WP 8933-22.DOC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 8933 OF 2022
Mohammed Shahad Choy Choo
Mauritian National, Aged 45 years
Occupation: Businesss
3B, Rue De La Concorde
Roche-Brunes, Mauritius ...Petitioner
Versus
1. Union of India
Through Dedicated Legal Cell,
Air Intelligence Unit,
CSI International Airport.
Andheri, Mumbai.
2. The Joint Commissioner of
Customs, (Airport),
Air Intelligence Unit,
CSI International Airport,
Andheri, Mumbai.
3. The Commissioner of Customs
(Appeals)
Mumbal Zone - III
Awas Corporate Point, (5th Floor),
Makwana Lane, Behind S.M.Centre,
Andheri-Krula Road, Marol,
Mumbai-400 059.
4. Principal Commissioner &
Ex- Officio) Additional Secretary to
Govt. of India, 8th Floor, World
Trade Centre, Centre- 1, ) Cuffe Parade,
Mumbai-400005 ..Respondents
_______
Mr. Anand M. Sachwani for Petitioner.
Mr. Jitendra B. Mishra a/w Abhishek Mishra, Ashutosh Mishra, Rupesh Dubey for
the Respondents
_______
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Laxmi
LAXMI
SUBHASH
SONTAKKE
Digitally signed
by LAXMI
SUBHASH
SONTAKKE
Date: 2026.01.30
18:58:55 +0530
WP 8933-22.DOC
CORAM:G. S. KULKARNI &
AARTI SATHE, JJ.
RESERVED ON:6
th
JANUARY 2026
PRONOUNCED ON: 30
th
JANUARY 2026
JUDGMENT (PER AARTI S. SATHE, J.)
1. Rule. Rule made returnable forthwith. By consent of the parties, heard
finally.
2. This Petition under Article 226 of the Constitution of India is filed
challenging the confiscation of gold jewellery by the Customs Authorities without
following the due process of law and without issuance of any show-cause notice
under Section 124 of the Customs Act, 1962 [hereinafter referred to as “the Act”].
The present Petition also challenges the disposal of the confiscated gold without
issuing any show-cause notice to the Petitioner while the appeal proceedings were
pending before Respondent No. 4. For the sake of convenience, the prayers in the
present Petition are reproduced herein below:-
(a) Rule be issued;
(b) This Hon'ble Court be pleased to issue a writ of
mandamus or any other appropriate writ or direction in the
nature of mandamus under Article 226 of the Constitution
of India, after perusing the relevant documents in the
matter and after examining the validity, propriety and
legality of the same, set aside the confiscation of gold
jewelry 373.700 grams.
(c) This Hon'ble Court be pleased to issue a writ of
mandamus or any other writ or direction in the nature of
mandamus under Article 226 of the Constitution of India,
after perusing the relevant documents in the matter and
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after examining the validity, propriety and legality of the
same direct the Respondent to refund and compensate the
Petitioner equivalent value of gold as on the present date as
the old and used gold jewelry has been disposed off by the
Respondent No.2.
(d) Interim/ad-interim relief in terms of prayer (c) above;
(e) Such other and further reliefs as this Hon’ble Court may
deem fit in the facts and circumstances of the case.”
3. Briefly the facts of the case are as follows:
i. The Petitioner is a citizen of Mauritius and is a businessman by profession
running a business in the name and style of M/s. Voila Chemical Company
Limited, having registration No. C-20172197, issued by the Government of
Mauritius.
ii. The Petitioner arrived at Mumbai Airport on 16
th
May 2014 from Mauritius
via Dubai by Flight No. EK-504. The Petitioner, when landed at the Mumbai
Airport, was wearing a gold Kada in his hand, one chain of 22 Carat and one chain
of 18 Carat and carrying one small coin of 14 Carat (hereinafter referred to as the
“gold jewellery”).
iii. It is the Petitioner’s contention that the gold jewellery was his personal
jewellery and was given to him by his family members, to which he attached great
sentimental and emotional values. On arrival of the Petitioner at the Mumbai
Airport on 16
th
May 2014, the Petitioner was intercepted by the Customs Officers,
and was requested to remove the gold jewellery which was worn by him and
accordingly the Petitioner removed the gold jewellery and handed it over to the
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said Officers. It is the Petitioner’s contention that after the officers verified the said
gold jewellery, they informed the Petitioner that at the time of his departure from
India, the gold jewellery would be returned to him, as he was scheduled to return
on 18
th
May 2014.
iv. The gold jewellery was thereafter detained under Detention Memo No.
A44486 dated 16
th
May 2014. The Petitioner was not returned his gold jewellery;
however, on the same date, the matter was referred for adjudication, and the
charges were orally communicated to the Petitioner by the Batch Officer. The
Petitioner thereafter requested that he be heard personally by the adjudicating
authority before any final adjudication was made against him.
v. The main charge against the Petitioner by the Customs Authorities, on
the basis of which the detention of the gold jewellery was made, was that the
Petitioner had opted to not declare the aforesaid gold jewellery to the Customs
Authorities and had sought clearance thereof by passing through the green channel
for customs clearance. As stated above, it was at that point in time that the
Petitioner was intercepted with the aforesaid gold jewellery, weighing 374 grams
and having an approximate value of Rs. 9,64,936/- in the year of its detention, i.e.,
2014. The Petitioner was heard on the said date, and the charges framed against
him were communicated to him.
vi. In reply thereto, the Petitioner orally submitted that the gold detained
from him was not of 999 purity but was 22 Carat (one chain, one Kada, one small
coin of 14 Carat and one chain of 18 Carat). The Petitioner also submitted that he
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had no intention to defraud the Customs Authority and the gold jewellery was his
personal jewellery, which was given to him by his family members. After affording
an oral hearing to the Petitioner, an Order-in-Original bearing dated 20
th
May
2014, issued on 30
th
July 2017 No. JC/RR/ADJN/107/2014-15 (Order-in-
Original) was passed by Respondent No.2, confiscating the gold jewellery of an
approximate weight of 374 grams. Respondent No.2 ordered the aforesaid
confiscation on the basis that the Petitioner had contravened the provisions of
Section 77 of the Act and hence the gold jewellery became liable for confiscation
under Section 111(l) and 111(m) of the Act. By way of the aforesaid Order-in-
Original, Respondent No.2 also held that the Petitioner was liable to pay penalty
under the provisions of Section 112(a) of the Act and a penalty under Section
114AA of the Act. The operative part of the order reads thus:-
“
ORDER
i) I confiscate gold jewellery in crude form weighing 374 grams of
value Rs. 9,64,936/- detained vide DR No A 44486 dated 16.05.2014
under Section 111 (d), (l) &(m) of the Customs Act, 1962. However, I
give the passenger Mr. Mohamed Shahad Choy Choo an option to
redeem the goods on payment of a fine of Rs. 3,50,000/- (Rupees
Three Lakh & Fifty Thousand only) under Section 125(1) of the
Customs Act, 1962. The normal baggage rate of duty and other charges
if any shall be paid under Section 125 (2) of the Customs Act 1962.
ii) I impose a personal penalty of Rs. 1,00,000/-(Rupees One Lakh
only) on Mr Mohamed Shahad Choy Choo under Section 112 (a) of
the Customs Act, 1962.
iii) further impose a penalty of Rs. 5,000/- (Rupees Five Thousand
only) on Mr Mohamed Shahad Choy Choo under Section 114 AA of
the Customs Act, 1962.
Before issue of this order in original a request vide letter dated
21.05.2014 was received from Mr. Mohamed Shahad Choy Choo to
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give him three months time to arrange money for getting the goods
released. The request is accepted.
”
vii. Being aggrieved by the Order-in-Original dated 20
th
May 2014 (supra)
passed by Respondent No.2, the Petitioner preferred an Appeal before Respondent
No.3 bearing Appeal No. S/49-522/2014 AP, praying for re-export of the gold
jewellery under Section 80 of the Act considering that the same was his personal
jewellery and not meant for sale and that the Petitioner was a Foreign National
from Mauritius. Respondent No.2 also filed an Appeal against the Order-in-
Original dated 20
th
May 2014 before Respondent No.3 challenging the release of
the gold jewellery to the Petitioner.
viii. On 23
rd
January 2015, Respondent No.3 passed an Order-in-Appeal
No. MUM/CUSTM-PAX-APP-645/14-15 after giving a personal hearing to the
authorized representative of the Petitioner. At the aforesaid hearing, none appeared
on behalf of the Respondent No. 2, and no cross-objections were filed. Respondent
No.3 by the aforesaid Order-in-Appeal dated 23
rd
January 2015, held that the
investigation did not reveal that the Petitioner was a habitual offender/carrier and
no attempt had been made on the part of the Petitioner to conceal the goods. She
further held that the Petitioner held a foreign passport and considering the facts of
the case and the difference in the CIF value & LMV, reduced the redemption fine
to Rs. 3,00,000/- and the penalty to Rs. 50,000/- under Section 112(a) of the Act.
