise, West Bengal and Ors. v. Hindustan Motors Ltd. and Anr., held:
"In the present case the Customs Authorities have stated that the appellants were permitted to clear the goods by mistake. It was the duty of the appellants to obey the law. If the allegations of the Customs Authorities be correct they had no right to import goods without a valid licence, they should not be heard to say that because of the order under section 47, steps cannot be taken against them under the other provisions of the Customs Act. This contention of counsel for the appellants, is, therefore, overruled."
22. In Euresian Equipment & Chemicals Ltd. and Ors. v. The Collector of Customs and Ors. , it was held:
"An order by the proper officer permitting clearance and loading of the goods under Section 51 of the Customs Act does not affect the position. Under Section 113 of the Customs Act export goods incur the liability to confiscation at the stage when they are attempted to be exported. The attempt to export necessarily precedes actual export. At the time of attempting to export the goods contrary to prohibition, the liability of the goods to confiscation arises and at that point of time, when the liability to confiscation arises, the goods are 'goods which are to be taken out of lndia to a place outside India' and are, undoubtedly, 'export goods' within in the meaning thereof as defined in Section 2(19) of the Act. Actual export of the goods, as a result of the attempt succeeding subsequent to the stage of the attempt, is not indeed of any material consequence."
The aforementioned decision has been followed in the case of United India Minerals .
The decision of the Delhi High Court in Jain Soodh Vanaspati as the said question was not affirmed by the Supreme Court in and the said question was left open.
23. In N.K. Bapna v. Union of India a bench of which S. Ranganathan, J was a party and who had also a party in Jain Soodh Vanaspati (supra) observed:--
"The third point made by Shri Sen is that once goods are cleared by the customs authorities, they are not" liable to confiscation unless the order granting clearance is reversed in appropriate proceedings. He places reliance for this proposition on Union of India v. Jain Shudh Vanaspati affirming the decision of the Delhi High Court in Jain Shudh Vanaspati Ltd. and Anr. v. Union of India and Ors. [1982 (10) E.L.T 42 (Del)] (to which once of us was a party). There was some discussion before us as to whether this Court has confirmed the decision of the High Court on the above point or left it open in para 4 of the judgment. We do not think it is necessary for us to enter into this controversy. That was a case where the goods had been completely cleared accepting the plea of the importer that their import was not prohibited. The High Court held that so long as this acceptance stood the goods were not liable to confiscation. We are here concerned with the question whether the goods are liable to confiscation under Section 111(j) and this question has to be answered in the affirmative in view of the language of the Section. The conclusion here that the goods are liable to confiscation does not go behind or ignore the effect of the order of clearance, as in that case. It accept the fact of clearance and proceeds on the footing that the goods, rightly cleared under Section 59 have been clandestinely removed from the warehouse within the meaning of Section 59. The decision cited by learned counsel is, therefore, of no assistance to him."
24. It is not necessary to multiply decisions as recently the aspect of the matter has been dealt with by me in India Sales International v. Collector of Customs in C.O. No. 8580(W) of 1994 disposed of on 23.11.1995. It appears that Ruma Pal, J in Bengal Tools Limited v. Additional D.G.R.I and Christal Implex Pvt. Ltd. v. Collector of Customs (Preventive) Calcutta, has taken the same view. Further more the adjudications is yet to take place as to whether the goods in question are the same which are said to be imported and covered by the bills of entries annexed to the writ application.
25. So far as the submission of the learned Counsel to the effect that the Department of the Customs, Preventive Unit, has no jurisdiction, suffice it to say that the Central Government had issued two notifications bearing No. 250/83 dated 27.8.83 which have been amended by various notification in terms whereof Collector of Customs (Preventive), West Bengal has the jurisdiction over the whole of the State of West Bengal, the State of Sikkim and the Union of Territory of Andaman and Niccobor Island. In terms of another notification bearing No. 251/83 CUS dated 27.8.83 as amended by various other notifications, the area of Port of Calcutta, Dum Dum Airport, under the jurisdiction of Calcutta, Howrah and South Subarban Corporation, so much of the Hooghly river as its down-stream of the Northern limited of the Calcutta port and all lands as are within 10 K.M high water mark at springtime on either side of the river. The Collector of Customs, Calcutta has the jurisdiction along with other officers working under the control of the said authority. It is, therefore, stated that Collector of Customs (Preventive), Deputy Collector of Customs and Assistant Collector of Customs working under the control of the Customs Authority, Preventive, has the jurisdiction over the entire State of West Bengal.
