TaxTMI 
TaxTMI 
TaxTMI 
2020 (12) TMI 138
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....s importer exporter code bearing No.0317500457 dated 05.04.2017. 4. Petitioner had imported copper wire rods 8 MM electrolytic tough pitch copper wire rod as per ASTM B49 in two consignments vide bills of lading dated 03.12.2019 and 07.12.2019. In the course of import, petitioner contemplated high seas sale of the imported goods to M/s. Chandrashekhar Industries, subsequently added as respondent No.4 to the present proceeding in terms of order dated 29.09.2020. Respondent No.4 was required to pay the agreed amount for the high seas sale by entering into a written agreement. However, only an oral agreement was entered into by and between the petitioner and respondent No.4. Unfortunately, without making any payment towards the high seas sale but on the basis of the oral agreement, two bills of entry dated 10.12.2019 were filed by respondent No.4 in respect of the two imported consignments. 5. It is stated that after filing of the bills of entry, respondent No.4 declined to make the agreed payment and instead requested for cancellation of the high seas sale orally agreed upon by and between the parties. Respondent No.4 however assured the petitioner that it would co-operate in getti....
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....ut claiming benefit of Notification No.25/99-Customs dated 28.02.1999. 10.1. Central Intelligence Unit, Nhava Sheva vide letter dated 23.12.2019 made a request that any amendment of 15 bills of entry as mentioned in the letter should not be considered. These 15 bills of entry included the two bills of entry of the petitioner. 10.2. Directorate of Revenue Intelligence (DRI), Ahmedabad vide letter dated 23.04.2020 informed that a case against respondent No.4 was booked for wrongful availment of benefit under Notification No.25/99Customs dated 28.02.1999. As such DRI requested to nullify the amendments made in the two bills of entry dated 10.12.2019. Request of DRI to cancel the amendment was accepted by the department on 29.04.2020. Following such acceptance of request, the importer in respect of the said two bills of entry became respondent No.4. 10.3. It is stated that the act of cancellation of high seas sale arose after 16.12.2019 when the premises of the importer, high seas seller and the concerned customs broker were searched by DRI, Ahmedabad and a case was booked against respondent No.4. When the petitioner came to know about such search, it approached the Nhava Sheva cust....
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....spondent No.4) to M/s. Nikom Copper and Conductors Private Limited (petitioner). The amended bills of entry were filed on merit rate of duty without claiming benefit of Notification No.25/99Customs dated 28.02.1999. 11.4. The held consignments covered by the two bills of entry were jointly examined by officials of DRI, Vapi and Nhava Sheva customs authorities on 09.01.2020 whereafter the seizure was made on 09.01.2020. Claim of the petitioner that it had entered into oral agreement with respondent No.4 for high seas sale of the consignments has been disputed and denied. It is submitted that there is no question of any oral agreement in high seas sale. It is the contention of respondent No.3 that respondent No.4 was working under the control of Shri. Jayant Shantilal Mirani who was the actual owner of the high seas seller i.e., the petitioner. The act of cancellation of high seas sale was done after 16.12.2019 when the premises of the importer, high seas seller and the concerned customs broker were searched and a case was registered against respondent No.4. In this connection, reference has been made to the statement of the customs broker who admitted that it was not correct to ame....
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....n to believe by the proper officer that the imported goods are liable to confiscation. He submits that the seizure memo does not record any reason to believe that the goods were liable to be confiscated. Referring to section 111 of the Customs Act, he submits that imported goods can be confiscated only under that provision which has a number of clauses but none of the clauses of section 111 would be attracted to the facts and circumstances of the case. While denying the allegations made against the petitioner in the affidavits filed by respondent Nos.1 and 2 on the one hand and by respondent No.3 on the other hand, he submits that the seizure memo must be capable of standing on its own; its validity must be judged from the reasons mentioned in the seizure memo itself. Furnishing of reasons subsequently to justify the seizure cannot validate an invalid seizure though the grounds given in the affidavit are wholly incorrect and untenable. 14.1. Mr. Shah submits that even if the averments made in the affidavits are taken as true, nowhere it is stated therein that the seized goods are liable to confiscation. Petitioner has not claimed any exemption or concession in respect of the impor....
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....ed that there was contravention of the Customs Act in which event the goods are liable to be confiscated. His further contention is that petitioner had resorted to amendment of the two bills of entry after it became aware of the search operations carried out by the DRI in the premises of respondent No.4 and two other firms and after a case was registered against respondent No.4. Such amendments of the bills of entry were not bona fide and were rightly cancelled by the respondents. In support of his submissions, Mr. Venegaonkar has painstakingly taken the Court to the various documents annexed to the affidavit of respondent No.3 and extensively relied upon the said documents. 17. Submissions made by learned counsel for the parties have been duly considered. Also perused the materials on record. 18. Question for consideration in this writ petition is the legality and validity of the seizure memo dated 09.01.2020 whereby the two consignments covered by the two bills of entry dated 10.12.2019 were seized. 19. To appreciate the above, it would be apposite to advert to the impugned seizure memo at the outset. For ready reference, the same is extracted hereunder:- "SEIZURE MEMO DATED ....
