TaxTMI 
TaxTMI 
2016 (4) TMI 923
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....r of a jewellery shop in the name and style as M/s Radhika Jewellery with Registration No. 6192 of Municipal Council at Imphal. It is in the name of the wife of the petitioner Smjti RK Sonia Devi, but the business is mainly managed by the petitioner with the help of his wife, relatives and employees. The Head Office is situated at Sagolband Bijoy Govinda near NRL Pump, Imphal-795001 and the Branch Office is at Paona Bazar, Governor Road, Imphal. The business of the petitioner, inter alia, includes sale of gold, jewellery and gold coins. The petitioner purchases gold from the bonafide sources with valid documents. Besides, the petitioner is also engaged in side business of granites, tiles and marbles. 3. The Commissioner of Customs (Preventive), NE Region, Shillong (respondent No. 1) has the jurisdiction over the entire North Eastern Region under the Customs Act, 1962 and the rules made thereunder. The Superintendent (Preventive) of Customs Shillong (Respondent No.2) is an Officer subordinate to respondent No. 1. The Inspector of Customs (Headquarters) Preventive Unit, Shillong , (respondent No. 3) is an Officer subordinate to respondent Nos. 1 and 2. Respondents No. 2 and 3, bot....
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....44161/13-14 dated21.06.2013 2202.640 grams 55,00,000.00 16. 44821/13-14 dated03.07.2013 76.190 grams 2,00,000.00 17. 46827/13-14 dated10.07.2013 701.320 grams 18,55,000.00 18. 46987/13-14 dated11.07.2013 37.740 grams 1,00,000.00 19. 47747/13-14 dated20.07.2013 671.640 grams 18,00,000.00 20. 51189/13-14 dated13.12.2013 101.530 grams 2,99,000.00 21. 522191/13-14dated 17.01.2014 115.940 grams 3,38,547.00 22. 02080/14-15 dated28.07.2014 1960.780 grams 55,00,000.00 23. 02084/14-15 dated28.07.2014 2495.540 grams 70,00,000.00 24. 02083/14-15 dated28.07.2014 1781.900 grams 50,00,000.00 Total 17.340 Kg 13,05,33,419.00 5. The petitioner states that the "Ningol Chak Kouba" festival in Manipur is a very important festival and the people on that occasion buy huge amount of gold according to their financial status. The said festival fell on 28th October, 2014. The petitioner decided to get "Hallmark gold coins" made in Kolkata before the start of the festival. The petitioner, accordingly, during the course of....
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....ed a seizure list and after interrogation of all the aforesaid four persons arrested them on 26.08.2014 at Dimapur and produced them before the Special Magistrate, Tinsukia on 27.08.2014. Thereafter, the Special Magistrate, Tinsukia was requested by Customs Superintendent CPF Tinsukia to handover the case to the department as the accused persons seemed to have violated various provisions of the Customs Act and the rules framed thereunder. The said prayers of Customs authority was placed before the Chief Judicial Magistrate, Tinsukia. The CJM allowed the prayer of the Superintendent of Customs CPF, Tinsukia. In fact such a prayer had been made by the Inspector of Customs, Headquarters Preventive Unit, Shillong vide petition dated 27.08.2014. At about 6.00 PM on 27.08.2014, all the gold biscuits, mobiles, other belongings along with relevant documents (seizure list, arrest report/memo etc) and four accused persons were handed over to the Customs Authority (respondent No.3) by Sub Inspector of Railway Protection Force in the Customs Office, Tinsukia. However, all the four accused persons were later released on bail by the Chief Judicial Magistrate, Tinsukia, District. 7. On 29.08.2....