26. The decision was rendered on a different fact situation. Sharad Himatlal Daftary v. Collector of Customs has also no application in the facts of the present case. In the said decision it was held that the order passed by the Customs Authority were non-existence. The said order was passed on the allegation that there had been no import licence which on fact was shown to be incorrect. In the said case even the bills of entry had not been filed and the goods were still under the control of customs awaiting clearance. It was contended on behalf of the writ petitioner therein that the bills of entry having not been filed the question of clearance was required to be considered by the appropriate authority. The observation of Sengupta, J in paragraphs 20 and 21 of the judgment would show that the learned Judge relied heavily on the practice of the Customs Department that when the goods are imported, the bills of entry for home consumption is filed along with the licences and the same could be filed at later date as it was held that the import licence should be submitted at any time before the goods were released by the Customs Authorities, the question of seizure of the said goods at that juncture did not arise.
27. In the instant case the goods in question were found at Titagarh within the jurisdiction of the Commissioner of Customs, Preventive and the Assistant Commissioner of Barasat Division and the Superintendent having jurisdiction in the matter. The said officers, therefore, in terms of the aforementioned notification had the requisite jurisdiction.
28. In I.T.C Limited v. Union of India report in , while considering a matter arising under a notice under Section 11A of the Central Excise and Salt Act, the court considered the relevant provision which are in part materia with the provision of the said Act and inter alia held that such notifications are intra vires. Such powers can be conferred under the Customs Act upon various authorities as would be evident from Sections 2(8), 3, 5 and 6 of the said Act. The Central Government for administrative convenience may delegate different powers with different officers over different areas dividing the countries into various administrative zones and also may place certain type of cases under a particular officer.
29. In Crystal Implex Put Ltd. v. Collector of Customs, Calcutta Suhas Chandra Sen, J. (as his lordship then was) held that Customs Officers in Calcutta and Bombay are officers of the same Department and if any detention of goods has to be done at Bombay for the purpose of investigation in Calcutta, the Customs Officer of Bombay can do so in exercise of their statutory authority under the Customs Act.
30. In any event the question as to whether the authority has the territorial jurisdiction to effect search and seizure is essentially a question of fact. The submission of Mr. Panja to the effect that Collector of Customs has jurisdiction in respect of all lands "as are within 10 K.M of the High Water mark at springtime either side of the river" and thus the Superintendent of Excise, Barasat has no jurisdiction to seize goods from Titagarh cannot be accepted. The said question has not been raised in the writ application and thus it is not possible for this court to entertain the same without factual background having been pleaded in the writ petition. Moreover both the Collector of Customs and the authorities of the Preventive Department may have concurrent jurisdiction over the matter. In any view of the matter, such a jurisdictional fact should be allowed to be decided at the first instance by the concerned authorities if and when a notice under section 124(1) of the said Act is served upon the petitioners whence they would be entitled to raise all contentions relating to validity and otherwise of such seizure including the question of territorial jurisdiction on the part of the concerned authorities.
31. In Express Newspapers Pvt. Ltd. v. The Workers reported in 1963 SC, page 569-it was held:--
"The High Court undoubtedly has jurisdiction to ask the Industrial Tribunal to stay its hands and to embark upon the preliminary enquiry itself. The jurisdiction of the High Court to adopt this course cannot be, and is indeed not disputed. But would it be proper for the High Court to adopt such a course unless the ends of justice seem to make is necessary to do so? Normally, the questions of fact, though they may be jurisdictional facts the decision of which depends upon the appreciation of evidence, should be left to be tried by the Special Tribunals constituted for that purpose. If and after the Special Tribunals try the preliminary issue in respect of such jurisdictional facts, it would be open to the aggrieved party to take that matter before the High Court by a writ petition and ask for an appropriate writ. Speaking generally, it would not be proper or appropriate that the initial jurisdiction of the Special Tribunal to deal with these jurisdictional facts should be circumvented and the decision of such a preliminary issue brought before a High Court in its writ jurisdiction."
