Ranjit Exports Pvt Ltd. v. Collector Of Customs — 1987 DIGILAW 429 (MAD)

ORDER Sathiadev, J. 1. The petitioner prays for a writ of mandamus, directing the respondents to return the two bales of fabrics covered by shipping bill No. 00859 dated 23.5.1984. The petitioner-company exports silk and cotton fabrics and majority' of its exports are through Calcutta and Madras Airports. It tendered two bales of fabrics on 23.5.1984 along with the relevant documents at the Aircargo Complex, Madras Airport, for being exported. Customs Officials inspected the contents of the bales and found that they do not tally with the declaration made by the petitioner on the shipping bill. On 25.5.1984 they drew samples from the two bales for investigation. On 1.6.1984, the petitioner corresponded for the release of the consignment claiming that the foreign buyer is pressing for immediate shipment and that they would cancel the order if the goods were loaded to them beyond 4.6.1984. On 5.6.1984, the petitioner was informed that the goods are with SIB unit and that the Assistant Collector of Customs, SIB could be contacted. On contacting the said authority, the petitioner was informed that the goods do not correlate [with] the description made in the shipping bills. On 21.5.1984, and 22.5.84 three shipping bills were handed over. But the 39 bales covered by the shipping bills dated 21.5.1984 and 22.5.1984 were not delivered to the Customs Authorities. On 22.5.1984, the petitioner received a phone message from the buyer asking the petitioner to defer the shipment and accordingly on 26.5.1984 the petitioner requested the Assistant Collector, Aircargo Complex to cancel the said three shipping bills and that they are not exporting them through Madras Airport because the petitioner had been instructed to dispatch them by rail to Calcutta. They were booked by rail to Calcutta on 30.5.84 and the goods were left with the railways for onward transmission to Calcutta. But at the instance of the respondents, as they had a search warrant, they were collected from the railways and on the respondents seizing them, they were kept in the godown of the petitioner. An order under Section 110 of the Customs Act, 1962 was served on the petitioner restraining it from removing the said 39 bales. Hence W.P.No. 7067 of 1984 was filed and ultimately under orders of this Court, the said goods were returned. An appeal is preferred against the order therein and is pending. An order under Section 110 of the Customs Act, 1962 was served on the petitioner restraining it from removing the said 39 bales. Hence W.P.No. 7067 of 1984 was filed and ultimately under orders of this Court, the said goods were returned. An appeal is preferred against the order therein and is pending. The two bales covered by this writ petition did not form part of the earlier writ petition and therefore by virtue of Section 110(2) of the Customs Act, hereinafter referred to as the Act, as the period of six months limit fixed therein had expired on 28.11.1984, the petitioner is entitled to the release of the goods since no show cause notice had been served till date. No proposal to extend the time limit of six months was ever served. In spite of them as the respondents had not complied with and performed the lawful duties and as the goods are valued more than Rs. 45,333.83 and as the petitioner is suffering considerable monetary loss, it has preferred the present writ petition. 2. The respondents in their counter would state that the petitioner had attempted to export misdescribed silk fabrics as against the description in the shipping bills "Handloom natural silk fabrics made on 100% Mulberry Raw Silk Filature Reeled Yarn other than dupion". Four shipping bills were filed for clearance of 41 bales and since the remaining 39 bales were not tendered, they were seized under mahazar. The samples taken from all the consignments had brought out a misdescription resorted to by the petitioner for exporting goods which do not tally with the description and the matter is under investigation. Once the goods are detained in Customs Area, they cannot be deemed to be seized under Section 110 of the Act, and therefore, there is no question of issue of show cause notice as claimed therein. 39 bales seized under mahazar have been released under orders of court. Since Section 110 of the Act could have no application to the facts and circumstances of this case and as they were detained for the purpose of enquiry, they are not deemed to be seized goods. Investigation is over and since the petitioner has indulged in litigation, they have not yet been seized by the department. 3. Since Section 110 of the Act could have no application to the facts and circumstances of this case and as they were detained for the purpose of enquiry, they are not deemed to be seized goods. Investigation is over and since the petitioner has indulged in litigation, they have not yet been seized by the department. 