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....stoms Officials under Section 110(1) of the Customs Act, which reads: Section 110(1): Seizure of goods, documents and things: If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods. As per the record, the detection of the seized gold biscuits was made at Dimapur Railway Station by Railway Protection Force on 26.08.2014 at about 0330-0345 hours and the same were formally seized by respondent No. 3 at Tinsukia CPF Office on 27.08.2014 on being handed over by Sub Inspector, Railway Protection Force. The impugned seizure memo/inventory of goods seized, on the face of it, discloses that the gold biscuits were rectangular in shape and size, and bore no marking. The seizure memo does not even disclose the purity of gold. Moreover, the seizure memo also discloses that three duplicate bills issued by Magna Project Pvt. Ltd Kolkata were also seized, which according to the petitioner, shows that the gold items were validly purchased from Magna Project Pvt. Ltd. Kolkata and were carried under the transit challan dated 25.08.2014. Thus, there was no ground for the Customs Inspector to come to the conclusion that the se....
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....son to believe". What is the law on this point has been repeatedly dealt with and elucidated by various High Courts and the Apex Court in the judgments. It is settled law that "the power of seizure cannot be used as a roving and fishing enquiry". Reason to believe is not the same as "reason to suspect" because if such an interpretation was given, then no citizen would be safe and property of any person could be seized. "Reason to believe" must exist prior to seizure and it is not a thing that is acquired after the seizure i.e. when the explanation of the person is not found to be correct. Such views have been taken by the Courts in (i) Angou Golmei vs. Smti Vizovolie Chakhsang and another reported in 1994(1)PLJR 800; (ii) Bawa Gopal Das Bedi & Sons and others vs. Union of India and others, reported in AIR 1982, Patna 152; (iii) Yogendra Prasad vs. The Union of India, 2004(4)PLJR 675 and (iv) RG Holdings Pvt. Ltd. Vs. State of Bihar, reported in 2008(2)PLJR 538). 13. The petitioner further states that the power to seize the goods under Section 110(1) of the Customs act, 1962 by the Customs Authority is for the purpose of the enforcement of the Act. The said power cannot be used i....
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.... Himachal Pradesh & others, reported in AIR 1954 SC 415, vide para 8. 16. The petitioner also submits that the gold biscuits have not been seized by the Customs Authority either from the possession of the petitioner or from the possession of its employees but the same were handed over by the Railway Protection Force to the Customs Authority, therefore, onus to prove that the gold in question is smuggled is on the seizing officer and in such an eventuality the provisions of Section 123 of Customs Act, 1962 would not be attracted. Besides, the petitioner, has otherwise, discharged the burden of proving that the seized gold biscuits are not smuggled gold and are also not illegally imported into India, by producing the related invoices etc. In this context, the petitioner refers to and relies on the judgment of the Constitution Bench of the Hon ble Apex Court in the case of Gian Chand & others vs. State of Punjab, reported in 1983 (13) ELT 1365(SC). The Hon ble Court has held that if the goods are seized by the police and delivered to the Customs Authorities under Section 180 of the Sea Customs Act, 1978, it is not seizure by the Customs within the meaning of Section 178A of the Sea....
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....aller biscuits. Gold bars, biscuits or coins sold in commercial parlance are normally in polished / finished condition and bears logo / inscriptions / number or writings for identification etc. Even after closer examination, no nexus between the present consignment (all almost of same weight 166.52 gms to 167.05 gms) and the gold sold under the three Tax Invoices of M/s Magna Projects Pvt. Ltd., Kolkata, could be established, nor could the same be explained by the carriers. According to respondents, when any commercial quantity of goods/gold moves from one State to another State, proper declarations/documentation under the Sales Tax laws of the States passing through, is required to be followed, till it reaches the destination of a State. One Mr. RK Templer arrested by the Railway Protection Force in this case, was found to be the same person who was earlier arrested for smuggling of gold from Myanmar through Moreh to Imphal and prosecuted vide Case No. 10 / CL / IMP / CUS / DPF/DCI/2014-15 dated 20.06.2014. In the earlier case dated 20.06.2014, this RK Templer had given his name as RK Swami. Thus a serious doubt was raised in the mind of officers that the same person with differen....