Respondent No.3 did not interfere with the penalty imposed under the provisions
of Section 114AA of the Act.
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ix. Both the Petitioner and Respondent No.2 filed Revision Applications
against the Order-in-Appeal dated 23
rd
January 2015 before Respondent No.4. In
the Revision Application filed by Respondent No.2, they prayed for setting aside
the Order-in-Appeal and the case being remanded back to Respondent No.3 to
decide the matter afresh in terms of the submission made by Respondent No.2. In
the aforesaid Revision Application, the Petitioner sought Revision of the Order-in-
Appeal once again seeking re-export of the gold jewellery under Section 80 of the
Act contending that the same is his personal jewellery and was not meant for sale
and that he is a foreign National of Mauritius. The Petitioner also prayed that the
personal penalty be set aside or reduced substantially insofar as the Petitioner was
concerned.
x. In the meantime, on 6
th
February 2019 during the pendency of the
Revision Application filed before Respondent No.4, Respondent No.2 sent the
Petitioner’s detained gold jewellery to the Government Mint, where the gold was
melted.
xi. On 12
th
March 2021, the Revision Application filed by the Petitioner
was heard by Respondent No.4 during the Covid-19 Lockdown period and an
order dated 28
th
May 2021 came to be passed in the aforesaid Revision
Application, wherein it was held that as the gold jewellery was not declared by the
Petitioner as required under Section 77 of the Act and the confiscation of the said
gold jewellery was justified in the facts of the case. However, absolute confiscation
as pleaded by Respondent No. 2, would be an order in excess inasmuch as the gold
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jewellery was of a personal nature of the Petitioner. It was further held that the
Petitioner is a foreign National and he was intercepted only on the ground that he
had opted for the Green Channel without declaring the gold jewellery as mandated
under Section 77 of the Act. It was further held that, in none of the orders before
the adjudicating authorities, there was any finding rendered against the Petitioner
that the gold jewellery was ingeniously concealed. It was held that the gold
jewellery was not of 24 Carat as ascertained by the adjudicating authority. Further,
the Petitioner had produced purchase receipts evidencing that the gold was old and
used and was hence not meant for sale. The order further went on to hold that
there were no allegations against the Petitioner that he was a habitual offender or
was involved in similar offences earlier, and since the Petitioner was a foreign
citizen, the release of the personal jewellery on payment of redemption fine
without allowing the Petitioner to re-export the same, would not allow him to take
back the gold and hence the said stand of Respondent No.2 was not justified. In
view thereof, Respondent No.4 allowed the re-export of gold and set aside the
penalty under Section 114AA of the Act, however, sustaining the penalty imposed
under Section 112(a) of the Act.
xii. The Petitioner thereafter filed a Refund Application dated 12
th
July
2021 before the Deputy Commissioner of Customs (Refund) for the refund
amount of sale proceeds of the seized gold jewellery after adjustment of fine and
personal penalty. It is the Respondent Department’s contention that this fact of
filing the refund application dated 12
th
July 2021 was not disclosed by the
Petitioner in the Petition and hence they have approached the Court with unclean
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hands. The Deputy Commissioner of Customs (Refund) pursuant to the
application filed by the Petitioner, passed the Refund Order dated 8
th
January 2024
wherein it was held that the legitimate right of refund could not be denied to the
Petitioner. Further, it was also held that the realized value of the gold jewellery was
Rs. 9,76,952/-, out of which the Petitioner was refunded an amount of Rs.
5,12,877/-, after reducing the warehouse charges, redemption fine, personal
penalty, and after adding pre-deposit of 7.5% of the personal penalty imposed.
4. It is in the backdrop of the aforesaid facts of the case that the issue
which has fallen for consideration before this Court is as to whether the
confiscation of the gold jewellery was justified and whether the consequent
imposition of redemption fine and penalty was also justified in the facts of the
present case.
5. Mr. Sachwani, learned Counsel for the Petitioner, has made the
following submissions in support of his contention that the confiscation of the gold
jewellery and the redemption fine for the re-export and the penalty are not
justified. The submissions as made by the Petitioner can be summarized as below:-
i. It is submitted that confiscation of the personal gold jewellery without
issuance of a show-cause notice under Section 124 of the Act was bad in law
and there was no seizure memo made by the Customs Department prior to
the aforesaid confiscation. It was also submitted that the Detention Memo,
which was purportedly made under Section 80 of the Act, was to be
primarily a temporary detention. However, the gold jewellery was not
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returned back to the Petitioner, despite the detention being a temporary
detention as envisaged under Section 80 of the Act.
ii. The Petitioner had no intention to clear the goods for home
consumption as these goods were meant for personal use and the Petitioner
had categorically requested Respondent No.2 and the other officers who had
issued the Detention Memo for reshipment of the goods.
iii. It is in fact the Petitioner’s contention that Respondent No.2 while
passing the Order-in-Original (supra) had held that the jewellery was for the
personal use of the Petitioner and not for any other ulterior motive. Hence,
the question of the redemption fine was not warranted, and the penalty was
also not imposable. It was further submitted that Respondent No.2, in the
Order-in-Original, had categorically come to a finding that the Petitioner was
clearing himself from the Green Channel, for which there is no seizure
memo nor any independent witnesses who have seen the Petitioner clearing
from the Green Channel on the date of arrival.
iv. It is further submitted that none of the adjudicating authorities have
disputed the fact that the Petitioner’s jewellery, which was detained, was
meant for personal use. It was further submitted that even in the revision
order, though it has appreciated that the Petitioner had used the gold
jewellery for personal purposes and had not concealed the same from the
Customs Authority, yet, it had erroneously upheld the penalty under Section
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112(a) of the Act and further not set aside the redemption fine and simply
allowed the re-export of the gold jewellery.
vi. It was also submitted that the gold jewellery was sent to the
Government Mint in 2019, without giving any notice to the Petitioner, when
the Appeal and Revision proceedings were pending before the Appellate
Authority as well as Revisional Authority. In view of the aforesaid, it was
contended on behalf of the Petitioner that since the gold jewellery was no
longer available with the Customs Authorities, Respondent Nos. 1 to 4 be
directed to reimburse the same amount or quantity of gold to the Petitioner
which was intercepted from the Petitioner on 16
th
May 2014 or the
equivalent value as on date.
6. An affidavit in reply on behalf of the Respondents is filed by one Mr. G.
B. Tilve, Assistant Commissioner of Customs CSMI Airport, Mumbai-III, wherein
it has been submitted that the present Petition is liable to be dismissed on the
ground that the Petitioner opted for passing through the Green Channel when he
was not entitled to, as the Petitioner was allegedly carrying prohibited goods i.e. the
gold jewellery. It is also contended that the Petitioner has wrongly submitted that
the goods were detained under Section 80 of the Act, however, the same were
confiscated under Section 111(d),(l), and (m) of the Act. It is further contended
that the goods were detained by issuing a detention memo as it was issued pending
adjudication and the same was not issued under Section 80 of the Act for re-export
purposes, this in view of the fact that no declaration was made by the Petitioner as
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required under Section 77 of the Act and temporary detention for re-export
purpose is allowed only for passengers who lawfully declare dutiable/restricted and
prohibited goods, under Section 77 of the Act, which was not done by the
Petitioner in the facts of the present case. It is next submitted that since the
confiscated gold jewellery was lying for a long time in the strong room, audit
objections were raised as it was sensitive material, therefore the gold jewellery was
disposed of by following the due process of law and subsequently passing an
Order-in-Original for disposal of the gold jewellery by the Office of the Pr.
Commissioner of Customs (Airport) Terminal 2.
7. Learned Counsel for the Respondents has also submitted a short note of
propositions opposing the admission of the present petition. He has primarily
submitted as follows:
i) The Petitioner, through his advocate, had filed refund application
dated 12th July 2021, inter alia praying for refund amount of sale
proceeds of the said gold jewellery after adjustment of redemption fine
and personal penalty, as ordered by the Order-in-Appeal dated
02.02.2015 (page 47 of the petition) and Revision Order dated
28.05.2021 (page 63 of the petition). However, this refund application
dated 12.07.2021 has not been annexed with the petition nor been
disowned till date. The same has been annexed in the reply of the
respondents (page 110).
ii) In ground (ff) of the petition at page 24, the Petitioner has
averred that he was asked to file a refund application which he has filed
as and by way of abundant precaution. It is pertinent to note that the
adjudicating authority vide order dated 8th January 2024 (page 197 of
rejoinder filed by the Petitioner has sanctioned the refund of Rs.