32. In State of Uttar Pradesh v. Shri Brahm Datt Sharma and Anr. , the Apex Court observed:
"The high Court was not justified in quashing the show cause notice. When a show cause notice is issued to a Govt. servant under a statutory provision calling upon him to show cause, ordinarily the Govt. servant must place his case before the authority concerned by showing cause and the courts should be reluctant to interfere with * the notice at that stage unlese the notice is shown to have been issued palpably without any authority of law. The purpose of issuing show cause notice is to afford opportunity of hearing to the Govt. servant and once cause is shown it is open to the Govt. to consider the matter in the light of the facts and submissions placed by the Govt. servant and only thereafter a final decision in the matter could be taken. Interference by the Court before that stage would be premature. The High Court in our opinion ought not to have interfered with the show cause notice. "
33. For the aforementioned reasons I am of the opinion that the submission rendered on behalf of the petitioner that the seizure has been effected by the 'Superintendent of Customs of Barasat without having any jurisdiction in the matter can be allowed to be raised in this application at this stage.
34. Re: Question: B. There cannot be any doubt whatsoever that a valid seizure can be effected where a proper officer has reason to believe that the goods are liable to be confiscated. There cannot also be any doubt whatsoever that such reason to believe cannot be arbitrary ipsedixit on the part of the concerned authority. In the seizure Memo reasons have been assigned to the effect that the petitioners have not shown any documents relating to the goods in question to show bonafide possession of the petitioners. 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 (R. S Seth Gopikisan Agarwal v. R. N. Sen Asstt. Collector of Customs & Central Excise and Ors).; ; [New Central Jute Mills Co. Ltd. v. T.N. Kaul and Ors). and 77 CWN 14 (Assistant Collector of Customs for Preventive and Ors. v. The New Central Jute Mills Co. Ltd.)
35. Now the following materials are relied upon by the respondents. Information was received by the Respondent authorities from the GRP about the goods in question. For a period of more than one week from the date of sealing of the godown, documents were not produced. According to the Respondents, no document relating to storage, possession and movements of the goods were produced it is also the contention of the respondents that the marks do not tally as given in xerox copies of the bills of entry. Bill of entry No. 1830 though submitted, xerox copies is now not being relied upon, as is admitted in the Affidavit-in-reply.
36. It is pertinent to note that recently the Supreme Court in the case of Union of India v. Shyamsunder has quoted with approval its earlier decision in the case of State of Gujarat v. Mohanlal Jitamalji Porwal which laid down the law to the following effect:
"Whether or not the official concerned has seized the article in the reasonable belief that the goods were smuggled goods is not a question on which the Court can sit in appeal. The law to this effect has been declared in no ambiguous terms in Pukhraj v. D. R. Kohli, . This Court has administered caution to the courts not to sit in appeal in regard to this question and has observed that if prima facie there are grounds to justify the belief the courts have to accept the officers belief regardless of the fact where the court of its own might or might not have entertained the same belief. The law declared by this Court is binding on the High Court and it was not open to the High Court to do exactly what it was cautioned against by this Court, Section 123 of the Act does not admit of any other construction. Whether or not the officer concerned had entertained reasonable belief under the circumstances is not a matter which can be placed under legal microscope, with an over-indulgent eye which sees no evil anywhere within the range of its eyesight. The circumstances have to be viewed from the experienced eye of the officer who is well equipped to interpret the suspicious circumstances and to form a reasonable belief in the light of the said circumstances."
