2007 (4) TMI 431 - AT - Central Excise

Summary

Issues involved: Extension of period for issue of show cause notice u/s 124 of Customs Act, 1962.

Extension of period for issue of show cause notice:
The Commissioner of Central Excise extended the period for issuing a show cause notice by another six months u/s 110(2) of the Customs Act, 1962. The appellant argued that the goods were meant for export and should be released promptly. They cited Foreign Trade Policy 2002-2009 and Supreme Court decisions to support their case. The respondent contended that there was no evidence of export intent and that the investigation was incomplete, justifying the extension.

Interpretation of Customs Act provisions:
Section 110 of the Customs Act, 1962 allows for seizure of goods and their return if no notice is issued within six months. The Commissioner can extend this period by another six months on sufficient cause being shown. This extension affects the citizen's right to property, requiring the Revenue to provide valid reasons. The case highlighted the balance between customs officers' powers and citizens' rights, emphasizing the need for sufficient cause for extensions.

Contradictory actions and decision:
The Additional Director General recommended provisional release of some goods meant for export, while a show cause notice was issued for extending the time to release the remaining quantity. The Commissioner's directions to pursue provisional release with the investigating agency and simultaneously extend the period were deemed contradictory and inconsistent. This raised doubts about the justification for the extension.

Release of seized goods under Foreign Trade Policy:
The appellant's claim that the seized goods were purchased for export with proper documentation was not disputed. As per the Foreign Trade Policy 2004-09, export goods should not be withheld without cause, and any seizure should be lifted within seven days unless there is prima facie evidence of irregularity. The judgment emphasized the need to adhere to policy provisions for releasing goods meant for export.

Order and implications:
The judgment modified the impugned order, directing the Commissioner to release the seized goods promptly upon an undertaking from the appellant as per the Foreign Trade Policy. It clarified that the release of goods does not preclude the authority from issuing a show cause notice later. The decision was made without delving into the case's merits, as it was still under investigation, allowing the appeals in favor of the appellant.