5,12,877/- to the petitioner, thereby allowing the refund application of
the petitioner. The Petitioner has not challenged the said Order dated
8
th
January 2024 till date.
iii) The Petitioner has not challenged the order of confiscation before
the lower authorities. The prayer in the Revision Application (page 55
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of the petition) filed by the Petitioner is only for re-export and setting
aside personal penalty. The Petitioner cannot approbate and reprobate.
iv) The judgment of this Hon'ble Court in the case of Leyla
Mehmoodi (page 151 of rejoinder) is not applicable in the facts and
circumstances of the case. In Leyla Mehmoodi, the gold was sold even
before issuance of Show Cause Notice much less to order of
confiscation. However, in the present case, the gold was sold on
06.02.2019 much after the same was ordered to be confiscated vide
Order-in-Original dated 20.05.2014, upheld vide Order-in-Appeal
dated 02.02.2015 and Revision Order dated 28.05.2021. In Leyla
Mehmoodi, there was specific prayer for return of gold which is not the
case here.
v) Before disposal of the gold, a notice was displayed on the notice
board of the Airport Commissionerate. Since the gold was lying for
about 5 years, it was sold pursuant to the circulars issued by the Board,
from time to time.
He has also relied on some decisions, which we shall deal with later, to contend that
the litigant/party cannot be permitted to approbate and reprobate on the same facts
and take inconsistent shifting stands.
8. In view of the aforesaid submissions, the Learned Counsel for the
Respondents submitted that no case has been made out by the Petitioner for
granting any relief as prayed for in the present Petition.
9. On the present proceedings, an order dated 18
th
November 2022 was
passed by a co-ordinate Bench of this Court which reads thus:-
“
1. In paragraph 12 of the Affidavit-in-Reply filed through one G. B.
Tilve, affirmed on 29th August, 2022, there is a reference to a disposal
order dated 28th January, 2019. The same has not been annexed to the
Affidavit. In paragraph 44 of the Affidavit-in-Reply it is averred that
gold was disposed following due process of law and subsequently
passing an order-in-original for disposal of the goods before the
competent authority. No details are provided. Respondent is directed to
provide copy of the disposal order dated 28th January, 2019 as also
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order-in-original for disposal of the goods referred to in paragraph 44
within one week.
Respondent shall also provide to Petitioner the entire details of the
alleged “due process of law” followed while disposing the gold. This
would include (a) notice, if any issued to Petitioner (b) valuation done
of the gold (c) auction notice (d) bills received (e) the details of the
purchaser and the payment receipt. All this shall be provided in a
further affidavit which shall be affirmed and copy served within one
week from today.
2. Stand over to 5th December, 2022.”
10. In pursuance of the aforesaid order, an additional affidavit dated 2
nd
December 2022 was filed by the G. B. Tilve, Assistant Commissioner of Customs
CSMI Airport, Mumbai-III. The relevant paragraphs of the aforesaid affidavits are
reproduced below:-
“
4. I state that the 57 packages containing 11,518.12 grams of
confiscated/unclaimed gold was lying in the strong room of
Airport Commissionerate. I further state that these packages
were lying for more than five years and all concerned notice
was displayed on the notice board of the Airport
Commissionerate intimating the disposal of the gold so as to
enable anyone to lodge objection before the Competent
Authority if any and no separate notice was given to any
individual.
5. I state that subsequent to the said notice the Competent
Authority vide Order-In-Original No.
ADC/AK/ADJN/427/2018-19 dated 28.01.2019 was passed
by the Additional Commissioner Airport and ordered
confiscation of gold contained in 57 packages under section
111(d), (1) and (m) of the Customs Act, 1962. The jewellery
of the Petitioner is mentioned at Sr. No. 41 in the list
annexed to the said O-I-O. Annexed herewith and marked as
"Exhibit-A" is the copy of the Order-In-Original No.
ADC/AK/ADJN/427/2018-19 dated 28.01.2019.
6. I state that the valuation of the gold was done at the time
of detention of the Gold and the same is mentioned in
detention receipt which is annexed as exhibit-A to the
affidavit-In-Reply of the Respondents.
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7. I state that the all the packages which were lying in the
strong room were removed for handing over to India
Government Mint for conversion of the gold into standard
gold bars.
8. 1 state that the India Government Mint vide out-turn
certificate No. OT/GAD/118 dated 06.02.2019 in the said
out-turn certificate the details of gold refined is mentioned
such as the weight of the gold before and after melting,
purity of the gold etc. The total gold handed over to the
Respondents weighing about 33830 grams. Annexed
herewith and marked as "Exhibit-B" is the copy of the out-
turn certificate No. OT/GAD/118 dated 06.02.2019.
9. I state that the said lot of the 33830 grams of gold was
auctioned by the State Bank of India and the State Bank of
India vide their letter No. BBM/2018-19/263 dated
08.03.2019. Annexed herewith and marked as "Exhibit-C" is
the copy of the letter No. BBM/2018-19/263 dated
08.03.2019.
10. I state that while disposing of the gold the Respondents
have followed the due process
.”
11. In response to the said affidavits, the Petitioner has filed an affidavit in
rejoinder dated 28
th
August 2024, once again reiterating the submissions as made
by him in the Petition. In the rejoinder affidavit, the Petitioner submitted that the
gold jewellery had been disposed of without any notice to the Petitioner, and that
too, when the appeal and revision proceedings were pending adjudication. It was
further submitted that during the pendency of the present Petition, a refund order
dated 8
th
January 2024 has been passed by the Deputy Commissioner of Customs
(Refund). It is also submitted that in the present case, there has been no seizure of
goods in question and the same were detained under Section 80 of the Act and on
the detention receipt at the bottom of the aforesaid receipt, it was specifically ticked
for re-export out of India. In view thereof, the Petitioner submitted that he had
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complied with Section 77 of the Act and since the gold jewellery had not been
seized, the question of confiscation of goods and release of the same on redemption
fine and penalty does not arise at all. The Petitioner also relied upon several case-
laws and circulars to contend that since there was no seizure of goods, the question
of confiscation and redemption fine being imposed along with penalty did not arise
at all. The Petitioner also categorically submitted that since the gold jewellery had
been disposed of without giving him notice and as the same is no longer available
with the Respondents, the same quantity of the gold should be returned to the
Petitioner or alternatively the present market value of the same quantity of the gold
be returned to the Petitioner.
12. We have heard the learned Counsel for the parties with their assistance
we have perused the record and the orders passed by the adjudicating authority.
13. At the outset we may note some of the admitted facts. It is not in
dispute that on 16
th
May 2014 the Petitioner arrived at Mumbai airport from
Mauritius via Dubai with the said gold jewellery and was apprehended /
intercepted at the Mumbai Airport. The gold jewellery was detained, and the
Petitioner was given an option to redeem the goods on payment of fine of Rs.
3,50,000/- under S. 125 (1) of the Act along with a penalty of Rs. 1,00,000/-
under Section 112(a) and a penalty under of Rs. 5000/- under Section 114AA of
the Act. The aforesaid fine and penalty were either reduced or deleted by various
subsequent orders passed by Respondent Nos. 3 and 4.
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14. In order to appreciate the controversy in the present case, it is important
to list out the following relevant provisions which will govern the dispute at hand.
“
80. Temporary detention of baggage.—Where the baggage
of a passenger contains any article which is dutiable or the
import of which is prohibited and in respect of which a true
declaration has been made under section 77, the proper
officer may, at the request of the passenger, detain such
article for the purpose of being returned to him on his
leaving India 1 [and if for any reason, the passenger is not
able to collect the article at the time of his leaving India, the
article may be returned to him through any other passenger
authorised by him and leaving India or as cargo consigned
in his name].
110. Seizure of goods, documents and things.—(1) If the
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 the goods except with the previous
permission of such officer.
[(1A) The Central Government may, having regard to the
perishable or hazardous nature of any goods, depreciation in
the value of the goods with the passage of time, constraints
of storage space for the goods or any other relevant
considerations, by notification in the Official Gazette,
specify the goods or class of goods which shall, as soon as
may be after its seizure under sub-section (1), be disposed
of by the proper officer in such manner as the Central
Government may, from time to time, determine after
following the procedure hereinafter specified.
