1965 (10) TMI 68 - HC - Customs

Summary

Issues Involved:
1. Legality of the seizure of diamonds by the Enforcement Directorate.
2. Authority of Customs Officers to seize the diamonds.
3. Compliance with Section 110 of the Customs Act regarding the issuance of notice within six months.
4. Validity of the extension of the notice period by the Collector of Customs.
5. Proper identification and seizure of the diamonds claimed by the appellants.

Detailed Analysis:

1. Legality of the Seizure by the Enforcement Directorate:
The Enforcement Directorate obtained a search warrant under Section 19 of the Foreign Exchange Regulation Act to search a shop and seize incriminating documents and foreign exchange. During the search, diamonds were found on an individual present in the shop and were seized. However, it was later conceded that the seizure was not justified under Section 151 of the Customs Act, as no other legal provision was pointed out to justify the seizure. Consequently, the seizure of the diamonds by the Enforcement Directorate was deemed without authority of law.

2. Authority of Customs Officers to Seize the Diamonds:
On 4th September 1964, the Customs Officers took charge of the diamonds from the Enforcement Directorate under Section 110 of the Customs Act. The court examined whether the Customs Officers had the proper belief that the goods were liable to confiscation. The Collector of Customs' affidavit stated that the diamonds were seized under the reasonable belief that they were smuggled goods. Although the affidavit did not detail the materials leading to this belief, the court decided not to require a supplementary affidavit as show cause notices had already been issued, and the appellants could raise this point during adjudication proceedings.

3. Compliance with Section 110 of the Customs Act:
Section 110(2) mandates that a notice under Section 124(a) must be issued within six months of the seizure. The Collector of Customs extended this period by three months on two occasions. The court discussed the computation of the six-month period, concluding that the day of seizure should be excluded, thus validating the extensions granted by the Collector.

4. Validity of the Extension of the Notice Period:
The court upheld the Collector of Customs' discretion to extend the notice period, finding no evidence that the discretion was exercised wrongly. The extensions were deemed valid as they were granted before the expiration of the initial six-month period.

5. Proper Identification and Seizure of the Diamonds:
In Appeal No. 3 of 1965, it was argued that the specific packet of diamonds claimed by the appellant was not properly identified as seized by the Customs Officers. However, the appellant's own admission that the Customs Authorities had re-sealed the packet in his presence, along with the Collector's assertion, led the court to dismiss this argument, confirming that the packet had indeed been seized by the proper Customs Officers.

Conclusion:
The appeals were dismissed on all points. The court found that while the initial seizure by the Enforcement Directorate was without authority of law, the subsequent seizure by the Customs Officers was lawful. The extensions of the notice period were valid, and the proper identification and seizure of the diamonds were confirmed. No costs were awarded due to the initial unlawful seizure by the Enforcement Directorate.