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....11 of the said Act, hence the same were seized under Section 110 of the Customs Act, 1962. The Customs department has referred to a judgment of Hon ble the Apex Court in the case of State of Maharashtra v. Natwarlal Damodardas Soni, reported in 1983 (13) ELT 1620(SC). Thus, the Officer concerned has discharged the burden by explaining circumstances from which a reasonable man, acting prudently, may infer that in all probabilities the gold items were smuggled goods. The officer has sufficient materials before him to entertain a reasonable belief that the gold seized was smuggled from a foreign country. Further another judgment of Hon ble the Apex Court in State of Gujarat v. Mohanlal, reported in AIR 1987(SC)1321, has also been referred to explain the reasonable belief as required under Section 123 of the Customs Act. In order to argue that the Court will not sit in appeal on the question of reasonable belief, the Court has to accept the Officers belief regardless of fact whether the Court, of its own, might not have entertained the same belief. 19. In rejoinder affidavit sworn by the petitioner Shri RK Anganbi Singh, he has tried to clarify the position that there were no ground....
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....ithout any covering documents, whereas, it was accompanied by the purchase documents and road challans. Moreover, since the gold was seized by the RPF and not by the Customs Authorities, there was no scope or occasion to produce any document before them. It was not a case of search and seizure by the Customs Department and they had simply received the gold and documents from the RPF. The gold was accompanied by the purchase documents issued by M/s Magna Projects Pvt. Ltd, Kolkata. Thus, it was not justified for the Customs Authorities to hold a view that the gold was being carried without any covering documents. It is also clarified by the petitioner that the belief of Customs Authorities that the gold with 100% purity is generally soft and is not suitable for coinage is also not correct. The gold with utmost purity is usually mixed with an alloy to make a gold coin or they are mixed with other metals to make them more durable. Thus, the gold bars which were initially purchased by the petitioner from M/s Magna Projects Pvt. Ltd, Kolkata were melted by mixing other substances so as to make the same suitable for making gold coins. That is why the gold in question did not retain its o....
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....ication. Thus, the stand of Customs Department is also not justified. The RPF seized the gold from the possession of two female passengers, namely, Smti T Santibala Devi and Smti RK Rojita Devi and there was absolutely no seizure of gold from one RK Templer Singh by the RPF. Thus, in the absence of any nexus between Shri RK Templer Singh and the persons from whom the gold was seized by the RPF, there could and should not have been any ground to believe that the gold was smuggled and that the said RK Templer Singh was accomplice in this case, rather an accomplice is one who actively participates in the commission of the crime. The petitioner has asserted that, in the instant case, the gold was being transported in a bonafide manner from one place to another alongwith supporting documents by two other persons. Thus, there was no question of Shri R.K Templer Singh being an active participant in the commission of any offence. The case referred to by the Customs Department against Shri R.K.Templer Singh is subjudice and that cannot be a ground to justify the statement that the goods seized are smuggled goods. It is necessary that the Customs Department should have a reasonable belief as....
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....ar area could not have justified the Customs Department to form a suo motu belief that the gold that was transported under genuine documents was a contraband. It can at the most give rise to a reasonable suspicion but based on that, no inference can be drawn that the gold in question was smuggled for the purpose of exercise of powers of seizure under Section 110 of the Customs Act, 1962. The petitioner has also placed reliance on a judgment of Hon ble the Supreme Court in this regard rendered in the case of State of Gujarat v. Mohanlal Porwal, reported in 1987 (29) ELT 483 (SC). The Supreme Court has held as under: "The reasonable belief should not be based on mere presumption and there must be a prima facie material. Without a properly formed reasonable belief it becomes a fishing expedition." 21. Thus, the intelligence report of spur in smuggling activities cannot be a prima facie material to hold that the gold was smuggled. Moreover, the report of smuggling cannot be used as a tool by the Customs officers to interfere with the genuine business transaction supported by purchase documents and challan. It is widely known that there is huge quantity of illicit import of gold i....
