1972 (1) TMI 83 - HC - Customs

Customs Act: Adjudication Orders Quashed, New Proceedings Required

PRADEEP & CO. Versus COLLECTOR OF CUSTOMS

The court quashed the adjudication proceeding and the orders of penalty and confiscation, emphasizing the mandatory requirement of issuing a show cause ... Show cause notice - Waiver of - Estoppel - Waiver of - Estoppel - Writ petition - Limitation Issues Involved:1. Jurisdiction and validity of the order imposing penalty and confiscation of a motor car under the Customs Act, 1962.2. Opportunity of hearing and issuance of show cause notice under Section 124 of the Act.3. Waiver and estoppel concerning the right to challenge the adjudication proceedings.4. Definition and role of 'owner' under the Customs Act.5. Delay in filing the writ petition.Detailed Analysis:1. Jurisdiction and Validity of the Order:The petitioner sought to quash an order imposing a penalty and confiscation of a motor car under the Customs Act, 1962. The car was seized for carrying smuggled goods, leading to an adjudication proceeding by the Customs Authorities. The petitioner claimed ownership of the car and argued that the Customs Authorities failed to provide a show cause notice, thus rendering the order invalid.2. Opportunity of Hearing and Issuance of Show Cause Notice:The primary grievance was that the Customs Authorities did not issue a show cause notice to the petitioner as required under Section 124 of the Act. The Customs Authorities contended that the petitioner had knowledge of the adjudication proceedings but did not claim ownership or participate in the proceedings. The court emphasized that under Section 124, the Customs Authorities are statutorily obligated to issue a show cause notice to the owner or person affected, ensuring compliance with principles of natural justice. The failure to issue such a notice constituted a breach of statutory duty, vitiating the entire adjudication proceeding and the resultant order of confiscation and penalty.3. Waiver and Estoppel:The respondents argued that the petitioner had waived his right to a show cause notice by not participating in the proceedings despite having knowledge of them. The court clarified that waiver involves the intentional relinquishment of a known right, which was not applicable here. The petitioner had not waived his right to defend himself, nor was he estopped from challenging the validity of the proceedings. The court noted that non-performance of a statutory duty by a public authority cannot be excused by estoppel.4. Definition and Role of 'Owner':The court discussed the definition of 'owner' under the Customs Act, noting that it must be understood in its ordinary dictionary meaning since it is not defined in the Act. The petitioner, as the owner under a hire purchase agreement, was entitled to a show cause notice. The Customs Authorities' failure to ascertain the ownership and issue the notice to the petitioner, despite having knowledge of his claim, was a significant lapse.5. Delay in Filing the Writ Petition:The respondents contended that the petitioner delayed moving the court despite knowing about the adjudication proceedings. The court found that the petitioner acted in good faith, relying on correspondence and directions from the court in a related suit. The delay was justified, and there was no negligence or lack of diligence on the petitioner's part.Conclusion:The court quashed the adjudication proceeding and the orders of penalty and confiscation, emphasizing the mandatory requirement of issuing a show cause notice under Section 124 of the Customs Act. The Customs Authorities were directed to start proceedings afresh in accordance with the law. The petition succeeded, and the rule was made absolute, with no order as to costs.