(1B) Where any goods, being goods specified under sub-
section (1A), have been seized by a proper officer under
sub-section (1), he shall prepare an inventory of such goods
containing such details relating to their description, quality,
quantity, mark, numbers, country of origin and other
particulars as the proper officer may consider relevant to the
identity of the goods in any proceedings under this Act and
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shall make an application to a Magistrate for the purpose of
—
(a) certifying the correctness of the inventory so prepared;
or
(b) taking, in the presence of the Magistrate, photographs of
such goods, and certifying such photographs as true; or
(c) allowing to draw representative samples of such goods,
in the presence of the Magistrate, and certifying the
correctness of any list of samples so drawn.
(1C) Where an application is made under sub-section (1B),
the Magistrate shall, as soon as may be, allow the
application.]
(2) Where any goods are seized under sub-section (1) and
no notice in respect thereof is given under clause (a) of
section 124 within six months of the seizure of the goods,
the goods shall be returned to the person from whose
possession they were seized:
[Provided that the Principal Commissioner of Customs or
Commissioner of Customs may, for reasons to be recorded
in writing, extend such period to a further period not
exceeding six months and inform the person from whom
such goods were seized before the expiry of the period so
specified:
Provided further that where any order for provisional
release of the seized goods has been passed under section
110A, the specified period of six months shall not apply.]
(3) The proper officer may seize any documents or things
which, in his opinion, will be useful for, or relevant to, any
proceeding under this Act.
(4) The person from whose custody any documents are
seized under sub-section (3) shall be entitled to make copies
thereof or take extracts therefrom in the presence of an
officer of customs
111. Confiscation of improperly imported goods, etc.—The
following goods brought from a place outside India shall be
liable to confiscation:—
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(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 1 [arrival manifest or
import manifest] or import report which are not so
mentioned;
(g) any dutiable or prohibited goods which are unloaded
from 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
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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 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 transited 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
non-observance 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.]
124. Issue of show cause notice before confiscation of
goods, etc.—No order confiscating any goods or imposing
any penalty on any person shall be made under this Chapter
unless the owner of the goods or such person—
(a) is given a notice in 1 [writing with the prior approval of
the officer of Customs not below the rank of 2 [an Assistant
Commissioner of Customs], informing] him of the grounds
on which it is proposed to confiscate the goods or to impose
a penalty;
(b) is given an opportunity of making a representation in
writing within such reasonable time as may be specified in
the notice against the grounds of confiscation or imposition
of penalty mentioned therein; and
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(c) is given a reasonable opportunity of being heard in the
matter:
Provided that the notice referred to in clause (a) and the
representation referred to in clause (b) may, at the request of
the person concerned be oral.
[Provided further that notwithstanding issue of notice
under this section, the proper officer may issue a
supplementary notice under such circumstances and in such
manner as may be prescribed.]”
(Emphasis supplied)
15. On a plain reading of the above provisions, it is clear that the same
govern the temporary detention of baggage (as envisaged under Section 80 of the
Act) and Section 110 deals with seizure of goods, documents and things, whereas
Section 111 envisages confiscation of improperly imported goods, and Section 124
categorically provides for issue of show-cause notice before confiscation of goods.
16. It is the Petitioner’s case that in the facts of the present case the
Petitioner’s gold jewellery was temporarily detained under Section 80 of the Act
and the same was to be returned to him on his leaving India inasmuch as the same
was meant for the personal use of the Petitioner and was worn by him on his body,
which would be returned to him by reshipment as they were not prohibited by
Section 77 of the Act. It is the Petitioner’s case therefore that the said gold jewellery
was wrongfully detained and not returned to the Petitioner when he returned to
Mauritius. This being the position, however, the Petitioner’s gold jewellery was
confiscated and an option was given to the Petitioner to pay the redemption fine of
Rs. 3,50,000/- imposed under Section 125 (1) of the Act and a consequential fine
imposed under Section 114AA in the Order-in-Original dated 20
th
May 2014
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passed by Respondent No. 2. The said order, which was challenged by the
Petitioner was upheld by Respondent No. 3 – by an order dated 23
rd
January 2015
wherein only the quantum of redemption fine and the penalty under Section
112(a) of the Act were reduced. Even in the revision proceedings, re-export was
allowed and the penalty under Section 112(a) was upheld. However, the penalty
under section 114AA of the Act was set aside. This revision order was passed on
28
th
May 2021 (supra). However, in the year 2019, the gold was sent to the
government mint, where the gold was melted, while the revision application was
pending before Respondent No. 4. These peculiar facts to our mind, are a complete
abuse of the process of law by the Respondent-Department, inasmuch as, none of
the provisions as envisaged above regarding detention and seizure have been
followed in the facts of the present case. The analysis of the relevant provisions
governing the facts of the present case would make it clear as to how none of these
provisions have been followed in respect of the seizure and confiscation of the gold
jewellery.
17. On a plain reading of Section 110 of the Customs Act, it is a provision
relating to seizure of goods, documents and things. It provides that if the proper
officer has a reason to believe that any goods are liable for confiscation under the
Customs Act, he may seize such goods. Sub-section (1), sub-sections (1A), (1B)
and (1D) are required to be cumulatively read inasmuch as section (1A) is the
power of Central Government to issue a notification in the Official Gazette to
specify the goods or class of goods which shall, as soon as may be after their seizure
under sub-section (1) be disposed of by the proper officer in such manner as the
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Central Government may, from time to time, determine after following the
procedure as specified in the said provision. This having regard to the perishable or
hazardous nature of any goods, depreciation in the value of the goods with the
passage of time, constraints of storage space for the goods or any other relevant
considerations. Sub-section (1B) provides that any goods specified under sub-
section (1A), having been seized by a proper officer under sub-section (1), the
proper officer shall prepare an inventory of such goods containing details relating
to their description, quality, quantity, marks, numbers, country of origin and other
particulars as the proper officer may consider relevant to the identity of the goods
in any proceedings under the Customs Act and shall make an application to a
Magistrate for the purpose, inter alia, of certifying the correctness of the inventory
so prepared; or taking, in the presence of the Magistrate, photographs of such
goods, and certifying such photographs as true; or allowing to draw representative
samples of such goods, in the presence of the Magistrate and certifying the
correctness of any list of samples so drawn. Sub-section (1C) provides that when an
application is made under sub-section (1B), the Magistrate shall, as soon as may be,
allow the application. Sub-section (1D) provides that when the goods seized under
sub-section (1) is gold in any form as notified under sub-section (1A), then, the
proper officer shall, instead of making an application (1B) to the Magistrate, make
such application to the Commissioner (Appeals) having jurisdiction, who shall, as
soon as may be, allow the application and thereafter, the proper officer shall dispose
of such goods in such manner as the Central Government may determine. In the
facts of the present case, none of the ingredients as listed out in Section 110 of the
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Act have been fulfilled prior to the seizure and confiscation of the gold jewellery in
question.
18. Further on a plain reading of Section 111 of the Act, the category of
goods under Clauses (a)-(q), which are liable for confiscation as improperly
imported has been specified, wherein the relevant clause in so far as the present
facts would be clause 111(e) which categorically states that dutiable or prohibited
goods found concealed in any manner in any conveyance are liable to be
confiscated. In the facts of the present case, even if the department has sought to
confiscate the gold jewellery invoking the above provisions, yet there was no
concealment of the gold jewellery by the Petitioner and in fact the Order-in-Appeal
categorically holds that the Petitioner was not a habitual offender/carrier and no
attempt was made to conceal the goods. It was in these circumstances that the
Order-in-Appeal reduced the quantum of fine and penalty in facts of the present
case. Thus, the provisions of both Sections 110 and 111 have stood breached in the
facts of the present case.
19. Further, the Order-in-Original dated 20
th
May 2014, and the Order-in-
Appeal dated 23rd January 2015 have also been passed without considering the
provisions of Section 110 and Section 111 of the Act. Redemption fines under
Section 125 (1) of the Act and further fines under Section 112(a) and 114-AA of
the Act imposed on the Petitioner amount to a gross abuse of the process of law as
envisaged in the aforesaid sections. What is fundamentally disturbing in the facts of
the present case, is that the gold jewellery was seized from the Petitioner on 16th
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May 2014, and as envisaged under Section 110(2), where if any goods are seized
under Section 110(1) and no notice in respect thereof is served under Section
124(a) within six months of the seizure of the goods, the goods shall be returned to
the person from whose possession they were seized. In the facts of the present case
no such show-cause notice was issued even after the six-month period post the
seizure on 16th May, 2014. In spite of this fatal legal flaw, Respondent Nos.2 and 3
have proceeded to pass the Order-in-Original order dated 20
th
May, 2014 and the
Order-in-Appeal dated 23rd January 2015 respectively, upholding the confiscation
and imposing relevant fines. This approach on the part of the authorities is a
blatant disregard of the provisions of law and cannot be sustained considering the
facts of the present case.