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....o the owner of the goods or the beneficial owner or any person holding himself out to be the importer, or any other person from whose custody such goods have been seized, on execution of an undertaking by such person that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer: Provided further that where it is not practicable to seize any such goods, the proper officer may serve an order on the owner of the goods or the beneficial owner or any person holding himself out to be importer, or any other person from whose custody such goods have been found, directing that such person shall not remove, part with, or otherwise deal with such goods except with the previous permission of such officer." 21. The two provisos are not relevant for the present deliberation. What is relevant here is the parent or main provision of sub-section (1). Sub-section (1) makes it abundantly clear that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. Thus, it is the proper officer who must have reason to believe that the goods in question are liable to confis....
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....e this expression in the context of section 34 of the Indian Income Tax Act, 1922. Reiterating what was held in Calcutta Discount Company Limited (supra), it was pointed out that the expression 'reason to believe' does not mean a purely subjective satisfaction on the part of the Income Tax Officer. The belief must be held in good faith: it cannot be merely a pretence. It is open to the court to examine the question as to whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief. To that extent, action of the Income Tax Officer in starting proceedings under section 34 is open to challenge in a court of law. 24. Again in Sheo Nath Singh Vs. Appellate Assistant Commissioner of Income Tax, 67 ITR 254, Supreme Court held that there can be no manner of doubt that the words 'reason to believe' suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds. The Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income Tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are....
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....rds, the Assessing Officer must have reason to believe that income chargeable to tax for a particular assessment year has escaped assessment for the said year. The reasons which are recorded by the Assessing Officer for reopening an assessment are the only reasons which can be considered when the formation of the belief is impugned. Recording of reasons distinguishes an objective from a subjective exercise of power and is a check against arbitrary exercise of power. The reasons which are recorded cannot be supplemented subsequently by affidavits. 27. A Division Bench of Punjab & Haryana High Court in MAPSA Tapes Private Limited Vs. Union of India, 2006 (201) ELT 7 while examining challenge to seizure of goods under section 110 of the Customs Act held that while power of seizure has to be conceded in the larger interest of society and to check evasion of tax (duty), but at the same time such a power affects not only right of possession and enjoyment of property but also privacy of a citizen. It also affects right of personal liberty under Article 21 of the Constitution. Procedure for affecting such a right has to be fair and reasonable. With the above observation, Punjab & Haryana ....
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....Investigation Unit at the Nhava Sheva Port. After narrating the imports and amendment to the bills of entry, it was recorded that the goods which were de-stuffed from the containers were imported under Notification No.25/1999-Customs dated 28.02.1999 by the original importer M/s. Chandrashekhar Industries (respondent No.4) though presently the name of importer on the two bills of entry was M/s. Nikom Copper and Conductors Private Limited (petitioner). The officer informed the panchas that respondent No.4 had contravened the provisions of the said notification dated 28.02.1999 by misusing it. Hence, the officer informed that the copper coils were liable to be seized under the provisions of the Customs Act. 31. From a conjoint reading of the seizure memo and the panchnama, both dated 09.01.2020, it is apparent that seizure was made by one officer (Uma Nath Chaudhary) whereas the panchnama was drawn by another officer (Amit Kumar Sharma). Assuming that both the officers are proper officers in terms of section 110(1) of the Customs Act, there is no recording or mentioning by Uma Nath Chaudhary in the seizure memo that he had reasons to believe that the goods in question were liable to....
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.... documents before filing of bills of entry on the basis of high seas sale. Thereafter respondent No.4 through its customs broker requested for amendment in the importer's name by submitting NOCs from both the parties. The said request was allowed and the name of the importer was changed from M/ s. Chandrashekhar Industries (respondent No.4) to M/s. Nikom Copper and Conductors Private Limited (petitioner) as there was no change in the original bills of lading and IGM. The letter further mentioned that the amendment was allowed on 18.12.2019 and letter from the Central Intelligence Unit was received by the Commissionerate on 23.12.2019. 32.1. DRI, Zonal Unit, Ahmedabad vide letter dated 23.04.2020 (Exhibit-G) informed the Joint Commissioner of Customs, Nhava Sheva-II, Group IV referring to the two bills of entry dated 10.12.2019 initially filed by respondent No.4 but subsequently amended in the name of the petitioner with bills of entry being filed on merit rate of duty without claiming benefit of Notification No.25/99-Customs dated 28.02.1999. Reference was made to the telephonic discussions and request to nullify the amendment. It was mentioned that after the held consignments wer....
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....tioner. In such circumstances, the customs authorities at Nhava Sheva had rightly allowed the amendments prayed for. As on the date of seizure i.e., 09.01.2020, the two bills of entry were in the name of the petitioner and the petitioner had not sought any concession or exemption or benefit under Notification No.25/99Customs dated 28.02.1999. In such circumstances, there could not have been any reason to believe that the said imported goods had contravened any of the provisions of section 111 dealing with confiscation and hence liable to seizure under section 110. That apart, all the developments mentioned above are post seizure developments which could have no bearing on the validity or invalidity of the impugned seizure. 35. At this stage, we may remind ourselves of the famous observations of Vivian Bose, J. in Commissioner of Police Vs. Gordhandas Bhanji, AIR 1952 SC 16. He had said that public orders publicly made in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant or of what was in his mind or what he intended to do. Public orders made by public authorities are meant to have ....