Bombay High Court
M/S. Nikom Copper And Conductors Pvt. ... vs Union Of India And Ors on 3 December, 2020
Bench: Ujjal Bhuyan, Abhay Ahuja
Minal Digitally signed
by Minal V.
Parab
V. Date:
2020.12.03
Parab 15:30:14 +0530
WPST3834_20.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION (ST.) NO.3834 OF 2020
M/s. Nikom Copper and Conductors Pvt. Ltd. ... Petitioner
Vs.
Union of India and others ... Respondents
Mr. Prakash Shah i/b. Mr. Yogesh M. Rohira for Petitioner.
Mr. J. B. Mishra for Respondent Nos.1 and 2.
Mr. H. S. Venegaonkar for Respondent No.3.
Mr. Prabhakar Jadhav for Respondent No.4.
CORAM : UJJAL BHUYAN &
ABHAY AHUJA, JJ.
Reserved on : NOVEMBER 03, 2020
Pronounced on: DECEMBER 03, 2020
P.C. : (Per Ujjal Bhuyan, J.)
Heard Mr. Prakash Shah, learned counsel for the petitioner; Mr. J. B. Mishra, learned counsel for respondent Nos.1 and 2; Mr. H. S. Venegaonkar, learned counsel for respondent No.3; and Mr. Prabhakar Jadhav, learned counsel for respondent No.4.
2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks quashing of seizure memo dated 09.01.2020 issued by Mr. Uma Nath Chaudhary, Intelligence Officer, Directorate of Revenue Intelligence, Sub-Regional Unit, Vapi.
3. Case of the petitioner is that it is a company which is engaged in the business of import and export of copper rods, bare wires, ferrous and non-ferrous metal, etc. Petitioner holds importer exporter code bearing No.0317500457 dated 05.04.2017.
4. Petitioner had imported copper wire rods 8 MM electrolytic tough pitch copper wire rod as per ASTM B49 in two consignments vide bills of lading dated 03.12.2019 and 07.12.2019. In the course of import, 1/21 WPST3834_20.odt petitioner contemplated high seas sale of the imported goods to M/s. Chandrashekhar Industries, subsequently added as respondent No.4 to the present proceeding in terms of order dated 29.09.2020. Respondent No.4 was required to pay the agreed amount for the high seas sale by entering into a written agreement. However, only an oral agreement was entered into by and between the petitioner and respondent No.4. Unfortunately, without making any payment towards the high seas sale but on the basis of the oral agreement, two bills of entry dated 10.12.2019 were filed by respondent No.4 in respect of the two imported consignments.
5. It is stated that after filing of the bills of entry, respondent No.4 declined to make the agreed payment and instead requested for cancellation of the high seas sale orally agreed upon by and between the parties. Respondent No.4 however assured the petitioner that it would co-operate in getting no objection certificate (NOC) and for substitution of the name of the petitioner in the two bills of entry.
6. Following the same, joint request was made by both the petitioner and respondent No.4 for amendment to the two bills of entry by substituting the name of the petitioner in place of respondent No.4. It is stated that office of respondent No.2 allowed such amendment and name of the petitioner was entered as the importer in the two bills of entry. Further clearance of the imported goods was sought for by the petitioner on payment of duty on merit without seeking any exemption. Following the same, petitioner approached the office of respondent No.2 for permitting clearance of the consignments on payment of customs duty on merit. It is stated that petitioner had informed the office of respondent No.2 that because of delay in clearance of the imported goods, it was incurring heavy detention and demurrage charges.
7. Thereafter office of respondent No.3 seized the imported goods vide seizure memo dated 09.01.2020.
2/21WPST3834_20.odt
8. Petitioner has questioned the legality and validity of such seizure by contending that the impugned seizure memo does not comply with the requirements of section 110 of the Customs Act, 1962 ('the Customs Act' hereinafter). Besides, it is contended that such illegal seizure has caused serious prejudice to the petitioner as it is incurring heavy detention and demurrage charges every day since the seizure.
