R.K. (O) Sonia Devi vs Commissioner Of Customs (Preventive)

[1] Heard DR. R.K. Deepak, learned counsel appearing for the petitioner and Mr. Boboy Potsangbam, learned counsel appearing for the respondents.

[2] The prayers in the writ petition read as follows:-

(ii) issue a writ of Certiorari, Mandamus and/or any other appropriate writ/order/direction to set aside and quash the Show Cause Notice dated

09.09.2015, issued by Respondent No. 1 on the basis of the Seizure Memo dated 17.03.2015, as perusal of the Inventory (Seizure List) dated

17.03.2015 would make it absolutely clear that the customs Seizing Officer has taken an unlawful view to effect the seizure of the gold bars.

(iii) issue a writ of Certiorari, Mandamus and/or any other appropriate writ/order/direction to set aside and quash the inventory of goods seized

(Seizure Memo) dated 17.03.2015 prepared by the Custom Inspector (Preventive) Unit, Imphal under section 110 of the Customs Act, 1962,

(iv) Issue a writ of Certiorari, Mandamus and/or any other appropriate writ/order/direction to set aside and quash the further proceedings initiated by

the Custom Authorities under the provisions of the Customs Act, 1962 pursuant to the aforesaid Seizure Memo dated 17.03.2015.

(v) Issue a writ of Certiorari, Mandamus and/or any other appropriate writ/order/direction to the Respondent Customs Authorities to forthwith release

the 21 pieces of Gold Bars rectangular in shape and sizes, weighing 3490.80 grams, along with other seized articles by the impugned Seizure Memo

dated 17.03.2015 to the Petitioner.

[3] The writ petition is of the year 2015. Notice was issued on 16.10.2015. The respondents appeared through various counsels and finally, Mr. Boboi

Potsangbam appears for the Customs Department. This case was taken up for hearing on earlier dates and today for final hearing. Reply affidavit has

been filed by the respondents on 16.02.2016 denying the entire allegations made against the Customs Department.

 [4] The brief facts which has led to the filing of this writ petition are as follows. The petitioner in this case, R.K. (O) Sonia Devi is running a

jewellery shop under the name and style of “M/s R.K. Radhika Jewelleryâ€, having Registration No. 6192 issued by the Imphal Municipal Council,

Manipur. The said gold business is run by her along with her husband R.K. Angangbi Singh. She claims that she is also engaged in retail and whole

sale purchase and sale of gold and gold ornaments. According to the petitioner, during the financial year 2013-2014 & 2014-2015, they purchased gold

bars worth more than Rs. 16 (sixteen) crores from M/s Magna Projects Pvt. Ltd, Kolkata. 38 numbers of gold purchase invoices are there and the

transactions were made through Axis Bank account of the petitioner, which is reflected in the letter of the M/s Magna Projects Pvt. Ltd., Kolkata.

[5] On 15.03.2015, during the course of normal trade, the petitioner decided to get “Hallmark Gold Coins†made in Kolkata, and therefore,

despatched 21 (twenty one) pieces of gold articles having a gross weight of 3490.80 grams, purity ranging an average of 99.5 to 99.9. This was sent

through her husband Shri R.K. Angangbi Singh by Air India Flight from Imphal to Kolkata with supporting documents and he was travelling with

others as will be evident from further narration.

[6] At the airport, the officers of the Customs, (Preventive) Division Imphal detained Shri R.K. Angangbi Singh and three others passengers namely,

R.K. Ranjana Devi, R.K. (O) Rojita Devi and Kh. Kimbem, whose names are indicated in the show-cause notice. From the above persons, the

officers recovered 21(twenty one) gold bars/biscuits/articles weighing 3490.80 grams from their accompanied baggage. R.K. Angangbi Singh claimed

the ownership of the gold bars/biscuits/articles and also produced documents to justify legal possession/transportation of the said gold. The gold was

not seized on that day. All the passengers and the gold articles were taken to Customs Office at New Checkon, Imphal and thereafter, the gold was

assayed by a registered local gold smith and after verifying it was gold and after ascertaining the local market value and after taking statements from

the persons namely, R.K. Angangbi Singh, RK. Ranjita Devi, R.K. Rojita Devi and Kh. Kimbem on 17.03.2015 and the documents, the seizure memo

dated 17.03.2015 in terms of Section 110 of the Customs Act, 1962, was issued by the Inspector, Customs Division Imphal in the presence of two

witnesses. The seizure of gold and quantity is not disputed by the petitioner. The documents submitted by R.K. Angangbi Singh, namely transit challan,

tax invoice of both M/s Radhika Jewellery and M/s Magna Project Pvt. Ltd, Kolkata and all other relevant documents were collected for further

action under the Customs Act, 1962. Consequently, the show cause notice is issued and that is challenged in this writ petition.

[7] It is the case of the department that on 18.03.2015, R.K. Angangbi Singh was arrested on 18.03.2015 and released on bail in compliance with the

order of the Sessions Judge, Imphal. This is disputed by the petitioner‟s counsel. RK Sonia Devi, proprietor of M/s Radhika Jewellery, gave statement

on 01.04.2015 primarily stating that she is the proprietor of the M/s Radhika Jewellery and the owner of the said 21 gold bars/articles, and that it was

purchased from the M/s Magna Projects Pvt. Ltd., Kolkata, and it is the part of the bulk gold purchased from M/s Magna Projects Pvt. Ltd., Kolkata.

The gold was changed in its form after such purchase for further use. The Customs Department made enquiry with the Superintendent of Taxes,

Government of Manipur on the nature of business transacted by the M/s Radhika Jewellery. They also enquired with the M/s Magna Projects Pvt.

