# Jaymatajee Enterprises (Seller), Ashutosh Pally, Jalpaiguri, W.B. & Anr v. The Commissioner of Customs

- **Citation:** (2020) 11 ILRA 13
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-10-22
- **Case number:** Writ Tax No. 573 of 2020
- **Bench:** Shashi Kant Gupta, Pankaj Bhatia
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/jaymatajee-enterprises-seller-ashutosh-pally-jalpaiguri-w-b-anr-v-the-45375
- **Pages:** 11

## Headnote

A. Tax Law -- Foreign Trade Regulation
Act; Customs Act, 1962:-Section 14(2),
110, 111, 123, 144, 151-A;- Customs
Valuation (Determination of the Value of
Imported Goods) Rules, 2007: Rule 3, 4 to
9, 12; Instruction No. 01/2017-Cus. (F.
No.
591/04/2016-Cus.
(AS))
dated
08.02.2017. -Seizure of goods

Section 110, Customs Act, 1962 - "reasons
to believe" - The power of seizure of goods can
be resorted to only when the Officer exercising the
said power has "reasons to believe" that the goods
are liable to confiscation. In the present case, the
goods were admittedly at Gorakhpur and not
seized from any port or any custom area to form a
belief that the goods were being imported into
India. There was evidence in the form of transport
documents to show that the goods were being
transported within India. (Para 30, 32)

It is well-settled that the 'reasons to believe
must be based upon acceptable materials,
which have to be more than a moon shine.
The material on record overwhelming suggests
that the 'reasons to believe' were based upon the
opinion
of
the
local
dealers,
prima
facie
examination of the goods by naked eye and
inscriptions in foreign language on some bags. The
reasons given for forming a belief for exercise of
power of seizure are invalid. The said reasons even
fail the test of 'wednesbury principles' as no
reasonable person can reach to conclusion of the
country of origin of 'Areca Nuts' by mere perusal
from naked eye as well as the opinion of the
traders, as the ICAR-National Bureau of Plant
Genetic
Resources
(Independent
Council
of
Agricultural Research) as well as the Ministry of
Agriculture and Farmer Welfare have firmly opined
that the country of origin cannot be traced by any
laboratory method also. (Para 31, 33, 36)

B. Alternative remedy - No appeal lies
against a seizure order. The goods detained
are perishable in nature and considering the fact
that relegating the petitioners to the appellate
remedy would render the entire exercise futile as
by then the goods itself will be of no value. (Para
24, 26)

C. Section 123, 144 - It is a common
ground
that
'Areca
Nuts'
is
neither
prohibited nor notified goods. (Para 6, 34)

D. Section 125, 151-A, 110-A; Circular
dated 16th August, 2017 - The seizure
memo as well as the provisional release
order are contrary to the Act and the
14 INDIAN LAW REPORTS ALLAHABAD SERIES
departmental
instructions
contained
in
Instruction No. 1/2017, which are binding on
the respondent authorities. The order of
provisional release has been passed even
contrary to terms of the circular issued and
there is no independent exercise of discretion by
the Adjudicating authority while passing the
provisional release order. (Para 18, 26, 35)

E. Violation of principles of natural
justice - Order has been passed in violation
of principles of natural justice inasmuch as
neither in the provisional release order has
the contention of the petitioners being
addressed nor has any opportunity of hearing
accorded before passing the
provisional
release order. (Para 26)

Writ Petition allowed. (E-4)

Precedent followed:-

## Text

11 All. Jaymatajee Enterprises (Seller), Ashutosh Pally, Jalpaiguri, W.B. & Anr. Vs. The Commissioner of
 Customs (Preventive), Sector H, Kendriya Bhawan, Lucknow & Ors.
13
group of persons rather and one on behalf
of a competitor.

22. It is trite to mention here that a
dispute between two warring groups is in
the realm of a private dispute and is not
allowed to be agitated as a Public Interest
Litigation vide Ramsharan Autyanuprasi
and another v. Union of India and others
[AIR 1989 SC 549].

23. Accordingly, in the facts and
circumstances of the case, as narrated
above, the petition is dismissed as not
maintainable in public interest at the behest
of the petitioner.
----------
(2020)11ILR A13
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 22.10.2020

BEFORE

THE HON'BLE SHASHI KANT GUPTA, J.
THE HON'BLE PANKAJ BHATIA, J.

