2001 (10) TMI 122 - HC - Customs

Court Upholds Seizure of Goods for Export to Libya under Customs Act

The court found the seizure of goods for export to Libya justified under the Customs Act, 1962, based on reasonable grounds and compliance with procedural ... Seizure - Reasonable belief Issues Involved:1. Validity and legality of the seizure of goods intended for export.2. Compliance with procedural requirements under the Customs Act, 1962.3. Justification for detaining all goods when only certain items are restricted/prohibited.4. Allegations of mala fide action by the authorities.5. Delay in conducting and concluding the enquiry.Detailed Analysis:1. Validity and Legality of the Seizure:The primary issue is the legality of the seizure of goods intended for export to Libya. The petitioner contends that the seizure was arbitrary and violated fundamental rights under Articles 14, 19(1)(g), 21, and 300A of the Constitution. The respondents argue that the seizure was based on specific intelligence indicating that the goods were being exported in contravention of the EXIM policy. They claim that some items in the consignment are prohibited/restricted under the EXIM policy and SCOMET (Special Chemicals, Organisms, Materials, Equipment, and Technologies) guidelines.2. Compliance with Procedural Requirements:The respondents assert that the seizure was conducted under Section 110(1) of the Customs Act, 1962, which allows seizure if there is a 'reason to believe' that goods are liable to confiscation. The court examined whether this belief was based on reasonable grounds. The court referred to several Supreme Court judgments to establish that the belief must be honest and reasonable, based on objective consideration of relevant materials. The court found that the Deputy Director, DRI, had relevant materials to form the belief that the goods were liable to confiscation, thus complying with procedural requirements.3. Justification for Detaining All Goods:The petitioner argued that only certain items in the consignment were restricted/prohibited, and there was no justification for detaining all goods. The respondents countered that even the non-restricted goods could be used as subsidiary goods in the production of defense materials, thus justifying their detention pending enquiry. The court found merit in the respondents' contention, noting that if the non-restricted goods were intended for use in manufacturing prohibited goods, detaining them was justified.4. Allegations of Mala Fide Action:The petitioner alleged that the seizure was tainted with legal mala fide, asserting that the respondents created grounds to justify the seizure retrospectively. The court, however, found no evidence of mala fide action. It noted that the belief formed by the Deputy Director, DRI, was bona fide and intended to serve statutory objectives. The court emphasized that judicial review is limited to examining the decision-making process, not the decision itself, and found the respondents' actions to be within legal bounds.5. Delay in Conducting and Concluding the Enquiry:The petitioner complained about the delay in conducting the enquiry and clearing the goods. The respondents argued that the nature of the goods required technical expertise for sampling, which necessitated administrative sanction and time. The court acknowledged the respondents' constraints but directed them to complete the enquiry and pass appropriate orders within two months, balancing the petitioner's interests and public interest.Conclusion:The court concluded that the seizure was legally justified and based on reasonable grounds. It directed the respondents to expedite the enquiry and issue final orders within two months. The writ petitions were disposed of with no order as to costs.