2018 (4) TMI 1539 - HC - Customs

High Court affirms Tribunal decision on Customs Act extension, stresses need for clear cause. Appeal dismissed.

The High Court upheld the Appellate Tribunal's decision to set aside the Commissioner's order extending time for issuing a show cause notice under Section ... Extension of time limit for issuance of SCN - confiscation of seized goods - Section 110 of the Customs Act, 1962 - Held that: - Proviso to sub-section (2) lays down that period of six months cannot be mechanically extended but it can be extended only if the Commissioner of Customs is satisfied that sufficient cause is shown by the Customs Officer. There is no finding recorded by the Commissioner that he was satisfied that investigation is being pursued seriously and there is a need for grant of more time for taking the investigation to its logical conclusion. There is no finding recorded that sufficient cause was made out by the Customs Officer - in view of the express words used in proviso to sub-section (2) of Section 110, the Commissioner could not have extended the time without recording his satisfaction on basis of the material on record that investigation is being pursued seriously and there is a need for more time for taking it to its logical conclusion. Merely because investigation is delayed, that is no ground for grant of extension of time so as to defeat the right created under sub-section (2) of Section 110. Grant of extension of time as provided in the proviso affects the right which is created under sub-section (2) of Section 110 in favour of the person from whom the goods have been seized. If no notice under Section 124 is issued within a period of six months from the date of the seizure, the persons from whom goods are seized is entitled to return of goods as a matter of right. Appeal dismissed. Issues Involved:1. Legality of the extension of time for issuing a show cause notice under Section 110(2) of the Customs Act.2. Validity of the Appellate Tribunal's decision to set aside the Commissioner's order extending time.3. Impact of the show cause notice issued after the extension of time on the appeal's status.Detailed Analysis:1. Legality of the Extension of Time for Issuing a Show Cause Notice under Section 110(2) of the Customs Act:The core issue revolves around whether the Commissioner of Customs had the authority to extend the time for issuing a show cause notice under the proviso to Section 110(2) of the Customs Act, 1962. The Commissioner extended the time for issuance of the show cause notice by six months from 28th November 2014, citing ongoing investigations and the need for further scrutiny of documents and verification reports. However, the Appellate Tribunal found that the Commissioner did not record a satisfactory finding that the investigation was being pursued seriously and that there was a need for more time to conclude it. The Tribunal noted that the reasons provided were vague and did not constitute sufficient cause for extension.2. Validity of the Appellate Tribunal's Decision to Set Aside the Commissioner's Order Extending Time:The Appellate Tribunal set aside the Commissioner's order extending the time for issuing the show cause notice. The Tribunal's decision was based on the finding that the Commissioner failed to record satisfaction as required under the proviso to Section 110(2) of the Customs Act. The Tribunal observed that the inquiry related to the live consignment was completed by May-June 2014, and the laboratory reports were received and shown to Panch witnesses by 29th May 2014. The Tribunal found the request for extension vague and unsupported by sufficient cause. The High Court upheld the Tribunal's findings, emphasizing that the Commissioner must record satisfaction based on material evidence that the investigation is being pursued seriously and requires more time.3. Impact of the Show Cause Notice Issued After the Extension of Time on the Appeal's Status:The Appellant argued that the appeal before the Tribunal had become infructuous as a show cause notice was issued on 25th May 2015, after the extension. However, the High Court rejected this argument, stating that the right to return of goods under Section 110(2) is a valuable right that cannot be defeated by a mere extension of time without sufficient cause. The High Court clarified that the issuance of the show cause notice does not render the appeal infructuous and that the Appellate Tribunal's decision to set aside the extension does not affect the validity of the show cause notice itself.Conclusion:The High Court dismissed the appeal, finding no merit in the arguments presented by the Appellant. The Court upheld the Appellate Tribunal's decision, emphasizing the necessity for the Commissioner to record satisfaction based on sufficient cause for extending the time under Section 110(2) of the Customs Act. The Court also clarified that the issuance of the show cause notice does not render the appeal infructuous, and the right to return of goods under Section 110(2) remains intact if the extension is not justified.