9. Aggrieved, present writ petition has been filed seeking the relief as indicated above.
10. Respondent Nos.1 and 2 in their affidavit in reply have taken the stand that respondent No.4 had filed two bills of entry bearing Nos.6020098 and 6022801 both dated 10.12.2019 by claiming the benefit of Notification No.25/99-Customs dated 28.02.1999 for import of the consignments which were pending for out of charge clearance at Nhava Sheva Port. The importer through its customs house agent requested vide letter dated 18.12.2019 to amend the said two bills of entry enclosing therewith letters of both the buyer and seller regarding cancellation of high seas sale. Accordingly, the two bills of entry were amended on 18.12.2019 by changing the name of the importer from M/s. Chandrashekhar Industries (respondent No.4) to M/s. Nikom Copper and Conductors Private Limited (petitioner). The amended bills of entry were filed on merit rate of duty without claiming benefit of Notification No.25/99-Customs dated 28.02.1999.
10.1. Central Intelligence Unit, Nhava Sheva vide letter dated 23.12.2019 made a request that any amendment of 15 bills of entry as mentioned in the letter should not be considered. These 15 bills of entry included the two bills of entry of the petitioner.
10.2. Directorate of Revenue Intelligence (DRI), Ahmedabad vide letter dated 23.04.2020 informed that a case against respondent No.4 was booked for wrongful availment of benefit under Notification No.25/99- 3/21 WPST3834_20.odt Customs dated 28.02.1999. As such DRI requested to nullify the amendments made in the two bills of entry dated 10.12.2019. Request of DRI to cancel the amendment was accepted by the department on 29.04.2020. Following such acceptance of request, the importer in respect of the said two bills of entry became respondent No.4.
10.3. It is stated that the act of cancellation of high seas sale arose after 16.12.2019 when the premises of the importer, high seas seller and the concerned customs broker were searched by DRI, Ahmedabad and a case was booked against respondent No.4. When the petitioner came to know about such search, it approached the Nhava Sheva customs authorities on 18.12.2019 for amendment in the two bills of entry.
10.4. Since the amendments were done in a fraudulent manner and not as per law, Joint Director, DRI, Ahmedabad vide letter dated 23.04.2020 requested the Joint Commissioner of Customs, Nhava Sheva to nullify the said amendment in the two bills of entry. Accordingly, the Joint Commissioner informed vide letter dated 04.06.2020 that the concerned Commissioner of Customs had approved to nullify the amendments whereafter respondent No.4 has become the importer in respect of the two bills of entry dated 10.12.2019.
10.5. While contesting the prayer of the petitioner for release of the seized goods, respondent Nos.1 and 2 have however placed reliance on section 110-A of the Customs Act taking the stand that the goods can be released provisionally under the aforesaid provision.
11. Respondent No.3 in his affidavit in reply has stated that intelligence input was gathered by DRI, Sub-Regional Unit, Vapi that 3 proprietorship firms including respondent No.4 were involved in diversion of the imported materials and which were not used for manufacturing of lead wire for electronic parts as required under Notification No.25/99-Customs dated 28.02.1999. Further intelligence 4/21 WPST3834_20.odt input was gathered that respondent No.4 was working under the control of Shri. Jayant Shantilal Mirani, owner of the petitioner. Proprietor of another proprietorship firm M/s. Shine Metal Industries, Shri Kuldeep Ramesh Kshirsagar admitted in his statement before the DRI authorities that he had never manufactured lead wire for electronic parts in his factory, further admitting that most of the imported copper wire rods were sold in the open market.
11.2. In the course of search operations, 1607 kg of copper wire having value of Rs.9,85,000.00 were seized on 16.12.2019 from the factory premises of respondent No.4 as it was not eligible to avail the benefit of Notification No.25/1999-Customs dated 28.02.1999.
11.3. The two bills of entry dated 10.12.2019 were filed by respondent No.4 claiming benefit of the said notification. Deputy Director, DRI, Surat vide letter dated 17.12.2019 requested the customs authorities at Nhava Sheva to put on hold the live consignments of respondent No.4 for examination. The two bills of entry were amended on 18.12.2019 whereby name of the importer was changed from M/s. Chandrashekhar Industries (respondent No.4) to M/s. Nikom Copper and Conductors Private Limited (petitioner). The amended bills of entry were filed on merit rate of duty without claiming benefit of Notification No.25/99- Customs dated 28.02.1999.
