2011 (7) TMI 8 - SC - Customs

Two seizures (confiscation) - two different laws - Section 11(d) versus section 120(2) of the Customs Act, 1962 - In one case high court has decided in favor of assessee and in another refused to grant relief to the assessee - Since, silver weighing 1713.807 kgs. was confiscated under Section 111(d), law applicable to the said confiscation was totally different from the confiscation of silver weighing 194.250 kgs. which was directed to be confiscated by applying the provisions of Section 120(2) of the Customs Act. The High Court in the impugned judgment and order held that since two different laws are applicable there is no question of getting the scope of reference expanded to include the silver weighing 1713.807 kgs. - Held that - High Court was justified in refusing to expand the scope of the reference so as to include the silver weighing 1713.807 kgs. which was confiscated under Section 111(d) while hearing the reference with regard to silver weighing 194.250 kgs. but confiscated under a different provision of law, namely, under Section 120(2) of the Customs Act.

Issues Involved:
1. Legality of invoking Section 120(2) of the Customs Act, 1962 for confiscation of silver.
2. Scope of reference to the High Court regarding the quantity of confiscated silver.
3. Applicability of different provisions of the Customs Act for different quantities of silver.
4. Principles of natural justice in the context of confiscation without a show cause notice.
5. Jurisdiction of the High Court to expand the scope of reference.
6. Applicability of Sections 130(4) and 130B of the Customs Act to the case.

Detailed Analysis:

1. Legality of Invoking Section 120(2) of the Customs Act, 1962:
The High Court held that the Tribunal was not justified in invoking the provision of Section 120(2) of the Customs Act, 1962 to confiscate the seized silver weighing 194.250 kgs. The Tribunal applied Section 120(2), which deals with the confiscation of mixed goods where smuggled goods cannot be separated from other goods. However, the High Court found this application illegal and without jurisdiction as there was no show cause notice issued proposing to apply this provision, thus violating the principles of natural justice.

2. Scope of Reference to the High Court:
The High Court restricted the scope of reference to the confiscated silver of 194.250 kgs. and refused to expand it to the entire quantity of 1913.256 kgs. The appellant sought to include the entire quantity in the reference, arguing that the deletion of specific words from the question referred would bring within its fold the entire quantity. However, the High Court maintained that the reference was limited to the specific quantity of 194.250 kgs. and not the entire quantity.

3. Applicability of Different Provisions of the Customs Act:
The Tribunal had confiscated silver weighing 1713.807 kgs. under Section 111(d) of the Customs Act, which deals with goods imported illegally, and silver weighing 194.250 kgs. under Section 120(2). The High Court observed that these two quantities of silver were confiscated under different provisions of law, and therefore, the legal principles applicable to each were different. Consequently, there was no scope for expanding the reference to include the silver confiscated under Section 111(d).

4. Principles of Natural Justice:
The High Court held that the confiscation of silver weighing 194.250 kgs. under Section 120(2) was illegal due to the absence of a show cause notice, which violated the principles of natural justice. The Tribunal's order was found to be without jurisdiction as the appellants were not given an opportunity to be heard regarding the application of Section 120(2).

5. Jurisdiction of the High Court to Expand the Scope of Reference:
The High Court refused to expand the scope of the reference to include the entire quantity of 1913.256 kgs. The court held that since the two quantities of silver were confiscated under different provisions, there was no question of expanding the reference to include the silver confiscated under Section 111(d). The High Court also noted that the appellant had the remedy to approach the Supreme Court against the High Court's order but did not do so at the appropriate stage.

6. Applicability of Sections 130(4) and 130B of the Customs Act:
The appellant's counsel argued that under Section 130(4) of the Customs Act, the High Court could hear any other substantial question of law not formulated by it. However, the court noted that this provision came into effect only in 2003 and was not applicable to the present case. The counsel also relied on Section 130B, which allows the High Court to require the statement to be amended. The court found that this provision was not relevant to the issue of redrafting or reframing a question of law.

Conclusion:
The Supreme Court upheld the High Court's decision, dismissing the appeal and confirming that the High Court was justified in refusing to expand the scope of the reference. The confiscation of silver weighing 194.250 kgs. under Section 120(2) was deemed illegal due to the lack of a show cause notice, and the principles of natural justice were found to be violated. The appeal was dismissed, and the parties were left to bear their own costs.

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