1972 (4) TMI 96 - HC - Customs

Summary

Issues Involved:
1. Validity of the ex parte extension order dated February 17, 1971, under the proviso to Section 110(2) of the Customs Act.
2. Legality of the extension order dated March 22, 1971, under the proviso to Section 110(2) of the Customs Act.
3. Right to claim the return of seized goods after the expiry of six months under Section 110(2) of the Customs Act.
4. Validity of the extension order under Section 79 of the Gold Control Act, 1968.
5. Legality of the show-cause notices issued on April 6, 1971.
6. Directions regarding the return of Indian currency notes and the Ambassador car to the petitioner.

Detailed Analysis:

1. Validity of the ex parte extension order dated February 17, 1971:
The petitioner argued that the ex parte extension order dated February 17, 1971, under the proviso to Section 110(2) of the Customs Act was a nullity as it was passed without notice to the petitioner. The respondents conceded this point based on the Supreme Court's judgment in Charan Das Malhotra's case, AIR 1972 SC 689, which held that the power under the proviso to Section 110(2) is quasi-judicial and requires an opportunity to be given to the affected party to show cause against the extension. Consequently, the issuance of a notice on March 9, 1971, was necessary to rectify this procedural lapse.

2. Legality of the extension order dated March 22, 1971:
The principal contention was that the order of extension passed on March 22, 1971, was invalid as it was made after the expiry of six months from the date of the seizure of the goods. The court held that a vested right accrued to the petitioner to claim the return of the seized goods immediately after the expiry of six months, and this right could not be taken away by an extension granted after the expiry of the six-month period. The court emphasized that the extension of time under the proviso to Section 110(2) must be made before the expiry of the initial six-month period to maintain the continuity of the Customs authorities' possession of the goods.

3. Right to claim the return of seized goods after the expiry of six months:
Under Section 110(2) of the Customs Act, if a notice under clause (a) of Section 124 is not given within six months of the seizure, the goods must be returned to the person from whom they were seized. The court held that once the six-month period expires without an extension, a valuable right to claim the return of the goods accrues to the owner, defeating the Customs authorities' right to retain possession. This right cannot be negated by a retrospective extension of time.

4. Validity of the extension order under Section 79 of the Gold Control Act, 1968:
The court found that the seizure of the goods was made under the provisions of the Customs Act, not the Gold Control Act. Therefore, the extension of time under Section 79 of the Gold Control Act could not be relied upon to retain possession of the seized goods under the Customs Act. The court held that the order extending time under Section 79 of the Gold Control Act was of no effect concerning the retention of the seized goods under the Customs Act.

5. Legality of the show-cause notices issued on April 6, 1971:
The petitioner did not argue against the legality of the show-cause notices issued on April 6, 1971. Consequently, the court did not grant any relief concerning these notices, and they remained valid.

6. Directions regarding the return of Indian currency notes and the Ambassador car to the petitioner:
The court quashed the order dated March 22, 1971, extending the time under the proviso to Section 110(2) of the Customs Act and directed the respondents to return the seized goods to the petitioner, except for the gold guineas, which the petitioner did not claim. The court also addressed the issue of the Income Tax Department's claim for Rs. 25,000 from the seized amount, directing that any payment to the Income Tax Department should be considered as if the amount had been returned to the petitioner, provided it was towards the petitioner's dues and not those of any other person.

Conclusion:
The petition was allowed in part, quashing the extension order dated March 22, 1971, and directing the return of the seized goods to the petitioner, subject to the Income Tax Department's claim. The show-cause notices issued on April 6, 1971, remained valid, and the parties were directed to bear their own costs.