1976 Supreme(Bom) 66

Bombay High Court
KANTAWALA,TULZAPURKAR
Mohanlal Devdanbhai Choksey - Appellant
Versus
M.P.Mondkar - Respondent
Decided On : 03/02/1976

The provisions of S.110 and S.124 of the Customs Act, 1962, are entirely independent and that non-compliance with the principles of natural justice while passing an order of extension under S.110 does not affect the validity of the show cause notice issued under S.124.

Headnote:

CUSTOMS ACT - Seizure of goods - Extension of time for issue of notice under S.124 - Validity - Show cause notice under S.124 - Validity - Effect of non-compliance with principles of natural justice while passing order of extension under S.110.

Fact of the Case:

The petitioners, a firm of gold and silver bullion dealers, delivered an intimation to the proper officer under S.11J of the Customs Act, 1962, in respect of their shop where the silver and gold bullion were being kept or stored by them. On Jan. 23, 1969, they sold and delivered three consignments of silver bullion to a firm at Nasik. On the same day, they obtained a transport voucher under S.11K for transport of the said goods by road from Bombay to Nasik. On Jan. 23, 1969, a party of Customs Officers raided the garage and residence of the petitioners and seized 23 bars of silver along with 11 small pieces of silver, a Willy's Station Wagon, some old books of account, and currency notes of the value of Rs. 54,000/-. On July 22, 1969, the Collector of Central Excise and Customs, Bombay passed an order extending the period for issue of notice under S.124 of the Act by six months from July 23, 1969. On Jan. 22, 1970, the Assistant Collector, Directorate of Revenue Intelligence, Bombay Unit, issued a show cause notice to the petitioners calling upon them to show cause why the silver bullion which was seized should not be confiscated and they should not be held liable for imposition of the penalty under Chapter XIV of the Act. The petitioners filed a petition under Art.226 of the Constitution challenging the validity of the order of extension dated July 22, 1969, and the show cause notice dated Jan. 22, 1970. The trial Court quashed the order of extension and directed the respondents to return the seized goods to the petitioners. The Customs Authorities and the Union of India filed appeals against the order of the trial Court.

Finding of the Court:

The Court held that the order of the Collector of Central Excise extending the period for issue of notice under S.124 was invalid as it was passed without giving any opportunity to the petitioners to be heard. However, the Court held that the show cause notice issued under S.124 was valid and the seizure of the goods was justified. The Court further held that the provisions of S.110 and S.124 are entirely independent and that non-compliance with the principles of natural justice while passing an order of extension under S.110 does not affect the validity of the show cause notice issued under S.124.

Issues: 1. Whether the order of the Collector of Central Excise extending the period for issue of notice under S.124 was valid? 2. Whether the show cause notice issued under S.124 was valid? 3. Whether the seizure of the goods was justified?

Ratio Decidendi: 1. The power under S.110(2) of the Customs Act, 1962, is quasi-judicial and requires a judicial approach. The power of extending the period to give notice under S.124(a) is to be exercised only on "sufficient cause being shown." This expression envisages at least some sort of enquiry on facts placed before the authority and determination by him of those facts. Extension order is not to be passed mechanically. The power under sub-sec.(1) cannot be equated with the power under the proviso to sub-sec.(2) of S.110. 2. S.124 of the Customs Act, 1962, does not lay down any period within which the notice required by it has to be given. The period laid down in S.110(2) of the Act relates only to the seizure of the goods and not the validity of the notice. Once the order of confiscation of the goods is passed under the provisions of S.111 of the Act, the question of return of goods after the expiry of the period mentioned in S.110 of the Act, cannot survive. 3. The seizure of the goods was justified as the Customs Officers had reason to believe that the goods were liable to confiscation.

Final Decision: The Court dismissed the appeal filed by the petitioners and modified the order passed by the trial Court by directing that the seized goods shall continue to remain with the petitioners subject to such final orders as may be passed by the Magistrate. The Court also directed the Customs Authorities to return all the books of account and documents except those which have been tendered as exhibits or which are likely to be tendered as exhibits in the criminal proceedings or in the adjudication before the Customs Authorities.