2020 (8) TMI 350 - HC - Customs

Principles of Natural Justice - Extension of period of issuance of SCN after seizure of goods - power of Principal Commissioner of Customs or Commissioner of Customs is empowered to extend the period for issuance of notice under Section 124 of the 1962 Act to another six months - affording an opportunity of hearing at the time of extension or not - Section 110(2) of the Customs Act, 1962 - HELD THAT - The seizure in the instant case was done on 16.10.2019 and the period of six months expired on 15.04.2020. In view of the Ordinance dated 31.03.2020 promulgated before expiry of period, had already been extended upto 30.06.2020 but still vide Exhibit R1(a) dated 11.03.2020, the Commissioner of Customs (Prev) on the basis of report of Assistant Commissioner of Customs (P), Thrissur Division extended the period from 15.04.2020 to another period of six months. Whether the said order was communicated to the petitioner within or after the expiry period? - In the absence of Ordinance, there would have been a force in the arguments of learned counsel appearing for the petitioners of non-adherence to the strict provisions of the Act as concededly the communication of extension received by the petitioner is dated 26.05.2020 (Exhibit P-19). Thus, the right of the petitioners has not been prejudiced or taken away in granting extension of six months for completion of proceedings under Section 124 of the 1962 Act - petition dismissed.

Summary

Issues Involved:
1. Whether the Principal Commissioner of Customs or Commissioner of Customs is empowered to extend the period for issuance of notice under Section 124 of the Customs Act, 1962, and if it is necessary to afford an opportunity of hearing at the time of extension.

Issue-wise Detailed Analysis:

1. Empowerment to Extend the Period for Issuance of Notice:
The central question of law is whether the Principal Commissioner of Customs or Commissioner of Customs can extend the period for issuing a notice under Section 124 of the Customs Act, 1962, as per the proviso to Section 110(2) of the same Act. The proviso to Section 110(2) was amended by Act No.13 of 2018, which allows the Principal Commissioner or Commissioner of Customs to extend the period for reasons recorded in writing, provided the affected party is informed before the expiry of the specified period.

2. Opportunity of Hearing:
The petitioners contended that the extension granted was ex parte without affording any opportunity of hearing, which is against the mandate of law. They argued that the extension should be granted before the expiry of six months and after hearing the parties from whom the goods were seized. They relied on judgments from the Supreme Court, such as I.J. Rao vs. Bibhuti Bhushan Bagh and Assistant Collector vs. Charan Dass Malhotra, which emphasized the necessity of a hearing before granting an extension.

3. Timeliness and Communication of Extension:
The petitioners argued that the extension was communicated beyond 40 days after the expiry of six months from the seizure, which violates the statutory requirement. They claimed that the period of six months expired on 15.04.2020, and no notice was issued within this period. The Customs Authorities, however, contended that the extension was granted on 11.03.2020, well within the six-month period, and was communicated as per the Ordinance No.2 of 2020, which extended the timelines due to the COVID-19 pandemic.

4. Legal Precedents and Applicability:
The petitioners relied on previous judgments that interpreted the unamended provisions of Section 110(2) to argue that an opportunity of hearing is essential before granting an extension. However, the court noted that these judgments pertained to the provisions before the amendment caused by the Finance Act of 2018. The amended provisions require only that reasons be recorded in writing and the affected party be informed before the expiry of the specified period.

5. Compliance with Amended Provisions:
The court examined whether the Customs Authorities adhered to the amended provisions of Section 110(2). The seizure occurred on 16.10.2019, and the six-month period expired on 15.04.2020. The Ordinance dated 31.03.2020 extended the period to 30.06.2020 due to the pandemic. The Commissioner of Customs extended the period on 11.03.2020, and the petitioners were informed on 26.05.2020. The court found that the right of the petitioners was not prejudiced by the extension as it was granted within the extended period provided by the Ordinance.

Conclusion:
The court concluded that the Principal Commissioner or Commissioner of Customs is empowered to extend the period for issuing a notice under Section 124 of the Customs Act, 1962, as per the amended provisions of Section 110(2). The requirement for an opportunity of hearing, as argued by the petitioners, pertains to the unamended provisions and does not apply post-amendment. The extension granted by the Customs Authorities was within the legal framework, and the writ petition was dismissed.