11.4. The held consignments covered by the two bills of entry were jointly examined by officials of DRI, Vapi and Nhava Sheva customs authorities on 09.01.2020 whereafter the seizure was made on 09.01.2020. Claim of the petitioner that it had entered into oral agreement with respondent No.4 for high seas sale of the consignments has been disputed and denied. It is submitted that there is no question of any oral agreement in high seas sale. It is the contention of respondent No.3 that respondent No.4 was working under the control of Shri. Jayant Shantilal Mirani who was the actual owner of the high seas seller i.e., 5/21 WPST3834_20.odt the petitioner. The act of cancellation of high seas sale was done after 16.12.2019 when the premises of the importer, high seas seller and the concerned customs broker were searched and a case was registered against respondent No.4. In this connection, reference has been made to the statement of the customs broker who admitted that it was not correct to amend the bills of entry on 18.12.2019 when the consignments were put on hold by DRI on 17.12.2019.
12. An affidavit has been filed on behalf of respondent No.4 by Smt. Vijaya Surendra Salekar. She has stated that her husband Surendra Shankar Salekar was the sole proprietor of M/s. Chandrashekhar Industries i.e., respondent No.4 which was engaged in the business relating to copper wires. She has stated that her husband Surendra Shankar Salekar had committed suicide on 16.12.2019 which has caused great distress to her from which she has not been able to recover. According to her, her husband had conducted business activity under the supervision of Shri. Anil Anand Satpute but after the death of her husband, all the business activities have been closed down. Being a house wife in distress, she has stated that she is unable to understand the complex issues involved in the case.
13. In its rejoinder affidavit petitioner has denied all the allegations made against it and has reiterated that the impugned seizure of the imported goods is ex-facie illegal and without jurisdiction. It has denied that respondent No.4 and two other firms were working under the control of Shri. Jayant Shantilal Mirani, owner of the petitioner. Petitioner had commenced business in the year 2017 whereas respondent No.4 was in existence since much before. The only relationship between petitioner and respondent No.4 and the two firms was that of high seas seller and high seas buyers. Except sale of goods on high seas, petitioner had no other relationship with respondent No.4 and the other two firms. Regarding cancellation of the amendment to the bills of entry it is submitted that the same was done without any notice or hearing. In any 6/21 WPST3834_20.odt event, there is no power or jurisdiction vested in the Commissioner of Customs to nullify an amendment in a bill of entry under the Customs Act. That apart, decision of the Commissioner to cancel the amendment was not his own independent decision after proper application of mind but was taken under the direction of DRI. Therefore, cancellation of the amendment to the bills of entry is a nullity.
14. Mr. Shah, learned counsel for the petitioner at the outset submits that the impugned seizure is ex-facie without jurisdiction and therefore, per se illegal. Referring to section 110 of the Customs Act, he submits that the sine qua non for seizure of goods is reason to believe by the proper officer that the imported goods are liable to confiscation. He submits that the seizure memo does not record any reason to believe that the goods were liable to be confiscated. Referring to section 111 of the Customs Act, he submits that imported goods can be confiscated only under that provision which has a number of clauses but none of the clauses of section 111 would be attracted to the facts and circumstances of the case. While denying the allegations made against the petitioner in the affidavits filed by respondent Nos.1 and 2 on the one hand and by respondent No.3 on the other hand, he submits that the seizure memo must be capable of standing on its own; its validity must be judged from the reasons mentioned in the seizure memo itself. Furnishing of reasons subsequently to justify the seizure cannot validate an invalid seizure though the grounds given in the affidavit are wholly incorrect and untenable.
14.1. Mr. Shah submits that even if the averments made in the affidavits are taken as true, nowhere it is stated therein that the seized goods are liable to confiscation. Petitioner has not claimed any exemption or concession in respect of the imported goods. Rather petitioner has sought for assessment of the imported goods on payment of full duty as per applicable tariff. Therefore, even clause (o) of section 111 which is the only provision having a remote relatability would not be applicable.
7/21WPST3834_20.odt 14.2. Learned counsel for the petitioner has also strongly argued that the bills of lading in respect of the imported consignments are in the name of the petitioner and in its possession. Those were never endorsed in favour of respondent No.4. Thus, petitioner clearly had and continues to have title over the goods. Therefore, respondent No.4 could not have filed the bills of entry in respect of the said goods. As such those were rightly amended on the request of both the parties. Contention of respondent Nos.1 to 3 that after cancellation of the amendment to the bills of entry, respondent No.4 has become the owner or importer of the goods has been denied and disputed. Not only such contention is factually and legally untenable, cancellation of amendment is without jurisdiction and in gross violation of the principles of natural justice. Therefore, such cancellation would be a nullity. In any case, when the seizure itself is bad in law, consequential cancellation of amendment to the bills of entry would be of no legal consequence. Besides, mere allegation that amendments to the bills of entry were done fraudulently would not suffice which in any event is not correct, he submits.