Writ Tax No. 573 of 2020

Jaymatajee Enterprises (Seller), Ashutosh
Pally, Jalpaiguri, W.B. & Anr. ...Petitioners
Versus
The
Commissioner
of
Customs
(Preventive), Sector H, Kendriya Bhawan,
Lucknow & Ors. ...Respondents

Counsel for the Petitioners:
Shubham Agrawal

Counsel for the Respondent:
Sri Ramesh Chandra Shukla

A. Tax Law -- Foreign Trade Regulation
Act; Customs Act, 1962:-Section 14(2),
110, 111, 123, 144, 151-A;- Customs
Valuation (Determination of the Value of
Imported Goods) Rules, 2007: Rule 3, 4 to
9, 12; Instruction No. 01/2017-Cus. (F.
No.
591/04/2016-Cus.
(AS))
dated
08.02.2017. -Seizure of goods

Section 110, Customs Act, 1962 - "reasons
to believe" - The power of seizure of goods can
be resorted to only when the Officer exercising the
said power has "reasons to believe" that the goods
are liable to confiscation. In the present case, the
goods were admittedly at Gorakhpur and not
seized from any port or any custom area to form a
belief that the goods were being imported into
India. There was evidence in the form of transport
documents to show that the goods were being
transported within India. (Para 30, 32)

It is well-settled that the 'reasons to believe
must be based upon acceptable materials,
which have to be more than a moon shine.
The material on record overwhelming suggests
that the 'reasons to believe' were based upon the
opinion
of
the
local
dealers,
prima
facie
examination of the goods by naked eye and
inscriptions in foreign language on some bags. The
reasons given for forming a belief for exercise of
power of seizure are invalid. The said reasons even
fail the test of 'wednesbury principles' as no
reasonable person can reach to conclusion of the
country of origin of 'Areca Nuts' by mere perusal
from naked eye as well as the opinion of the
traders, as the ICAR-National Bureau of Plant
Genetic
Resources
(Independent
Council
of
Agricultural Research) as well as the Ministry of
Agriculture and Farmer Welfare have firmly opined
that the country of origin cannot be traced by any
laboratory method also. (Para 31, 33, 36)

B. Alternative remedy - No appeal lies
against a seizure order. The goods detained
are perishable in nature and considering the fact
that relegating the petitioners to the appellate
remedy would render the entire exercise futile as
by then the goods itself will be of no value. (Para
24, 26)

C. Section 123, 144 - It is a common
ground
that
'Areca
Nuts'
is
neither
prohibited nor notified goods. (Para 6, 34)

D. Section 125, 151-A, 110-A; Circular
dated 16th August, 2017 - The seizure
memo as well as the provisional release
order are contrary to the Act and the
14 INDIAN LAW REPORTS ALLAHABAD SERIES
departmental
instructions
contained
in
Instruction No. 1/2017, which are binding on
the respondent authorities. The order of
provisional release has been passed even
contrary to terms of the circular issued and
there is no independent exercise of discretion by
the Adjudicating authority while passing the
provisional release order. (Para 18, 26, 35)

E. Violation of principles of natural
justice - Order has been passed in violation
of principles of natural justice inasmuch as
neither in the provisional release order has
the contention of the petitioners being
addressed nor has any opportunity of hearing
accorded before passing the
provisional
release order. (Para 26)

Writ Petition allowed. (E-4)

Precedent followed:-

1. Commissioner of Customs Vs M/s Maa
Gauri Traders, Customs Appeal No. 03 of
2019 (Para 20)

2. Union of India Vs Salsar Transport
Company (Para 20)

3. M/s Ayesha Exports Vs U.O.I., CWJC No.
7589 of 2018 (Para 20)

4. M/s Ramesh Kumar Bind Vs U.O.I. (Para
20)

5. Writ Tax No. 589 of 2017 (Para 21)

6. Creative Media Vs St.of U.P. & 2 ors., Writ
Tax No. 469 of 2019 (Para 22)

Precedent distinguished:-

1.
Authorized
Officer,
State
Bank
of
Tranvacore Vs Mathew K.C., Civil Appeal No.
1282 of 2018 (Para 22)

2. St. of U.P. & ors. Vs M/s Kay Pan
Fragrance Pvt. Ltd., Civil Appeal No. 891 of
2019, 2019 (31) G.S.T.L. 385 (SC) (Para 22)

Present petition challenges seizure order
dated 17.08.2020 and the order of
provisional release dated 01.09.2020.
(Delivered by Hon'ble Pankaj Bhatia, J.)

1. The amendment application filed
by the petitioners is allowed.

2. The above referred writ petition has
been filed challenging the seizure of goods
of petitioner no. 1 and vehicle of petitioner
no. 2 vide Panchnama dated 17.8.2020 and
the order of provisional release dated
1.9.2020, whereby an order has been
passed releasing the goods provisionally in
respect of petitioner no. 1 on the following
terms and conditions:-

"i. Execution of Bond for the
value/estimated value of the seized goods
i.e. Rs. 53,76,000.00;

ii. Furnishing Bank Guarantee or
Security Deposit of Rs. 13440000.00;

iii. Statement of goods owner
under Section 108 of the Customs Act, 1962
before provisional release of the seized
betel
nuts
&
Compliance
of
other
applicable laws (any other conditions, as
prescribed by adjudicating authority)."

