2022 (1) TMI 1021 - HC - Customs

Seeking release of export consignments covered under the three shipping bills - Period of six months from the date of seizure expired - whether different authorities can proceed with respect to the same transaction if liabilities arising from one transaction are in respect of different legislations under which the authorities operate and there is no bar and/or impediment in doing so? - interpretation of amended proviso to Section 110 (2) of Customs Act. HELD THAT - The proviso to Section 110 (2) as it originally stood, that is prior to 29.03.2018 conferred power on the authority to extend the period of issuance of Show Cause Notice under section 124 (a) of the Act by further period not extending 6 months on sufficient cause being shown. The important change that has been brought about by the amendment with effect from 29.03.2018 is that the authority can extend the period of issuance of Show Cause Notice for a further period of 6 months by recording reasons in writing and inform the person from whom such goods were seized before the expiry of the period so specified. The question would be whether in terms of the amended proviso the person from whom the goods were seized is entitled to be heard before the time for issuance of Show Cause Notice is extended by the authority. The Hon ble Supreme Court in the celebrated decision in the case of Tulsiram Patel while answering the question as to whether the principle of natural justice be modified or in exceptional cases can it even be excluded to be read that the rule of audi alteram partem is a subject to the doctrine of necessity and yields to it as pointed out by the Hon ble Supreme Court in J. MOHAPATRA CO. VERSUS STATE OF ORISSA 1984 (8) TMI 350 - SUPREME COURT . It was held that where a right to prior notice and an opportunity to be heard before the order is passed would obstruct taking of prompt action such a right can be excluded. Such a right can also be excluded where action is to be taken its object and purpose and the scheme of the relevant statutory provisions warrants its exclusion nor can the audi alteram partem rule to be invoked, if importing it would have the effect of paralyzing the administrative process or where the need for promptitude or urgency of taking action so demands. The person from whose possession the goods have been seized is entitled to notice of the proposal before the authority for the extension of the original period of 6 months mentioned in Section 110 (2) of the Act and he is also entitled to heard upon such proposal, subject to the restrictions that he is not entitled to information as to the investigation which is in process, because there can be no right in any person to be informed midway, during an investigation of the materials collected in the case against him and moreover there is a need for maintaining confidentiality of the investigation proceedings. While on the issue, it will be relevant to take note of the decision of Hon ble Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT wherein it was held that when words in statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences and it would not be open to the Courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act - The other tools of interpretation namely contextual or purposive interpretation cannot be applied nor any resort be made to look to other supporting materials especially in taxation statutes where equity has no place. Petition dismissed.

Summary

Issues Involved:
1. Legality of the extension of the period for issuance of Show Cause Notice under Section 110(2) of the Customs Act, 1962.
2. Requirement of adherence to the principles of natural justice before extending the period for issuance of Show Cause Notice.
3. Impact of the amendment to the proviso to Section 110(2) of the Customs Act, 1962.
4. Validity of the order dated 24.06.2020 extending the period for issuance of Show Cause Notice.

Detailed Analysis:

1. Legality of the Extension of the Period for Issuance of Show Cause Notice under Section 110(2) of the Customs Act, 1962:
The appeal by the Directorate of Revenue Intelligence (DRI) challenged the order dated 14.09.2020, which quashed the extension of the period for issuing a Show Cause Notice under Section 110(2) of the Customs Act, 1962. The court had to determine whether the extension was legally valid post the amendment to the proviso to Section 110(2).

2. Requirement of Adherence to the Principles of Natural Justice Before Extending the Period for Issuance of Show Cause Notice:
The writ petitioners argued that the extension order was passed without granting them an opportunity to be heard, which was arbitrary and illegal. They relied on the Supreme Court decisions in Charan Das Malhotra and Bibhuti Bhushan Bagh, which mandated adherence to the principles of natural justice, including providing an opportunity of hearing before extending the period for issuance of a Show Cause Notice.

3. Impact of the Amendment to the Proviso to Section 110(2) of the Customs Act, 1962:
The amendment to the proviso to Section 110(2), effective from 29.03.2018, altered the requirements for extending the period for issuance of a Show Cause Notice. The amended proviso required the authority to record reasons in writing and inform the person from whom the goods were seized, but did not explicitly mandate a prior hearing.

The court noted that the amendment brought a significant change, doing away with the requirement of "sufficient cause being shown" and instead requiring reasons to be recorded in writing and informing the person before the expiry of the specified period. The court held that the amended proviso did not necessitate a prior hearing, as the legislative intent was to exclude such a requirement.

4. Validity of the Order Dated 24.06.2020 Extending the Period for Issuance of Show Cause Notice:
The court evaluated whether the order dated 24.06.2020, extending the period for issuance of the Show Cause Notice, complied with the amended proviso to Section 110(2). The order recorded reasons in writing, referring to the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, which extended the time limit for issuing notices due to the COVID-19 pandemic.

The court concluded that the order fulfilled the twin conditions of recording reasons in writing and informing the person from whom the goods were seized. Therefore, the extension was valid and did not violate the principles of natural justice.

Conclusion:
The court allowed the appeal, setting aside the order passed in the writ petition and dismissing the writ petition. The court clarified that the judgment would not prejudice the respondents' right to challenge the final adjudication order dated 21.09.2020, except on the issue addressed in this appeal. The court emphasized that the amended proviso to Section 110(2) did not require a prior hearing before extending the period for issuance of a Show Cause Notice.