15. Mr. J. B. Mishra, learned counsel for respondent Nos.1 and 2 has placed reliance on the affidavit filed by the said respondents and submits that office of respondent No.2 had carried out cancellation of amendment on the basis of inputs received from DRI authorities.
16. Mr. Venegaonkar, learned counsel for respondent No.3 has strongly opposed the submissions of Mr. Shah and contends that the seizure was done in view of overwhelming materials gathered by the respondents regarding the illegal activity of petitioner, respondent No.4 and two other firms in diverting the imported goods to the open market after availing exemption and concession under Notification No.25/99- Customs dated 28.02.1999. Responding to the arguments of Mr. Shah that the impugned seizure does not record any reason to believe that the goods were liable to confiscation, he submits that the seizure memo has to be read together with the panchnama which clearly mentioned that 8/21 WPST3834_20.odt there was contravention of the Customs Act in which event the goods are liable to be confiscated. His further contention is that petitioner had resorted to amendment of the two bills of entry after it became aware of the search operations carried out by the DRI in the premises of respondent No.4 and two other firms and after a case was registered against respondent No.4. Such amendments of the bills of entry were not bona fide and were rightly cancelled by the respondents. In support of his submissions, Mr. Venegaonkar has painstakingly taken the Court to the various documents annexed to the affidavit of respondent No.3 and extensively relied upon the said documents.
17. Submissions made by learned counsel for the parties have been duly considered. Also perused the materials on record.
18. Question for consideration in this writ petition is the legality and validity of the seizure memo dated 09.01.2020 whereby the two consignments covered by the two bills of entry dated 10.12.2019 were seized.
19. To appreciate the above, it would be apposite to advert to the impugned seizure memo at the outset. For ready reference, the same is extracted hereunder:-
" SEIZURE MEMO DATED 09.01.2020
To
M/s. Chandrashekhar Industries,
A-44, STICE,
Musalgaon MIDC Area,
Nashik, Maharashtra
AND
M/s. Nikom Copper and Conductors Pvt. Ltd.,
Basement-06, Keshava Building,
Bandra Kurla Complex, Bandra East,
Mumbai, Maharashtra-400051
9/21
WPST3834_20.odt
This is to inform you that the goods i.e., Copper Wire Rod 8MM Electrolytic Tough Pitch Copper Wire Rod as per ASTM B49 imported by M/s. Chandrashekhar Industries pertains to Bills of Entry No.6020098 dated 10.12.2019 and 6022801 dated 10.12.2019 found lying in the premises of M/s. Kerry Indev Logistics CFS, Plot No.10, Somathane Village, Kone Savla Rasayani Rd., SH82 Panvel, Sawala Apta Rd, Navi Mumbai, Maharashtra 410206, as detailed in panchnama dated 09.01.2020 drawn at premises of M/s. Kerry Indev Logistics CFS, Plot no.10, Somathane Village, Kone Savla Rasayani Rd., SH82 Panvel, Sawala Apta Rd, Navi Mumbai, Maharashtra 410206 are hereby seized under the provisions of Customs Act, 1962, today i.e. on 09th January 2020. The details of the seized goods are as under:
SR. Description of the Total Quantity Total Total
No. goods (Gross Weight Quantity Assessable
in Kgs.) (Net Weight Value as
in Kgs.) declared in
Bills of Entry
(in Rs.)
01. Copper Wire Rod 101209.00 100309.00 4,42,60,359/-
8MM Electrolytic
Tough Pitch
Copper Wire Rod
as per ASTM B49
You are further informed not to remove, sale or part with or deal with in any other manner without the permission of competent authority of Directorate of Revenue Intelligence, Regional Unit, Surat having office situated at 2nd Floor, Avalon Building, Above Indian Bank, B/h S. D. Jain School, Piplod Vesu, Surat-395007.
