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Issues Involved:
1. Legality of the extensions for issuing the show cause notice. 2. Validity of the ex parte extensions. 3. Sufficiency and specificity of the show cause notice under Section 124 of the Customs Act. 4. Burden of proof under Section 123 of the Customs Act. 5. Grounds for penalty under Section 112 of the Customs Act. 6. Applicability of Section 111(d) and Section 160 of the Customs Act. Detailed Analysis: 1. Legality of the Extensions for Issuing the Show Cause Notice: The court examined the legality of the extensions granted for issuing the show cause notice under the proviso to Sub-section (2) of Section 110 of the Customs Act. It was noted that the first extension was granted on 19th September 1963, and the second extension was granted on 20th February 1964. The court clarified that the maximum period for issuing the notice could be extended up to one year from the date of seizure, provided sufficient cause was shown. The court concluded that multiple extensions could be granted as long as the total period did not exceed one year from the date of seizure. 2. Validity of the Ex Parte Extensions: The court held that the extensions granted ex parte, without notifying the appellant, were invalid. It emphasized that the extension of time affected a vested right of the appellant to have the seized goods returned after six months. The court stated that such extensions required a judicial approach, necessitating a hearing of both parties to determine if sufficient cause was shown. The court found that the second extension, granted ex parte, could not be justified and invalidated it. 3. Sufficiency and Specificity of the Show Cause Notice under Section 124 of the Customs Act: The court scrutinized the show cause notice issued on 6th March 1964 and found it to be vague and unspecific. The notice failed to provide clear and specific grounds for the proposed confiscation and penalty, thus denying the appellant a reasonable opportunity to defend himself. The court emphasized that the grounds for confiscation must be clear, specific, and unambiguous to allow the appellant to discharge the heavy burden of proof under Section 123 of the Customs Act. 4. Burden of Proof under Section 123 of the Customs Act: Section 123 imposes a heavy burden on the person from whose possession the goods were seized to prove that they are not smuggled goods. The court noted that the appellant had provided names of dealers from whom he had purchased the watches and requested the Customs authorities to verify the records. The court found that the vague language of the notice did not provide the appellant with a reasonable opportunity to prove the legal importation of the watches. 5. Grounds for Penalty under Section 112 of the Customs Act: The court highlighted that penalty under Section 112 requires deliberate action and knowledge that the goods were smuggled. The show cause notice did not allege any specific acts or omissions by the appellant that would justify the imposition of a penalty. The court concluded that the notice failed to charge the appellant with the necessary ingredients of the offence under Section 112, thereby preventing him from adequately defending himself. 6. Applicability of Section 111(d) and Section 160 of the Customs Act: The court briefly addressed the argument regarding the applicability of Section 111(d) and Section 160 of the Customs Act, noting that the issue did not arise in this case due to the lack of evidence showing that the watches were imported before the commencement of the said Act in 1962. The court did not make a definitive ruling on this point. Conclusion: The court quashed the show cause notice dated 6th March 1964, finding it not in accordance with law due to the invalid ex parte extensions and the vague and unspecific grounds provided in the notice. The court ordered the return of the seized watches to the appellant and set aside the order of the learned judge in the lower court. The operation of the order was stayed for three weeks as requested.
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