Seizure order quashed for non-compliance with Section 110 requirements and inadequate reasoning in memo

The Patna HC quashed a seizure order dated 14.08.2020 for violating Customs Act provisions. The court held that the second petitioner had locus standi to challenge the seizure due to established business transactions between parties. The HC ruled that petitioners were not required to exhaust alternative remedies under Section 128 as statutory provisions under Section 110 were not properly complied with. The court determined that seizure memo cannot be read with Panchnama to establish reasons for seizure, as the seizing officer must disclose minimal reasons in the seizure memo itself. The seizure order was found unsustainable and was quashed.

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Issues Involved:

1. Locus standi of the second petitioner.
2. Requirement to exhaust alternative remedy under Section 128 of the Customs Act, 1962.
3. Whether the seizure memo should be read with the Panchnama.
4. Compliance with "reasons to believe" under Section 110 of the Customs Act, 1962.
5. Applicability of Section 110 (1A), (1B), (1C) of the Customs Act, 1962 regarding the seizure of the truck.

Issue-wise Analysis:

1. Locus Standi of the Second Petitioner:

The court held that the second petitioner has locus standi to challenge the seizure memo dated 14.08.2020 along with the first petitioner. This is because there were evident transactions between the petitioners, as shown in the Tax Invoice, Transportation Note, and Way Bill. The court dismissed the respondents' argument against the second petitioner's locus as overly technical, noting that the affidavit's omission was a minor error.

2. Requirement to Exhaust Alternative Remedy:

The court addressed the contention that the petitioners should have pursued an alternative remedy under Section 128 of the Customs Act, 1962. It was noted that the seizure memo lacked minimal reasons, thus denying the petitioners an effective opportunity to appeal. The court referred to precedents that allow bypassing alternative remedies when statutory provisions are violated or principles of natural justice are breached. The court concluded that the petitioners were not required to exhaust the alternative remedy due to the procedural deficiencies in the seizure memo.

3. Seizure Memo and Panchnama:

The court examined whether the Panchnama could be read into the seizure memo. It was determined that the Panchnama, a statement by witnesses, cannot substitute for reasons in the seizure memo, as per a notification dated 08.02.2017. The court found that the seizure memo was prepared before the Panchnama, and hence, the latter could not be used to justify the former. The court rejected the respondents' argument that the Panchnama sufficed as a reason for the seizure.

4. Compliance with "Reasons to Believe":

The court scrutinized whether the Seizing Officer complied with the "reasons to believe" requirement under Section 110 of the Customs Act, 1962. It was concluded that merely citing sections in the seizure memo without specific reasons does not fulfill the statutory requirement. The court emphasized that the Seizing Officer must disclose minimal reasons in the seizure memo to enable an effective appeal.

5. Applicability of Section 110 (1A), (1B), (1C):

The court evaluated the applicability of Section 110 (1A), (1B), (1C) regarding the seizure of the truck. It was determined that these provisions were not complied with, particularly concerning the truck, which falls under "Conveyance" in the Notification dated 05.02.1986. The court held that the Customs Officials should have followed the required procedures for the seizure of the truck.

Conclusion:

The court quashed the seizure memo dated 14.08.2020, finding it unsustainable due to procedural deficiencies and non-compliance with statutory requirements. The writ petition (CWJC No. 7682 of 2020) was allowed, and pending applications were disposed of. Other related cases were directed to be de-linked and relisted for a later date.

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