20. To add further insult to the injury, the Customs authorities have further
acted without following the provisions of law inasmuch on 6
th
February 2019, the
gold jewellery detained from the Petitioner was sent to the Government Mint
where the gold was melted without issuing a notice under Section 124(a) of the Act
to the Petitioner, during the pendency of the Revision Applications before
Respondent No. 4. However, what is perplexing to note is that we find that no
reasons, whatsoever, are placed on record much less brought to our notice, as to
why it was felt necessary by the proper officer to send the Petitioner’s gold
jewellery to the mint hurriedly on 06
th
February 2019. Section 110(2) provides that
where any goods are seized under 110(1) and no notice is issued under of Section
124(a) within six months of the seizure of the goods, the goods ‘shall be returned’
to the possession of the person from whom it was seized. In the facts of the present
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case, the seizure took place on 06
th
May 2014 and the 6-month period ended on
06
th
November 2014. However, neither was a show-cause notice served on the
Petitioner in a manner known to law and nor were the proceedings by the customs
authorities imposing redemption fines and penalties completed while following the
due process of law as envisaged under Sections 110 and 111 of the Act. It is
surprising as to what was the need and purpose on the part of the Customs
authorities to dispose of the gold jewellery hurriedly and not provide an
opportunity to the Petitioner to make a representation prior to confiscation of the
goods. As envisaged in Section 110(2) of the Act, a notice in respect of the goods
which are seized has to be given under Section 124(a) within six months of the
seizure of the goods and if such notice is not issued then the said goods are to be
returned to the person from whose possession the goods had been seized.
21. It is a settled principle of law that when the order of a customs officer is
not final and is subject to an appeal, and if the appellate authority finds later that
there was no good ground for the exercise of that power, the property could no
longer be retained and under the Act and has to be returned to the owner. In such a
situation there is a legal obligation on the part of the department to preserve the
property intact and also return it in the same condition in which it was seized,
inasmuch as in such a situation the State Government would be a bailee of the
seized property until the order became final. In such context, the relevant
observations of the Supreme Court in State of Gujarat v. Memon Mahomed Haji
Hasam, 1967 SCC OnLine SC 120 reads thus:-
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“On the facts of the present case, the State Government no doubt
seized the said vehicles pursuant to the power under the Customs Act.
But the power to seize and confiscate was dependent upon a customs
offence having been committed or a suspicion that such offence had
been committed. The order of the Customs Officer was not final as it
was subject to an appeal and if the Appellate Authority found that there
was no good ground for the exercise of that power, the property could
no longer be retained and had under the Act to be returned to the
owner. That being the position and the property being liable to be
returned there was not only a statutory obligation to return but until
the order of confiscation became final an implied obligation to preserve
the property intact and for that purpose to take such care of it as a
reasonable person in like circumstances is expected to take. Just as a
finder of property has to return it when its owner is found and
demands it, so the State Government was bound to return the said
vehicles once it was found that the seizure and confiscation were not
sustainable. There being thus a legal obligation to preserve the property
intact and also the obligation to take reasonable care of it so as to enable
the Government to return it in the same condition in which it was
seized, the position of the State Government until the order became
final would be that of a bailee. If that is the correct position once the
Revenue Tribunal set aside the order of the Customs Officer and the
Government became liable to return the goods the owner had the right
either to demand the property seized or its value, if, in the meantime
the State Government had precluded itself from returning the property
either by its own act or that of its agents or servants. This was precisely
the cause of action on which the respondent's suit was grounded. The
fact that an order for its disposal was passed by a Magistrate would not
in any way interfere with or wipe away the right of the owner to
demand the return of the property or the obligation of the Government
to return it. The order of disposal in any event was obtained on a false
representation that the property was an unclaimed property. Even if the
Government cannot be said to be in the position of a bailee, it was in
any case bound to return the said property by reason of its statutory
obligation or to pay its value if it had disabled itself from returning it
either by its own act or by any act of its agents and servants. In these
circumstances, it is difficult to appreciate how the contention that the
State Government is not liable for any tortious act of its servants can
possibly arise
.”
In the facts of the present case, the appeals were pending before the
Revision Authority for adjudication and hence the action of the Respondents/
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Custom Authorities to dispose off the gold jewellery hurriedly in 2019 was not in
consonance with the aforesaid principles of law.
22. On a plain reading of the provisions of Section 124, it is clear that, no
order confiscating any goods or imposing any penalty on any person shall be made
under this Chapter, unless the owner of the goods or such person is given a notice
in writing with the prior approval of the Officer of Customs not below the rank of
an Assistant Commissioner of Customs. Further, an opportunity of making a
representation in writing within a reasonable time as may be specified in the notice
against the grounds of confiscation or imposition of penalty has to be given and
also a reasonable opportunity of being heard in the matter has to be given to the
owner of the goods. It is only after these conditions are fulfilled, that the
confiscation of the goods can be made and if the case of the noticee is accepted
then the logical corollary would be that the same have to be released to the owner.
If they are not released, then Chapter XIV makes another provision, namely in
Section 125 which provides for the option to pay a fine in lieu of confiscation.
Section 125 reads as follows-
“
125. Option to pay fine in lieu of confiscation.—(1)
Whenever confiscation of any goods is authorised by this
Act, the officer adjudging it may, in the case of any goods,
the importation or exportation whereof is prohibited under
this Act or under any other law for the time being in force,
and shall, in the case of any other goods, give to the owner
of the goods 4 [or, where such owner is not known, the
person from whose possession or custody such goods have
been seized,] an option to pay in lieu of confiscation such
fine as the said officer thinks fit: [Provided that where the
proceedings are deemed to be concluded under the proviso
to sub-section (2) of section 28 or under clause (i) of sub-
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section (6) of that section in respect of the goods which are
not prohibited or restricted, the provisions of this section
shall not apply: Provided further that], without prejudice to
the provisions of the proviso to sub-section (2) of section
115, such fine shall not exceed the market price of the goods
confiscated, less in the case of imported goods the duty
chargeable thereon. [(2) Where any fine in lieu of
confiscation of goods is imposed under sub-section (1), the
owner of such goods or the person referred to in sub-section
(1), shall, in addition, be liable to any duty and charges
payable in respect of such goods.] [(3) Where the fine
imposed under sub-section (1) is not paid within a period of
one hundred and twenty days from the date of option given
thereunder, such option shall become void, unless an appeal
against such order is pending. Explanation.—For removal of
doubts, it is hereby declared that in cases where an order
under sub-section (1) has been passed before the date on
which the Finance Bill, 2018 receives the assent of the
President and no appeal is pending against such order as on
that date, the option under said sub-section may be exercised
within a period of one hundred and twenty days from the
date on which such assent is received.]
”
23. In the facts of the present case neither a notice was issued under Section
124 nor the provisions of Section 110 and Section 111 were followed and the
Petitioner was subjected to the fine as contemplated under Section 125 of the Act
and further under Sections 112 and 114AA of the Act. The fact that the gold
jewellery had been sent in the year 2019 to the mint and thereafter the Revision
Order was passed in 2021, allowing for the re-export of the gold reeks of further
abuse of the process of law, inasmuch as, now there is no gold available with the
customs authorities to allow re-export as stipulated by such order.
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24. This case, to our mind, is also one of these a gross cases which shows
complete apathy on the part of the Customs Department to follow the basic
principles of law. Even if the Customs Department has the power to dispose of the
gold it has to be exercised fairly, reasonably and transparently. Disposal of the
property belonging to a person like the Petitioner and of all the seized goods,
would have to withstand the test of law and more particularly, the Constitutional
requirement of reasonableness, non-arbitrariness, fairness, and transparency as
enshrined under Article 14 of the Constitution, coupled with safeguarding the
valuable rights of the property recognised by the Constitution under Article 300A.
25. A Division Bench of this Court in the case of Leyla Mahmoodi and Anr
vs. Additional Commissioner of Customs and Ors., to which one of us (G. S.
Kulkarni, J.) was a member, in similar circumstances, allowed the petition of the
Petitioner, therein taking a serious view of the matter where the Customs
Authorities had already disposed off the seized gold without following the due
process of law. Relevant paras of the said judgment, which are aptly applicable to
the present facts, are reproduced below:-
“34. Now applying such legitimate requirements to the facts of the
present case, we find that no reasons whatsoever are placed on
record, much less brought to our notice, as to why it was felt
necessary by the proper officer that the petitioners' gold was
required to be disposed of hurriedly on June 1, 2018 even prior to
the issuance of show-cause notice, which was issued on July 6,
2018, i.e., one month and five days after the disposal order.