37. The Supreme Court noted that its decision in D. R. Kohli (supra) has been followed in the case of Indu Ramchand Bharvani v. Union of India and Assistant Collector of Customs v. Mohanlal Shankarlal Kensara reported in 1990 (Supp) SCC 793.
38. The question as to whether the authority had any reason to believe or not must, therefore, be judged in the context as to whether prima facie there are grounds to justify the belief. This Court cannot sit in appeal with regard thereto where the opinion has bonafide been formed by the Customs authority.
39. In Hindusthan Motors it has been held that non-production of the documents itself is sufficient for entertaining the belief for exercise of powers under Section 110 of the Act,
40. At the time of seizure of such goods, It is not necessary to give the detailed reasons inasmuch as Section 110(1) of the Act provides for assignment of reasons which on ultimate analysis may be found to be correct or incorrect. During further investigation after seizure, it may be found by the seizing authorities that apart from the reasons on the basis whereof the goods had been seized, other reasons also exist. It is one thing to say that some goods had been seized without there being any reason to believe in existence at all and it is another thing to say that sufficient reasons to believe existed but during investigation other reasons had also been found.
41. In Assistant Collector of Customs in prevention v. The New Central Jute Mills Company Limited reported in 77 CWN 14, this court, relying on the decision of R. S Seth Gopikishan v. R. N. Sen, Assistant Collector of Customs and Central Excise & Ors. inter alia held that the procedures prescribed under Section 165(1) of the Criminal Procedure Code for search is not applicable in Section 105(2) of the Customs Act inasmuch as two Sections are intended to meet total different situations. in Gopikishan's case (supra) the Supreme Court held that Section 105 of the Act neither compel the officer to give reasons nor the particulars of the goods. This Court observed that the statutory requirement of reasonable belief rooted in the information in possession of Customs Officer and to safeguard the citizens from vexatious proceedings. 'Belief is a mental operation of accepting a fact as true, so without any fact, on belief can be formed. It is true that it is not necessary for the Customs authorities to state reasons for his belief but if it is challenged that he had no reason to believe for such seizure, he must disclose the materials upon which his belief was formed. As has been held in Seunath Singh's case , the court can examine the materials to find out whether on honest and reasonable person can base his reasonable belief upon such materials although the sufficiency of the reasons for the belief cannot be investigated by the Court.
42. In Gopikishan Agarwal's case 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. It further noticed that the legislative policy recorded in the Section is that search must be with regard to 2 categories mentioned therein.
43. The Supreme Court further observed "That apart under Section 165(5) the Code of Criminal procedure read with Section 105(2) of the Act, he has to send forthwith to the Collector of Customs a 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 mala fide. It further observed that an effective control had also been laid down under Section 136(2) of the Act.
In the instant case the records produced before me show that all requirements of the Act were complied with.
43. In. I. T. O v. Laxmani Mealal Das reported in 1976 (103) Income Tax Reports, page 437 the Supreme Court held on the facts of that case that the second ground to the effect that the income of the respondents chargeable to tax had escapped assessment could not have led to be formation on the belief. It was held "whether the grounds are adequate or not is not a matter for the court to investigate. The sufficiency of the grounds such induce the Income tax Officer to act is, therefore, not a justiciable issue. It is, of course, open to the assesses to contend that the Income tax Officers did not hold the belief that there had been such non-disclose ure. The existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. The expression reason to belief does not mean a purely subjective satisfaction on the part of the Income tax Officer. The reason must be held in good faith. It cannot be merely a pretence it is open to the court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the Section. To this limited extent, the action of the Income tax Officer in starting proceedings in respect of income escaping assessment is open to challenge in a court of law.
44. In Hindustan Motors Limited v. T.N. Kaul and Ors. reported in 1971 CLJ 181 the Division Bench of this court (of which Sabya Sachi Mukherjee, J. as his lordshib then was, a member) was considering the provisions of Foreign Exchange Regulation Act. It was held that though the formation of opinion is subjective and is vested in the appropriate officer, yet such formation of opinion is also subject to scrutiny by the Court. It was held that in terms of Section 19(D) of the Foreign Exchange Regulation Act, 1947 the identity of the informer need not be disclosed.