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.... at the time of seizure that the goods are contravening goods is a pre-condition to the seizure, otherwise seizure would become illegal. Further, from the seizure list prepared by the Customs Department dated 27.8.2014, it also appears that the Customs Officer took possession of gold from the custody of RPF by exercising power of seizure under Section 110(1) of the Customs Act, 1962 without having any reasons to believe that the items that were seized were gold and the same were smuggled and thus liable to confiscation under the Customs Act, 1962. The Customs Inspector, Shillong, while making seizure inventory, recorded "yellow rectangular metal biscuits believed to be gold of foreign origin" and he also recorded that the gold bore no markings. Thus, the Customs Inspector, at the time of seizure was not even certain that the items seized were gold, and that is why, in his seizure, he has stated, "yellow rectangular metal biscuits." It is submitted that the respondents only entertained suspicion instead of reasonable belief to exercise power of seizure under Section 110 of the Customs Act, 1962. The petitioner has also taken objection to defamatory statement made against him that he....
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....department for keeping costly articles, which shall be operated by an Officer not below the rank of Commissioner, so that the articles remain intact. The Commissioner of Customs shall take the custody of gold under seizure which is worth Rs. 1,23,00,000/- and ensure its safe custody." 24. Pursuant to the above order, the Customs Department has, again through the Commissioner of Customs (Preventive), North Eastern Region, Shillong, filed a detailed affidavit and tried to clarify and reiterate the position further. The affidavit reads as: "1.That I am conversant with the fact and circumstances of the case based on records. 2. That on 26.8.2014 at about 0330-0345 hrs, the officials of Railway Protection Force (RPF) Dimapur intercepted four persons namely, Shri RK Templer Singh, Male, aged 45 years, S/o (L) Ketuki Singh, Village-Sagolband, Bijoy Govinda Leikai, P.O/P.S Imphal West, Dist: Imphal West, Manipur. Shri RK Semson Singh, aged 22 years, S/o RK Boysama Singh, Village-Sagolband, Bijoy Govinda Leikai, PO/PS Imphal West Dist: Imphal West, Manipur. Smti T Santibala Devi, aged 26 years, W/o RK Semson Singh, Village- Sagolband, Bijoy Govinda Leikai, PO/PS Imphal West, Dist: ....
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.... arrested by the RPF officials on 26.8.2014 at Dimapur and were produced before the Honble Special Railway Magistrate, Tinsukia, was requested by Customs Superintendent, CPF, Tinsukia to hand over the case to the Customs Formation as they have violated various sections and rules under Customs Act, 1962. The Honble Railway Magistrate forwarded the same to the Honble Chief Judicial Magistrate, Tinsukia, Assam and the prayer of the Superintendent Customs, CPF Tinsukia was allowed. 5. That in Customs CPF (Custom Preventive Force) Office, Tinsukia all the Gold Biscuits, mobiles phones, other belongings along with the relevant documents (seizure list, arrest report, personal search list, arrest memo, statements etc) along with the 4 accused were handed over to the Customs by Shri PR Meena, Sub- Inspector, Railway Protection Force, Dimapur at 6 pm on 27.8.2014. Then, in the presence of the witnesses, the officers on a reasonable belief that the recovered Gold Biscuits were without any supportive documents and were smuggled from Myanmar, seized the said 26 gold biscuits. Then, a registered goldsmith was called in the Customs CPF Office, Tinsukia by the officers and the weighment of the ....