3. And in respect of petitioner no. 2 as
follows:-

"i. Execution of Bond for the
value/estimated value of the seized truck
i.e. 700000.00;

ii. Furnishing Bank Guarantee or
Security Deposit of Rs. 70000.00;

iii. Statement of the truck owner
under Section 108 of the Customs Act, 1962
before provisional release of the seized
truck & Compliance of other applicable
laws (any other conditions, as prescribed
by adjudicating authority)."

4. The contention of the counsel for
the petitioners, in brief, is that the
petitioners received an order from one M/s
11 All. Jaymatajee Enterprises (Seller), Ashutosh Pally, Jalpaiguri, W.B. & Anr. Vs. The Commissioner of
 Customs (Preventive), Sector H, Kendriya Bhawan, Lucknow & Ors.
15
Jagdamba Enterprises for supplying 17920
K.G. of betel nuts and the petitioner
purchased 24,000 K.G. of betel nuts from
one Neelkamal Saha, West Bengal by
means of two tax invoices dated 14.8.2020
each for 12,000 K.G. It is also stated that
said Neelkamal Saha had purchased 19,884
K.G. of betel nuts in an E-auction held by
the Customs Department. It is further stated
that the petitioners and the purchaser
Jagdamba Enterprises both are registered
under the G.S.T. Act. After purchasing the
said betel nuts from the said Neelkamal
Saha, the petitioners transported the said
goods to the consignee M/s Jagdamba
Enterprises through Truck No. DL01 GC1731 owned by the petitioner no. 2 and the
goods were sent alongwith requisite E-Way
Bill Invoices etc. It is further stated that the
goods
were
valued
for
the
total
consignment value of Rs. 29,56,800/-. As
soon as the Truck carrying the betel nuts
entered the State of Uttar Pradesh, the
respondent no. 3 intercepted the said Truck
and vide Panchnama dated 17.8.2020,
seized the goods as well as the vehicle i.e.
Truck No. DL01 GC-1731. A copy of the
Panchnama is on record as Annexure-3 to
the writ petition.

5. In the Panchnama on record, the
Panches made a statement that on the
request of the Excise Authorities, they
agreed to act as Panch and after the
interception of the Truck, the driver
disclosed his name as Satendra Kumar, the
Officers informed the Truck driver that they
have received specific information that
''Areca Nuts' of foreign origin was being
transported. On opening of the material
being transported it transpired that some
bags had inscriptions in foreign language
which led to a belief that the arcenuts were
of foreign origin,it is also recorded that the
officers informed the panches that on the
basis of information prima facie the goods
appeared to be of foreign origin and also
that as per the opinion of the local dealers
the supari appeared to be illegally imported
from bangladesh in violation of Section
11read with the provisions of Foreign Trade
Regulation Act on the said basis he
proceeded to seize the goods by means of
the Panchnama dated 17.8.2020.

6. Counsel for the petitioners argues
that as no bonafide ''reasons to believe'
existed, the seizure of the goods was
wholly arbitrary and illegal. He further
argues that the goods were purchased in an
E-auction held by the Customs Department
itself and as such there was no question of
the goods being imported. It is further
stated that on 18.8.2020 and 20th August,
2020, the petitioner wrote a letter to the
respondents for release of the goods and the
vehicle and requested as the goods were of
perishable nature, the same may be
released. Counsel for the petitioners Shri
Shubham Agarwal further argues that even
the manner of taking sample was contrary
to the provisions of Section 144. He thus
argues that as the goods i.e. 'Areca Nuts
'were not 'notified goods' under Section 123
of the Act and do not fall in the category of
prohibited/notified goods, the seizure order
is liable to be quashed and goods were
liable to be released.

7. Counsel for the petitioners argues
that Section 110 of the Customs Act confers
powers on the proper Officer for seizure of
goods, documents and things if the proper
Officers has ''reasons to believe' that the
goods are liable to confiscation under this
Act. Section 110 (1) is being quoted
hereinunder:-

"SECTION
110.
Seizure
of
goods, documents and things.-(1) If the
16 INDIAN LAW REPORTS ALLAHABAD SERIES
proper officer has reason to believe that
any goods are liable to confiscation under
this Act, he may seize such goods:

Provided that where it is not
practicable to seize any such goods, the
proper officer may serve on the owner of
the goods an order that he shall not
remove, part with, or otherwise deal with
goods except with the previous permission
of such officer."

