TIME LIMITATION FOR ISSUANCE OF SHOW CAUSE NOTICE UNDER CUSTOMS ACT, 1962

[Mr. M. GOVINDARAJAN]

In MUHAMMAD ALI, MUHAMMED SHAFI K.P., ABDUL SHUKOOR, MUHAMMED YASIR YOOSAF, SEENATH FOUSIYA V. VERSUS UNION OF INDIA, CHAIRMAN, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, NEW DELHI, COMMISSIONER OF CUSTOMS (PREVENTIVE) , MANIPUR., SUPERINTENDENT OF CUSTOMS, MANIPUR.- 2024 (8) TMI 1066 - MANIPUR HIGH COURT, the present writ petition was filed by five persons viz. Muhamed Ali, Muhamed Shafi, Abdul Shukoor, Mohamed Yasir, Seenath Fousiya. The petitioners 1, 2 and 4 were travelling to Guwahati and 3 and 5 were travelling to Delhi. During the security check in the Manipal International Airport the CISF personnel seized 9 items of jewelries from the petitioners under section 110 of the Customs Act, 1961 (‘Act’ for short) on 23.02.2023. The seized products were handed over to Anti-Smuggling Unit, Customs Division, Imphal.

The Additional Commissioner of Customs issued a show cause notice to the petitioner based on the seizure of jewellery on 17.08.2023 by speed post. On 26.09.2023 the petitioners sent a letter to the Department with the request to release the jewellery to them. Since the same were not returned the petitioners filed the present writ petition before the High Court.

The petitioners submitted the following before the High Court-

• Section 110 (1) of the Act confers power and jurisdiction on the proper Officer of Customs to seize any goods with respect to which he has a reasonable belief that the goods are liable for confiscation under the Act.
• Under section 110 (2) of the Act, it is provided that where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 of the Act within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized and that any further retention of the seized goods will be rendered illegal as being ultra vires of the provisions of section 110 (2) of the Act.
• The petitioners have approached the concerned authorities many times with a request to release/ return the seized gold jewelleries.
• The jewelleries were still in the illegal custody of the Department.
• The respondents are duty bound to release the seized jewelleries to the petitioners as mandated by section 110 (2) of the Act.
• Non-release of the said gold jewelleries to the petitioners amounts to abuse of power and jurisdiction conferred on the respondents under the Act.
• The refusal to release the seized gold jewelleries as provided under section 110 (2) of the Act is per se illegal and unsustainable and such act grossly violates the petitioners' Fundamental Right to Equality as guaranteed under Article 14 of the Constitution of India.
• Appropriate direction be issued to the respondents to return forthwith the seized gold jewelleries to the petitioners.

The Revenue contended the following before the High Court-

• As per the prevailing existing office procedure, the Show Cause Notice was drafted by the seizing unit, i.e., Divisional Preventive Unit, Imphal. The same was sent through e-office electronically for approval by the competent authority at Customs (P), NER, Shillong.
•  In view of the monetary amount involved in the case, the show cause notice was required to be signed by the Additional Commissioner of Customs sitting at Shillong and after approval of the same, the show cause notice was signed by the Additional Commissioner on 17.08.2023.
• The approved and signed show cause notice was then sent through e-office to the seizing unit at Customs Division, Imphal for DIN generation and issued of the show cause notice
• There were some technical glitches while generating DIN due to limited internet connectivity and frequent disruptions and as such, DIN can be generated only in the evening of 21.08.2023 at Imphal Customs Office and that during the said period, the movement of files through e-office was not smooth as well. 
• Then due to prevailing crisis wherein sporadic firings between the two warring communities that took place in Imphal city and its periphery, the District Magistrate imposed strict curfew against movement of the public and therefore, the show cause notice was registered only on 25.08.2023 through speed post for delivery to the concerned noticees, hence there was no delay in issuance of the show cause notice.
• The petitioner filed the writ petitions without availing the alternative remedy available in the Act vide sections 128 and 129 by filing appeal before the appropriate Authority.
• Therefore, the writ petition is not maintainable and liable to be rejected.

The High Court heard the submissions of both the parties. The High Court, after analyzing the facts of the case, considered the following questions to be answered in the present writ petition-

•  Whether the show cause notice was issued within the period of time prescribed under section 110 (2) of the Act?
• What will be the consequence if the show cause notice was not issued within the limited period prescribed under the aforesaid Act?

The High Court analyzed the provisions of Section 110, 124 and 153 of the Act. The High Court observed that a conjoint reading of the provisions of section 110, 124 and 153 of the Act, makes it very clear that if any goods are seized under section 110 (1) of the Act, a notice as provided under section 124 of the Act is required to be given to the owner of the goods before passing any order confiscating the goods or imposing any penalty and section 110 (2) mandates that such notice under section 124 (a) should be given within 6 months of the seizure and that on failure of giving such notice within the prescribed period, the seized goods shall be returned to the person from whose possession they were seized. Section 153 of the Act provides the mode of service of notice.

In the present case, the High Court observed that the gold jewelleries were seized from the petitioners on 23.02.2024 and the Show Cause Notice under section 124 of the Customs Act was dispatched only on 25.08.2023 through speed post for delivery to the petitioners. If the period of 6 months is to be reckoned from 23-02-2023, the period of six months will lapse on 22/23.08.2023. Therefore, the High Court held that the Show Cause Notice dated 17.08.2023 was not given within the period of 6 months prescribed under section 110 (2) of the Act. Therefore, the High Court held that the retention of the seized gold jewelleries by the Customs officials is illegal as being violative of the provisions of section 110 (2) of the Act.

In regard to the contentions of the Revenue that the petitioner did not avail the alternative remedy available in the Act by filing appeals before the Appellate Authorities, the High Court observed that since no order has been passed by the authority for confiscating the seized gold jewelleries or imposing any penalty thereof, there is no necessity or requirement of filing any appeal.

The High Court allowed the petition filed by the petitioner and directed the Department to release forthwith the seized gold jewelleries to the concerned petitioners.