35. In so far as the applicability of sub-section (1D) is concerned,
in the present case, sub-section (1D) was not applicable, as an
application was made to the Magistrate and no such application
was made, as provided under sub-section (1D), to the
Commissioner (Appeals).
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36. There is something more fundamental in the present
proceedings inasmuch as on January 14, 2018 the gold jewellery in
question was seized from the petitioners. Sub-section (2) of section
110 provides that where any goods are seized under sub-section
(1) and no notice in respect thereof is issued under clause (a) of
section 124 within six months of the seizure of the goods, the
goods shall be returned to the person from whose possession they
were seized. Thus, the seizure having taken place on January 14,
2018, six months period was to end on July 14, 2018, however,
what is significant is that a show-cause notice for confiscation of
such gold came to be issued to the petitioners on July 6, 2018,
however, the same was never served on the petitioners in a manner
known to law.
37. Be that as it may, it is surprising as to how such notice to
confiscate the gold jewellery could be issued, when the gold
jewellery stood disposed of by the Assistant Commissioner by an
order dated June 1, 2018, which was preceded by the notice dated
April 4, 2018 as noted above, although all this was not to the
knowledge of the petitioners. Once the gold itself was not available
for confiscation, it is surprising as to what was the need and
purpose for issuing such notice. This inasmuch as the confiscation
of the gold jewellery in question would be required to be
understood in terms of what Chapter XIV of the Customs Act
would provide, which contains provisions in relation to
confiscation of goods. In the said Chapter, provisions of section
124 would have significant bearing on the facts of the present case,
inasmuch as section 124 provides for issuance of show-cause notice
before confiscation of goods. Section 124 reads thus:
"124. Issue of show-cause notice before confiscation of
goods, etc.
No order confiscating any goods or imposing any
penalty on any person shall be made under this Chapter
unless the owner of the goods or such person.—
(a) is given a notice in writing with the prior approval of
the officer of Customs not below the rank of an
Assistant Commissioner of Customs, informing) him of
the grounds on which it is proposed to confiscate the
goods or to impose a penalty;
(b) is given an opportunity of making a representation
in writing within such reasonable time as may be
specified in the notice against the grounds of
confiscation or imposition of penalty mentioned
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therein; and
(c) is given a reasonable opportunity of being heard in
the matter:
Provided that the notice referred to in clause (a) and the
representation referred to in clause (b) may, at the
request of the person concerned be oral.
Provided further that notwithstanding issue of notice
under this section, the proper officer may issue a
supplementary notice under such circumstances and in
such manner as may be prescribed."
38. On a plain reading of section 124 what would be implicit is
that an order confiscating any goods or imposing any penalty can
be passed only after the owner of the goods is issued a notice in
terms of the said provisions, inter alia, informing him of the
grounds on which it is proposed to confiscate the goods or to
impose a penalty and an opportunity of making a representation in
writing is given to him within such reasonable time as may be
specified in the notice against the grounds of confiscation or
imposition of penalty and a reasonsable opportunity of being
heard. The object of the provision making an allowance of
representation is to permit such person who has been issued such
notice to show cause against non-confiscation. In the event, the
case of the noticee is to be accepted, the only consequence which
the law would recognize would be that the confiscation of goods,
subject-matter of show-cause notice, itself would be dropped. The
corollary to this would be that the seized goods are required to be
released to the owner. If they are not to be released, then Chapter
XIV makes another provision, namely, in section 125 which
provides for
"Option to pay fine in lieu of confiscation". Section 125 reads thus:
"125. Option to pay fine in lieu of confiscation.—(1)
Whenever confiscation of any goods is authorised by
this Act, the officer adjudging it may, in the case of any
goods, the importation or exportation whereof is
prohibited under this Act or under any other law for the
time being in force, and shall, in the case of any other
goods, give to the owner of the goods or, where such
owner is not known, the person from whose possession
or custody such goods have been seized, an option to
pay in lieu of confiscation such fine as the said officer
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thinks fit:
Provided that where the proceedings are deemed to be
concluded under the proviso to sub-section (2) of
section 28 or under clause (i) of sub-section (6) of that
section in respect of the goods which are not prohibited
or restricted, the provisions of this section shall not
apply:
Provided further that, without prejudice to the
provisions of the proviso to sub-section (2) of section
115, such fine shall not exceed the market price of the
goods confiscated, less in the case of imported goods the
duty chargeable thereon.
(2) Where any fine in lieu of confiscation of goods is
imposed under sub-section (1), the owner of such goods
or the person referred to in sub-section (1), shall, in
addition, be liable to any duty and charges payable in
respect of such goods.
(3) Where the fine imposed under sub-section (1) is not
paid within a period of one hundred and twenty days
from the date of option given thereunder, such option
shall become void, unless an appeal against such order is
pending.
Explanation.-For removal of doubts, it is hereby
declared that in cases where an order under sub-section
(1) has been passed before the date on which the
Finance Bill, 2018 receives the assent of the President
and no appeal is pending against such order as on that
date, the option under said sub-section may be exercised
within a period of one hundred and twenty days from
the date on which such assent is received."
39. Now applying such provision to the facts of the case, the
situation is quite alarming, inasmuch as, on one hand, the Assistant
Commissioner had already disposed of the gold jewellery of the
petitioners before the period of six months as contemplated under
sub-section (2) of section 110 would come into play, that is, almost
at the fag end of such period of six months would come to an end
(eight days before such period would expire), the petitioners were
purportedly issued a show-cause notice under section 124 as to
why the gold jewellery of the petitioners ought not to be
confiscated. As noted above such show-cause notice in effect was
meaningless as the gold jewellery itself was not available for
confiscation.
40. It is quite glaring that the respondents have failed to follow the
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basic procedure, the law would recognize, namely, that knowing
well that the petitioners are foreign nationals, no attempt was made
to serve show-cause notice on the petitioners through the
Consulate General of the Islamic Republic of Iran, when the
respondents were fully aware that the petitioners were not available
in India. The concerned officer nonetheless proceeded to
adjudicate the show-cause notice and passed an order-in-original
on January 18, 2019 without hearing the petitioners.
41. Be that as it may, as noted above, now the proceedings which
had arisen under the show-cause notice dated July 6, 2018 issued
to the petitioners have attained finality in view of the revisional
authority passing an order on September 19, 2022, whereby it has
been held that absolute confiscation was not justified in the present
case and the petitioners be permitted to re-export the gold
jewellery on payment of a redemption fine. Such order as seen
from the facts as noted above is incapable of compliance, inasmuch
as, the gold jewellery itself is not available for the petitioners to re-
export it. This more significantly as the revisional authority having
observed that this was not the case where the petitioners have
attempted to smuggle the gold.
42. As rightly urged on behalf of the petitioners, the Assistant
Commissioner who disposed of the gold never informed either the
appellate authority or the revisional authority that the seized gold
jewellery of the petitioners itself was not available and was
disposed of. This, in our opinion, is something which raises a
serious doubts on the method and manner in which the customs
officers discharge their duties under the Act. In our opinion, even
if there is a power to dispose of the gold, it has to be exercised
fairly, reasonably and transparently. Disposal of the property
belonging to the persons like the petitioners and/or to sell the
seized goods at the ipse dixit of the officers, is not what the law
would recognise. The procedure to dispose of such valuable
commodities is required to withstand the test of law and more
particularly, the Constitutional requirement of reasonableness,
non-arbitrariness, fairness and transparency as enshrined under
article 14 of the Constitution coupled with safeguarding the
valuable rights of property recognized by the Constitution, under
article 300A. It cannot be otherwise, as section 110(1A) would be
required to be read, interpreted and applied only in a manner the
basic law of land under the provisions of articles 14 and 300A of
the Constitution of India, would permit the Department to so
apply.
43. As noted above sub-section (1A) of section 110 cannot be read
as absolute entitlement or authority with the proper officer to
dispose of the items like gold in the absence of any cogent reasons,
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which would attract the ingredients of sub-section (1A) of section
110. Such reasons as falling under sub-section (1A) are required to
be intimated to the owner of the goods for the reason that
ultimately the disposal of the goods would entail serious
consequences of affecting the Constitutional rights of the owner of
the goods guaranteed under article 300A of the Constitution, as
the owner would be deprived of his property. This would be the
basic requirement of law the proper officer dealing with any goods,
which are merely seized and not confiscated would be required to
be followed. This for the reason that prior to the goods being
confiscated, rights in the goods, the corporeal ownership of the
goods remain with the owner of the goods and such rights do not
stand vested and/or transferred in favour of the Customs
Department/Government.