8. He further argues that only the
goods which are liable to confiscation can
be seized and Section 111 of the Customs
Act provides for the goods which can be
confiscated under Section 111 of the
Customs Act. Section 111 of the Customs
Act is quoted hereinunder:-

"111. Confiscation of improperly
imported goods, etc.--The following goods
brought from a place outside India shall be
liable to confiscation:--

(a) any goods imported by sea or
air which are unloaded or attempted to be
unloaded at any place other than a customs
port or customs airport appointed under
clause (a) of section 7 for the unloading of
such goods;

(b) any goods imported by land
or inland water through any route other
than a route specified in a notification
issued under clause (c) of section 7 for the
import of such goods;

(c) any dutiable or prohibited
goods brought into any bay, gulf, creek or
tidal river for the purpose of being landed
at a place other than a customs port;

(d) any goods which are imported
or attempted to be imported or are brought
within the Indian customs waters for the
purpose of being imported, contrary to any
prohibition imposed by or under this Act or
any other law for the time being in force;

(e) any dutiable or prohibited
goods found concealed in any manner in
any conveyance;

(f) any dutiable or prohibited
goods required to be mentioned under the
regulations in an import manifest or import
report which are not so mentioned;

(g) any dutiable or prohibited
goods
which
are
unloaded
form
a
conveyance
in
contravention
of
the
provisions of section 32, other than goods
inadvertently unloaded but included in the
record kept under sub-section (2) of section
45;

(h) any dutiable or prohibited
goods unloaded or attempted to be
unloaded in contravention of the provisions
of section 33 or section 34;

(i) any dutiable or prohibited
goods found concealed in any manner in
any package either before or after the
unloading thereof;

(j) any dutiable or prohibited
goods removed or attempted to be removed
from a customs area or a warehouse
without the permission of the proper officer
or
contrary
to
the
terms
of
such
permission;

(k) any dutiable or prohibited
goods imported by land in respect of which
the order permitting clearance of the goods
required to be produced under section 109
is not produced or which do not correspond
in any material particular with the
specification contained therein;

(l) any dutiable or prohibited
goods which are not included or are in
excess of those included in the entry made
under this Act, or in the case of baggage in
the declaration made under section 77;

(m) [any goods which do not
correspond in respect of value or in any
other particular] with the entry made under
this Act or in the case of baggage with the
declaration made under section 77 3[in
11 All. Jaymatajee Enterprises (Seller), Ashutosh Pally, Jalpaiguri, W.B. & Anr. Vs. The Commissioner of
 Customs (Preventive), Sector H, Kendriya Bhawan, Lucknow & Ors.
17
respect thereof or in the case of goods
under transhipment, with the declaration
for transhipment referred to in the proviso
to sub-section (1) of section 54];

(n) any dutiable or prohibited
goods
transisted
with
or
without
transhipment or attempted to be so
transited in contravention of the provisions
of Chapter VIII;

(o) any goods exempted, subject
to any condition, from duty or any
prohibition in respect of the import thereof
under this Act or any other law for the time
being in force, in respect of which the
condition is not observed unless the nonobservance of the condition was sanctioned
by the proper officer;

[(p) any notified goods in relation
to which any provisions of Chapter IVA or
of any rule made under this Act for
carrying out the purposes of that Chapter
have been contravened.]"

9. He thus argues that for confiscation
of goods it is essential to establish that:-

(i) the goods were imported into
India, and;

(ii) the goods should be dutiable
and that the imported duty has not been
paid.

10. He further argues that even
assuming without accepting the contentions
of the respondents, none of the conditions
specified in Clause (a) to Clause (p) of
Section 111 are made out in respect of
goods brought by the petitioners within the
territorial limits of India and being
transported within the territorial limits of
India and he further argues that there is no
whisper
or
reason
recorded
by
the
respondents to come to a conclusion that
the goods were being imported without
payment of any duty. He thus argues that
the goods could not be seized at the first
instance itself in exercise of powers under
Section 110 of the Customs Act.

11. The next argument of counsel for
the petitioners is that Section 110-A
provides for provisional release of goods,
documents and things seized pending
adjudication. Section 110-A is quoted
hereinbelow:-

"[SECTION 110A. Provisional
release of goods, documents and things
seized pending adjudication.--Any goods,
documents or things seized under section
110, may, pending the order of the
20[adjudicating authority], be released to
the owner on taking a bond from him in the
proper form with such security and
conditions
as
the
19[adjudicating
authority] may require.]"

12. He thus argues that in terms of the
powers conferred on the Adjudicating
Authority, the goods are liable to be
released provisionally to the owner on
taking bond from him in the proper form
with such security and conditions as may
be required.

