TaxTMI 
TaxTMI 
2020 (1) TMI 114
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions of search, seizure and arrest. Chapter XIV (Sections 111 to 127) deals with the confiscation of goods and imposition of penalty. Section 111 throws some light with regard to the nature of goods which are liable for confiscation. 4. Section 2(25) of the Act defines "imported goods" to mean any goods brought into India from a place outside India but does not include goods cleared for home consumption. Section 2(11) defines "customs area" to mean any area of a customs station or a warehouse and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities and "smuggling" in relating to any goods as per subsection (39) of Section 2 means an act or omission which will render such goods liable to confiscation under section 111 or section 113. 5. Chapter IV of the Act empowers the Central Government to prohibit importation and exportation of any goods and Chapter IV-A and IV-B deal with the detection of illegally imported goods and prevention of the disposal thereof. 6. Section 111 defines the category of goods brought from a place outside India liable to be confiscated. 7. We are dealing with a case where betel nuts hav....
X X X X Extracts X X X X
X X X X Extracts X X X X
....402 is also a registered dealer under GST Act. 15. With these undisputed facts, before us, learned Additional Solicitor General of the India, Shri S. D. Sanjay invites our attention to the general practice of trade of illegal transportation of such goods from Nepal into India. For entry of such goods imported from anywhere other than India, is prohibited in law. But is it really so? in the instant case. Well except for bald assertion, there is nothing to support such a statement. 16. It is seen that the learned Single Judge by distinguishing its earlier decision rendered in M/s Ayesha Exports Vs. The Union of India (CWJC No.7589 of 2018) dealing with the very same issue directing release of the goods on the very same set of facts, dismissed the writ petition holding that there was a report of the laboratory indicating the goods to be not fit for human consumption; that investigation would reveal as to whether the goods were liable for confiscation or not and that there are Circulars and Memorandum issued by the Government. 17. At this stage, we may point out that the endeavour of the learned Single Judge in distinguishing the judgement in M/s Ayesha Exports (supra), in relati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e language used in the order itself. 20. While dealing with the same very provision, Rohinton Fali Nariman J., in Tata Chemicals Limited Versus Commissioner of Customs (Preventive), Jamnagar, (2015) 11 SCC 628, has explained the meaning of "reason to believe" by opining it to be not the subjective satisfaction of the officer concerned, for "such power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with the restraints imposed by law" and that such belief must be that of an honest and reasonable person based upon reasonable grounds. Further, if the authority would be acting without jurisdiction or there is no existence of any material or conditions leading to the belief, it would be open for the Court to examine the same, though sufficiency of the reasons for the belief cannot be investigated. 21. In Assistant Collector of Customs Versus Charan Das Malhotra, 1971 (1) SCC 697, Shelat J., has held reasonable believe to be relevant and not extraneous. 22. In Kewal Krishan Vs. State of Punjab, AIR 1967 SC 737, Kapur J., while dealing with identical provisions has clarified that confiscatory power based on 'reason to believe' has to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e satisfaction of the Income Tax Officer: the forum of decision as to the existence of reasons and the belief is not in the mind of the Income Tax Officer. If it be asserted that the Income Tax Officer had reason to believe that income had been under assessed by reason of failure to disclose fully and truly the facts material for assessment, the existence of the belief and the reasons for the belief, but not the sufficiency of the reasons, will be justiciable. The expression therefore predicates that the Income Tax Officer holds the belief induced by the existence of reasons for holding such belief. It contemplates existence of reasons on which the belief is founded, and not merely a belief in the existence of reasons inducing the belief; in other words, the Income Tax Officer must on information at his disposal believe that income has been under-assessed by reason of failure fully and truly to disclose all material facts necessary for assessment. Such a belief, be it said, may not be based on mere suspicion: it must be founded upon information." (Emphasis supplied) 28. The view stands reiterated in Income-Tax Officer I Ward, District VI, Calcutta and others Versus Lakhmani Mew....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be paradoxical if they were not imposed." 30. In Indian Nut Products and others Versus Union of India and others, (1994) 4 SCC 269, while dealing with the similar provision, N.P. Singh J. has opined as under:- "10. It is well-settled that if a statute requires an authority to exercise power, when such authority is satisfied that conditions exist for exercise of that power, the satisfaction has to be based on the existence of grounds mentioned in the statute. The grounds must be made out on the basis of the relevant material. If the existence of the conditions required for the exercise of the power is challenged, the courts are entitled to examine whether those conditions existed when the order was made. A person aggrieved by such action can question the satisfaction by showing that it was wholly based on irrelevant grounds and hence amounted to no satisfaction at all. In other words, the existence of the circumstances in question is open to judicial review." 31. The reason to believe as held in Sheo Nath Singh v. CIT, (1972) 3 SCC 234, cannot be basis on mere suspicion, gossip or rumour though belief on an honest basis and on reasonable grounds and the officer may act on dir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in and those were believed to be of foreign origin. Also the Customs Officer had specific information about illegal importation of foreign origin 'Dried Areca Nuts/ Betal Nuts', thus these kinds of shape, size and colour of Areca Nuts strengthen their belief that those Dried Areca Nuts were actually of foreign origin and were illegally imported into India. The driver could not produce any documents regarding importation of said Dried Areca Nuts. The truck along with the loaded goods (Dried Areca Nuts) were detained by the Customs Officer." (Emphasis supplied) 36. The customs authorities sent the samples for analysis to two laboratories. The Expert as per the report used the word 'suspect'. Based thereupon, petitioners' request for release of the seized goods was rejected vide communication dated 29th of March, 2019. 37. Perusing the impugned judgement, we find the Single Judge to have heavily relied upon the contents of the affidavit filed by the Revenue, wherein it stood averred that "the Areca Nuts of Indian origin are normally oval in shape" and it is this which made the Customs Officer forms a reasonable belief that cut dried Areca were illegally smuggled into India. As w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by presuming the same to be ipso facto applicable, the learned Judge concluded the Department to have lawfully seized the goods and the vehicle. 42. Circular No.3 of 2011 purportedly issued under the provisions of the Prevention of Food Adulteration Act, 1954, does not even deal with the issue in question. Firstly, the Prevention of Food Adulteration Act or its guidelines/Rules does not authorise the Customs Officer to issue any circular or take appropriate action under the provisions of the said Act. The Customs Officers are also not empowered or authorized under the said Act or the Rules framed thereunder. Even the Food Safety and Standards Act, 2006 does not empower the officers to take any appropriate action under the said provisions. Secondly, the said Circular does not deal with the product in question. It be only observed that there is no live link or tell a tale sign of the product being of a foreign origin or having passed through a territory other than India, much less Nepal. 43. Who were those "customs officers" who informed the seized nuts not to be of Indian origin, as recorded in the Panchnama, is embedded only in the mind of the officer and despite a period of 1....