2003 (7) TMI 694 - HC - Customs

Summary

Issues Involved:
1. Whether detention of the petitioners' goods on 3.11.1976 amounted to seizure within the meaning of Section 110(1) of the Customs Act, 1962?
2. If the answer to question (i) is affirmative, whether the Show Cause Notice issued on 7.5.1977 was bad in law in view of the provisions of Section 110 of the Customs Act, 1962?
3. Whether the petitioners' goods could be confiscated or penalties imposed after the Bill of Entry had been assessed and the goods had been cleared under Section 47 of the Customs Act, 1962?

Detailed Analysis:

Issue 1: Whether detention of the petitioners' goods on 3.11.1976 amounted to seizure within the meaning of Section 110(1) of the Customs Act, 1962?

The petitioners argued that the direction given on 3.11.1976 amounted to a seizure under Section 110 of the Customs Act. The respondents contended that the seizure memo dated 11.11.1976 marked the actual seizure date. The Court examined the definition of "seizure" from Black's Law Dictionary, which implies taking possession or interfering with an individual's possessory interest. The Court found that the direction on 3.11.1976 not to deliver the goods without the Assistant Collector's consent amounted to meaningful interference with the petitioners' possessory interests, thereby constituting a seizure. The Court concluded that the seizure occurred on 3.11.1976, not 11.11.1976.

Issue 2: If the answer to question (i) is affirmative, whether the Show Cause Notice issued on 7.5.1977 was bad in law in view of the provisions of Section 110 of the Customs Act, 1962?

Having established that the seizure occurred on 3.11.1976, the Court examined the implications under Section 110(2) of the Customs Act, which mandates issuing a show cause notice within six months of the seizure. The show cause notice was served on 9.5.1977 and 10.5.1977, beyond the six-month period. The petitioners argued that this delay rendered the notice invalid. The Court, however, agreed with the respondents that the consequence of not issuing the notice within six months was limited to the return of the seized goods, not affecting the validity of the notice or subsequent proceedings under Section 124. The Court cited Supreme Court rulings affirming that the delay affects only the seizure's continuance, not the notice's validity.

Issue 3: Whether the petitioners' goods could be confiscated or penalties imposed after the Bill of Entry had been assessed and the goods had been cleared under Section 47 of the Customs Act, 1962?

The petitioners contended that once the goods were cleared under Section 47, the Customs Authorities had no jurisdiction to confiscate them. The Court referred to the Supreme Court's decision in Union of India and Others Vs. Jain Shudh Vanaspati Ltd., which held that a clearance order obtained fraudulently does not preclude the issuance of a show cause notice under Section 124. The Court emphasized that determining fraud is the authority's responsibility under the statute, not the Court's in writ jurisdiction. The issuance of the show cause notice was valid, and the clearance under Section 47 did not bar subsequent action under Section 124.

Conclusion:

The writ petition was dismissed. The Court clarified that the non-issuance of the show cause notice within six months entitled the petitioners to the return of the seized goods without conditions. The goods had already been returned upon furnishing a bank guarantee, which was now ordered to be canceled. The proceedings pursuant to the show cause notice were to continue, and the appropriate order was to be passed by the concerned authorities. The Court expected the proceedings to be completed expeditiously. No costs were awarded.