13. The next argument of Shri
Agarwal is that the valuation of the goods
imported is to be determined in terms of the
specific Rules known as the Customs
Valuation (Determination of the Value of
Imported
Goods)
Rules
2007.
He
particularly relies on Rule 3, which states
that subject to Rule 12, the transaction
value of the imported goods should be
accepted as the value. He further states that
Rule 3 (4) provides that in the event the
goods cannot be valued in terms of the
provisions of Rule 3 (1), the value shall be
determined through Rule 4 to 9 of the
Valuation Rules, 2007.
18 INDIAN LAW REPORTS ALLAHABAD SERIES

14. On the basis of Rule 3, counsel for
the petitioners argues that exercise for
determining the Rules either in terms of
Rule 3 or in terms of Rules 4 to 9 was
carried out by the respondents while
passing the impugned order and the goods
were arbitrarily valued by the respondents
as is clear from the order dated 1.9.2020.
However as the counsel for respondent has
placed reliance on the Notification No
36/2001-Customs (NT) dated 3.8.2001as
amended vide Notification No 84/2019Customs (NT) dated 15.11.2019 issued
under Section 14(2) of The Customs Act
wherein the valuation of Arecanuts is
notified, the contention of the counsel for
the petitioner on the manner of valuation
does not merit acceptance.

15. Attacking the provisional release
order dated 1.9.2020, counsel for the
petitioners argues that although a discretion
is vested in the Adjudicating Authority in
terms of the powers conferred under
Section 110-A, the discretion has to be
exercised in accordance with law and in
good faith and cannot be the pretence for
confiscating the goods. He has further
argued that the condition of furnishing bank
guarantee or security deposit of Rs.
7,00,000/- for the release of the Truck
seized is also bad in law.

16. Shri Agarwal then proceeded to
argue on the provisions of law to stress that
the Ministry of Finance has issued specific
Instruction No. 01/2017-Cus. (F. No.
591/04/2016-Cus. (AS)) dated 8.2.2017
stating that the Delhi High Court in a
reasoned order has held that the Panch and
statement by Panches (witness) cannot be
taken to be an order passed by the proper
Officer under Section 110 of the Customs
Act and in terms of the said position in all
the future cases following may be adhered
to. The relevant part of the said Instruction
No. 01/2017-Cus. (F. No. 591/04/2016Cus. (AS)) dated 8.2.2017 is quoted
hereinbelow:-

- "Whenever goods are being
seized, in addition to panchnama, the
proper
officer
must
also
pass
an
appropriate
order
(seizure
memo/order/etc.) clearly mentioning the
reasons to believe that the goods are liable
for confiscation.

- Where it is not practicable to
seize any such goods, the proper officer
may serve on the owner of the goods an
order that he shall not remove, part with, or
otherwise deal with the goods except with
the previous permission of such officer. In
such cases, investigations should be fasttracked to expeditiously decide whether to
place the goods under seizure or to release
the same to their owner."

17. In view of the said circular, Shri
Agrawal submits that the same is binding
on the Department, however, has not been
followed for the reasons best known by the
respondents and the Panchnama is the only
document of seizure on record.

18. He further placed on record the
circular dated 16th August, 2017 (based
upon which the order dated 1.9.2020 is
passed), which provide for guidelines for
provisional release of the seized imported
goods,
pending
adjudication
wherein
instructions have been issued that for the
provisional release besides executing a
bond for the full value/estimated value of
the seized goods, competent authority shall
take a bank guarantee or security deposit to
cover the entire amount of duty/differential
duty, the amount of fine that may be levied
in lieu of confiscation under Section 125 of
the Customs Act and the amount of
11 All. Jaymatajee Enterprises (Seller), Ashutosh Pally, Jalpaiguri, W.B. & Anr. Vs. The Commissioner of
 Customs (Preventive), Sector H, Kendriya Bhawan, Lucknow & Ors.
19
penalties that may be levied under the
Customs Act. Attacking the said circular,
Shri Agarwal argues that the said circular in
fact guides the Adjudicating Authority for
passing a particular order in a particular
manner. He submits that Section 151-A of
the Customs Act confers the power on the
Board to issue instructions to the Officers
of the Customs for uniformity in the
classification or with respect to the levy of
duty thereon, however, even the Board is
prohibited from issuing any directions so as
to require any Officer of the Customs to
make a particular assessment or to dispose
of a particular case in a particular manner
or to interfere with the discretion of the
Commissioners of Customs (Appeals) in
the exercise of its appellate function.
Section
151-A
is
being
quoted
hereinbelow:-

