2016 (5) TMI 125 - HC - Customs

Validity of impugned order passed by the learned Single Judge - Directions provided to release the goods imported by respondent - Show cause notice in terms of Section 110(2) of the Customs Act 1962 are not issued in view of the expiry of six months from the date of seizure of goods - Appellant submitted that the goods were actually detained under Section 17(2) of the Customs Act and there was no confiscation under Section 110 of the Act hence Section 110(2) of the Act had no application and there was no question of permitting return of goods to the respondent. Held that - none of the procedures as stipulated under Section 153 of the Act were followed by the appellant while serving a show cause notice before exercising power under proviso to sub-section 2 of Section 110 of the Act. The service on the custom agent was no service and vitiates the order. Section 146(A) of the Act provides that any person who is to appear before an officer of the customs/appellate authority may do so other than where appearance is required under Section 108 by an authorized representative. Section 146A(2) provides that an authorized representative would include a relative/regular employee/customs broker licensed under Section 146/legal practitioner/person who has acquired such qualification as may be specified. Similarly Section 147 of the Act provides for liability of principal and agent. Section 147(1) provides that where the Act requires anything to be done by the owner/importer/exporter the same may be done by his agent. Confiscation/seizure of goods would not fall within the meaning of import of goods as used in Section 146 of the Act and Regulation 2(c) of the Customs Broker Licensing Regulations 2013. Such confiscation being penal in nature cannot be termed to be a part of the duty of a custom agent. Service would have to be effected on the owner of the goods personally or through agent so specifically authorized to accept. The right of owner of goods cannot be defeated without prior notice on him. Hence the contention of the appellant that service of the show cause notice could also be effected on the Custom Agent in view of Sections 146 146A & 147 of the Act is a contention without merits and the view of the learned Single Judge that for a custom agent to be able to receive notice of show cause in circumstance as stated above is agreed. - Decided against the revenue

Summary

Issues Involved:
1. Validity of the order extending the period for issuance of a show cause notice.
2. Legality of service of the show cause notice on the customs agent.
3. Applicability of Section 110(2) of the Customs Act, 1962.
4. Entitlement of the respondent to the return of seized goods.

Issue-wise Detailed Analysis:

1. Validity of the order extending the period for issuance of a show cause notice:
The appeal challenged the order dated 23.11.2015 by the learned Single Judge, which quashed the order dated 23.01.2015 extending the period for issuance of a show cause notice by six months. The respondent argued that the show cause notice was backdated and dispatched after the expiry of the initial six-month period. The court found that the show cause notice and the impugned order were indeed backdated, as supported by the tracking records and the envelopes. Consequently, the order extending the period for issuance of a show cause notice was quashed.

2. Legality of service of the show cause notice on the customs agent:
The appellant contended that the service of the show cause notice on the customs agent was valid. However, the court noted that Section 153 of the Customs Act, 1962, as amended in 2012, requires service of notices directly to the person concerned, not their agents. The court emphasized that the amendment consciously removed the phrase "or to his agents," indicating that service on an agent was no longer valid. The court also referred to Regulation 2(c) and 11(a) of the Customs Brokers Licensing Regulations, 2013, which do not authorize customs agents to accept service of notices. Therefore, the service of the show cause notice on the customs agent was deemed invalid.

3. Applicability of Section 110(2) of the Customs Act, 1962:
The appellant argued that the goods were detained under Section 17(2) of the Customs Act, and not confiscated under Section 110, thus Section 110(2) was inapplicable. The court rejected this argument, noting that Section 17 deals with self-assessment of duty and does not provide for detention of goods. The court concluded that Section 110(2) was applicable, which mandates the return of goods if no show cause notice is issued within six months of seizure, unless extended by the Commissioner of Customs.

4. Entitlement of the respondent to the return of seized goods:
The respondent claimed entitlement to the return of the seized goods due to the expiry of the six-month period without a valid show cause notice. The court agreed, noting that the goods were seized on 25.07.2014, and no valid show cause notice was issued within the stipulated period. The court directed the release of the goods, as the extension order dated 23.01.2015 was invalid due to improper service of the show cause notice. The court clarified that the ongoing investigation would not be affected by this decision, and the appellant could continue their investigation and proceed to trial by complying with Section 124 of the Customs Act.

Conclusion:
The court upheld the learned Single Judge's decision, quashing the order extending the period for issuance of a show cause notice and directing the release of the seized goods. The appeal was dismissed, affirming that the service of the show cause notice on the customs agent was invalid and that the respondent was entitled to the return of the goods under Section 110(2) of the Customs Act, 1962.