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....014. Moreover, as per the Disposal Manual of Government of India, Department of Revenue, Central Board of Excise and Customs, all the requisite formalities had been complied with for storage of valuables. It is submitted that as per Manual, instruction specified in Paragraph 2.5.1(iv), it is stated that when the valuable are stored in a strong room. Following measures must be taken strictly: a) Strong room storing valuables such as Gold, Silver, Dimamonds,Gems & Jewellery and precious/semi-precious stones, should invariably have a double lock system, b) Two keys for operating the Strong Room should be entrusted to two separate officers; one of the in-charge of the Strong Room or godown and the other to a superior/supervisory officer of gazette rank; In the instant case, the seized goods has been kept in the strong room having double lock system and one of the key is with the Assistant Commissioner and another key with the Superintendent 9Disposal). The Strong Room can be accessed only when both the keys are inserted. Moreover, as per clause (viii) of the said manual instruction, no officer, including custodian-in charge of the Strong Room/godown should be allow....
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....s shown below: Sl.No Invoice No. Description of gold Quantity (in gm) Quantity (in gm) recovered gold biscuits as per the inventory Fineness per mille as certified by India Govt. Mint Kolkata 1 37260/ 13-14dt. 01.06.1 3 Goldbar fineness 99.5 950 All the recovered 26 gold biscuits weighed in between 166.5 gm to 167.05 gm No.1 - 995.3 No. 2 - 995.5 No. 3 - 995.4 No. 4 - 995.0 No. 5 - 995.3 No.6 - 995.0 No. 7 -995.3 048606 148.14 045607 801.86 2 38757/ 13-14dt 11.06. 13 Goldbar fineness 99.5 3200 SO- B37928 1000.00 SO- B37928 1000.00 SO- B37928 1000.00 SO- B37928 200.00 3 47709/ 13-14dtd 19.07. 13 Goldbar fineness 99.5 1172.35 All the recovered 26 gold biscuits weighed in between 166.5 gm to 167.05 gm No. 8 - 995.3 No. 9 - 996.0 No. 10 - 996.1 No. 11 - 995.9 No. 12 - 995.6 No. 13 - 996.9 No. 14 - 995.5 No. 15 - 995.3 No. 16 - 996.1 No. 17 - 996.2 No. 18 - 996.1 No. 19 - 995.7 No. 20 - 995.3 No. 21 - 995.2 No. 22 - 995.5 No. 23 - 996.1 ....
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....t Commissioner of Customs in furtherance of earlier affidavits. The Assistant Collector has also filed a furthermore affidavit dated 17th March, 2015 with similar averments as made in earlier five affidavits. 26. From the foregoing rival submissions and the pleadings, it appears that this petition involves some vital disputed questions of facts which cannot be gone into and appreciated in the exercise of prerogative writ jurisdiction and the same would need scrutiny of evidence as well as supporting documents to ascertain the veracity of the such contentions. The petitioner has stated that during the period commencing from 1st April 2013 to 17th April 2014 he purchased a huge quantity of gold bars as entered into sales invoices with dates and numbers. He has also submitted that the "Ningol Chak Kouba festival" is a very important festival in the State of Manipur and the people over there spend huge amount in purchasing gold according to their financial status. That festival was being celebrated on 28th October, 2014. Thus, the petitioner being the owner of a famous jewellery shop at Imphal decided to get "Hallmark gold coins" made in Kolkata before the start of the festival. The....
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....nt No. 04/14-15 and searched the residential premises of the petitioner. According to the petitioner, the Railway Protection Force handed over the seized gold items at 6PM on 27.08.2014 to the Customs authority which the authority received in purported exercise of the power under Section 110 of the Customs Act, 1962. The description of the gold items were recorded as yellow rectangular in shape having gross weight 4334.79 grams and valued at Rs. 1,22,15,438 and thus believed to be gold of foreign origin. Three duplicate bills of Magna Project Pvt. Ltd., Kolkata were also seized by the Customs Authorities but it seems that they did not find any mention about the transit challan dated 25.08.2014 issued by the petitioner to the carriers of the gold. Thereafter, the petitioner was summoned by the Superintendent of Customs under Section 108 of the Customs Act, 1962 to appear before him on 09.09.2014. The petitioner thus appeared before the authority at Imphal on the said date 09.09.2014 where respondent No. 3 Customs Inspector had also gone from Shillong. He recorded the statement of the petitioner at 1600 hours on 09.09.2014, at 1030 hours, on 11.09.2014 and also on 12.09.2014. However....