"SECTION [151A. Instructions
to officers of customs.--The Board may, if
it considers it necessary or expedient so to
do for the purpose of uniformity in the
classification of goods or with respect to
the levy of duty thereon, 3[or for the
implementation of any other provision of
this Act or of any other law for the time
being in force, in so far as they relate to
any prohibition, restriction or procedure
for import or export of goods] issue such
orders, instructions and directions to
officers of customs as it may deem fit and
such officers of customs and all the other
persons employed in the execution of this
Act shall observe and follow such orders,
instructions and directions of the Board:

Provided that no such orders,
instructions or directions shall be issued--

(a) so as to require any such
officer of customs to make a particular
assessment or to dispose of a particular
case in a particular manner; or

(b) so as to interfere with the
discretion
of
the 4[Commissioner
of
customs ((Appeals)] in the exercise of his
appellate functions.]"

19. Counsel for the petitioners further
argues
that
along
with
request
for
provisional release, the petitioners had
placed on record the letter dated 4th
January, 2018 issued by the Department of
Agriculture, Co-operation and Farmers
Welfare, Government of India to the effect
that the betel nuts cannot be conclusively
determined upon examination of the naked
eye with regard to its origin further It
cannot
be
determined
even
through
laboratory test whether the betel nuts are
indiginous or are of a foreign origin and
also to the effect that there is no mechanism
available to test the country of origin of
''Areca Nuts'. He has also placed reliance
on the letter issued by ICAR-National
Bureau
of
Plant
Genetic
Resources
(Independent
Council
of
Agricultural
Research) to the effect that it is not possible
to determine the country of origin of betel
nuts.

20. Shri Shubham Agarwal has also
placed reliance on the judgment passed by
this Court in the case of Commissioner of
Customs Vs. M/s Maa Gauri Traders,
Customs Appeal No. 3 of 2019, the
judgment of the Patna High Court in the
case of Union of India Vs. Salsar
Transport Company, the judgment of the
Patna High Court in the case of M/s Ayesha
Exports Vs. The Union of India (CWJC
No. 7589 of 2018), where in it was
recorded that there was no standardise
laboratory test for determining the country
of origin and that ARDF is not a credited
laboratory. He has also placed reliance on
the judgment of the Patna High Court in the
case of M/s Ramesh Kumar Baid Vs.
20 INDIAN LAW REPORTS ALLAHABAD SERIES
Union of India, wherein it was recorded
that when the goods were seized within
territory of India and not of any land
custom station or any port, a mere seizure
on the basis of specific information
received cannot be said to be justified.

21. Thus in sum and substance on the
basis of the arguments made above, the
counsel for the petitioners argues that the
seizure of goods vide panchnama dated
17.8.20 and the order dated 1.9.2020 are
liable to be set aside. He has also placed
reliance on a judgment of this Court,
whereby this Court had directed in Writ
Tax No. 589 of 2017 that the goods be
released on furnishing security other than
cash and bank guarantee in respect of the
total amount of value of the goods.

22. A counter affidavit has been filed
on behalf of the respondents by one Shri
Rakesh
Srivastava
posted
as
Deputy
Commissioner of Customs, Lucknow. In the
counter affidavit, it has been stressed that the
writ petition is not maintainable in view of
the judgment of this Court in the case of
Creative Media Vs. State of U.P. and 2
others (Writ Tax No. 469 of 2019). Counsel
for the respondents has further argued that
an alternative remedy of appeal lies before
the Commissioner (Appeals) against the
order of provisional release and as such the
writ petition is liable to be dismissed on the
ground of alternative remedy. For the said
proposition, the counsel for the respondents
has relied upon the judgments in the case of
Authorized
Officer,
State
Bank
of
Tranvacore Vs. Mathew K.C. (Civil Appeal
No. 1282 of 2018) and the judgment of the
Supreme Court of India in the case of State
of Utttar Pradesh & Others Vs. M/s Kay
Pan Fragrance Pvt. Ltd in (Civil Appeal
No. 8941 of 2019), 2019 (31) G.S.T.L. 385
(SC).

23. Thus, in sum and substance, the
counsel for the respondents has argued that
in view of the availability of alternative
remedy of appeal against the order of
provisional release, the writ petition is
liable to be dismissed.

