1977 (8) TMI 66 - HC - Customs

Summary

Issues Involved:
1. Legality of the seizure and retention of goods under Section 110(2) of the Customs Act.
2. Validity of the confiscation of goods and imposition of penalties under Section 124 of the Customs Act.
3. Relationship between Sections 110 and 124 of the Customs Act.
4. Right to restoration of seized goods after the expiry of the statutory period.

Detailed Analysis:

1. Legality of the Seizure and Retention of Goods under Section 110(2) of the Customs Act:
The petitioner contended that no notice under Section 124 of the Customs Act, 1962 was issued within six months of the seizure of the goods, and the period was not extended under the proviso to Section 110(2). Therefore, the retention of the seized goods was illegal and without jurisdiction, violating sub-section (2) of Section 110 of the Act. The petitioner argued that such goods, illegally detained, could not be confiscated under Section 111(b) in an adjudication proceeding upon a notice under Section 124. The right to restoration of the seized goods is a civil right accruing to the owner on the expiry of six months if no notice under Section 124 is issued or the period is not extended after giving the owner a reasonable opportunity of being heard.

2. Validity of the Confiscation of Goods and Imposition of Penalties under Section 124 of the Customs Act:
The respondents contended that Sections 110 and 124 are independent. Section 110 pertains to the seizure and detention of goods for a specified period, while Section 124 deals with the power to confiscate and impose penalties. They relied on various judicial precedents, including decisions from the Madras High Court and this Court, which held that the limitation prescribed by Section 110(2) does not control the proceedings under Section 124.

3. Relationship Between Sections 110 and 124 of the Customs Act:
The Court analyzed the relationship between Sections 110 and 124, noting that Section 110(2) was incorporated to prevent indefinite deprivation of property based on mere reasonable belief by a Customs officer. The six-month period allows for the collection of evidence to support the reasonable belief that the goods are liable to confiscation. If the evidence is not collected within this period, the goods must be returned. The Court observed that although Sections 110 and 124 are independent, there is a connecting link between the notice of confiscation and the retention of seized goods. The power to extend the period under the proviso to Section 110(2) must be exercised judicially, not mechanically.

4. Right to Restoration of Seized Goods After the Expiry of the Statutory Period:
The Court emphasized that the right to restoration of seized goods is a civil right accruing on the expiry of the initial six months unless an extension is granted. This vested civil right cannot be defeated by an ex-parte order of extension. The Court noted that when seized goods are returned, they lose the character of "offending goods" and cannot be confiscated. The statutory authority cannot act contrary to law by retaining and confiscating goods that should have been returned.

Judgment:
The Court quashed the impugned order of confiscation made by the Collector of Central Excise and Customs, the appellate order passed by the Central Board of Excise and Customs, and the revisional order passed by the Secretary to the Government of India under Section 131 of the Customs Act. A writ of mandamus was issued directing the respondents to refund the sale proceeds of the goods to the petitioner. The operation of the order was stayed for four weeks.