45. 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.
46. 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 question and has found out the illegal motive on the part of the petitioners to be in possession of foreign made goods, in my opinion, no illegality can be said to have committed. Such illegal possession, according to the respondents, attract the provision of confiscation under the Customs, Act.
47. In this case the Court is not concerned with the fact as to whether in fact any confiscation shall be effected or not. The petitioner may be able to show that they had not violated any of the provision of the Act and the goods were thus not liable for confiscation.
48. The only question which arises for consideration at this juncture is as to whether there has been reasons to believe that such goods if seized, would liable for confiscation or not.
49. Moreover it has been admitted by the petitioner that at least the third licence and one of the Bills of Entry being No. 1380 which were produced before the authorities at the time of seizure/detention had no connection with the seized goods.
At this stage this court is not concerned as to whether the representatives of the petitioner had done any mistake or not.
50. The question as to whether the goods in question are those of the petitioner alleged to have imported under the Bills of Entry are pending adjudication and, thus, this court at this Juncture has no say in the matter.
51. Re: Question: C In view of the fact, as noticed hereinbefore, it may not be said with certainty that the proceeding would fail. Several disputed questions of fact had been raised in this application. Such question cannot properly be adjudicated by this Court in exercis of its jurisdiction under Article 226 of the Constitution of India. The investigation is in progress. As regards the petitioners alleged export commitments no particulars have been furnished. It is the positive case of the respondents that during course of investigation it transpired that the petitioners are not engaged in any trade. According to the respondents, the petitioner No. 2 who is Director In-charge even has shown his ignorance as regards person from whom the goods were exported are required to be manufactured and the parties to whom the goods are to be exported. Allegedly no stock register book and other documents have been produced to show that the petitioners, are engaged in bonafide export business.
52. In Income Tax Officer v. India Foils Ltd. reported in 76 CWN page 549 upon which Mr. Panja placed reliance, the fact situation was entirely different. It was held that the notice under Section 154 of the Income Tax Act was not justified in circumstances of the case and in that situation it was observed that the appellant should wait till the assessment are made pursuant to the notice. In that case it was held that the Income Tax Officer was proceeding under a statute which had no application in the case of the petitioner.
53. On the other hand in Union of India v. Lexus Exports Ltd. reported in 1995 (58) E.C.R 238, the Apex Court has held:
"The proceedings of seizure and confiscation are proceedings in rem. Until the culmination of the adjudication it is difficult to envisage any right on the part of the respondents from whom they are seized to export them on the basis of a future title they expect to acquire by payment of fine. Learned counsel, however, says that it would earn foreign exchange for the country. But sanctity of legal proceedings cannot be whittled down on grounds of such expediency."
54. It may be that ultimately the petitioner may succeed upon investigation of facts that the petitioners are genuine exporters and the goods imported by them were meant for export to the contracting parties to the petitioner in terms of the licences granted to it. In view of the aforementioned authoritative pronouncements of the Supreme Court, in my opinion, the goods cannot be released at this stage.
55. Re : Question : D The submission of Mr. Panja to the effect that the respondents have failed to discharge their burden cannot be allowed to be raised at this stage. This court cannot go into the merit of the matter at this stage. The jurisdiction of this court is limited. The Court could direct release of the goods and stop the investigation and other adjudication proceedings only in the event a finding could be arrived at that the concerned respondents lacked inherent jurisdiction in the matter. No notice has yet been issued under Section 124 of the act. As and when such a notice had been issued, it would be open to the petitioner to place all relevant materials before the competent authorities.