Ltd., Kolkata, who gave detail of the sale of 4548.190 grams of gold to R.K. (O) Sonia Devi of M/s Radhika Jewellery in July 2013 but denied any

relationship with regard to purchase of gold concerned with the e-way bill serial No. 10730041241 dated 16.03.2015. One Shri Shashikant Sindhe,

Director of M/s Magna Projects Pvt. Ltd., Kolkata, was also enquired; he gives certain version with regard to the sale of gold to the M/s Radhika

Jewellery and to the individuals concerned. Questions were put to the above said person about the nature of business transaction between the

petitioner‟s proprietor firm and M/s Magna Projects Pvt. Ltd. and statements have been recorded, and all the above are part of the details contained

in the show cause notice.

[8] Consequent to seizure of the gold and on the basis of the statement recorded from various persons and the verification of the documents, the

Customs Department was of the view that gold biscuits/articles of foreign origin were illegally imported and smuggled into India in violation of Section

7(1)(C) of the Customs Act, 1962 and in contravention of Section 11 of the Customs Act read with import (Control) Order No. 17/55 dated

01.12.1992 issued under Section 3(1) of the Foreign Trade (Development and Regulation) Act, 1992 as made applicable under Section 3(2) of the

Foreign Trade (Development and Regulation) Act, 1992 and hence, the same was liable for confiscation under Section 111(b) and 111(d) of the

Customs Act, 1962.

The specific allegation against R.K. Angangbi Singh is that he was directly involved in illegal importation, acquisition, possession, concealment,

transportation etc. of the said seized gold biscuits. All the persons concerned with R.K. Angangbi Singh were privy to the arrangement of

transportation of the smuggled gold under the cover of fabricated invoice purportedly issued by the M/s Magna Project Private Limited, Kolkata to

evade detection and to mislead the investigation. As a result, a show cause notice was issued against R.K. Angangbi Singh, R.K. (O) Sonia Devi,

R.K. Ranjana Devi, R.K. (O) Rojita Devi, Kh. Kimbem and Shri Shashikant Sindhe.

The show cause notice dated 09.09.2015 (Annexure-A/14) was issued in the following terms:-

In view of the above facts and circumstances, it appears that :-

(i) The said gold biscuits of foreign origin have been illegally imported/smuggled into India in violation of Section 7(1)(C) of the Customs Act, 1962 and

in contravention of Section 11 of the Act ibid, read with Import (Control) Order No. 17/55 dated 01.12.1992 issued under Section 3 (1) of the Foreign

Trade (Development and Regulation) Act 1992 as made applicable under Section 3(2) of the Act ibid and thus liable for confiscation under Section

111(b) and (d) of the Customs Act 1962.

(ii) R.K. Angangbi Singh was directly involved in illegal importation, acquisition, possession, concealment, transportation etc., of the said seized gold

biscuits of foreign origin. He was the person who along with his wife removed foreign markings embossed on the said gold biscuits, concealed in his

luggage and subsequently made arrangement for transportation of the said smuggled gold biscuits under the cover of fabricated invoice purportedly

issued by M/s Magna Projects Pvt. Ltd., Kolkata to evade detection and mislead the investigation. He produced the said invoice in order to claim his

illegal activity of transportation of the said goods as licit however, on being categorically asked, he failed to produce records of sale, purchase or stock

of gold to justify licit possession of the said gold biscuits, and thereby made it evident that the said purchase document was manufactured/fabricated

and submitted as an act of afterthought in order to hoodwink the investigation. R.K. Angangbi Singh was also found involved in another case No.

06/CL/IMP/CUS/HQRS. PREV/SH/2014-15 dated 27-8-2014 of similar nature where twenty six gold biscuits of foreign origin weighing 4334.79 gms

were seized. He was the person found involved in illegal importation, acquisition, possession, concealment, transportation etc., of the said twenty six

pieces gold biscuits of foreign origin. He was the person who removed the foreign markings embossed on the said gold biscuits of foreign origin and

also instrumental in transportation of the said smuggled gold biscuits through carriers under the cover of invoices issued by M/s Magna Projects Pvt.

Ltd., Kolkata, R.K. Angangbi Singh, during investigation of the said case, produced different sets of purchase invoices to mislead the investigation and

the judiciary. He submitted fake purchase invoices to justify his claim, and neither presented himself nor produced any records of sale, purchase or

stock of gold to justify licit possession of the seized gold biscuits before the investigation after repeated summons. All these factors made it evident

that R.K. Angangbi is a repeated / habitual offender and a part of a syndicate that was actively involved in smuggling of gold of foreign origin through

the Indo-Myanmar border. It thus appears that R.K. Angangbi Singh has concerned himself in acquiring, carrying, transporting, removing, depositing,

harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with the said seized gold biscuits of foreign origin which he knew

or had reasons to believe are liable to confiscation under Section 111(b) and (d) of the Customs Act, 1962 and thereby rendering himself liable for

penal action under Section 112(b)(ii) of the Act ibid and also liable for prosecution under Section 135 of the Customs Act, 1962.

R.K. (O) Sonia Devi of M/s Radhika Jewellery stated that she was the owner of the said twenty one gold biscuits of foreign origin. R.K. (O)

Sonia Devi admitted that she and R.K. Angangbi Singh, her husband had converted the said gold biscuits of foreign origin into different size / shape as

per their own convenience. She also stated that she had provided the invoice of M/s Magna Projects Pvt. Ltd. Kolkata which was issued in the month

of July 2013 as covering documents for transportation of the said gold biscuits. However, on being asked that the size of the gold that mentioned in the

invoice of M/s Magna Projects Pvt. Ltd. Kolkata and that of the recovered/seized gold biscuits did not correspond with one another, she could not give

any valid reason. She further stated that she had mentioned the registration No. 6192 of IMC dated 3.7.2013 on the invoice of M/s Magna Projects

