1975 (3) TMI 29 - HC - Customs

Seizure of goods - Distinction between - Reason to believe - Connotation of - Order by consent -Personal penalty - Estoppel - Importation of goods without licence - Effect - Stay by order/injunction of Court - Computation of period of limitation - Procedure - Appeals

Summary

Issues Involved:
1. Validity of the seizure dated November 7, 1969.
2. Validity of the order extending the time for issuing a show cause notice dated May 4, 1970.
3. Validity of the show cause notice dated October 28, 1970.

Detailed Analysis:

1. Validity of the Seizure Dated November 7, 1969
The seizure was made under Section 110(1) of the Customs Act, 1962, which allows seizure if the proper officer "has reason to believe" that goods are liable to confiscation. The appellants argued that the condition precedent for the exercise of power under Section 110(1) was not met, as there were no objective reasons for forming this belief. However, the affidavit of Rampriti Lahiri, Inspector of Customs, disclosed sufficient reasons for forming this belief, including the detection of a consignment of primary nickel of foreign or U.S.A. origin and the inability of the factory authorities to produce documents proving lawful importation. The court upheld the seizure, stating that the officer had objective reasons to believe that the goods were illegally imported.

2. Validity of the Order Extending the Time for Issuing a Show Cause Notice Dated May 4, 1970
The order extending the time for issuing a show cause notice by six months was set aside by Sabyasachi Mukharji, J., primarily because it was passed ex parte. The Supreme Court's decision in Assistant Collector of Customs & Others v. Charan Das Malhotra, AIR 1972 SC 689, was relied upon, which stated that an opportunity of being heard ought to have been given before making such an order. The court rejected the argument that the respondents had waived their right to contend that the notice under Section 110(2) was not served, as the order for the release of goods was not by consent in the strict sense. The court also rejected the argument that the order of injunction against the Enforcement Directorate saved the period of limitation prescribed by Section 110(2) of the Customs Act, 1962, as no injunction was ever passed against the Customs authorities.

3. Validity of the Show Cause Notice Dated October 28, 1970
The show cause notice was issued under Section 124(a) of the Customs Act, 1962, requiring Hindustan Motors Ltd. to show cause why the seized goods should not be confiscated under Section 111(d) and why a penalty should not be imposed under Section 112. The appellants argued that the Customs authorities were complaining of a breach of the conditions of the import licence, and as per the Supreme Court's decision in Additional Collector of Customs, Calcutta & Others v. M/s. Best & Co., AIR 1971 SC 170, the Customs Act would not be applicable in such cases. However, the court found that the Customs authorities alleged that the goods were imported without a valid licence, as they were of USA origin, and thus the Customs Act was applicable. The court upheld the show cause notice, stating that the Customs authorities were within their rights to issue the notice based on the alleged importation without a licence.

Conclusion:
- The seizure dated November 7, 1969, was upheld as valid.
- The order extending the time for issuing a show cause notice dated May 4, 1970, was set aside.
- The show cause notice dated October 28, 1970, was upheld as valid, allowing the Customs authorities to proceed with the notice in accordance with the law.