1995 (5) TMI 153 - AT - Central Excise

Summary

Issues:
Extension of time for issue of show cause notice under Section 110(2) of Customs Act, 1962; Validity of the order allowing extension of time; Requirement of valid reasons for extension; Legality of notice issued by the Collector; Justification for seizure of goods; Scope of Sections 110 and 124 of Customs Act; Necessity of disclosing grounds for extension; Authority to issue notice for extension; Liability of department when goods are released provisionally.

Analysis:
The appeal pertains to an extension of time for the issue of a show cause notice under Section 110(2) of the Customs Act, 1962. The appellant, M/s. Uttam Laminates, challenged the order allowing the extension, contending that the Collector should be satisfied with valid reasons before granting an extension. The appellant argued that the notice issued by the Collector was invalid as it lacked adequate cause for the extension. The appellant also raised concerns about the lack of material presented to justify the extension, as required by law. The appellant sought to quash the order dated 25-1-1994 extending the time for issuing the show cause notice.

During the hearing, the appellant's advocate reiterated these submissions, emphasizing that the seizure of goods was unwarranted, and there was no need for an investigation. The advocate highlighted that the Collector's decision was influenced by a previous tribunal order regarding product classification, which did not justify the extension of time for the show cause notice. On the contrary, the Departmental Representative supported the impugned order, citing Supreme Court decisions in similar cases and urging the dismissal of the appeal.

The Member (T) analyzed the submissions and referred to the Supreme Court judgment in Harbanslal v. Collector of Central Excise & Customs, Chandigarh, which clarified the provisions of Sections 110 and 124 of the Customs Act. The judgment emphasized that the objective of Section 110 is not to initiate confiscation proceedings but to outline the consequences of not initiating such proceedings within the prescribed time. The Member highlighted the distinction between Sections 110 and 124, affirming that the invalidity of an order under Section 110 does not affect the validity of confiscation proceedings under Chapter IV of the Act.

Regarding the necessity of disclosing grounds for extension, the Member cited a Supreme Court case emphasizing that while the person from whom goods were seized should be notified of the proposed extension, they are not entitled to detailed information about the ongoing investigation. The Member dismissed the appellant's argument that the notice for extension should have been issued by an officer other than the Collector.

In the impugned order, it was noted that the seized goods were released provisionally, and the liability under Section 110 of the Customs Act only applies when goods are not released within six months. The Member referred to a Supreme Court judgment to support the position that if goods are released provisionally, no extension of time for issuing a show cause notice is necessary. Consequently, the appeal was deemed devoid of merit and dismissed.