The Allahabad High Court held that once the seizure is held to be bad in law, no confiscation can take place.
The petitioners, Jaymatajee Enterprise (Seller) received an order from one M/s Jagdamba Enterprises for supplying 17920 Kgs. of betel nuts and the petitioner purchased 24,000 Kgs of betel nuts from one Neelkamal Saha, West Bengal by means of two tax invoices each for 12,000 Kgs.
It is also stated that Neelkamal Saha had purchased 19,884 Kgs. of betel nuts in an E-auction held by the Customs Department. It is further stated that the petitioners and the purchaser Jagdamba Enterprises both are registered under the GST Act.
After purchasing the said betel nuts from the said Neelkamal Saha, the petitioners transported the said goods to the consignee M/s Jagdamba Enterprises through trucks owned by the petitioner, and the goods were sent along with requisite E-Way Bill Invoices etc. It is further stated that the goods were valued for the total consignment value of Rs. 29,56,800.
As soon as the truck carrying the betel nuts entered the State of Uttar Pradesh, the respondent authority intercepted the said Truck and vide Punchnama, seized the goods as well as the vehicle i.e. truck.
After the interception of the Truck, the driver disclosed his name as Satendra Kumar, the Officers informed the Truck driver that they have received specific information that ‘Areca Nuts’ of foreign origin was being transported.
In the present case as demonstrated by the petitioner prima facie that the goods in question were purchased in an E-auction held by the Customs Authorities themselves within the territory of India, the fact that there was evidence in the form of transport documents to show that the goods were being transported within India, the prima facie ‘reason to believe’ recorded are unsustainable.
The division bench of Justice Shashi Kant Gupta and Justice Pankaj Bhatia noted that the basis for forming ‘reasons to believe’ as recorded in the Panchnama is wholly without any acceptable material and there is no prima facie material to suggest that the goods in questions were of foreign origin or were smuggled into India from any Customs Station or that the goods were imported without payment of import duty.
Therefore, the court held that no valid ‘reasons to believe’ existed for exercising the powers of seizure as was done by means of Panchnama.
“We do not deem it fit to address on the question of validity and legality of the provisional release order inasmuch as once the seizure is held to be bad in law, no confiscation can take place, however, we leave the other arguments raised by the counsel for the petitioners while attacking the provisional release order open,” the court said.
The court directed the respondent authority to release the goods i.e. ‘Areca Nuts’ as well as the vehicle in question in favor of the petitioner.
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