56. It is well settled principles of law that this Court normally does not interfere with the statutory right of the authorities to investigate in the matter. In I. T. C. Ltd. v. Union of India , the Apex Court held :
"A statutory enquiry can be stopped at the threshold only if it can be established on undisputed facts that the writ petitioner should not have been put in peril at all. But if a prima facie case has been made out in the show cause notice, on the basis of allegations of facts, which calls for an answer, it will not be proper for the writ Court to intervene. The impugned show cause notice cannot be challenged on the allegation that correct inferences of facts had not been drawn. In the instant case, a large number of documents were seized the various offices of the petitioner company all over India. Some documents were also seized from the wholesale dealers. A large number of persons including the Officers of the company, wholesale dealers, secondary whole-sellers and retailers were examined. It is not possible in the writ Jurisdiction to examine all the documents and evidence and find out whether correct conclusions of facts were drawn at the time of issuance of the show cause notice."
57. In Godrej & Boyce Manufacturing Co. Pvt. Ltd. v. Union of India reported in 1992(38) ECR 136 (Bombay), the Apex Court held:--
"After considering the contention urged by Shri Sethna and Shri Hidayatullah, we have no hesitation in concluding that this is not a matter where the Court should exercise jurisdiction under Article 226 of the Constitution of India and stifle the investigation. From the material to which our attention was invited by Shri Sethna, it cannot be stated that the proceedings under the show cause notice proceed without any evidence whatsoever. It is not for this Court to assess the sufficiency of evidence or whether the evidence available with the Department should be accepted or not. It is open for the petitioners to file any effective reply to (he material available to the Department and if necessary to cross-examine the witnesses on whose statements the Department is relying. In these circumstances we decline to exercise our. writ jurisdiction and examine whether the show cause notice should be struck down. It is now well settle that issuance of show cause notice can be quashed only on the ground that it was wholly without jurisdiction or it was issued without any material whatsoever available with the Department."
58. In Crystal Impex Pvt. Ltd. v. Collector of Customs (preventive), Calcutta , Suhas Chandra Sen, J (as His Lordship then was), upon taking into consideration a large number of decisions held that in view of the affidavit -in-opposition filed by the Customs Department, this have been able to make out a prime facie case which calls for an answer, therefore, the writ petition fails.
59. In I.J. Rao, Asstt, Collector of Customs v. Bibhuti Bhushan Bagh the Supreme Court held that the concerned persons are not only entitled to information as to the investigation which is in process because there can be no right in any person to be informed mid-way, during an investigation of the material collected in the case against him and moreover there is need for maintaining confidentiality of the investigation proceedings. It has, however, been held that the concerned persons from whom goods have been seized can set up case for the damage, injury or hardship that is likely to be caused to him because of extension.
60. It may be notice that the respondents further contended that the petitioners are not entitled to any relief in view of their conduct. However, in my opinion, it is not necessary to go into such question at this stage which may prejudice the petitioners in the adjudication proceedings.
61. Before parting with the case, however, it is necessary to place on regards that although Mr. Panja contended that in view of improper verification of the affidavit-in-opposition the same should not be looked into, the respondents have filed a supplementary affidavit annexing therewith a copy of the original affidavit-in-opposition as also the report produced before this court pursuant to an order dated 13th November, 1995 and the said Affidavit has been properly verified. The defeats in the said affidavit, therefore, stands cured and on that ground, I am of the opinion, that it is not necessary for this court to consider the said question at this stage any further.
62. However, in view of the fact that according to the petitioners they had to export the goods in question after manufacturing ladies coats etc. The concerned respondents are hereby directed to issue notice to the respondents, if they are so advised, in terms of Section 124(1) of the Act at an early date and preferably within a period of one week from this date. The petitioners may file their objection within two weeks thereafter and the adjudication proceedings may be completed at an early date and preferably within a period of three weeks thereafter. The petitioner should not ask for any adjournment and would be entitled to produce all documents which according to them are required to be produced. The Union of India is also hereby directed, in the event the confiscation proceedings is decided in favour of the petitioner, to grant extension as regards the validity of the licence for the period the goods in question were under seizure. Such a direction is being made, in the interest of justice, so that the petitioner may not suffer any damage for acts of ommissions and commissions, if any, on the part of the respondents.
63. This application is disposed of with the aforementioned observations and directions. However, in the facts and circumstances of this case there will be no order as to costs.
64. All parties are directed to act on a signed copy of the operative portion of this judgment.