2025 (7) TMI 732 - HC - Customs

Delhi HC dismisses petition challenging customs confiscation and penalties for poppy seeds smuggling through mis-declaration

Jyoti Enterprises Versus Additional Commissioner Of Customs Inland Container Depot.

Delhi HC dismissed writ petition challenging customs order involving absolute confiscation of goods and penalties for alleged smuggling of poppy seeds and ... Absolute confiscation of goods - levy of penalties - non-involvement in the transaction and unauthorised use of its IEC code - mis-declaration of goods - HELD THAT:- A perusal of the impugned order reveals that the said M/s Meadows International Co. had appointed one Mr. Manish as an Authorized Representative who in turn had used the services of an Advocate to file the writ petition and he himself did not have any knowledge of the consignment which were exported. The matter required a deeper probe which led to the investigation and then the passing of the impugned order. The Order-in-Original dated 27th March, 2025 clearly shows that there is some kind of a group which is operating for smuggling of poppy seeds and areca nuts. The use of the IEC of the Petitioner cannot prima facie be accepted to be merely an innocent instance of misuse. Moreover, the Petitioner is claiming innocence on the one hand, the exporter has filed a writ petition before this Court but it is not clear as to who has acted for the exporter as the authorised person claims to have no knowledge of the case. Only the advocate who filed the writ petition appears to have had knowledge of the case. The entire matter required a deeper probe, after which the Petitioner has been found to be complicit. There appears to be clandestine import of goods like poppy seeds and areca nuts after indulging in misdeclaration. Hence, various facts would have to be gone into. The Court is not inclined to entertain a writ petition. The Petitioner is free to avail of his remedies in accordance with law against the Order-in-Original by way of an appeal to the Commissioner (Appeals) under Section 128 of the Customs Act, 1962 along with the requisite pre-deposit. Petition disposed off. 1. ISSUES PRESENTED and CONSIDERED- Whether the impugned Order-in-Original dated 27th March, 2025 directing absolute confiscation of goods and imposition of penalties on the Petitioner is legally sustainable.- Whether the Petitioner's claim of innocence and non-involvement in the transaction, including alleged unauthorized use of its Import Export Code (IEC), can be accepted.- Whether the Customs Department's findings of misdeclaration and clandestine import of prohibited goods (poppy seeds and areca nuts) under the guise of ammonium sulphate are supported by evidence.- Whether the Petitioner is entitled to relief by way of writ petition under Article 226 of the Constitution of India or must seek remedy through statutory appellate mechanism under the Customs Act, 1962.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Legality and sustainability of the impugned Order-in-Original directing confiscation and penaltiesThe Customs Act, 1962, empowers the Customs Department to confiscate goods and impose penalties where misdeclaration or smuggling is established. The impugned order was passed after a comprehensive investigation triggered by an alert regarding five containers bearing Bill of Lading No. HDMUHKGA89775100, initially consigned to a third party but later altered to the Petitioner's IEC. The Customs Department found that the goods declared as ammonium sulphate were in fact poppy seeds and areca nuts, which are controlled/prohibited items.The Court noted that the investigation revealed the existence of a group operating for smuggling these goods and that the Petitioner's IEC was used not as an innocent mistake but as part of a clandestine import scheme. The Petitioner's claim of innocence was undermined by the evidence of repeated communications from the alleged consignor requesting 'no objection' for re-export, and threats made to the Petitioner's proprietor, which were reported to the police. Furthermore, the exporter's authorized representative was found to lack knowledge of the consignment, indicating possible concealment or misrepresentation.The Court observed that the impugned order was the result of a detailed probe and was supported by material findings, including seizure and opening of the containers, and the misdeclaration of goods. The legal framework under the Customs Act supports confiscation and penalties in such cases of smuggling and misdeclaration.Thus, the Court held that the impugned order was legally sustainable and not liable to be interfered with in writ jurisdiction.Issue 2: Petitioner's claim of innocence and unauthorized use of IECThe Petitioner contended that its IEC was misused without authorization and that it had lodged a police complaint alleging the same. The Petitioner also claimed non-involvement and sought to distance itself from the transaction.However, the Court found that the Petitioner's claim was not prima facie acceptable given the evidence. The Petitioner received communications from the alleged consignor and was requested to provide 'no objection' for re-export, indicating some level of involvement or at least acquiescence. The investigation revealed that the Petitioner's proprietor was threatened, which was reported to the police, but the overall conduct suggested complicity rather than mere victimhood.The Court further noted that the exporter's authorized representative lacked knowledge of the consignment, raising questions about the genuineness of the transactions and the Petitioner's role.Therefore, the Court concluded that the Petitioner's innocence claim was not substantiated and that the use of the IEC was not an innocent instance of misuse but part of a smuggling operation.Issue 3: Whether the Petitioner can seek relief under writ jurisdiction or must resort to statutory appealThe Petitioner approached the High Court under Article 226 challenging the impugned order. The Court, however, observed that the impugned order was passed after a comprehensive investigation and that the Petitioner has statutory remedy available under Section 128 of the Customs Act, 1962 to file an appeal before the Commissioner (Appeals) with requisite pre-deposit.The Court emphasized that the writ jurisdiction is not a substitute for the statutory appellate remedy, especially when the order is administrative and investigative in nature and detailed findings have been recorded. The Court declined to entertain the writ petition and directed the Petitioner to avail the statutory appeal mechanism.Issue 4: Treatment of earlier writ petition filed by the exporter and its relevanceThe Court referred to an earlier writ petition filed by the exporter seeking warehousing and re-export of the goods. The Court noted that the facts revealed in the impugned order were not placed before the earlier Court. The earlier order had directed warehousing and expeditious investigation but did not address the full scope of the smuggling operation or the Petitioner's complicity.The Court observed that the exporter's authorized representative lacked knowledge of the consignment, indicating possible misrepresentation in the earlier proceedings. The present investigation and impugned order thus superseded the earlier interim directions.3. SIGNIFICANT HOLDINGS'The Order-in-Original dated 27th March, 2025 clearly shows that there is some kind of a group which is operating for smuggling of poppy seeds and areca nuts. The use of the IEC of the Petitioner cannot prima facie be accepted to be merely an innocent instance of misuse.''The entire matter required a deeper probe, after which the Petitioner has been found to be complicit. There appears to be clandestine import of goods like poppy seeds and areca nuts after indulging in misdeclaration.''Under these circumstances, the Court is not inclined to entertain a writ petition. The Petitioner is free to avail of his remedies in accordance with law against the Order-in-Original by way of an appeal to the Commissioner (Appeals) under Section 128 of the Customs Act, 1962 along with the requisite pre-deposit.'The Court established the core principles that misdeclaration and smuggling under the Customs Act attract confiscation and penalties, and that claims of innocence must be supported by credible evidence. The statutory appellate remedy must be exhausted before seeking writ relief against such orders.Final determinations:- The impugned order directing confiscation and penalties is upheld as legally valid and supported by evidence.- The Petitioner's claim of unauthorized use of IEC and non-involvement is rejected as unsubstantiated.- The writ petition is dismissed, and the Petitioner is directed to pursue statutory appeal remedies.