Place: Navi Mumbai Date: 09.01.2020 (Uma Nath Chaudhary) Intelligence Officer, DRI, Sub-Regional Unit, Vapi"
20. Having extracted the impugned seizure memo as above, we may mention that power of seizure of goods, documents and things is traceable to section 110 of the Customs Act. Sub-section (1) of section 110 is relevant and the same is quoted hereunder:-10/21
WPST3834_20.odt "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 the owner of the goods or the beneficial owner or any person holding himself out to be importer, or any other person from whose custody such goods have been found, directing that such person shall not remove, part with, or otherwise deal with such goods except with the previous permission of such officer."
21. The two provisos are not relevant for the present deliberation.
What is relevant here is the parent or main provision of sub-section (1). Sub-section (1) makes it abundantly clear that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. Thus, it is the proper officer who must have reason to believe that the goods in question are liable to confiscation under the Customs Act. Once he forms such a belief then he i.e., the proper officer who has formed the belief may seize such goods.
21.1. Therefore, formation of reason to believe by the proper officer that the goods in question are liable to confiscation under the Customs Act is the condition precedent for invoking the jurisdiction under section 110 to seize such goods. Having reason to believe by the proper officer that any goods are liable to confiscation is the sine qua non for exercise of the power of seizure. The expression 'reason to believe' is an expression of considerable import and in the context of the Customs Act, confers jurisdiction upon the proper officer to seize goods. This expression finds place in a number of statutes - fiscal, penal, etc. 11/21 WPST3834_20.odt
22. In Calcutta Discount Company Limited Vs. Income Tax Officer, 41 ITR 191, Supreme Court examined this expression in the context of section 34 of the Indian Income Tax Act, 1922. As per the said provision, if the Income Tax Officer had reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to income tax had escaped assessment for that year or had been under-assessed or granted excessive relief, he could serve a notice upon the assessee and proceed to assess or re-assess such income but of course within the limitation period mentioned therein. It is in that context, Supreme Court held that the expression 'reason to believe' postulates belief and the existence of reasons for that belief. The belief must be held in good faith: it cannot be merely a pretence. The expression does not mean a purely subjective satisfaction of the Income Tax Officer. The above expression contemplates existence of reasons on which the belief is founded and not merely a belief in the existence of reasons inducing the belief. In other words, the Income Tax Officer must on information at his disposal believe that income had been under-assessed by reason of failure to fully and truly disclose all material facts necessary for assessment. Such a belief is not to be based on mere suspicion; it must be founded upon information.
23. Supreme Court in S. Narayanappa Vs. Commissioner of Income Tax, 63 ITR 219 again had the occasion to examine this expression in the context of section 34 of the Indian Income Tax Act, 1922. Reiterating what was held in Calcutta Discount Company Limited (supra), it was pointed out that the expression 'reason to believe' does not mean a purely subjective satisfaction on the part of the Income Tax Officer. The belief must be held in good faith: it cannot be merely a pretence. It is open to the court to examine the question as to whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief. To that extent, action of the Income Tax Officer in starting 12/21 WPST3834_20.odt proceedings under section 34 is open to challenge in a court of law.
24. Again in Sheo Nath Singh Vs. Appellate Assistant Commissioner of Income Tax, 67 ITR 254, Supreme Court held that there can be no manner of doubt that the words 'reason to believe' suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds. The Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income Tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief. Court can always examine this aspect though sufficiency of the reasons for the belief cannot be investigated by the Court.
25. Finally, in Income Tax Officer Vs. Lakhmani Mewal Das, 103 ITR 437, Supreme Court held that the grounds or reasons which lead to the formation of belief that income chargeable to tax has escaped assessment must have a material bearing on the question of escapement of income from assessment. Once there exists reasonable grounds for the Income Tax Officer to form such belief, that would be sufficient to clothe him with jurisdiction. Sufficiency of the grounds, however, is not justiciable. The expression 'reason to believe' does not mean a purely subjective satisfaction on the part of the Income Tax Officer. The reason must be held in good faith and cannot be a mere pretence. It is open to a 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. Elaborating further, Supreme Court held that rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income Tax Officer and the formation of his belief that there has been escapement of income from assessment in that particular year. Supreme Court sounded a note of caution by observing that though the powers of the Income Tax Officer to re-open assessment are wide, those are not 13/21 WPST3834_20.odt plenary; the words of the statute are 'reason to believe' and not 'reason to suspect'.
