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2020 (10) TMI 235 - HC - CustomsSearch and seizure proceedings - Extension of seizure period - validity of the retention of the goods for carrying out the confiscation proceedings - HELD THAT - As per the pre-amended provision the mandate was that there should be sufficient cause shown in the order of extension, in which circumstance there was a requirement to apprise the person from whom such seizure was effected as to the cause pleaded by the Investigating Officer to extend the time for issuing a notice under sub-section (1) and under clause (a) of Section 124 within the six month period with respect to goods seized under sub-section (1). The amended provision has done away with the words 'sufficient cause shown' and as of now for extension, what is required is only that reasons be recorded in writing - It is also pertinent that the Central Government had come out with the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, which provided by Chapter V that the time limits under certain Indirect Tax Laws, including the Customs Act, which falls during the period from 20.03.2020 to 29.06.2020 or any date after 29.06.2020 shall stand extended to 30.06.2020 or such date afterwards as the Central Government may specify. Hence, the proceedings in the present case, which would have normally expired on 15.04.2020, stood automatically extended to 30.06.2020, which may not be very relevant for our purposes since already there was an extension granted on 11.03.2020. Further in this case, the Investigating Officer had considered a representation made by the appellants, though not statutorily provided for, as per the directions issued by this Court in Ext. P17 judgment. The representation as is revealed from Exhibits P17 and P18, urge that they were in possession of the goods validly and in compliance of statutory formalities. There was no contention as could be urged under Section 110 (1A); which were the aspects; then absent in the statute as highlighted by the Constitution Bench in I.J.Rao to find the requirement of hearing under the un-amended Proviso to Section 110(2). Admittedly the seizure was conducted on 16.10.2019 and the six months period provided under Section 110(2) expired on 15.04.2020. On 11.03.2020, Annexure R1(a) was passed by the Commissioner invoking the power under the Proviso to Section 110(2). However, we notice with some distress that Annexure R1(a) order was never communicated to the appellants. The communication issued to the appellants was by Exhibit P19, which is of the Investigating Officer merely informing the extension, again without the reasons being explicitly stated therein - Since the period stands extended to 14.10.2020, even now there could be a service effected, which would satisfy the mandate under the proviso to Section 110(2). There is however, no warrant to issue a direction to effect such service, since there is a deemed service and information conveyed as to the reasons for extension. The refusal of the learned Single Judge to interfere with the impugned order to be perfectly justified - Appeal dismissed - decided against appellant.
Issues Involved:
1. Validity of the extension of the period for issuing a notice under Section 124 of the Customs Act. 2. Requirement of a hearing before extending the period for issuing a notice. 3. Legality of the retention of seized goods for confiscation proceedings. 4. Adequacy of reasons recorded for the extension of the period. 5. Compliance with procedural requirements for extending the period. Issue-wise Detailed Analysis: 1. Validity of the extension of the period for issuing a notice under Section 124 of the Customs Act: The appeal challenges the judgment of a learned Single Judge, which declined interference with the proceedings initiated after the search and seizure evidenced by Exhibit P11 and Exhibit P19. The appellants argued that the period for issuing a notice for confiscation had expired, and the seized gold should be released. The court noted that the Customs Act, 1962, requires a notice to be issued within six months of the seizure, and although the period was extended, no notice or hearing was granted before the extension. The amendment to Section 110(2) of the Customs Act in 2018 mandates only recording reasons for the extension, not showing sufficient cause, thus eliminating the requirement for a hearing before the extension. 2. Requirement of a hearing before extending the period for issuing a notice: The appellants contended that the Hon'ble Supreme Court has held that before extending the time as per the proviso, the persons from whom the goods were seized should be given a notice and an opportunity for hearing. The court examined the amended and unamended provisions of Section 110(2) and concluded that the amended proviso does not require a hearing before the extension is granted. The Rajasthan High Court's judgment in Commissioner of Customs (Preventive), Jodhpur v. Swees Gems And Jewellery was cited, which held that the amended provision only requires the Commissioner to record reasons in writing and inform the person from whom the goods were seized before the expiry of the period specified in the extension order. 3. Legality of the retention of seized goods for confiscation proceedings: The court observed that the legality of the retention of the goods for confiscation proceedings is not vitiated by the impugned proceedings for extension. The consequence of finding the extension to be bad would only be that the goods would have to be restored, but the confiscation proceedings could continue. The court held that the amended proviso to Section 110(2) does not require a hearing before the extension is effected, and the information of such extension should be served within the extended period. 4. Adequacy of reasons recorded for the extension of the period: The court examined whether the reasons recorded for the extension were arbitrary or perverse. The reasons cited in Annexure R1(a) included the pandemic situation, the quantum of gold involved, and the nature of the investigation, which involved inter-State accomplices. The court found these reasons to be rational and sufficient to support the extension. The court also noted that the pandemic situation justified the extension, as it had impacted the investigation process. 5. Compliance with procedural requirements for extending the period: The court addressed the appellants' contention that the extension order should have been served within the initial six-month period. The court held that the order of extension should be made within the initial period, but the service of such order can be within the extended period. The court found that the order of extension was passed on 11.03.2020, within the initial period, but was not communicated to the appellants. However, since the appellants approached the court before the expiry of the extended period and the Department produced Annexure R1(a) in their statement, the court deemed the service and information of the reasons for extension to be satisfied. Conclusion: The court upheld the judgment of the learned Single Judge, finding no illegality, irrationality, or procedural defect in the extension order. The appeal was rejected, and the parties were left to bear their respective costs.
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