Pvt. Ltd. by hand and thus it is evident that she had fabricated / doctored the invoice of M/s Magna Projects Pvt. Ltd. in order to hoodwink the

investigation, R.K. (O) Sonia Devi was also found involved in another case No. 06/CL/Imp/CUS/HQRS. PREV/SH/2014-15 dated 27-8-2014 of

similar nature where twenty six gold biscuits of foreign origin weighing 4334.79 gms were seized. She was the person found involved in illegal

importation, acquisition, possession, concealment, transportation etc. of the said twenty six pieces gold biscuits of foreign origin. She was the person

who along with R.K. Angangbi Singh, her husband, admittedly removed the foreign markings embossed on the said gold biscuits of foreign origin and

also the person instrumental in arranging transportation of the said smuggled gold biscuits through carriers. It, therefore, appears that R.K. (O) Sonia

Devi was actively involved in the smuggling of the said seized gold biscuits of foreign origin along with R.K. Angangbi Singh, her husband, and thereby

concerned herself in acquiring, transporting, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing

with the seized gold biscuits of foreign origin which she knew or had reasons to believe are liable to confiscation under Section 111(b) and (d) of the

Customs Act, 1962 rendering herself liable to penal action under section 112(b)(ii) of the Customs Act, 1962 and also liable to prosecution under

Section 135 of the Customs Act, 1962.

R.K. Ranjana Devi was found involved in transportation of the said gold biscuits of foreign origin. She had concealed facts and misled the

investigation. She was also found involved in another case No. 06/CL/IMP/CUS/HQRS. PREV/SH/2014-15 dated 27-8-2014 of similar nature where

twenty six gold biscuits of foreign origin weighing 4334.79 gms were seized. She was the person found involved in acquisition, possession,

concealment, transportation etc., of the said twenty six pieces gold biscuits of foreign origin. She was the person who as instructed by R.K. Angangbi

Singh, her relative, admittedly involved in transportation of the said smuggled gold biscuits for monetary benefits. R.K. Ranjana Devi has thus

concerned herself in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with the

seized gold biscuits of foreign origin which she knew or had reasons to believe are liable to confiscation under Section 111(b) and (d) of the Customs

Act, 1962 rendering herself liable for penal action under Section 112(b)(ii) of the Customs Act, 1962 and also liable for prosecution under Section 135

of the Customs Act, 1962.

R.K. (O) Rojita Devi was found involved in transportation of the said gold biscuits of foreign origin. She had concealed facts and misled the

investigation. She was also involved in another case No. 06/CL/IMP/CUS/HQRS. PREV/ SH/2014-15 dated 27-8-2014 of similar nature where

twenty six gold biscuits of foreign origin weighing 4334.79 gms were seized. She was the person found involved in acquisition, possession,

concealment, transportation etc., of the said twenty six pieces gold biscuits of foreign origin. She was the person, who, as instructed by R.K. Angangbi

Singh, her relative, admittedly involved in transportation of the said smuggled gold biscuits for monetary benefits under concealment in her inner

garments. Thus, R.K. Rojita Devi has concerned herself in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in

any other manner dealing with the said seized gold biscuits of foreign origin which she knew or had reasons to believe are liable to confiscation under

Section 111(b) and (d) of the Customs Act, 1962 rendering herself liable to penal action under Section 112(b)(ii) of the Customs Act, 1962 and also

liable to prosecution under Section 135 of the Customs Act, 1962

Kh. Kimbem was found involved in transportation of the said gold biscuits of foreign origin. She had concealed facts and misled the investigation.

She was the person who, aided R.K. Angangbi Singh, her relative, in transportation of the said gold biscuits of foreign origin concealed in his luggage

hereby concerned herself in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with

the seized gold biscuits of foreign origin which she knew or had reasons to believe are liable to confiscation under Section 111(b) and (d) of the

Customs Act, 1962 rendering herself liable to penal action under Section 112(b)(ii) of the Customs Act, 1962 and also liable to prosecution under

Section 135 of the Customs Act, 1962.

Shashikant Shinde Director of M/s Magna Projects Pvt. Ltd. had aided and abetted R.K. Angangbi Singh in his illicit gold smuggling activities by

providing him invoice of M/s Magna Projects Pvt. Ltd. which R.K. Angangbi Singh had used to hoodwink the investigation. He was working hand in

gloves with R.K. Angangbi Singh in his gold smuggling activities. He had concealed facts and misled the investigation. He was also found involved in

another case No. 06/CL/IMP/CUS/HQRS. PREV/SH/2014-15 dated 27-8-2014 of similar nature where twenty six gold biscuits of foreign origin

weighing 4334.79 gms were seized. He was instrumental in providing false /fabricated documents of M/s Magna Projects Pvt. Ltd. to justify purchase

and acquisition of the seized gold biscuits of foreign origin in the said case. Sashikant Shinde had thus concerned himself in carrying, removing,

depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with the said seized gold biscuits of foreign origin

which he knew or had reasons to believe are liable to confiscation under Section 111(b) and (d) of the Customs Act, 1962 thereby rendering himself

liable to penal action under Section 112(b)(ii) of the Customs Act, 1962 and also liable to prosecution under Section 135 of the Customs Act, 1962.

Smt. R.K. (O) Sonia Devi, R.K. Angangbi Singh, R.K. (O) Rojita Devi, Kh. Kimbem, R.K. Ranjana Devi and Shashikant Shinde are, therefore,

called upon to show cause to the Commissioner of Customs (Preventive), N.E.R. 110, M.G. Road, Shillong within 30 (thirty) days of receipt of this

notice as to why the seized twenty one gold biscuits of foreign origin weighing 3490.80 gms collectively valued at Rs. 90,76,080/- (Rupees ninety lakh

seventy six thousand and eighty) only including the seized documents/goods as listed in the inventory shall not be confiscated under Section 111(b), (d)

and 119 of the Customs Act, 1962 and as to why penalty shall not be imposed upon them under Section 112 (b) (ii) of the Customs Act 1962 for the

reasons stated above.â€​

[9] Challenging the above show cause notice, the writ petition was filed. Dr. R.K. Deepak, learned counsel appearing for the petitioner, at the outset

denied each and every averment made in the show-cause notice.

