2009 (9) TMI 38 - HC - Customs

Release of Hot Mix Paver Machine seized imported free of customs duty on actual user condition violation of condition machines transfereed to insurance companies against claim after accident - Held that - , the notice has not been given to the petitioner within the statutory period of 6 months, the continued seizure of the machine is bad in law and is hereby quashed. Rule is accordingly made absolute in terms of prayer clause (a). We make it clear that this order would not prevent the respondents from taking any other action against the respondent no.3 to whom a notice has been issued within the statutory period and/or qua the machine, if it is otherwise permissible in law.

Summary

Issues Involved:
1. Seizure and confiscation of the Hot Mix Paver Machine.
2. Non-issuance of notice to the petitioner.
3. Interpretation of Sections 110 and 124 of the Customs Act, 1962.
4. Compliance with the principles of natural justice.

Issue-wise Detailed Analysis:

1. Seizure and Confiscation of the Hot Mix Paver Machine:
The petitioner sought a mandamus directing the Union of India and customs authorities to release the Hot Mix Paver Machine seized from its premises. The machine was imported by respondent no.3 without payment of customs duty under an exemption for actual users. It was sold to the petitioner after an accident, within five years of import, violating the condition for duty-free import. Consequently, the machine was seized under section 111(o) of the Customs Act, 1962.

2. Non-issuance of Notice to the Petitioner:
The petitioner argued that no notice was issued before or after the seizure, violating section 110(2) read with section 124(a) of the Customs Act. The petitioner cited precedents from the Supreme Court and Bombay High Court supporting the requirement of notice within six months, extendable by another six months. The respondents contended that notice to respondent no.3, the original importer, sufficed.

3. Interpretation of Sections 110 and 124 of the Customs Act, 1962:
Section 111(o) allows confiscation of goods if conditions for duty exemption are breached. Section 110(1) authorizes seizure of goods liable for confiscation. Section 110(2) mandates issuing a notice under section 124(a) within six months, extendable by the Commissioner of Customs for another six months. Section 124 requires notice to the owner or person from whose custody goods are seized, providing grounds for confiscation and an opportunity to be heard.

4. Compliance with the Principles of Natural Justice:
The court emphasized that administrative or quasi-judicial orders affecting civil rights must follow principles of natural justice, including giving affected persons a reasonable opportunity to be heard. The court interpreted "owner of the goods or such person" in section 124 to mean both the owner and the person from whose custody goods are seized. This ensures the transferee, who may be unaware of import conditions, receives notice and an opportunity to contest confiscation.

Conclusion:
The court concluded that the petitioner, from whose custody the machine was seized, was entitled to notice under section 124. The failure to issue notice within six months rendered the continued seizure illegal. The court quashed the seizure and made the rule absolute in favor of the petitioner, while allowing the respondents to pursue other legal actions against respondent no.3 or the machine.