24. Counsel for the petitioners in
rejoinder states that the order of provisional
release is liable to be interfered for the
reason that the goods in question are
''Areca Nuts' and they have a limited shelf
life and the appeal would take a long time
to be decided and the goods being a
perishable nature, the entire purpose is
liable to be defeated. He further argues that
when the basic conditions of seizure are
non-existent and no Appeal lies against a
seizure order, this Court should not hesitate
in exercising its jurisdiction under Article
226 of the Constitution of India and thus,
the argument of the counsel for the
respondents that the writ petition is not
maintainable in view of the alternative
remedy, is liable to be rejected. He further
argues that the order impugned has been
passed contrary to mandate of Section 110A and solely on the on the dictation of the
Board through its circular, which itself is
bad in law and violative of the powers
conferred upon the Board under Section
151-A of the Customs Act. He further states
that the valuation of the goods in the
provisional release order is contrary to the
specific valuation rules and no reasons
have been disclosed for valuing the goods
in such a hefty manner and there being
prima facie illegalities in the discretion
exercised by the Adjudicating Authority,
this Court should not hesitate in exercising
its powers under Article 226 of the
Constitution of India. He further argues that
the mandate of the circular no. 1/2017 is
binding on the respondents but has been
conveniently not followed and thus not
11 All. Jaymatajee Enterprises (Seller), Ashutosh Pally, Jalpaiguri, W.B. & Anr. Vs. The Commissioner of
 Customs (Preventive), Sector H, Kendriya Bhawan, Lucknow & Ors.
21
only the provisional release order is liable
to be quashed even the seizure by means of
a Panchnama is also liable to be set aside.

25. On the basis of the arguments
advanced at the bar, the first question to be
considered is whether the alternative
remedy of appeal before the Commissioner
(Appeals) is an efficacious remedy and in
view of the said remedy, the writ petition
cannot be entertained.

26. We are in complete disagreement
with the counsel for the respondents for the
following reasons:-

(i) No appeal lies against a
seizure order;

(ii)
the
goods
detained
are
perishable in nature and considering the
fact that relegating the petitioners to the
appellate remedy would render the entire
exercise futile as by then the goods itself
will be of no value;

(iii) the seizure memo as well as
the provisional release order are contrary to
the Act and the departmental instructions;

(iv) order has been passed in
violation of principles of natural justice
inasmuch as neither in the provisional
release order has the contention of the
petitioners being addressed nor has any
oppertunity of hearing accorded before
passing the provisional release order, and ;

(v) the order of provisional
release has been passed even contrary to
terms of the circular issued and there is no
independent exercise of discretion by the
Adjudicating Authority while passing the
provisional release order.

27. Thus, on all the above grounds,
which are all well carved out exceptions for
exercise of jurisdiction under Article 226 of
the Constitution, we reject the preliminary
objection of the counsel for the respondents
that in view of the remedy of appeal writ
petition is not maintainable.

28. Reverting to the judgments relied
upon by the counsel for the respondents on
the grounds of alternative remedy. The
Supreme Court while deciding the matter in
Authorized
Officer,
State
Bank
of
Tranvacore
(supra)
held
that
writ
jurisdiction
should
normally
not
be
entertained without assigning any special
reasons and that too without even granting
opportunity to contest the maintainability
of the writ petition and failure to notice the
subsequent
developments
in
the
interregnum. The Court was dealing with
the exercise of powers under Article 226 of
the Constitution by the High Court against
the proceedings initiated under Section 13
of the SARFAESI Act and relating to an
interim order, the Court had also observed
that there was no assertion that the
grievance fell within the well defined
exceptions to the exercise of jurisdiction
under Section 226. The said judgment
would not benefit the respondents solely
for the reasons that in the present case,
specific averments have been raised and
argued which carved out the well known
exceptions as recorded abovefor exercise of
powers
under
Article
226
of
the
Constitution.

29. The next judgment of the
Supreme Court in the case of The State of
Uttar Pradesh 7 Ors. v. M/s Kay Pan
Fragrance Pvt. Ltd. (supra), the Supreme
Court was seized of a matter whereby the
High Court had entertained the writ
petitions at the first instance itself without
the
petitioner
taking
any
recourse
whatsoever, as provided under the statute
and in view of the said facts, the Supreme
Court held that recourse firstly to be taken
22 INDIAN LAW REPORTS ALLAHABAD SERIES
to the remedy provided under the Act and
entertaining the writ petition directly is an
improper exercise of powers. The said
judgment may not benefit the argument of
the respondents for the sole reason that in
the present case, the petitioners have
approached the statutory authority for
release of goods and the statutory authority
has, in fact, passed an order and the validity
of the said order is under challenge and the
petitioners have not approached this Court
at the first instance. Furthermore, the
petitioners have carved out a case for
exercise of powers under Article 226 under
the well known exceptions. Thus, the
objections
of
the
counsel
for
the
respondents is liable to be rejected.