[10] The core issue raised by Dr. R.K. Deepak, learned counsel for the petitioner is that the seizure of the gold in terms of the Section 110(1) of the

Customs Act, 1962 is bad because it was done in an arbitrary manner when there was no reason to believe that the gold seized was illegally possessed

by smuggling. He referred to Section 110(1) of the Customs Act which reads as follows:-

“Section 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.â€​

[11] It is pleaded that the seizure is bad for the reason that there was nothing to show that these persons were involved in smuggling, they were

travelling inland by air with valid documents. They are taking the gold under cover of proper and valid documents and therefore, the seizure on the

plea of reason to believe that it is smuggled gold is not correct. There was no reason to believe so. The gold was illegally detained and the seizure was

effected thereafter to justify the illegal detention of the gold.

The second contention is that the passengers were confronted by the Customs Officers in the airport on 15.03.2015 whereas, the seizure was effected

on 17.03.2015. Therefore, the officials illegally detained the gold till the date of seizure, (i.e) 17.03.2015. Therefore, the order of seizure under Section

110 is bad because it is an action as an afterthought. It is also pleaded that Customs Officials do not have jurisdiction to detain and seize the gold

inland when it is transported supported by valid documents for business purpose. To support his proposition, learned counsel for the petitioner referred

to GROUNDS at para 24 (vii) and (ix) in the writ petition, which read as follows :

“24. (vii). Investigation is a post seizure process, which cannot be taken as the basis for justifying the illegal detention and seizure. It is a settled

legal position that to make a seizure under Section 110 (1) of the said Act, the Customs Officer must have a reason to believe that the goods were of

foreign origin and smuggled, otherwise the seizure would be illegal. Here respondent No. 3 made an attempt to justify the wrongful detention and

seizure of the Petitioner‟s gold on baseless, ambiguous and flimsy grounds, which is not permissible under the said Act.

(ix) The Respondent‟s plea that the case records were sent to the Commissioner after investigation did not prove that the seizure was lawful.

Question of quasi-judicial proceedings did not arise when the detention and seizure was wrong. It is an act of highhandedness and abuse of power

causing serious prejudice to the Petitioner.

When the detention and seizure were proved to be illegal and invalid, there was no ground to initiate quasi-judicial grounds by issuing a baseless Notice

under Section 124 of the said Act. Needless to mention here that the Seizure Memo dated 17.03.2015 purposely suppressed the fact that the

Petitioner‟s gold were wrongfully taken into custody by the Customs Officer without any provision of law and nowhere in the Seizure Memo it was

mentioned that the said gold was of foreign origin and smuggled in nature, and as such detention and seizure made in the absence of the same were

altogether illegal. Therefore, the impugned Notice dated 09.09.2015 issued by the Respondent Authority No. 2 is unlawful and void.â€​

[12] The learned counsel relied upon the decision in the case of Gian Chand V State of Punjab, AIR 1962 SC 496 and also the decision in the case of

State of Gujarat v. Mohanlal Jimatji Porwal and another, AIR 1987 SC 1321. He, therefore, plead for quashing the show cause notice and for other

reliefs as the initial act of seizure is bad in law.

[13] Mr. Boboy Potsangbam, learned counsel for the respondent controverted the arguments made by the learned counsel for the petitioner by relying

upon the reply affidavit and stating that in the case of gold, Section 123 of the Customs Act is attracted and therefore, on the seizure of such goods

specified therein, when it is seized on a reasonable belief, the burden shifts on the person from whom it is recovered or who claims, to prove that it is

not smuggled goods. It is further pleaded that the show-cause notice clearly analyses the statement of various persons and the supporting documents

to come to the conclusion that each individual who are the recipients of show-cause notice have shown their complicity in the possession of gold which

according to the department, are not licit import.

Statement of the persons shows that each one of the noticees are in one way or other involved in the act of acquiring, carrying, transporting, removing,

depositing, harbouring, keeping, concealing, selling or purchasing or such other manner of dealing with the seized gold. Therefore, they have

contravened section 111(b) and (d) of the Customs Act, 1962.

Section 111 of the Customs Act, 1962 reads as follows:-

Section 111. Confiscation of improperly imported goods, etc. â€" The following goods brought from a place outside India shall be liable to

confiscation:-

(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 import of such goods;

(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;

Therefore, the goods are liable for confiscation and the individuals are liable for penalty under Section 112(b)(ii) of the Customs Act, 1962.

Section 112. Penalty for improper importation of goods, etc.

(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or

in any other manner dealing with any goods which he knows, or has reason to believe are liable to confiscation under section 111, shall be liable-

(ii) in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding ten per cent of the

duty sought to be evaded or five thousand rupees whichever is higher;

Provided that where such duty as determined under sub-section (8) of section 28 and the interest payable thereon under section 28AA is paid within

thirty days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such

person under this section shall be twenty-five per cent of the penalty so determined.â€​

He also referred to the restriction imposed in terms of Section 7(1)C of the Customs Act and Section 11 of the Customs Act which read with the

Import (Control) Order No. 17/55 dated 01.12.1982 issued under Section 3(1) of the Foreign Trade (Development and Regulation Act, 1992) make the

seize in this case liable for action under the Customs Act as above.

[14] Since the gold in this case has been seized on the reasonable belief that it has been acquired in contravention of law as stated above, it is liable for

confiscation, and therefore, the petitioner and other persons who are the recipients of the show-cause notice have to participate in the adjudication

proceedings and clear themselves off the charge made in the show-cause notice. The department has collected all the relevant materials documents

including statements and annexed it as a part of the show-cause notice. The noticees have a right to fair adjudication of the case before the competent

authority and prove the bonafide ownership of the gold which was seized and clear themselves of the charge made in the show cause notice. That

exercise should not be stopped at the instance of the writ petitioner. The writ petition is premature and more so at the stage of show cause notice. It is

an intention to delay the adjudication of the case.

