Case:-- Malabar Diamond Gallery Pvt. Ltd. vs.

The Additional Director General,

Directorate of Revenue Intelligence and Ors. MANU/TN/1614/2016

FACTS:- The officers of the Additional Director General, Directorate of Revenue Intelligence,
visited the premises of the appellant's office, in connection with certain enquiry made relating to
smuggling of gold jewellery. According to them, based on intelligence, they seized smuggled
gold jewellery from the possession of one person. He had given voluntary statements, confessing
that he had smuggled gold jewellery. Case of the appellant is that they used to receive gold
jewellery through their sister concern. Before the writ court, appellant also contended that the
request to provisionally release the seized goods in terms of Section 110-A of the Customs Act,
1962 was not considered, despite appellant's assurance that they would cooperate in the
investigation and therefore, they were constrained to file writ petition, for a mandamus directing
Additional Director General, to release gold, which was rejected.

JUDGEMENT

Objective satisfaction, at the stage of provisional release, casts a duty on the authority, to
consider, as to whether, there are prohibitions/restrictions in the Customs Act, 1962, or any
other law for the time being in force and whether he is bound to exercise his discretion,
satisfying principles of fairness, reasonableness and whether, it is in accordance with the objects
sought to be achieved. At the time of provisional release, it is also to be seen as to whether
subjective satisfaction is based on valid materials, and not on whims and fancies of the authority.
(para 92)

Keeping in mind, the objects and purpose for which, Customs Act, 1962, is enacted, dealing with
prohibition/restriction, this Court is of the considered view that the competent authority, has to
arrive at a satisfaction, as to whether, goods seized and liable for confiscation, can be released
provisionally, pending adjudication, and in that context, the role of the Courts, in exercise of the
powers, under Article 226 of the Constitution of India, should be confined only to test such
satisfaction, arrived at, by the competent authority, with regard to the objects of the Customs
Act, 1962 and any other law for the time being in force. When the competent authority, under the
Customs Act, 1962, makes a plea that there is a prima facie case of smuggling and that the
appellant has failed to discharge the burden, in terms of Section 123 of the Customs Act and
when the adjudication proceedings are pending, we are of the considered view that it would be
appropriate to direct provisional release? (para 93)

94. Though the argument of the learned counsel for the appellant is that since gold is not
notified, as one of the prohibited goods, by way of any notification, in the official gazette and
therefore, provisional release can be ordered, we are inclined to accept the said contention, as
prohibition/restriction, is inbuilt in the Customs Act, 1962. While considering the objections, on
the notification and other provisions, relied on and pressed into service, we cannot reject the
objections of the revenue. Sub-Section (d) of Section 111 of the Customs Act, 1962, clearly
states that any goods which are imported or attempted to be imported contrary to any provision
imposed by any law, for the time being in force, in this country, are liable to be confiscated.
Therefore, when prohibitions/restrictions are inbuilt in the statute, or by notifications, relied on
by the department, subject to which, goods are to be imported and when there is a failure to
comply with the conditions, they are liable for confiscation, for which, in the instant case, a show
cause notice has been issued. (para 94)

Under the Customs Act, 1962, the authorities are duty bound to pass orders for confiscation,
impose penalty, initiate prosecution and pending conclusion of the adjudicating proceedings,
may order provisional release. At the time, when discretion is exercised under Section 110A and
if any challenge is made under Article 226 of the Constitution of India, the twin test, to be
satisfied is "relevance and reason". Testing the discretion exercised by the authority, on both
subjective and objective satisfaction, as to why, the goods seized, cannot be released, when
smuggling is alleged and on the materials on record, we are of the view that the discretion
exercised by the competent authority, to deny provisional release, is in accordance with law.
When there is a prima case of smuggling, for which, action for confiscation is taken, such
proceedings taken should be allowed, to reach its logical end, and not to the stiffed, by any
provisional release. (para 95)

Going through the material on record, and in the light of the decisions considered, in particular,
Om Prakash Bhatia's case (cited supra), we are of the considered view that the discretion
exercised by the competent authority, considering the objects of the Customs Act, 1962, or any
other law for the time being in force, cannot be held as not in conformity with the Customs Act,
1962, or any other law, for the time being in force. (para 96)
Case :--Suttons and Sons (India) Pvt. Ltd. Vs. Union of India (Uoi), 1995 (75) ELT
229(Cal)

Section 11 provides that the Central Government by notification in the Official Gazette may
prohibit the import or export of goods of any specific description. The Plants, Fruits and Seeds
(Regulation of Import into India) Order having been issued under Section 3 of the Destructive
Insects and Pests Act, 1914 will have the force of the notification issued under Section 11 of the
Customs Act, 1962 and accordingly any amendments made in such notification by the Central
Government shall also be binding on the Customs Authorities. The Customs Authorities cannnot
take the plea that such notification has not been issued by the Customs Department. Once the
notifications are issued whether under the Customs Act, 1962 or under The Destructive Insects &
Pests Act, 1914 by the Central Government, the Customs Authorities are bound to comply with
the notification issued by the Central Government. (Para 36)

Case :--Commissioner Of Customs (Air) vs P.Sinnasamy

if there is any prohibition of import or export of goods under the Act or any other law for the
time being in force, it would be considered to be prohibited goods; and (b) this would not include
any such goods in respect of which the conditions, subject to which the goods are imported or
exported, have been complied with. This would mean that if the conditions prescribed for import
or export of goods are not complied with, it would be considered to be prohibited goods. This
would also be clear from Section 11 which empowers the Central Government to prohibit either
'absolutely' or 'subject to such conditions' to be fulfilled before or after clearance, as may be
specified in the notification, the import or export of the goods of any specified description. The
notification can be issued for the purposes specified in sub-section (2). Hence, prohibition of
importation or exportation could be subject to certain prescribed conditions to be fulfilled before
or after clearance of goods. If conditions are not fulfilled, it may amount to prohibited goods.
(para 9 )

Case:-- Sheikh Mohd. Omer v. Collector of Customs, Calcutta and others [(1970) 2 SCC
728], Wherein it was contended that the expression 'prohibition' used in Section 111(d) must be
considered as a total prohibition and that the expression does not bring within its fold the
restrictions imposed by clause (3) of the Import Control Order, 1955. The Court negatived the
said contention and held thus:" What clause (d) of Section 111 says is that any goods which are
imported or attempted to be imported contrary to “any prohibition imposed by any law for the
time being in force in this country” is liable to be confiscated. “Any prohibition” referred to in
that section applies to every type of “prohibition”. That prohibition may be complete or partial.
Any restriction on import or export is to an extent a prohibition. The expression “any
prohibition” in section 111(d) of the Customs Act, 1962 includes restrictions. Merely because
Section 3 of the Imports and Exports (Control) Act, 1947, uses three different expressions
“prohibiting”, “restricting” or “otherwise controlling”, we cannot cut down the amplitude of the
word “any prohibition” in Section 111(d) of the Act. “Any prohibition” means every prohibition.
In other words all types of prohibitions. Restriction is one type of prohibition. From item (I) of
Schedule I, Part IV to Import Control Order, 1955, it is clear that import of living animals of all
sorts is prohibited. But certain exceptions are provided for. But nonetheless the prohibition
continues.”