26. This Court in Prashant S. Joshi Vs. ITO, 324 ITR 154 also examined this expression but in the context of section 147 of the new Income Tax Act i.e., Income Tax Act, 1961. As per section 147, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or re- assess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the re-assessment proceedings. This Court observed that the basic postulate which underlines section 147 is formation of the belief by the Assessing Officer that any income chargeable to tax has escaped assessment for any assessment year. In other words, the Assessing Officer must have reason to believe that income chargeable to tax for a particular assessment year has escaped assessment for the said year. The reasons which are recorded by the Assessing Officer for re- opening an assessment are the only reasons which can be considered when the formation of the belief is impugned. Recording of reasons distinguishes an objective from a subjective exercise of power and is a check against arbitrary exercise of power. The reasons which are recorded cannot be supplemented subsequently by affidavits.
27. A Division Bench of Punjab & Haryana High Court in MAPSA Tapes Private Limited Vs. Union of India, 2006 (201) ELT 7 while examining challenge to seizure of goods under section 110 of the Customs Act held that while power of seizure has to be conceded in the larger interest of society and to check evasion of tax (duty), but at the same time such a power affects not only right of possession and enjoyment of property but also privacy of a citizen. It also affects right of personal liberty under Article 21 of the Constitution. Procedure for affecting such a right has to be fair and reasonable. With the above observation, Punjab & Haryana High Court examined the expression 14/21 WPST3834_20.odt 'reason to believe' appearing in section 110 of the Customs Act and held that while existence of the power of seizure may be justified but its exercise will be liable to be struck down unless reasons to believe were duly recorded before action of search and seizure is taken.
28. In Tata Chemicals Limited Vs. Commissioner of Customs (Preventive), Jamnagar, 2015 (320) ELT 45, Supreme Court explained the meaning of the expression 'reason to believe' as appearing in section 110 of the Customs Act. Supreme Court has opined that the said expression does not connote the subjective satisfaction of the officer concerned. For such a power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with the restraints imposed by law, the belief must be that of an honest and reasonable person based upon reasonable grounds. If the authority acts without jurisdiction or there is no existence of any material or conditions leading to the belief, it would be open to the Court to examine the same though sufficiency of the reasons for the belief cannot be investigated.
29. This Court in Fomento Resources Private Limited Vs. Union of India, 2019 (367) ELT 897 examined the said expression while considering challenge to seizure of a vessel under section 110 of the Customs Act. In paragraph 21 of the said judgment, it was observed that there was no material placed nor any indication in the seizure memo as regards the reason to believe that the material collected or relied upon is available for taking such a drastic action. Though sufficiency of the grounds is not justiciable, the grounds must be reflected in the order. The seizure memo did not indicate that the proper officer was possessed of any material to form the opinion that the vessel was liable for confiscation. As a matter of fact, one of the reasons for quashing the order of seizure was that there was no indication in the seizure order that the proper officer had reason to believe that the goods were liable for confiscation.
15/21WPST3834_20.odt
30. Having noticed the above, we may now advert to the panchnama dated 09.01.2020. This panchnama was drawn at the premises where the seizure memo was made. It was signed by two panchas i.e., Shri. Chetan Tukaram Mundhe and Shri. Mayur Krushna Patil. It was drawn by Shri. Amit Kumar Sharma, Investigating Officer, Central Investigation Unit at the Nhava Sheva Port. After narrating the imports and amendment to the bills of entry, it was recorded that the goods which were de-stuffed from the containers were imported under Notification No.25/1999-Customs dated 28.02.1999 by the original importer M/s. Chandrashekhar Industries (respondent No.4) though presently the name of importer on the two bills of entry was M/s. Nikom Copper and Conductors Private Limited (petitioner). The officer informed the panchas that respondent No.4 had contravened the provisions of the said notification dated 28.02.1999 by misusing it. Hence, the officer informed that the copper coils were liable to be seized under the provisions of the Customs Act.