[15] Counsel for the respondents relied upon the decision of the Supreme Court in the case of Pukhraj v. D.R. Kohli, Collector of Central Excise,

Madhya Pradesh and Vidarbha and another, AIR 1962 SC 1559, and the case of State of Gujarat v. Mohanlal Jimatji Porwal and another, AIR 1987

SC 1321 to plead that the seizure under Section 110 was valid in law. He also referred to another case of R.K. Angnangbi Singh, who is the husband

of RK. Sonia Devi, proprietor of M/s Radhika Jewellery who in an earlier case of seizure of gold, claimed the ownership of 26 pieces of gold weighing

about 4334.79 grams seized from passengers on the train from Dimapur to Kolkata for which a show-cause notice was issued and unsuccessfully

challenged in W.P. (C) No. 344 of 2014 and dismissed by the First Bench of Meghalaya High Court on 27.08.2015 on the plea of alternative remedy.

The said decision was upheld by the Hon‟ble Supreme Court. There is, therefore, no reason to interfere at the stage of show cause notice. He

pleaded for dismissing the case.

[16] The primary issue in the present case as pleaded by Dr. R.K. Deepak, learned counsel for the petitioner involves around the legal plea as to

whether the seizure order passed under Section 110 of the Customs Act, 1962 is valid in law. The provision of Section 110 enables the proper Officer,

if he has reason to believe that any goods are liable to confiscation under the act, he may seize the said goods. The later part of Section 110 is not

relevant to the plea as above. The core issue is whether there was reason to believe to seize the gold. Before we embark on that, it is to be mentioned

that the gold seized in this case attracts the provision of Section 123 of the Customs Act, 1962. When Section 123 comes into operation, as has been

pointed out, the burden of proof shifts to the person from whom the goods are seized under the provision of the Customs Act. For the purpose of

proceeding for an alleged offence which are in contravention of the Customs Act, the authority has to seize the goods from the persons, who claims

the gold. If there is prima facie ground or reason to conclude that there is violation of the Customs Act, then seizure can be effected.

[17] The counsel for the petitioner pleads that reasonable belief should come before the seizure is made. There was no reason to believe to come to

the conclusion of illegal possession of gold at the airport that is on 15.03.2015. Therefore, the goods were improperly detained from 15.03.2015 to

17.03.2015. This is inherently bad. Consequently, the seizure on 17.03.2015 is illegal and an afterthought. This violation vitiates the seizure and the

consequent proceedings namely the show cause notice.

Learned counsel for the petitioner pleaded that proper Officer should have had reason to believe when he embarks on search or seizure. In this case,

there was no reason to believe right from time of search and seizure. Therefore, the seizure order under Section 110 is bad because the proper officer

had issued the seizure order without there being any reason to believe. Besides, it is an action in afterthought to cover up the illegal act of detention of

gold.

[18] This contention appears to be incorrect and misconceived. A reading of section 110 of the Customs Act, 1962 provides that at the time of seizure,

if the authority has reason to believe that the goods are liable for confiscation under the Act, then he is entitled to seize goods. The plea of the

petitioner that in the airport, the detention of gold was bad, is not correct. The gold was seized only after making certain enquiries including recording

of statements and when it appears to the officer that he has reason to believe that the goods are liable for confiscation. The seizure appears to have

been made on 17.03.2015 based on relevant material and not in an arbitrary manner as suggested by the petitioner‟s counsel. It is clear from the

provision of Section 110 of the Customs Act, 1962 that the seizure of the goods should be made by the proper Officer if he has reasons to believe that

the goods are liable to confiscation. If there is some reason to believe for the officer to do so, it cannot be faulted. The law appears to be so decided.

[19] The exercise of power under Section 110 of the Customs Act, 1962 presupposes that the proper officer has reason to believe that the goods are

liable for confiscation under the Act. The key word is “reason to believeâ€​ not “reasons to believeâ€​.

The exercise of power by the officer under Section 110 of the new Act referable to the old Act, has been clearly highlighted by the decision of

Supreme Court in the case of Pukhraj v. D.R. Kohli, Collector of Central Excise, Madhya Pradesh and Vidarbha and another: AIR 1962 SC 1559 in a

case of Sea Customs Act 1878. In that case 5 gold bars weighing 290.6 Tolas were found in possession of the appellant and the appellant came to be

a gold smith by profession at Madhya Pradesh. He was travelling on a train from Calcutta on the Calcutta-cum-Nagpur route and was searched in the

railway station and the gold was recovered. Therefore, he was proceeded under the Sea Customs Act. The confiscation was upheld by High Court

with the modification on the penalty. The matter went up to Supreme Court and the Supreme Court held in the case of Pukhraj (supra) in para 6 and 8

as follows :

(6) Now S. 178A places the burden of proving that the goods are not smuggled goods on the person from whose possession the said goods are seized,

where it appears that the said gods are seized under the provisions of the Sea Customs Act in the reasonable belief that they are smuggled goods.

Once it is shown that the goods were seized in the manner contemplated by the first part of S. 178A, it would be for the appellant to prove that the

goods were not smuggled goods; and since it has been held by the Collector of Central Excise that the appellant had not discharged the onus imposed

on him by S. 178A, the statutory presumption remained unrebutted and so, the goods must be dealt with on the basis that they are smuggled goods. As

soon as we reach this conclusion, it follows that under S. 167(8) of the Sea Customs Act, the said goods are liable to confiscation. That is the view

taken by the High Court when it rejected the appellant‟s prayer for a writ quashing the order of confiscation passed by the Collector of Central Excise

in respect of the gold in question, and we see no reason to interfere with it.

