1974 (9) TMI 55 - HC - Customs

Seizure of goods - Detention extension of time - Hearing - Penalty confiscation - Stay/Dispensation of pre-deposit - Natural justice

Summary

Issues Involved:
1. Whether the proviso to section 110(2) of the Customs Act, 1962, limits proceedings for confiscation or penalty imposition under section 124.
2. Whether the proviso to section 129 requires a judicial or quasi-judicial adjudication of interim relief applications and the application of natural justice principles.

Issue-wise Detailed Analysis:

1. Limitation under Section 110(2) for Proceedings under Section 124:
The first issue revolves around whether the proviso to section 110(2) acts as a limitation on proceedings for confiscation or penalty imposition under section 124 of the Customs Act, 1962. The petitioner argued that the entire proceeding was illegal and without jurisdiction because the show cause notice was issued on an ex parte extension of time granted by the Collector under section 110(2). The petitioner relied on the Supreme Court's decision in Assistant Collector, Customs v. Malhotra and the Allahabad High Court's decision in Md. Hanif v. Collector, C. and C. Excise to support this contention. However, the court held that section 110(2) only limits the period for which goods can be detained without a notice under section 124(a) and does not prescribe a limitation for initiating proceedings under section 124. The court found that the Supreme Court's decision in Malhotra's case did not support the petitioner's contention and that the Allahabad High Court's extension of the principle laid down by the Supreme Court was incorrect. Thus, the ex parte extension of time did not render the proceedings for penalty imposition invalid or without jurisdiction.

2. Judicial or Quasi-Judicial Adjudication under Section 129:
The second issue concerns whether the proviso to section 129(1) requires a judicial or quasi-judicial adjudication of interim relief applications and the application of natural justice principles. The petitioner argued that the Board's rejection of their application for relief under section 129(1) was unlawful because it was done ex parte and based on an ex parte report from the Collector. The court agreed with the petitioner, holding that the discretion vested in the Board under section 129(1) is judicial or quasi-judicial and must be exercised with reference to objective tests such as hardship to the appellant. The court emphasized that the principles of natural justice require that the appellant be heard and given an opportunity to contest the report before the Board makes a decision. The court cited several Supreme Court decisions supporting the application of natural justice principles in such cases. Consequently, the court set aside the Board's ex parte order rejecting the petitioner's application for relief and the subsequent orders dismissing the appeal for non-compliance with section 129(1).

Conclusion:
The court concluded that the proceedings for penalty imposition were not invalidated by the ex parte extension of time under section 110(2). However, the Board's ex parte rejection of the petitioner's application for relief under section 129(1) violated principles of natural justice. The court set aside the Board's order and subsequent orders, directing the Board to reconsider the petitioner's application and appeal in accordance with law. The Rule was made absolute in part, and the application for interim relief was dismissed as infructuous. There was no order as to costs.