3. Insofar as the two bales in this petition are concerned, the respondents have taken a firm stand that they have not yet been [?] seized them and that they are in their physical custody since they have power to detain the goods for finding out whether the petitioner had committed any contravention of any of the provisions under Customs Act. The petitioner would contend that when the goods had been detained and after the samples were taken and investigation made and on the proper officer having entertained a reason to believe that they are liable to be confiscated under the Act, and in spite of the demand made by the petitioner when they had been indefinitely kept in physical custody of the respondent, in law, from that date, the goods having been seized and the period under Section 110(2) will be operative from that date and more than six months having been elasped and no notice having been issued as stipulated therein, the petitioner is entitled to the custody of the goods. 4. Under Section 110(1) of the Act, a seizure could take place without issue of any order of seizure. It is only in respect of those goods where it is not practicable to seize any such goods, the owner of the goods is to be served with an order by the proper officer not to remove, part with or otherwise deal with the goods by the owner. Therefore, there may be instances wherein the proper officer would come into custody of goods in the normal of course of export and import transactions like violation of proper duty payable thereon etc. In the course of inspection, if he found that there had been any contravention of the provisions of the Customs Act, the proper officer would physically retain the custody of the goods and proceed with confiscation proceedings. In the course of inspection, if he found that there had been any contravention of the provisions of the Customs Act, the proper officer would physically retain the custody of the goods and proceed with confiscation proceedings. The language of the provisions of the Act are to the effect that in such circumstances, he has to issue seizure order and only from that date, the seizure contemplated under Section 110(1) of the Act would come into operation. Even without serving an order of seizure, the proper officer could effect seizure of goods. Learned Counsel for the respondents had not placed before Court any provision which compels the proper officer to serve an order of seizure and only thereafter he could get custody of the goods. Evidently, such a procedure would hamper effective functioning of officials entrusted with duties to enforce the provisions of Customs Act. If he comes across in the course of his duties any goods which are prohibited from being imported straightaway he could take physical custody of the goods and from that moment onwards, in law, he had effected seizure of the goods. Looked at from this point of view and there being no specific provision in the Act having been placed before this Court to show that only after seizure is effected, there could be confiscation, it has to be held that without serving an order, seizure can be effected by taking physical custody of the goods in relation to which the proper officer has "reason to believe" that they are liable for confiscation. 5. Therefore, in the instant case when the goods were inspected in the laboratory and on the receipt of the report on the day when the respondents believed that the goods are liable to be confiscated under Section 113 of the Act and is liable to legal action under Section 114 of the Act, it was on that date the seizure had been effected and from that date, a period of six months under Section 110(2) of the Act has to be computed. In spite of having drawn an, opinion that the two bales are liable to be confiscated under Section 113 of the Act, the respondents cannot still claim that the goods are still detained for investigation purposes. In spite of having drawn an, opinion that the two bales are liable to be confiscated under Section 113 of the Act, the respondents cannot still claim that the goods are still detained for investigation purposes. The two bales covered by this petition have no connection whatsoever with the thirty nine bales regarding which a memo of seizure was served because the provisions of Section 110(1) of the Act is applicable to those bales. These two bales were delivered on 23.5.1984. It was on 25.5.84, the report of the laboratory was available. Therefore, the period under Section 110(2) of the Act had come to an end on 26.11.1984. No show cause notice contemplated therein had been ever served by them. It is now stated that only on 26.3.85, the show cause notice had been served. Therefore, when the period of six months had already elapsed, the petitioner is entitled to the release of the goods. 6. Mr. K. Alagiriswamy, learned Counsel for the petitioner relied upon the decision in Gian Chand and ORs. v. The State of Punjab which deals with seizure under Section 178-A of Sea Customs Act. It was held that the seizure under the authority of law involved a deprivation of possession and when the police seized the goods, the owner of it lost possession and thereafter that right have not vested with the police and under the eye of law under Section 180, the seizure having taken place, there was no need for a fresh seizure under the Act. It was further held that taking possession of the goods by the authorities when they were delivered to them under Section 180 of the Sea Customs Act, did not amount to a seizure under Section 178-A of the Act. The term "seized" in S-178-A means "taken possession of contrary to the wishes of the owner of