(8) The last contention raised by Mr. Bobde was that there is nothing on record to show that the seizure of gold from the appellant had been

effected by the officer concerned acting on a reasonable belief that the said gold was smuggled. It would be recalled that S. 178A of the Sea

Customs Act requires that before the burden can be imposed on the appellant to show that the goods in question were not smuggled, it has to be

shown that the goods had been seized under the said Act and in the reasonable belief that they are smuggled goods. The argument is that the

question as to whether there was a reasonable belief or not is justiciable and since there is no material on the record to show that the

belief could have been reasonable, the statutory presumption cannot be raised. In our opinion, this argument is not well founded. There

are two broad features of this seizure which cannot be ignored. The first feature on which the officer relied is supplied by the quantity of gold in

question. It was found that the appellant was carrying on his person five pieces of gold bullion weighing as much as 290.6 tolas. This large quantity of

gold valued at nearly Rs. 30,000 itself justified a reasonable belief in the mind of the officer that the gold may be smuggled. In that connection, it may

not be irrelevant to remember that the said officer had received positive information in the month of September, 1956 regarding the smuggling of gold

by the appellant. That is why he was intercepted by the officer on October 25, 1956 at the Raigarh railway station at 16.30 hours. Then the other fact

on which the reasonable belief can be founded is the suspicious circumstances of the appellant‟s journey. The appellant was found travelling without a

Railway ticket and his explanation as to how he came to be in the said passenger train is obviously untrue. A person carrying a large quantity of gold

and found travelling without a ticket may well have raised a reasonable belief in the mind of the officer that the gold was smuggling. The object of

travelling without a ticket must have been to conceal the fact that the appellant had travelled all the way from Calcutta at which place the gold must

have been smuggled. The story subsequently mentioned by the appellant about his journey to Tatanagar which has been disbelieved brings into bold

belief the purpose which the appellant had in mind in travelling without a ticket. After all, when we are dealing with a question as to whether the

belief in the mind of the officer who effected the seizure was reasonable or not, we are not sitting in appeal over the decision of the said

officer. All that we can consider is whether there is ground which prima facie justifies the said reasonable belief. That being so, we do not

think there is any substance in the argument that the seizure was effected without a reasonable belief and so is outside S. 178A.

(Emphasis supplied)

This was also followed in the case of State of Gujarat vs. Mohanlal Jimatli Porwal and another : AIR 1987 SC 1321 in paragraph 4 as follows.

P.W. 1, Superintendent of Customs Shri Mahida testified that he had seized the article in question in the reasonable belief that the same was an

article made of smuggled gold. The acceptance of this evidence would result in the burden of proof being shifted on the person from whom the article

was seized to establish that it was not smuggled gold in view of the statutory provision (Section 123 of Customs Act) relating to burden of proof which

would justify raising the presumption that the article in question was made of smuggled gold. Whether or not the official concerned had seized

the article in “reasonable belief†that the goods were smuggled goods is not a question on which the Court can sit in appeal. The

law to this effect has been declared in no ambiguous terms in Pukhraj v. D.R. Kholi, AIR 1962 SC 1559 : (1962) Supp (3) SCR 86.6

This Court has administered caution to the Courts not to sit in appeal in regard to this question and has observed that if prima facie

there are grounds to justify the belief the Courts have to accept the officer’s belief regardless of the fact whether the Court of its

own might or might not have entertained the same belief. The law declared by this Court is binding to the High Court and it was not open to the

High Court to do exactly what it was cautioned against by this Court. Section 123 of the Act does not admit of any other construction. Whether or

not the officer concerned had entertained reasonable belief under the circumstances is not a matter which can be placed under legal

microscope, with an overindulgent eye which sees no evil anywhere within the range of its eyesight. The circumstances have to be

viewed from the experienced eye of the officer who is well equipped to interpret the suspicious circumstances and to form a reasonable

belief in the light of the said circumstances. In the present case the concerned official had mentioned three circumstance which made him

entertain the reasonable belief that the article was a smuggled one viz :

(1) On the basis of the prior information he was alert and was on the look out, watching the movements of respondent No. 1.

(2) The chain which had adorned the waistline of respondent No. 1 was coated with mercury so as to give an appearance of being made of silver.

(3) As per the opinion of the goldsmith it was made of pure gold.

If these circumstances did not make the Superintendent of Customs entertain a reasonable belief that it was a smuggled article, he was not fit to be an

officer of the Customs Department. The circumstances that the chain was coated with mercury and given an appearance of having been made of

silver though it was made of pure gold of 99.60 purity or 24 carat, was sufficient even for a layman, not to speak of a Customs official, to entertain the

belief that it was smuggled gold. Would anyone who was wearing an article as an ornament, evidently for ostentious purposes, give the article of pure

gold the appearance of being made of silver ? To repeat the observation made earlier one might coat an article of silver to given an appearance of

having been made of gold but no one would ordinarily take the trouble and incur the expenditure to coat an article of gold in order to give it an

appearance of having been made of silver. This was an extremely unusual circumstance which would have aroused the suspicion of anyone. When

the goldsmith was summoned at the Railway Station to test the article on the spot, and he expressed the opinion that it was made of pure gold, there

was no scope for taking any other view. Even if a layman, let alone a judge, were to ask himself the question as to whether in these circumstances he

would have entertained a reasonable belief that the article was a smuggled article inasmuch as gold of this purity is manufactured only in foreign

countries which have sophisticated equipment and the further fact that an attempt to camouflage the article was made by the person concerned his

commonsense would not have given himself any other answer. The conduct of respondent 1 in coating the article of pure gold to make it appear as if

it was of silver was itself a conduct which could have provided the basis for entertaining a reasonable belief it being a relevant piece of evidence as

per the law declared by this Court in Isardas Daulat Ram v. Union of India, (1962) Supp (1) SCR 358 : AIR 1966 SC 186. 7The view taken by the

High Court is altogether unreasonable and accordingly it cannot be sustained.

(Emphasis supplied)

In the case of State of Gujarat Vs. Mohanlal Jitan Porwal(Supra) also, the seizure of gold was from the passenger travelling in a train and the

provision of the Customs Act was invoked. Hence, the plea of inland seizure invoking Customs Act is bad in law is an untenable plea, also the primary

plea that the seizure is bad because there was no reason to believe.