31. From a conjoint reading of the seizure memo and the panchnama, both dated 09.01.2020, it is apparent that seizure was made by one officer (Uma Nath Chaudhary) whereas the panchnama was drawn by another officer (Amit Kumar Sharma). Assuming that both the officers are proper officers in terms of section 110(1) of the Customs Act, there is no recording or mentioning by Uma Nath Chaudhary in the seizure memo that he had reasons to believe that the goods in question were liable to confiscation and hence may be seized. Similarly, the other officer in the panchnama mentioned that the imported goods had contravened Notification No.25/99-Customs dated 28.02.1999 and thus were liable to be seized under the Customs Act. Even here also, there is no mentioning or recording by Amit Kumar Sharma that he had reasons to believe that the goods were liable to be confiscated and hence may be seized. Firstly, the belief as above has to be of the proper officer who had made the seizure. It cannot be that seizure is made by one officer and the reasons to believe are recorded by another officer. Secondly, the proper officer who made the seizure must have reasons to believe that the seized goods 16/21 WPST3834_20.odt are liable to confiscation. Seizure of goods is not an end in itself. It is a discretionary power vested upon the proper officer who has reasons to believe that the goods to be seized are liable to confiscation. No such reasons to believe is discernible in the panchnama, not to speak of in the seizure memo.
32. Let us now refer to and examine the documents annexed to the affidavit of respondent No.3 on which much reliance was placed by Mr. Venegaonkar, learned counsel for respondent No.3. Exhibit-A is a letter dated 17.12.2019 issued by Mr. Madhur D. Singh, Deputy Director, DRI, Regional Unit, Surat addressed to Deputy Commissioner, Central Intelligence Unit, Nhava Sheva. By this letter, the Deputy Commissioner was informed that a case was booked against respondent No.4 and two other firms in connection with misuse of Notification No.25/99-Customs dated 28.02.1999. Therefore, a request was made to put on hold the 15 consignments mentioned therein which included the two consignments covered by the two bills of entry dated 10.12.2019. It is seen that office of Commissioner of Customs, Nhava Sheva had informed the DRI, Sub- Regional Unit, Vapi on 10.01.2020 in response to letter dated 08.01.2020 for providing documents relating to consignments of respondent No.4 (Exhibit-B). In that letter, it was mentioned that in both the bills of entry, the name of the original importer was M/s. Nikom Copper and Conductors Private Limited (petitioner) which has been mentioned in the Import General Manifest (IGM) and the bills of lading. The two bills of entry dated 10.12.2019 were filed in the name of respondent No.4 on high seas sale basis but respondent No.4 did not submit any documents before filing of bills of entry on the basis of high seas sale. Thereafter respondent No.4 through its customs broker requested for amendment in the importer's name by submitting NOCs from both the parties. The said request was allowed and the name of the importer was changed from M/ s. Chandrashekhar Industries (respondent No.4) to M/s. Nikom Copper and Conductors Private Limited (petitioner) as there was no change in the original bills of lading and IGM. The letter further mentioned that 17/21 WPST3834_20.odt the amendment was allowed on 18.12.2019 and letter from the Central Intelligence Unit was received by the Commissionerate on 23.12.2019.
32.1. DRI, Zonal Unit, Ahmedabad vide letter dated 23.04.2020 (Exhibit-G) informed the Joint Commissioner of Customs, Nhava Sheva-II, Group IV referring to the two bills of entry dated 10.12.2019 initially filed by respondent No.4 but subsequently amended in the name of the petitioner with bills of entry being filed on merit rate of duty without claiming benefit of Notification No.25/99-Customs dated 28.02.1999. Reference was made to the telephonic discussions and request to nullify the amendment. It was mentioned that after the held consignments were jointly examined, those were seized on 09.01.2020. However, it was mentioned that nullification of amendment in the bills of entry had not yet been done and the amendments were still effective. Therefore, the Joint Commissioner of Customs was requested to nullify the amendments in the two bills of entry dated 10.12.2019 at the earliest.
33. Following the same, the Joint Commissioner informed Joint Director, DRI, Zonal Unit, Ahmedabad vide letter dated 04.06.2020 that as per his direction, Commissioner of Customs (In-charge of Group IV) had approved to nullify the amendment carried out in the two bills of entry.