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.... from Myanmar through Moreh to Imphal vide Case No. 10 / CL / IMP / CUS / DPF/DCI/2014-15 dated 20.06.2014 said to be still pending. In that case, the said RK Templer has given his name as RK Swami Singh. It had thus created a serious doubt and bonafide belief in the mind of RPF Officers that the gold items were not being carried under a valid transaction and could be the smuggled goods. Though the carriers disclosed that the gold items belong to Mr. RK Angangbi Singh, Imphal, but they also informed that he was to proceed to Kolkata by flight and receive the gold at Howrah, Kolkata. It also created a strong suspicion: for, why one will take the risk of sending gold biscuits worth more than Rs. 1.22 crores through carriers by bus/train while he himself would travel by air to receive the gold only at the destination point. If the gold biscuits were legally acquired and possessed, then the owner should have carried the gold with him by air to Kolkata, after making a full declaration to the security/enforcement agencies. That apart, the Department was also alert having received prior information about the spurring in smuggling of gold mainly of Myanmars origin from across the border al....
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....right to file statutory appeal. Hon ble the Apex Court in the case of Gulabdas & Co. V. Assistant Collector of Customs and Another reported in AIR 1957 SC 733 has held that; ".......................Unless the provisions relating to the imposition of duty are challenged as unconstitutional, or the orders in question are challenged as being in excess of the power given to the Customs Authorities and therefore without jurisdiction, it is difficult to see how the question of any fundamental right under Article 19 (1), Cls. (f) & (g), of the Constitution can at all arise. If the provisions of law under which the impugned orders have been passed are good provisions and the orders passed are with jurisdiction, whether they be right or wrong on facts, there is really no question of the infraction of a fundamental right. If a particular decision is erroneous on facts or merits, the proper remedy is by way of an appeal." 30. This is not a case where despite existence of an efficacious alternative remedy in the nature of substantive right this Court has to exercise its discretionary jurisdiction. There is no violation of the principle of natural justice or a fundamental right or ther....
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....rejudicially affect the subject, then, although there are not two parties apart from the authority and the contest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasi-judicial act provided the authority is required by the statute to act judicially." Now the Sea Customs Act empowers the Customs authorities to impose a certain duty on goods imported and this no doubt prejudicially affects the importer. The Act, further clearly requires the authorities to proceed judicially in imposing that duty when a dispute arises, that is, after giving a hearing to the party affected" (emphasis is ours). The Hon ble Court has also placed reliance on its earlier judgments in Rashid Ahmed v. Municipal Board, Kairana, reported in [1950] SCR 566 and Union of India v. VTR Varma, reported in [1958]SCR 499 and held as: "We see considerable force in the argument of the learned Solicitor-General. We must, however, point out that the rule that the party who applies for the issue of a high prerogative writ should, before he approaches the Court, have exhausted other remedies open to him under-the law, is not one whic....
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....cretion to refuse to interfere in a writ petition unless there are good grounds therefore. But it should be remembered that the rule of exhaustion of statutory remedies before a writ is granted is a rule of self imposed limitation, a rule of policy, and discretion rather than a rule of law and the court may therefore in exceptional cases issue a writ such as a writ of certiorari notwithstanding the fact that the statutory remedies have not been exhausted. In The State of Uttar Pradesh v. Mohammad Nooh [(1958) SCR 595], SR Das, CJ, speaking for the Court, observed: "In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will like only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute (Halsburys Laws of England, 3rd Ed., Vol. II, p. 130 and the cases cited there). The fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion....