1984 (6) TMI 55 - HC - Customs

Summary

Issues Involved:
1. Validity of the order dated 3-10-1969 made by the Collector without notice and hearing.
2. Validity of the proceedings initiated for confiscation and imposition of penalties.
3. Barred by time for the show cause notices.
4. Imposition of personal penalties based on no evidence.
5. Entitlement to the return of 6,000 tolas of gold.

Detailed Analysis:

1. Validity of the Order Dated 3-10-1969:
The petitioners argued that the order made by the Collector on 3-10-1969 was void as it was made without notice and an opportunity of hearing, violating the proviso to sub-section (2) of Section 110 of the Customs Act, 1962, and principles of natural justice. The respondents did not dispute this but justified the proceedings and the order made thereon. The court, referencing the Supreme Court ruling in Charandas Malhotra's case, agreed that the order was in contravention of the Act and principles of natural justice. However, the court assumed the order was void for the sake of argument and examined other issues on that basis.

2. Validity of Proceedings for Confiscation and Imposition of Penalties:
The petitioners contended that all subsequent proceedings, including confiscation and penalties, were void if the initial order was void. The court, however, noted that Chapters XIII and XIV of the Act are independent and distinct, serving different purposes. It held that the invalidity of an order under Section 110 does not affect the validity of proceedings under Chapter XIV. This view was supported by rulings from the High Courts of Madras, Punjab and Haryana, and Bombay, which the court agreed with.

3. Barred by Time for Show Cause Notices:
The petitioners argued that the show cause notices were barred by time as they were served after one year of seizure. The court rejected this, stating that there is no provision in the Act declaring that if a show cause notice is not issued or served within one year, the proceedings for confiscation and penalties automatically lapse. The court distinguished this case from the Gujarat High Court ruling in Ambalal Morarji Soni's case, which dealt with a different enactment, the Gold Control Act.

4. Imposition of Personal Penalties Based on No Evidence:
The court examined the imposition of penalties on the petitioners. For the petitioner in Writ Petition No. 4616 of 1978, the court found no evidence supporting the penalty, as he was only a student and not involved in the business. The penalty was based solely on his relation to another petitioner. Hence, the court quashed the penalty against him. For the other petitioners, the court found the penalties were based on evidence and their own statements. However, the court noted that the Collector did not provide reasons for the quantum of penalties, and neither did the appellate and revisional authorities. The court directed the Collector to re-examine and decide the penalties with proper reasoning.

5. Entitlement to the Return of 6,000 Tolas of Gold:
The petitioners claimed entitlement to the return of the gold. The court noted that the petitioners had expressly disclaimed their title to the gold, stating it belonged to another person who had not claimed it. The court held that the petitioners could not claim the return of the gold in a petition under Article 226 of the Constitution, given their disclaimer of ownership.

Orders and Directions:
1. The court quashed the order of penalties against the petitioner in W.P. No. 4616 of 1978.
2. The court quashed the penalties of Rs. 2,00,000/- against the petitioners in W.P. Nos. 4614 and 4615 of 1978 and directed the Collector to re-examine and impose appropriate penalties, not exceeding the original amount.
3. The writ petitions were disposed of with parties bearing their own costs.