property". In the decision in Shantilal Mehla v. Union of India and Ors. 1983 ELT 1615 it was held that retention beyond the time limit under Section 110(2) is illegal and without jurisdiction. It was further held that since the right of retention of the seized goods is a vested civil right which goes to the owner of the goods on the expiry of six months any detention beyond the time limit is illegal and any confiscation effected also becomes illegal and nullity. It was further held that since the right of retention of the seized goods is a vested civil right which goes to the owner of the goods on the expiry of six months any detention beyond the time limit is illegal and any confiscation effected also becomes illegal and nullity. As to scope of Section 110(2) of the Customs Act in the decision in Assistant Collector, Customs v. Malhotra it was also held that Sub-section (1) of Section 110 does not contemplate enquiry at the stage of seizure because the only requirement is satisfaction of the concerned officer that there are sufficient reasons to believe that the goods are liable to be confiscated. The decision in Md. Hussain Jaffar v. Assistant Director (Match), Sattur (1983 Excise Law Times 763) deals with the case of T.V. Set being directed by the Customs Inspector not to be removed from the house of the owner and who in turn [had] given an undertaking that he would not dispose of it and produce the same as and when required and when no orders of seizure having been ever served, it was held under such facts and circumstances that it would tantamount to seizure, though it had not been physically removed because of the petitioner's undertaking. Mr. K. Alagiriswamy heavily relied upon this decision and contends that the emphasis is on the opinion of the proper officer that the goods involved are liable to be confiscated and on such opinion formed, .if he prevents the owner from exercising his lawful rights over it which as the owner he could do then from that moment onwards the goods have been seized by the customs authority. The moment the proper officer informs the owner that the goods are liable to be confiscated, irrespective of whether a written order is served or not, in the eye of law, seizure has been effected under the provisions of the Act. Hence, he submits that the period of six months under Section 110(2) of the Act would be operative from that moment. Lastly he relied upon the decision in K. Srinivasan v. The Collector of Customs, Madras which stales that it is impossible to contend that without effecting seizure, there could be confiscation. Hence, he submits that the period of six months under Section 110(2) of the Act would be operative from that moment. Lastly he relied upon the decision in K. Srinivasan v. The Collector of Customs, Madras which stales that it is impossible to contend that without effecting seizure, there could be confiscation. It is also held that on failure to follow the procedure under Section 124 of the Act, it entitles the return of the goods to the person from whom it was seized. 7. Therefore, all these decisions go to show that if what is done by a proper officer under Section 110 of the Act results in seizure of the goods and if he forms an opinion that there is a reason to believe that the goods are liable to be confiscated, then from that moment onwards, the seizure had taken place. In the instant case, as pointed out above, the moment the report from the laboratory was received and the authority had drawn the opinion that the goods are liable to be confiscated under Section 113 of the Act which had resulted in the belated show cause notice dated 26.3.84 being issued, the further retention of the goods beyond 25.5.1984 could never be treated as detention of goods for payment of duty. Therefore, the period of six months under Section 110(2) of the Act will automatically get lapsed over the goods, and hence the related issue of show cause notice dated 26.3.84, being beyond the time fixed by the statute the petitioner is entitled to release of the goods forthwith on production of steno copy of this order. It is made clear that this situation is the outcome of the failure on the part of the concerned authority in not acting within the time limit fixed by the statute. When such failure causes occasions in the discharge of public duties, there is no other alternative than to grant the relief which is conferred on the citizen under the Act. Thereafter, there is no purpose in claiming that the confiscated goods are get released inspite of action initiated by the authorities [sic]. It is not initiation of the proceedings that matters, but it must be followed up by the proper officer under Section 110 of the Act who must take prompt steps to issue notice within six months. Thereafter, there is no purpose in claiming that the confiscated goods are get released inspite of action initiated by the authorities [sic]. It is not initiation of the proceedings that matters, but it must be followed up by the proper officer under Section 110 of the Act who must take prompt steps to issue notice within six months. It is only when the authority fails to take prompt action, the statute provides that confiscated goods are liable to be released. To this effect the writ petition is allowed with costs. Counsel fee. Rs. 250.