30. Reverting to the validity of seizure
order, it is clear from the statute that the
power of seizure of goods under Section 110
of the Customs Act can be resorted to only
when the Officer exercising the said power
has ''reasons to believe' that the goods are
liable to confiscation. In the present case,
admittedly the goods were at Gorakhpur and
not seized from any port or any custom area
to form a belief that the goods were being
imported into India. In the Panchnama, which
the counsel for the respondents submits is a
seizure memo, the only reasons recorded are
that on a prima facie examination, the ''Areca
Nuts' loaded in the Truck and as on some of
the bags inscriptions in foreign language was
written as well as that the ''Areca Nuts' on
being taken out from the bags appeared to be
of a foreign origin. The ''Areca Nuts' were
shown to the local businessman and on the
basis of their experience, they said that the
''Areca Nuts' appears to be of foreign origin.
Thus, on these three grounds, the action for
seizure was initiated.

31. It is on record in the form of
certificates issued by the Ministry of
Agriculture and Farmer Welfare as well as
by ICAR to the effect that there is no
mechanism available to trace the country of
origin of ''Areca Nuts' and there is no
laboratory test available for the same and
further on the basis of examination by
naked eye it cannot be conclusively
determined with regard to origin of the
''Areca Nuts'. The ICAR has also opined
that without there being samples available
from the country of origin, it was not
possible to determine the country of origin
of the seized ''Areca Nuts'. That being the
definite opinion of the Deparment of
Agriculture and Farmers Welfare as well as
the ICAR, it is difficult to comprehend as
to how on the basis of exmination by naked
eye and the opinion of the traders can lead
to forming an opinion that the goods in
question namely ''Areca Nuts' are imported.
Even otherwise there is nothing on record
to form a belief that the goods in question
were imported without payment of import
duty (even if it is assumed for the sake of
argument that the goods were of foreign
origin).

32. On the contrary, in the present
case as demonstrated by the petitioner
prima facie that the goods in question were
purchased in an E-auction held by the
Customs Authorities themselves within the
territory of India, the fact that there was
evidence
in
the
form
of
transport
documents to show that the goods were
being transported within India, the prima
facie ''reason to believe' recorded are
unsustainable.

33. It is well settled that the ''reasons
to believe' must be based upon acceptable
materials, which have to be more than a
moon shine. The material on record
overwhelming suggests that the ''reasons
to believe' were based upon the opinion of
11 All. Girish Vs. State of U.P. & Anr.
23
the local dealers, prima facie examination
of the goods by naked eye and inscriptions
in foreign language on some bags. We are
not inclined to accept the reasons given for
forming a belief for exercise of power of
seizure are valid in law. The said reasons
even fail the test of ''wednesbury principles'
as no reasonable person can reach to
conclusion of the country of origin of
''Areca Nuts' by mere perusal from naked
eye as well as the opinion of the traders, as
the Institutes as well as the Ministry have
firmly opined that the country of origin
cannot be traced by any laboratory method
also.

34. It is also common ground that
'Areca Nuts' is neither prohibited nor
notified goods.

35. The order of the seizure is further
bad in law as it has failed to follow the
specific
instructions
contained
in
Instruction No. 1/2017, which are binding
on the respondent authorities.

36. Thus, the basis for forming
''reasons to believe' as recorded in the
Panchnama
are
wholly
without
any
acceptable material and there being no
prima facie material to suggest that the
goods in questions were of foreign origin or
were smuggled into India from any
Customs Station or that the goods were
imported without payment of import duty,
we have no hesitation in holding that no
valid ''reasons to believe' existed for
exercising the powers of seizure as was
done by means of Panchnama dated
17.8.2020. Consequently, the seizure order
dated 17.8.2020 is quashed.

37. Once we have quashed the seizure
order dated 17.8.2020, we do not deem it fit
to address on the question of validity and
legality of the provisional release order
inasmuch as once the seizure is held to be
bad in law, no confiscation can take place,
however, we leave the other arguments
raised by the counsel for the petitioners
while attacking the provisional release
order open.

38. In view of the findings recorded
above, we direct that the respondent
authorities shall forthwith release the goods
i.e. ''Areca Nuts' as well as the vehicle in
question in favour of the petitioner nos. 1
and 2 respectively on the petitioners filing a
copy of this order before the authority
concerned.

39. The writ petition is allowed in
terms of the said order passed.

40.

Copy
of
the
judgment
downloaded from the official website of
this Court shall be treated/accepted as
certified copy of the judgment.
----------

(2020)11ILR A23
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 21.09.2020

BEFORE

THE HON'BLE GAUTAM CHOWDHARY, J.

Application U/S 482 No. 4300 of 2020

Girish ...Applicant(In Jail)
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Applicant:
Sri Prabhat Kumar Srivastava, Sri Brajesh
Kumar

Counsel for the Opposite Parties:
A.G.A.