[20] The above two decisions make it clear that the respondent officer in the present case acting on reasonable belief that the gold is liable to

confiscation for contravention of the provisions of the Customs Act, 1962 issued the seizure memo. The case of Pukhraj (Supra) clearly applies to the

facts of the present case because prima facie materials were there before the authority to come to the conclusion that there is reason to believe that

the goods in question are liable for confiscation under the Act. This cannot be interfered by the High Court at this stage.

[21] The petitioner counsel relied upon the decision of Gian Chand and others v. State of Punjab: AIR 1962 SC 496 to plead that irregularity in seizure

would affect the case in hand. This contention appears to be misconceived on facts because it was a case of seizure of gold by the City Inspector of

Police, Jullundur on tip-off, and that gold was seized by the Police Officer in exercise of Section 180 of the Sea Customs Act 1878 and handed over to

the Customs Authority and the Seizure was not effected by the Customs Authority in terms of Section 178-A of the Sea Customs Act. Therefore it

was found to be erroneous. The Supreme Court held that the delivery of goods to the Customs Authorities under the later part of Section 180 of the

Sea Customs Act is not seizure under the Act within the meaning of Section 178-A of the Sea Customs Act. The facts of the present case is totally

different.

[22] In the present case, a power is granted to the Customs Officer under Section 110 of the Customs Act, 1962. He exercised that power on the

reasonable belief that the goods are liable for confiscation and the goods were seized two days after certain procedural formalities. The officers did

not act in haste but has taken the decision to seize the goods after following certain formalities as enumerated above. Therefore, decision of the

Supreme Court in Gian Chand and others v. State of Punjab: AIR 1962 SC 496 does not apply to the facts of the present case. The argument of the

learned counsel is that it is only in the case where there is a doubt on the licit ownership of gold and in contravention of the Customs Act, Section 110

can be made applicable. This contention has been addressed in para 20 above.

[23] Another plea of the counsel is that Customs Act is extended to curb smuggling and therefore, the movement of gold inland is no good ground to

seize the gold. He relied upon the decision of the Supreme Court in the case of Commissioner of Customs (Preventive), Mumbai v. M. Ambalal and

Company, (2011) 2 SCC 74. The principle does not have any relevance to the facts of the present case.

It is a case where adjudication resulted in fine and penalty and the party approached the High Court for certain relief under the Kar Vivad Samadhan

Scheme, 1998 (in short “the KVS Scheme). In that context, the Supreme Court was dealing with the scope of Customs Act. There is no specific

ruling to say that the power vested with the authority under Section 110 should be any way different from the decision rendered in the case of Pukhraj

v. D.R. Kohli, Collector of Central Excise, Madhya Pradesh and Vidarbha and another: AIR 1962 SC 1559 followed by State of Gujarat v. Mohanlal

Jimatji Porwal and another, AIR 1987 SC 1321.

[24] In the case of State of Maharashtra v. Natwarlal Damodardas Soni (1980) 4 SCC 669, the Supreme Court highlighted the nature of illegal acts

involved in gold smuggling in para 22 as follows:-

“22. It may be remembered that smuggling particularly of gold, into India affects the public economy and financial stability of the country. The

provisions of Section 135(1) and like statutes which are designed to suppress smuggling have to be construed in accordance with the Mischief Rule

first enunciated in Heydon case [(1584) 76 ER 73]. Accordingly, the words “acquired possession†or “keeping†in clause „b‟ of Section

135(1) are not to be restricted to “possession†or “keeping†acquired as an owner or a purchaser of the goods. Such a narrow construction

â€" which has been erroneously adopted by the High Court â€" in our opinion, would defeat the object of these provisions and undermine their

efficacy as instruments for suppression of the mischief with the legislature had in view. Construed in consonance with the scheme of the statute, the

purpose of these provisions and the context, the expression “acquired possession†is of very wide amplitude and will certainly include the

acquisition of possession by a person in a capacity other than as owner or purchaser. This expression takes its colour from the succeeding phrase

commencing with the word “orâ€, which is so widely worded that even the temporary control or custody of a carrier, remover, depositor,

harbourer, keeper or dealer of any goods which he knows or has reason to believe to be smuggled goods or prohibited goods (liable to confiscation

under Section 111) cannot escape the tentacles of clause (b). The expressions “keeping†and “concealing†in the second phrase of clause (b)

also cover the present case.â€​

[25] Thus, this Court has no hesitation to come to the conclusion that the plea of seizure was invalid in law, cannot be countenance in the light of the

decisions of Supreme Court referred to above and in the light of the provisions of Section 110 and Section 123 of the Customs Act, 1962. The plea of

learned counsel for the petitioner is a fallacy. The goods were seized from the persons who were travelling through the airport. It was seized after

statements were recorded. The gold assay was made. It is only thereafter, on 17.03.2015, the seizure was made. This makes it very clear that the

Officer did not act in haste but has applied his mind that he has reason to believe that the goods are liable for confiscation and only thereafter, he

issued the seizure memo on 17.03.2015. The answer to issue raised by the learned counsel is already available in the two decisions of the Hon‟ble

Supreme Court in the case of Pukhraj v. D.R. Kohli, Collector of Central Excise, Madhya Pradesh and Vidarbha and another: AIR 1962 SC 1559

followed by State of Gujarat v. Mohanlal Jimatji Porwal and another, AIR 1987 SC 1321. The above stated reasons, the argument addressed by the

learned counsel for the petitioner on the legal plea as above has to be rejected as totally misconceived and incorrect.

