1988 (1) TMI 39 - HC - Customs

Summary

Issues: Effect of non-service of notice under section 110(2) of the Customs Act, 1962

Analysis:
The judgment dealt with the effect of non-service of notice under section 110(2) of the Customs Act, 1962 in two Civil Rules involving wholesalers of cigarettes. The petitioners were not manufacturers of cigarettes and were not liable for excise duty. Central Excise authorities seized goods from their premises, but no notice under section 124 of the Customs Act was served within the prescribed period. The petitioners sought the return of seized goods or refund of security. The Collector of Customs extended the initial period of notice by six months. The petitioners argued that failure to serve notice entitled them to the return of goods. However, the goods were already released under Rule 206(3) of the Central Excise Rules pending adjudication. The petitioners contended that release under Rule 206(3) did not amount to release under section 110(2) of the Customs Act.

The judgment clarified that non-service of notice under section 110(2) affected only the seizure of goods, not penal actions under other provisions. It highlighted the independence of sections 110 and 124 of the Customs Act. The court referred to previous decisions, including Mohanlal Devdanbhai v. M.P. Mondkar and Assistant Collector v. Charandas Malhotra, emphasizing that the validity of notices under section 110(2) did not impact actions under section 124. The judgment affirmed that despite goods being released, Central Excise authorities could proceed with penalties under the law.

Regarding the petitioners' request for refund of security and seized documents, the court held that it was premature to direct refunds at that stage. The judgment emphasized the authority of Central Excise authorities to retain documents until adjudication. Since the petitioners were not manufacturers liable for excise duty, they could still face penalties under relevant provisions. The court dismissed the Civil order, vacated interim orders, and directed the Central Excise authorities to expedite proceedings within six months. No costs were awarded, and the order applied to both matters heard analogously.