Judgment

KULDIP SINGH, J.- The question for our consideration in this appeal is whether the provisions of Section 123 of the Customs Act, 1962 (the Act) would be attracted in a case where the retention of the goods has become illegal under Section 110(2) of the Act because no notice as required under the said provision was served within the statutory period.

2. The factory premises of the appellant-firm were raided by the Custom authorities on 26-5-1969 and 28 packages of synthetic fabrics of foreign origin were seized. The seizure was made under Section 110 of the Act. By the order dated 27-11-1969 the Collector Customs extended the period for the issue of show-cause notice prescribed under Section 124 of the Act by two months from the date of the order. Finally, the show-cause notice in terms of Section 124(1)(a) of the Act was received by the appellant-firm on 26-12-1969. The Assistant Collector, Bombay by the order dated 24-2-1971 under Section 112(b) of the Act, confiscated the goods in dispute and also imposed a penalty of Rs 50,000 on the appellant. The appeal filed against the order of the Assistant Collector was dismissed by the Appellate Collector. The appellant challenged the orders of the Assistant Collector and the Appellate Collector by way of a writ petition under Articles 226/227 of the Constitution of India before the High Court of Gujarat at Ahmedabad. The High Court dismissed the writ petition with cost. This appeal, by way of special leave, is against the judgment of the High Court.

3. It was contended before the High Court that the goods in dispute were seized by the Custom authorities on 29-5-1969 and the notice as contemplated by Section 124(1)(a) read with Section 110 of the Act was given on 19-12-1969. The said notice, having been served on the appellant after the statutory period of six months, was invalid and illegal. It was further contended that the notice being invalid, the appellant was entitled to the return of the seized goods under Section 110(2) of the Act and further the Custom authorities were debarred from holding the adjudication proceedings in respect of the goods in dispute. In other words, it was contended that once the notice under Section 110(2) of the Act is invalid, no proceedings for confiscation of the seized goods can thereafter continue. The High Court, relying upon the judgment of this Court in Assistant Collector of Customs v. Charan Das Malhotra{(1971) 1 SCC 697}, held the show-cause notice under Section 110(2) read with Section 124(1)(a) of the Act to be invalid but even then found the adjudication proceedings and the confiscation order to be valid on the following reasoning:

"The consequence is that the order passed by the Collector of Customs and Central Excise dated 27-11-1969 extending the period of six months provided in Section 110 by two months provided in Section 110 by two months from 26-11-1969 is bad and illegal in view of the provisions of Section 110(2) of the Act. But the question then arises is whether the petitioner is entitled to return of the goods seized, once the order of confiscation is passed under Section 111 of the Act. So far as Section 110 is concerned it deals with the seizure of the goods and the return thereof. In other words if the said provisions are not satisfied the goods seized have to be returned. Section 110 of the Act deals with the seizure of the goods. Section 124 of the Act deals with the confiscation and imposition of the penalty. The provisions relating to the seizure of the goods and those relating to the confiscation of the goods or imposition of penalty stand on different footing. Section 124 of the Act does not lay down any period within which the notice required by it has to be given. The period laid down in Section 110(2) affects only the seizure of the goods and not the validity of the notice. In the present case after the proceedings of seizure, proceedings for confiscation and imposition of penalty were proceeded with and the