[26] Normally, Courts in exercise of power under Article 226 of the Constitution of India does not interfere at the stage of show cause notice except

in exceptional cases. In this regard, reliance may be placed on the decision of the Hon‟ble Supreme Court in the case of :

(i) Union of India (UOI) and Ors. v. Kunisetty Satyanarayana: (2006) 12 SCC 28. Relevant para 8 and 9 read as follows:

It is well settled by a series of decisions of this Court that ordinarily no writ lies against a charge sheet or show-cause notice vide Executive

Engineer, Bihar State Housing Board v. Ramdesh Kumar Singh and Ors. MANU/SC/0180/1996:AIR 1966 SC 6, 9S1pecial Director and Anr. V.

Mohd. Ghulam Ghouse and Anr. MANU/SC/0025/2004 :2004(164)ELT141(SC )U, lagappa and Ors. V. Divisional Commissioner, Mysore and

Ors.MANU/SC/1005/2000 : JT2000(10)SC206, State of U.P. v. Brahm Datt Sharma and Anr. MANU/SC/0711/1987 : [1987]2SCR444 etc.

The reason why ordinarily a writ petition should not be entertained against a mere show-cause notice or charge-sheet is that at that stage the writ

petition may be held to be premature. A mere charge-sheet or show-cause notice does not give rise to any cause of action, because it does not

amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is

quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings

and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show-cause notice

or charge-sheet does not infringe the right of any one. It is only when a final order imposing some punishment or otherwise adversely affecting a party

is passed, that the said party can be said to have any grievance. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article

226 should not ordinarily be exercised by quashing a show-cause notice or charge sheet.

No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without

jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter.

(ii). Executive Engineer, Bihar State Housing Board Vs. Ramesh Kumar Singh; & Ors: (1996) 1 SCC 327. Relevant para 10 read as follows:

We are concerned in this Case, with the entertainment of the Writ petition against a show cause notice issued by a competent statutory authority.

It should be borne in mind that there is no attack against the vires of the statutory provisions governing the matter. No question of infringement of any

fundamental right guaranteed by the Constitution is alleged or proved. It cannot be said that Ext. P-4 notice is ex facie a “nullity†or totally

“without jurisdiction†in the traditional sense of that expression that is to say, that even the commencement or initiation of the proceedings, on the

face of it and without anything more, is totally unauthorised. In such a case, for entertaining a Writ Petition under Article 226 of the Constitution of

India against a show-cause notice, at that stage, it should be shown that the authority has no power or jurisdiction, to enter upon the enquiry in

question. In all other cases, it is only appropriate that the party should avail of the alternate remedy and show cause against the same before the

authority concerned and take up the objection regarding jurisdiction also, then. In the event of an adverse decision, it will certainly be open to him, to

assail the same either in appeal or revision, as the case may be, or in appropriate cases, by invoking the jurisdiction under Article 226 of the

Constitution of India.

[27] One another aspect which has to be considered is the plea of alternate remedy. The department would strongly plead that no writ petition should

be entertained by passing adjudication on factual aspects. It is a plea on alternate remedy. It is well settled by catena of decision of the Hon‟ble

Supreme Court that a writ petition can be entertained in certain circumstances. However, the writ court will refrain itself in there are factual issues in

dispute and where voluminous records to be verified. In this regard, learned counsel for the respondents relies on para 31 of the order dated

27.08.2015 passed by the High Court of Meghalaya in W.P. (C) No. 344 relatable to the case of the petitioner in the earlier case of seizure of gold

and it reads as follows:-

“31. Hon‟ble the Apex Court in the case of A.V. Venkaeswaran, Collector of Customs v. Ramchand Sobharj Wadhwani and Ors. Reported in

AIR 1961 SC 1506 : 1962 SCR(1) 75 3while dealing with a case where the Central Board of Revenue had issued a ruling to the effect that fountain-

pens with nibs or caps being gold-plated fell within item 61(8), has held that, the basis of the rule by which Courts insist upon a person exhausting his

remedies before making application for the issue of a prerogative writ is that the Court‟s jurisdiction ought not to be lightly invoked when the subject

can have justice done to him by resorting to the remedies prescribed by statutes.

Hon‟ble the Apex Court in the case of Province of Bombay v. KL Advani, reported in AIR 1950 SC 222 : [1950] SCR 621 has observed as :

“If a statutory authority has power to do any act which will prejudicially affect the subject, then, although there are not two parties apart from the

authority and the contest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be

a quasi-judicial act provided the authority is required by the statute to act judicially.†„Now the Sea Customs Act empowers the Customs

authorities to impose a certain duty on goods imported and this no doubt prejudicially affects the importer. The Act, further clearly requires the

authorities to proceed judicially in imposing that duty when a dispute arises, that is, after giving a hearing to the party affectedâ€​ (emphasis is ours).

[28] In the present case, the learned counsel for the petitioner restricted his argument more to the validity of the seizure memo made in terms of

Section 110 of the Customs Act, 1962. Therefore, case was admitted and after hearing, the relief is declined. The issue of alternate remedy is not

considered in the present case as the legal contention raised is considered on merits and rejected as against the petitioner.

Hence, the writ petition stands dismissed.

Interim order stands vacated.

[29] It is unfortunate that the proceedings have been stayed this long. Only one writ petitioner has filed this case. The proceedings of all other noticees

have been kept in abeyance. There is no restraint in so far as other noticees are concerned, and the department could have proceeded further.

Nevertheless, in view of the ruling of this Court declining the relief, the respondents are at liberty to proceed with the adjudication without further

delay. The show-cause notice has been issued long back. The petitioner is entitled to submit a reply to the show-cause notice and have it adjudicated

as per the law.

[30] After dismissal of the case, DR. R.K. Deepak, learned counsel for the petitioner sought for 2(two) months time and no more to submit a reply to

the show-cause notice and pursue the adjudication proceedings.

Considering the voluminous documents and much delay which has happened in the interregnum, 2(two) months time and no more as sought for by the

petitioner counsel DR. R.K. Deepak, is granted.

A reply to the show-cause notice is to be submitted on or before 17.04.2020 to the authorities and adjudication can go on as per law.