Simplified Explanation of the Judgment
The Patna High Court recently ruled in favor of two business entities challenging the seizure of their dried areca nut consignments by Customs authorities in Bihar. The core issue revolved around whether the seizure memos issued by the Customs Department complied with legal requirements under the Customs Act, 1962.
Two separate writ petitions—CWJC No. 17756 of 2024 and CWJC No. 17758 of 2024—were filed by traders engaged in the inter-state transportation of dried areca nuts from Assam to Delhi. In both cases, large consignments (about 24–25 metric tons each) were seized by the Customs (Preventive) Division at Kishanganj and Muzaffarpur, respectively. The authorities claimed the goods were of “foreign origin” and liable for confiscation under various provisions of the Customs Act and the Foreign Trade (Development and Regulation) Act, 1992.
The petitioners argued that the seizures were arbitrary and illegal. Their main contention was that the seizure memos lacked the legally mandated “reason to believe” that the goods were of foreign origin and liable to confiscation. They pointed out that while the memos mentioned “foreign origin,” they did not specify the country of origin or explain how this conclusion was reached.
The court noted that this issue had been addressed in earlier judgments, including Krishna Kali Traders v. Union of India, Assam Supari Traders v. Union of India, and M/s Ashoke Das v. Union of India. In those cases, the court had emphasized the necessity for seizure memos to clearly document the “reason to believe” as required under Section 110(1) of the Customs Act.
The Customs Department, represented by the Additional Solicitor General, did not dispute that the seizure memos in the current cases were drawn up in the same manner as those in the earlier judgments. They argued, however, that the “panchnama” (a record prepared during seizure) could be read together with the seizure memo to imply the existence of valid reasons.
The court rejected this argument, reiterating that the “reason to believe” must be explicitly stated in the seizure memo itself. It clarified that the panchnama is prepared after the seizure and cannot retrospectively justify it. As such, the seizure memos failed to meet the statutory requirements.
The court also addressed the issue of the provisional release orders, which had imposed a condition that the seized goods could only be sold to industrial or processing units due to a Food Safety and Standards Authority of India (FSSAI) report suggesting the nuts were not fit for direct human consumption. However, since the seizures themselves were quashed, the conditions of the release orders became irrelevant to the scope of this judgment.
In conclusion, the court quashed the seizure memos and allowed the writ petitions. However, it clarified that the Customs Department was still free to continue its investigation and issue show-cause notices under the law.
Significance or Implication of the Judgment
This judgment strengthens procedural safeguards for traders and logistics operators transporting goods within India. It underscores that government authorities must strictly comply with statutory requirements before seizing goods. The decision will likely affect how Customs officers handle future seizures and may discourage arbitrary or unsubstantiated actions.
For businesses involved in the inter-state trade of goods such as areca nuts, the ruling offers reassurance that legal recourse exists when procedural fairness is ignored. It also balances administrative authority with judicial oversight, reinforcing that even preventive actions must be well-documented and lawful.
Legal Issue(s) Decided and the Court’s Decision with Reasoning
- Whether seizure of goods without recording “reason to believe” in the seizure memo is valid?
- Decision: No. The Court held that the seizure memo must contain explicit reasons to believe that goods are liable to confiscation under Section 110(1) of the Customs Act.
- Reasoning: As per precedent, the seizure memo is a statutory document, and vague references like “foreign origin” without justification fail to meet legal standards.
- Can panchnama be read into the seizure memo to justify seizure?
- Decision: No. The Court clarified that the panchnama is prepared after the seizure and cannot substitute the requirement of reasoned justification in the seizure memo.
- Can Customs continue investigation even after quashing the seizure memo?
- Decision: Yes. The Hon’ble Supreme Court has clarified in earlier orders that quashing a seizure memo does not bar further investigation under the Customs Act.
Judgments Referred by Parties (with citations)
- Krishna Kali Traders & Another v. Union of India, 2024 SCC OnLine Pat 880
- Assam Supari Traders v. Union of India, 2024 SCC OnLine Pat 6401
- M/s Ashoke Das v. Union of India, 2025 SCC OnLine Pat 1553
Judgments Relied Upon or Cited by Court (with citations)
- Worldline Tradex Pvt. Ltd v. Commissioner of Customs, (2016) 40 GSTR 141 (Delhi High Court)
- Mary Pushpam v. Telvi Curusumary, (2024) 3 SCC 224
- Om Sai Trading Company v. Union of India, 2019 SCC OnLine Pat 2262
- SLP(C) No. 11124 of 2021, Supreme Court (Order dated 15.09.2022)
Case Title
CWJC No. 17756 of 2024: A.S. Trading and Company v. Union of India & Ors.
CWJC No. 17758 of 2024: Maa Kamakhya Traders v. Union of India & Ors.
Case Number
CWJC No. 17756 of 2024 & CWJC No. 17758 of 2024
Coram and Names of Judges
Hon’ble Mr. Justice Rajeev Ranjan Prasad
Hon’ble Mr. Justice Ashok Kumar Pandey
Names of Advocates and who they appeared for
For Petitioners: Mr. Prabhat Ranjan, Advocate
For Respondents: Mr. Additional Solicitor General, Mr. Anshuman Singh (Senior Standing Counsel, Customs Department)
Link to Judgment
395ca50c-7924-48a1-8ff8-826e070c37fa.pdf
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