34. From the above, it is apparent that on the date of seizure, the bills of entry were in the name of the petitioner and the petitioner had not (and still has not) claimed any benefit under the Notification No.25/99- Customs dated 28.02.1999. It may be mentioned that office of the Commissioner of Customs had informed DRI authorities that the amendments were allowed because NOC was submitted by both the parties i.e., buyer and seller of the high seas sale. It was also mentioned that amendment was allowed as there was no change in the original bills of lading and IGM. At this stage, we may refer to Standing Order No.10 of 2017 dated 03.05.2017 issued by the Commissioner of Customs, 18/21 WPST3834_20.odt Nhava Sheva-IV which has been placed on record by respondent No.3 as Exhibit-E to his affidavit. This Standing Order prescribes the essential documents necessary for registration of high seas sale contract / transaction. The documents are high seas sales contract, non-negotiable copy of bill of lading, high seas sale invoice and commercial invoice, authority letter for customs broker from high seas sales buyer and copies of importer exporter code of both buyer and seller. From the above, it is evident that a high seas sale has to be in writing in the form of an agreement / contract which has to be signed by both the buyer and the seller and duly notarized. Therefore, respondents have rightly contended that the high seas sale entered into by and between the petitioner and respondent No.4 was no sale in the eye of law as it was done orally. If the high seas sale was not a sale in the eye of law then respondent No.4 could not have filed the two bills of entry relating to the two import consignments. This is more so when the bills of lading and IGM were in the name of the petitioner. In such circumstances, the customs authorities at Nhava Sheva had rightly allowed the amendments prayed for. As on the date of seizure i.e., 09.01.2020, the two bills of entry were in the name of the petitioner and the petitioner had not sought any concession or exemption or benefit under Notification No.25/99- Customs dated 28.02.1999. In such circumstances, there could not have been any reason to believe that the said imported goods had contravened any of the provisions of section 111 dealing with confiscation and hence liable to seizure under section 110. That apart, all the developments mentioned above are post seizure developments which could have no bearing on the validity or invalidity of the impugned seizure.
35. At this stage, we may remind ourselves of the famous observations of Vivian Bose, J. in Commissioner of Police Vs. Gordhandas Bhanji, AIR 1952 SC 16. He had said that public orders publicly made in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant or of what was in his mind or what he intended 19/21 WPST3834_20.odt to do. Public orders made by public authorities are meant to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself. This salutary principle was reiterated and re-stated with great emphasis by a Constitution Bench of the Supreme Court in Mohinder Singh Gill Vs. Chief Election Commissioner, AIR 1978 SC 851. Supreme Court held that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. If that is allowed, an order bad in the beginning may, by the time it comes to the court on account of a challenge, gets validated by additional grounds later brought out. It was succinctly put that 'orders are not like old wine becoming better as they grow older'.
36. From an analysis of the above, it is evident from the seizure memo as well as the materials as on that date i.e., 09.01.2020 that there could not have been any reason to believe by the proper officer that the goods seized were liable to confiscation. Therefore, the very action of seizure is devoid of jurisdiction and hence illegal. If the very act of seizure is illegal, all consequential actions would have no legal sanction.
37. However, even if we look at the amendments to the two bills of entry, it cannot be said that the amendments so carried out were undeserving or ought not to have been carried out in view of what we have discussed in paragraph 34 above. Furthermore, the cancellation of amendment was not carried out by the authority which had allowed the amendment after due application of mind. It was carried out as per the direction of DRI, Zonal Unit, Ahmedabad. Such cancellation certainly resulted in adverse civil consequences upon the petitioner who was the beneficiary of the amendment. Without putting the petitioner to notice and without giving an opportunity of hearing to the petitioner, the amendments which were carried out on 18.12.2019 could not have been 20/21 WPST3834_20.odt unilaterally cancelled after 4/5 months. Such cancellation of amendment would, therefore, be a nullity having no legal sanctity.
38. In this connection, we may refer to a Division Bench decision of this Court in WASP Pump Private Limited Vs. Union of India, 2008 (230) ELT 405. In that case, when an objection as to availing the writ jurisdiction was made on the ground of having alternative remedy, this Court declared that it is a well settled proposition of law that if an order is a nullity then it is invalid and its invalidity can be set up anywhere and everywhere when such order is sought to be executed or enforced.
39. Therefore, in our considered opinion, subsequent cancellation of the amendments to the two bills of entry would make no material difference at all to the illegality of the seizure.
40. That being the position and upon thorough consideration of all aspects of the matter, we are of the view that the impugned seizure memo dated 09.01.2020 cannot be legally sustained. The same is hereby set aside and quashed. As a consequence, the seized goods shall be released to the petitioner on payment of the requisite duty and completion of necessary formalities.
41. Writ petition is accordingly allowed to the above extent. However, there shall be no order as to costs.
42. This order will be digitally signed by the Private Secretary of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.
(ABHAY AHUJA, J.) (UJJAL BHUYAN, J.)
Minal Parab
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