45. It is abundantly clear from the record that the gold jewellery
belonging to the petitioners was not merely disposed of but sold by
the respondents, which is clear from the respondents' own showing
in the reply affidavit as also compounded by a letter of the State
Bank of India dated August 1, 2018. Once the property of the
ownership of the petitioners was being disposed of and/or sold, in
our opinion, certainly the provisions of article 300A of the
Constitution would stand attracted. Article 300A of the
Constitution reads thus:
"300A. Persons not to be deprived of property save by
authority of law.—No person shall be deprived of his
property save by authority of law."
46. It is well-settled that the provisions of article 300A of the
Constitution are available to any person including a juristic person
and are not confined to only citizen, and that the illegal seizure
would amount to the owner being deprived of his right of property
as contained under article 300A of the Constitution of India. (See :
paragraph 55 of the Dharam Dutt v. Union of Indial and
paragraph 25 of the State of West Bengal v. Sujit Kumar Rana™).
47. In the present case the gold jewellery belonging to the
petitioners has been dealt, disposed of and sold in patent disregard
to the basic principles of law as articles 14 and 300A of the
Constitution would ordain. This apart, even the provisions of the
Customs Act, which we have discussed, stand violated not only in
taking away the substantial statutory rights as the law would
guarantee to the petitioners, on seizure of the petitioners gold
jewellery but also in the manner in which the gold jewellery has
been disposed of. If such is the consequence of the actions, as taken
by the respondents and the same cannot be recognized in law on
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any parameters, then the only conclusion to be reached by the
court is that the disposal/sale of the gold jewellery belonging to the
petitioner, is per se illegal, void, ab initio and unconstitutional.
Once such action on the part of the respondents is being regarded
as a brazen illegality, the mandate of law would be to restore to
status quo ante which is the legitimate corollary to remedy such
illegality. The legal principle in this regard can be discussed.
48. In State of Gujarat v. Memon Mahomed Haji Hasam- involved
an issue in regard to illegal seizure of the vehicles as belonging to
the respondents therein, leading to an order of confiscation being
finally set aside and a claim for return of the vehicles being made.
It so transpired that the vehicles were sold and the amounts were
paid to the creditors of the respondents. It is in such context the
Supreme Court observed that the order of confiscation was not the
final order and was subject to appeal/further proceedings and if the
appellate authority found that there was no good ground for
exercising of power of confiscation, the property could no longer
be retained under the Act and was required to be returned to the
owner, which was the statutory obligation to return the property. It
was held that there was a legal obligation to preserve the property
in tact, also an obligation to take reasonable care of the same so as
to enable the property to be returned in the same condition in
which it was seized. It was held that the respondent was entitled to
return of the property or to the value of the property. The
observations of the Supreme Court in such context are required to
be noted, which read thus:
"6. There can, therefore, be bailment and the
relationship of a bailor and a bailee in respect of specific
property without there being an enforceable contract.
Nor is consent indispensable for such a relationship to
arise. A finder of goods of another has been held to be a
bailee in certain circumstances.
7. On the facts of the present case, the State
Government no doubt seized the said vehicles pursuant
to the power under the Customs Act. But the power to
seize and confiscate was dependent upon a customs
offence having been committed or a suspicion that such
offence had been committed. The order of the customs
officer was not final as it was subject to an appeal and if
the appellate authority found that there was no good
ground for the exercise of that power, the property
could no longer be retained and had under the Act to be
returned to the owner. That being the position and the
property being liable to be returned there was not only a
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statutory obligation to return but until the order of
confiscation became final an implied obligation to
preserve the property intact and for that purpose to take
such care of it as a reasonable person in like
circumstances is expected to take. Just as a finder of
property has to return it when its owner is found and
demands it, so the State Government was bound to
return the said vehicles once it was found that the
seizure and confiscation were not sustainable. There
being thus a legal obligation to preserve the property
intact and also the obligation to take reasonable care of
it so as to enable the Government to return it in the
same condition in which it was seized, the position of
the State Government until the order became final
would be that of a bailee. If that is the correct position
once the Revenue Tribunal set aside the order of the
customs officer and the Government became liable to
return the goods the owner had the right either to
demand the property seized or its value, if, in the
meantime the State Government had precluded itself
from returning the property either by its own act or that
of its agents or servants. This was precisely the cause of
action on which the respondent's suit was grounded.
The fact that an order for its disposal was passed by a
Magistrate would not in any way interfere with or wipe
away the right of the owner to demand the return of the
property or the obligation of the Government to return
it. The order of disposal in any event was obtained on a
false representation that the property was an unclaimed
property. Even if the Government cannot be said to be
in the position of a bailee, it was in any case bound to
return the said property by reason of its statutory
obligation or to pay its value if it had disabled itself
from returning it either by its own act or by any act of
its agents and servants. In these circumstances, it is
difficult to appreciate how the contention that the State
Government is not liable for any tortious act of its
servants can possibly arise. The decisions in State of
Rajasthan v. Mst. Vidhyawati and Kasturi Lal v. State of
U.P.4, to which Mr. Dhebar drew our attention, have no
relevance in view of the pleadings of the parties and the
cause of action on which the respondent's suit was
based."
49. In "Union of India v. Shambhunath Karmakar"
15
the Division
Bench of the Calcutta High Court on a plea of the respondents
therein for return of the gold ornaments, which were seized from
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them which were forwarded for melting, it was observed that the
owner of the goods was entitled to claim damages for disposal of
the seized gold. It was observed that the cause of action for return
of the gold accrued on the date the confiscation order was set aside
and the owner became entitled to obtain return of the seized gold.
It was observed that the seized gold was not sold to a third party
for value and that if the seized gold has been forwarded for melting
to the Government of India, it really amounted to appropriation of
the gold by another Department of the Government. It was also
observed that if the gold and gold ornaments were melted, the
same resulted only in the change of form. The court observed the
Government would continue to hold the melted gold in some form
or other and therefore, the Government was bound to return the
said gold or the value. It was also observed that at the time when
the confiscation order was set aside, both in equity and law status
quo ante prior to the passing of the confiscation order ought to be
restored.
50. In Zhinet Banu Nazir Dadany a Division Bench of the Delhi
High Court was dealing with a similar situation, as in the present
case, wherein the gold as seized by the respondent was disposed of
when the same was neither perishable nor hazardous. In such
context, the Division Bench held that the gold could not have been
hurriedly disposed of and in the absence of a show-cause notice
being served or the petitioners. It was held that there was no reason
to proceed to the disposal of the seized gold without notice, and
that too without passing any order on adjudication and accordingly
set aside the seizure of the gold with a direction that the proceeds
which were collected in the auction which were equal to the vary of
the gold ought to be refunded to the petitioner with interest. The
relevant observations of the court in paragraphs 22 and 23 which
reads thus:
22. There is no explanation offered by the respondents
as to why they were constrained to dispose of the seized
gold, when it was neither perishable nor hazardous.
Also, there is no answer why it had to be disposed of
without notice being issued to the person from whom it
was seized. This irrespective of whether the SCN was
served or not. The SBEC has issued a circular dated
February 14, 2006 in this regard where it was impressed
upon the field formations as under:
'An instance has recently been brought to the
notice of the Board where seized goods were
disposed of without issuing notice to the owner of
the goods. The seizure having been set aside by
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the adjudicating authority, the owner of the goods
sought their return but was advised to obtain the
sale proceeds, which were significantly lower than
the seizure value. In subsequent proceedings, the
High Court has directed the refund of an amount
higher than the sale proceeds, as well as payment
of interest. The loss of the exchequer has resulted
from a failure to comply with the requirements of
section 150 of the Customs Act, 1962.
2. It is impressed upon field formations that where
any goods, not being confiscated goods, are to be
sold under any provision of the Customs Act, they
shall be sold by public auction or by tender or in
any other manner after notice to the owner of the
goods.
3. It is further clarified that the requirement to
issue notice to the owner of the goods shall also
obtain in case of goods that have been confiscated
but in respect of which all appeal/legal remedies
have not been exhausted by the owner of the
goods.'
23. In the present case with the seized material not
being perishable, being gold bars there was no reason
for the respondents it off and to have hurriedly disposed
it off and that too without notice to the petitioner.
When it was plain that even the SCN was not served
upon the petitioner, there was no reason to proceed
with disposal of the seized gold without notice. It also
appears that the respondents hurriedly went ahead and
passed an adjudication order more than four years after
the gold was seized only after the present petition was
filed..."
