1976 (3) TMI 54 - HC - Customs

Summary

Issues Involved:
1. Validity of the order extending the period for issuing a show cause notice under Section 124 of the Customs Act, 1962.
2. Justification of the seizure of goods by Customs Officers.
3. Validity of the show cause notice issued under Section 124 of the Customs Act, 1962.
4. Return of seized goods, currency notes, gold coins, calculating machine, station wagon, and books of account to the petitioners.
5. Interpretation and interplay of Sections 110 and 124 of the Customs Act, 1962.

Issue-Wise Detailed Analysis:

1. Validity of the Order Extending the Period for Issuing a Show Cause Notice:
The petitioners contended that the order dated July 22, 1969, extending the period for issuing a show cause notice under Section 124 of the Customs Act was in breach of the principles of natural justice as it was issued without giving any opportunity to the petitioners to be heard. The learned Judge quashed the order of extension, citing the Supreme Court's decision in Assistant Collector of Customs and Superintendent, Preventive Service Customs, Calcutta and others v. Charan Das Malhotra, which held that the power under Section 110(2) is quasi-judicial and requires a judicial approach. The extension order must not be passed mechanically and must be preceded by an opportunity for the affected party to be heard.

2. Justification of the Seizure of Goods:
The petitioners argued that the seizure of goods was unjustified as there was no reasonable belief that the goods were liable to confiscation under Section 110(1) of the Act. The learned Judge rejected this contention, stating that the Customs authorities had sufficient grounds to believe that the goods were liable to confiscation, thus justifying the seizure.

3. Validity of the Show Cause Notice Issued Under Section 124:
The petitioners argued that the show cause notice dated January 22, 1970, should be quashed as it was issued after the expiry of the six-month period prescribed in Section 110(2) and without a valid order of extension. The respondents contended that Sections 110 and 124 are independent provisions, with Section 110 dealing with the seizure of goods and Section 124 dealing with the confiscation of goods and imposition of penalties. The court agreed with the respondents, stating that Section 124 does not prescribe any time limitation for issuing a show cause notice and that the failure to issue a notice within the period specified in Section 110(2) only results in the obligation to return the seized goods but does not invalidate the notice under Section 124.

4. Return of Seized Goods, Currency Notes, Gold Coins, Calculating Machine, Station Wagon, and Books of Account:
The learned Judge issued a writ of mandamus directing the respondents to return the seized items to the petitioners. However, the return of goods was stayed for two weeks to allow the respondents to apply for an order under Section 516A of the Code of Criminal Procedure. The respondents appealed, arguing that some of the books of account and documents had been tendered as exhibits in ongoing proceedings and should not be returned. The court modified the order, allowing the retention of documents required as exhibits in ongoing proceedings and directing the return of other items.

5. Interpretation and Interplay of Sections 110 and 124:
The court analyzed the provisions of Sections 110 and 124, concluding that they serve different purposes. Section 110 deals with the seizure and retention of goods to facilitate investigation, while Section 124 prescribes the procedure for confiscation and imposition of penalties. The court held that the failure to issue a show cause notice within the period specified in Section 110(2) does not impose a limitation on the exercise of powers under Section 124. The court cited various judgments, including those of the Calcutta, Madras, and Gujarat High Courts, to support this interpretation.

Conclusion:
The appeal by the petitioners was dismissed with costs, while the appeal by the Customs Authorities and the Union of India was partially allowed, modifying the order of the trial court to reflect the directions given regarding the retention and return of seized items.