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HIGH COURT OF CALCUTTA
D. N. SINHA, A. K. MUKHERJI
CHARANDAS MALHOTRA - Appellant
Versus
ASSISTANT COLLECTOR OF CUSTOMS AND SUPERINTENDENT PREVENTIVE SERVICE - Respondent
A. F. O. O. 218 Of 1966
Decided On : MAY 12, 1967
CUSTOMS ACT, 1962 - SECTION 110(2), 111(D), 123, 124 - EXTENSION OF TIME FOR ISSUING SHOW CAUSE NOTICE - VAGUENESS AND UNSPECIFICITY OF NOTICE - PENALTY UNDER SECTION 112 - KNOWLEDGE OF SMUGGLED GOODS - ADMISSION OF ILLEGAL PROCUREMENT.
Fact of the Case:
The appellant's shop was raided by customs officials, and 218 foreign-made watches were seized. The appellant produced documents to prove the legal importation of some of the watches, and 87 were released. The remaining 131 watches were seized, and a statement was taken from the appellant. The appellant wrote several letters to the customs authorities, requesting the release of the watches and providing additional documents and information. The customs authorities granted two extensions of time for issuing the show cause notice, but both extensions were granted ex parte without giving the appellant an opportunity to be heard. The show cause notice was eventually issued on March 6, 1964, more than a year after the seizure of the watches.
Finding of the Court:
The court held that the second extension of time for issuing the show cause notice was invalid because it was granted ex parte and without giving the appellant an opportunity to be heard. The court also held that the show cause notice was vague and unspecific and did not give the appellant a reasonable opportunity to defend himself. The court further held that the notice did not make the necessary allegations to support the imposition of a penalty under Section 112 of the Customs Act, 1962, and that there was no evidence that the appellant had knowledge that the watches were smuggled.
Issues: 1. Whether the second extension of time for issuing the show cause notice was valid. 2. Whether the show cause notice was vague and unspecific. 3. Whether the notice made the necessary allegations to support the imposition of a penalty under Section 112 of the Customs Act, 1962. 4. Whether there was evidence that the appellant had knowledge that the watches were smuggled.
Ratio Decidendi: 1. An extension of time for issuing a show cause notice under Section 110(2) of the Customs Act, 1962, must be granted in accordance with the principles of natural justice, which require that the person affected be given an opportunity to be heard. 2. A show cause notice under Section 124 of the Customs Act, 1962, must be clear, specific, and unambiguous, and must give the person affected a reasonable opportunity to defend himself. 3. A notice under Section 124 of the Customs Act, 1962, must make the necessary allegations to support the imposition of a penalty under Section 112 of the Act, including an allegation that the person affected had knowledge that the goods were smuggled. 4. The burden of proving that goods are not smuggled goods lies on the person from whose possession the goods were seized, but this burden cannot be discharged if the show cause notice is vague and unspecific.
Final Decision: The court quashed the show cause notice and ordered the return of the seized watches to the appellant.
( 1 ) THE facts in this case are shortly as follows : The appellant Charan-das Malhutra carried on business under the name and style of "wallton Watch Company" as the sole proprietor thereof at No. 12. Chow-ringhee Road, Calcutta. In the petition it has been stated that the appellant used to carry on another business under the name and style of "welcon Watch Co. " at No. 170, Mahatma Gandhi Road, Calcutta, which business was closed in the year 1965 and its stock-in-trade was transferred to the appellant's present business On the 19th of March, 1963 the respondents nos. 1 and 2 caused a search to be conducted by their Rummaging Staff at the appellant's place of business as aforesaid at No. 12, Chowringhee Road. Calcutta. It is said that the search was conducted from 10-30 A. M. till midnight of 19th March. 19r3 As a result of the said search, 218 watches of foreign make were found in the appellant's shop. On scrutiny of documents produced, 87 watches were released and the balance 181 watches were seized. On that date, a statement was taken from the appellant, a copy whereof is set out at page 12 of the paper book. In that statement he inter alia said as follows:"i have produced Bills against some of the watches for your Inspection. I am however, very unwell and I am not in a position to produce further vouchers or receipts against watches shown in the Inventory. I shall however, produce the same for your inspection as early as possible. I do state that I purchased twenty four watches from the Custom House Sales in the year 1957 or 1958. Out of this quantity I have sold all except two watches which I have produced to you and which I surrender herewith to you. "on the 28th March, 1963 the appellant wrote to the Assistant Collector of Customs etc. asking him as to when he could attend with the necessary documents for verification and release of the seized articles As there was no reply to this, a reminder was given on the 8th April, 1963 complaining that owing to seizure of the watches normal business could not be resumed. To this also there was no reply, and on the 17th April. 1988 another reminder was Riven stating that the appellant's business had come to a standstill. On the 4th May, 1963 the appellant wrote another letter which contained the following statement :"this is to state that most of the watches seized are very old stock some of which were owned by my other concern, Welcon Watch Co. , 170. Mahatma Gandhi Road which was closed in the year 1955 and its stock-in-trade was transferred to the allied concern. Purchase vouchers for (sic) other vouchers are being submitted to you and you are requested to please expedite release of the watches. " (2) There was another letter dated 6th May, 1963 which refers to one voucher being shown which was destroyed by white ants. With the letter, the appellant submitted 52 vouchers and other documents in respect of 131 watches seized on the 19th March, 1963. It is stated that the vouchers related to 126 watches. On the 21st of June 1968 the Rummaging Inspector wrote to the appellant as follows:--"please refer to your letter dated 6th May, 1963 forwarding vouchers, bills, invoice, etc. relating to the seized watches. These vouchers, however, do not cover all the watches seized from you and your representative Shri Sunderlal Lala who came to deliver the abovementioned vouchers assured that the remaining vouchers would be submitted as soon as possible hut none of them has since been forwarded. You are accordingly requested to send the wanting vouchers immediately and at least within a week hereof. You are also requested to produce your Stock Book within the same period for verification of your Stock of watches. "there is a letter dated 26th June, 1963 by Messrs. Benson Watch Company relating to three Benson Watches which were seized. They stated that these watches were sold long time back and it was not possible for them to trace out such old documents They however certified t
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