2020 (12) TMI 138 - HC - Customs

Court Declares Seizure Memo Illegal for Lack of Jurisdiction

M/s. Nikom Copper and Conductors Pvt. Ltd. Versus Union of India and Others

M/s. Nikom Copper and Conductors Pvt. Ltd. Versus Union of India and Others - 2021 (378) E.L.T. 421 (Bom.) Issues Involved:1. Legality and validity of the seizure memo dated 09.01.2020.2. Compliance with Section 110 of the Customs Act, 1962.3. Validity of amendments to the bills of entry.4. Jurisdiction and procedural fairness in the cancellation of amendments to the bills of entry.Detailed Analysis:1. Legality and Validity of the Seizure Memo:The petitioner challenged the seizure memo dated 09.01.2020, issued by the Directorate of Revenue Intelligence (DRI), claiming it did not comply with Section 110 of the Customs Act, 1962. The petitioner argued that the seizure memo did not record any 'reason to believe' that the goods were liable to confiscation, a mandatory requirement under Section 110. The court examined the seizure memo and the accompanying panchnama and found no mention of any reasons to believe that the goods were liable to confiscation. The court held that the seizure was devoid of jurisdiction and hence illegal.2. Compliance with Section 110 of the Customs Act, 1962:Section 110(1) of the Customs Act requires that the proper officer must have 'reason to believe' that the goods are liable to confiscation before seizing them. The court emphasized that this belief must be held in good faith and based on reasonable grounds. The court referred to various precedents, including Calcutta Discount Company Limited v. Income Tax Officer and Tata Chemicals Limited v. Commissioner of Customs, to underscore that the belief must be of an honest and reasonable person based upon reasonable grounds. The court concluded that the seizure memo did not meet this requirement, rendering the seizure illegal.3. Validity of Amendments to the Bills of Entry:The petitioner and respondent No.4 had initially entered into an oral agreement for the high seas sale of the imported goods. Subsequently, the bills of entry were amended to reflect the petitioner as the importer. The court noted that a high seas sale must be in writing and duly notarized, which was not the case here. Despite this, the customs authorities had allowed the amendments based on NOCs from both parties. The court found that as of the date of seizure, the bills of entry were in the petitioner's name, and the petitioner had not claimed any benefit under Notification No.25/99-Customs. Therefore, there could not have been any reason to believe that the goods were liable to confiscation.4. Jurisdiction and Procedural Fairness in the Cancellation of Amendments:The amendments to the bills of entry were later canceled by the customs authorities based on directions from DRI, Ahmedabad, without giving notice or an opportunity to the petitioner. The court held that such cancellation resulted in adverse civil consequences and could not be done unilaterally without following due process. The cancellation was deemed a nullity and without legal sanctity. The court referenced the Division Bench decision in WASP Pump Private Limited v. Union of India, which held that an order that is a nullity can be challenged anywhere and everywhere.Conclusion:The court set aside and quashed the seizure memo dated 09.01.2020, declaring it illegal and devoid of jurisdiction. Consequently, the seized goods were ordered to be released to the petitioner upon payment of requisite duty and completion of necessary formalities. The writ petition was allowed to this extent, with no order as to costs.