51. In our opinion, the petitioners would also be correct in
contending that the impugned action of the respondents in the
present case was in the teeth of the CBEC instructions dated
February 14, 2006. The relevant extract as relied on behalf of the
petitioners reads thus:
"8. As per CBEC instructions vide letter F. No.
711/4/2006-Cus.
(AS), dated February 14, 2006, before selling the goods
notice must be given to the owner/importer. The text of
the circular is reproduced herewith—
As instance has recently been brought to the notice of
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the Board where seized goods were disposed of without
issuing notice to the owner of the goods. The seizure
having been set aside by the adjudicating authority, the
owner of the goods sought their return but was advised
to obtain the sale proceeds, which were significantly
lower than the seizure value. In subsequent
proceedings, the High Court has directed the refund of
an amount higher than the sale proceeds, as well as
payment of interest. The
loss to the exchequer has resulted from a failure to
comply with the requirements of section 150 of the
Customs Act, 1962.
It is impressed upon filed formations that where any
goods, not being confiscated goods, are to be sold under
any provision of the Customs Act, they shall be sold by
public auction or by tender or in
any other manner after notice to the owner of the
goods.
It is further clarified that the requirement to issue notice
to the owner of the goods shall also obtain in case of
goods that have been confiscated but in respect of
which all appeal/legal remedies have not been exhausted
by the owner of the goods."
52. We are also of the opinion that the concerned officer of the
respondents in the present case has completely overlooked that the
gold jewellery in question was sold/disposed of at the stage of the
seizure, in fact, prior to the issuance of a show-cause notice under
section 124 of the Customs Act, being issued to the petitioners,
much less prior to any order of confiscation being passed, which
came to be passed on January 18, 2019. Such order was certainly
subjected to an appeal as per the provisions of section 128 of the
Customs Act, before the appellate authority and thereafter, a
revision being maintainable under the provisions of section
129DD before the Central Government. It was thus an obligation
on the concerned Customs officials as conferred by law to preserve
the gold jewellery belonging to the petitioner unless the
circumstances for justified reasons or otherwise were against
preservation of the said goods that for no reason whatsoever the
goods ought not to be preserved, till the proceedings attain finality.
In the present case there are none.
53. We may also sound a note of caution that it would be travesty
of justice, as also a patent illegality if in the teeth of the well-settled
principle of law and constitutional provisions conferring right to
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property, any authority being conferred on the Customs officials
purportedly under section 110 to dispose of the seized goods, can
be recognized, merely because the goods are seized under the
Customs Act. The Customs official without recording cogent and
acceptable reasons and without a prior notice being issued to the
owner of the goods or the persons from whom the goods are
seized, would not wield a power/authority to sell and/or dispose of
the seized goods, and more particularly, valuable items like gold.
Such unbridled power cannot be recognized under the provisions
of section 110 of the Customs Act, and if any action contrary to the
legitimate principles of law as applicable and discussed by us
hereinabove, is sought to be taken, the same would be rendered
illegal.
54. In other words, the scheme as envisaged under section 110
cannot be read to mean that mere seizure of the gold by the
customs officer can be construed to confer any power, authority to
sell the goods without following the due procedure in law namely
of a prior notice of hearing being granted to the owner of the
goods, or to the person from whom the goods are seized, when the
property of the ownership of a person is sought to be deprived to
him by sale or disposal of the goods. It would be fallacious to read
into the scheme of section 110(1) read with (1A) to (1D) any
power to be exercised by the Customs officials which is not based
on cogent reasons and which can be exercised without due
procedure being not followed, apart from such action satisfying the
test of lack of any illegal motives, non-arbitrariness, reasonableness
and fairness, on the part of the Customs Officials.
55. In the present case, it is difficult to imagine as to what could be
the reason for the customs officers to dispose of the goods
hurriedly and with such lightening speed and by throwing to the
wind the norms of fairness and reasonableness. This is not
acceptable even from the reading of the provisions of section 110.
Any reading of section 110 otherwise than what has been discussed
above, would amount to foisting draconian, reckless and/or
unfettered authority on the customs officers conferring a licence to
commit illegality. In fact the recognition of any such power with
the customs officers would lead to an anomalous situation of the
substantive provisions and procedure for confiscation and the
appellate/revisional remedy being rendered meaningless, only to be
realized that any order for return of property at any stage of such
proceedings, would merely remain a paper order, impossible of
implementation/execution. Thus, such substantive provisions of
the Customs Act cannot be rendered nugatory, by recognizing
unguided and unfettered powers being conferred under section 110
on the customs officers, to dispose of the seized property, till the
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orders of any confiscation attains finality, unless there are strong
reasons which would justify any such action when tested on such
constitutional and legal parameters, and that too on the satisfaction
of the officers to be reached only after hearing the owner of the
property.
58. In the light of the above discussion, interest of justice would require
that the petition be allowed by granting the following reliefs to the
petitioners:
Order
(i) It is declared that the action on the part of the Assistant
Commissioner of Customs in disposing of/selling the gold jewellery
belonging to the petitioners subject-matter of the present proceedings, is
illegal and unconstitutional.
(ii) The respondents are directed, to restore to the petitioners, equivalent
amount of gold namely 1028 gms. and/or to compensate the petitioners
by making payment of amounts equivalent to the market value of the
said gold, as on date.
(iii) The above directions be complied by the respondents within a
period of three weeks from today.
(iv) In the event the petitioners are granted payment of the amounts as
directed in (ill) above, the amount of redemption fine and penalty as
directed by the Revisional Authority in its order, be deducted.
59. The petition is accordingly, disposed of in the above terms. No
costs.
”
(Emphasis supplied)
25. In the present case, the Petitioner had sought to redeem the gold
pursuant to the order of the Revisional Authority giving them an option to redeem
the confiscated goods on paying a redemption fine and penalty. However, in facts
of the present case the very basis of confiscation and seizure of the gold jewellery
itself is bad in law and made without following the due process of law. Hence the
Petitioner is entitled to the value of the gold jewellery as per the present market
value. Further, in the facts of the present case, the Revisional Authority has ordered
the re-export of the gold jewellery when the same is itself not available for re-
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export. For such reason, we are not persuaded to accept the Revenue’s contention
that the petitioner be granted the value of the gold as on the date of seizure. This
would be contrary to the decision of the Division Bench in Leyla Mahmoodi and
Anr. Vs. Additional Commissioner of Customs and Ors. (supra), which is accepted
by the Respondents. It is for such reason, we do not accept the Revenue’s
contention relying on the decision in the case of Division Bench in Ramesh Shamji
Patel Vs. Union of India (O.S. Writ Petition (L) No. 23037 of 2024), the fact of
the said case being totally different wherein the Petitioner had written to the
authorities to redeem the gold and therefore there was no challenge to the
confiscation or seizure of the gold.
26. Further the contention of the Respondent that the Petitioner has not
disclosed in the Petition that he had filed the refund application on 12
th
July 2021
and has hence suppressed facts from this Court would not be completely correct
inasmuch as in the affidavit-in-rejoinder filed by the Petitioner, the Petitioner has
averred that his refund application was processed and allowed on 8
th
January 2024.
Further, this contention of the Respondent would not help them to advance their
case further, as the very premise of confiscation is bad in law.
27. In so far as the judgments relied upon by the Respondents are
concerned, the same are not apposite to the facts of the case, inasmuch as the
Petitioner had prayed for the re-export of the gold jewellery on the ground that the
same was meant for personal use and not liable for confiscation. In fact, when the
gold jewellery was confiscated from the Petitioner the detention memo was issued
under Section 80 of the Act, is the case of the Petitioner. Hence, the confiscation of
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the said gold jewellery without following the provisions of law is itself bad in law.
Therefore, the contention of the Respondent that the Petitioner cannot approbate
and reprobate deserves to be rejected, as also the decisions relied upon by the
Respondents in such context will not assist the Respondents.
28. In the light of the above discussion, it is eminently in interest of justice
that the Petition be allowed in terms of the following order:-
Order
i. It is declared that the action on the part of the Office of the Pr.
Commissioner of Customs (Airport) in disposing of/selling the gold jewellery
belonging to the Petitioner in the present proceedings, is illegal and
unconstitutional.
ii. The Respondents are directed, to restore to the Petitioner, the equivalent
amount of gold namely 373.700 grams. and/or to compensate the Petitioner by
making payment of amounts equivalent to the market value of the said gold, as on
date.
iii. The above directions be complied by the Respondents within a period of
three weeks from today.
iv. The petition is accordingly disposed of in the above terms. No Costs.
(AARTI SATHE, J.) (G. S. KULKARNI, J.)
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