Simplified Explanation of the Judgment

In two connected writ petitions, the Patna High Court recently quashed seizure memos issued by customs authorities regarding consignments of dried areca (betel) nuts transported from Assam to Delhi. These seizures, conducted under Section 110 of the Customs Act, 1962, were challenged by two trading firms that claimed the action lacked legal justification and procedural compliance.

The customs authorities had intercepted two trucks in Kishanganj and Muzaffarpur on 22nd November 2023, each carrying large consignments of dried areca nuts. The seizure memos described the goods as of “foreign origin” and alleged violations of multiple sections of the Customs Act, 1962, and the Foreign Trade (Development and Regulation) Act, 1992. In addition, the seized nuts were later declared substandard under a Food Safety and Standards Authority of India (FSSAI) report, leading to a conditional release order that restricted their sale only to industrial processing units.

The petitioners contended that the seizures were arbitrary and lacked the foundational requirement under Section 110(1) of the Customs Act—that the proper officer must have “reason to believe” that the goods are liable for confiscation. According to the petitioners, the seizure memos did not disclose any such reason, nor did they specify the actual country of origin of the goods, despite labeling them as “foreign origin.” Moreover, they argued that any reference to a ‘panchnama’ (a contemporaneous memo of seizure) could not legally substitute the mandatory requirement of recording “reason to believe” in the seizure memo itself.

The petitioners supported their claims by relying on prior judgments from the same court, particularly in Krishna Kali Traders v. Union of India, Assam Supari Traders v. Union of India, and M/s Ashoke Das v. Union of India, where similar seizure memos were quashed due to procedural lapses.

The Union of India, represented by the Additional Solicitor General and Senior Standing Counsel, acknowledged that the seizure memos in the current case were materially similar to those previously quashed. However, the government sought to justify the seizure by referring to accompanying documents like the panchnama and internal departmental circulars that allegedly supported the action.

The Court, after hearing both sides, held that:

• The seizure memos did not conform to the statutory requirements under Section 110(1) of the Customs Act.
• A panchnama prepared after the seizure cannot retroactively supply the “reason to believe.”
• The Court reaffirmed that the requirement of recording the basis for belief is a mandatory safeguard to prevent arbitrary action.

Relying on the reasoning adopted in M/s Ashoke Das, the Court quashed the seizure memos in both cases. However, the Court clarified that while the seizure itself is invalidated, the customs authorities remain empowered to proceed with investigations and issue show cause notices under law. Petitioners were advised to submit replies to such notices, and the adjudicating officer was directed to decide the matter independently.

Significance or Implication of the Judgment

This ruling reinforces procedural safeguards for businesses engaged in interstate trade, especially in regions like Bihar where goods from the Northeast pass en route to other states. The judgment serves as a reminder to enforcement agencies that statutory powers must be exercised strictly in accordance with the law.

The decision has wide-reaching implications for transporters and traders dealing in commodities that may be mischaracterized as “foreign origin” without proper verification. It ensures that the customs department cannot rely on vague descriptions or assumptions to seize goods, particularly when such seizures can paralyze legitimate trade.

The Court also provided clarity that its judgment does not bar further lawful proceedings, thereby maintaining a balance between the rights of traders and the enforcement powers of the state.

Legal Issue(s) Decided and the Court’s Decision with reasoning

• Whether seizure of goods without specific “reason to believe” mentioned in the seizure memo is valid?
  • Decision: No. The Court held that absence of “reason to believe” in the seizure memo violates Section 110(1) of the Customs Act, 1962.
• Can panchnama substitute the legal requirement of a seizure memo containing reasons?
  • Decision: No. Panchnama is supplementary and cannot replace the statutory requirement in the seizure memo.
• Whether the label “foreign origin” without identification of the country is legally sufficient for seizure?
  • Decision: No. The term “foreign origin” must be supported by concrete findings; otherwise, the seizure becomes arbitrary.
• Does quashing of seizure memo bar further action under the Customs Act?
  • Decision: No. The Court allowed further proceedings including adjudication and investigation, in accordance with law.

Judgments Referred by Parties

• Krishna Kali Traders v. Union of India, 2024 SCC OnLine Pat 880
• Assam Supari Traders v. Union of India, 2024 SCC OnLine Pat 6401
• Mary Pushpam v. Telvi Curusumary, (2024) 3 SCC 224
• M/s Ashoke Das v. Union of India, 2025 SCC OnLine Pat 1553

Judgments Relied Upon or Cited by Court

• Worldline Tradex P. Ltd v. Commissioner of Customs, (2016) 40 GSTR 141 (Delhi High Court)
• 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 & Others
CWJC No. 17758 of 2024: Maa Kamakhya Traders v. Union of India & Others

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 the Petitioners: Mr. Prabhat Ranjan, Advocate
For the Respondents: Mr. Additional Solicitor General, assisted by Mr. Anshuman Singh, Senior Standing Counsel (Customs)

Link to Judgment

a133efc1-efbc-48d6-892a-57367d9e189f.pdf

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