Court upholds extension of notice period under Customs Act, deems retention of seized goods legal

The court upheld the extension of the period for issuing a notice under Section 124 of the Customs Act, noting that a hearing before the extension was not required under the amended provision. The retention of seized goods for confiscation proceedings was deemed legal, and the reasons recorded for the extension were found to be adequate. The court clarified that the extension order should be made within the initial period, but service can be within the extended period. Ultimately, the appeal was rejected, affirming the judgment of the Single Judge without identifying any illegality or procedural flaw.

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Issues Involved:
1. Validity of the extension of the period for issuing a notice under Section 124 of the Customs Act.
2. Requirement of a hearing before extending the period for issuing a notice.
3. Legality of the retention of seized goods for confiscation proceedings.
4. Adequacy of reasons recorded for the extension of the period.
5. Compliance with procedural requirements for extending the period.

Issue-wise Detailed Analysis:

1. Validity of the extension of the period for issuing a notice under Section 124 of the Customs Act:
The appeal challenges the judgment of a learned Single Judge, which declined interference with the proceedings initiated after the search and seizure evidenced by Exhibit P11 and Exhibit P19. The appellants argued that the period for issuing a notice for confiscation had expired, and the seized gold should be released. The court noted that the Customs Act, 1962, requires a notice to be issued within six months of the seizure, and although the period was extended, no notice or hearing was granted before the extension. The amendment to Section 110(2) of the Customs Act in 2018 mandates only recording reasons for the extension, not showing sufficient cause, thus eliminating the requirement for a hearing before the extension.

2. Requirement of a hearing before extending the period for issuing a notice:
The appellants contended that the Hon'ble Supreme Court has held that before extending the time as per the proviso, the persons from whom the goods were seized should be given a notice and an opportunity for hearing. The court examined the amended and unamended provisions of Section 110(2) and concluded that the amended proviso does not require a hearing before the extension is granted. The Rajasthan High Court's judgment in Commissioner of Customs (Preventive), Jodhpur v. Swees Gems And Jewellery was cited, which held that the amended provision only requires the Commissioner to record reasons in writing and inform the person from whom the goods were seized before the expiry of the period specified in the extension order.

3. Legality of the retention of seized goods for confiscation proceedings:
The court observed that the legality of the retention of the goods for confiscation proceedings is not vitiated by the impugned proceedings for extension. The consequence of finding the extension to be bad would only be that the goods would have to be restored, but the confiscation proceedings could continue. The court held that the amended proviso to Section 110(2) does not require a hearing before the extension is effected, and the information of such extension should be served within the extended period.

4. Adequacy of reasons recorded for the extension of the period:
The court examined whether the reasons recorded for the extension were arbitrary or perverse. The reasons cited in Annexure R1(a) included the pandemic situation, the quantum of gold involved, and the nature of the investigation, which involved inter-State accomplices. The court found these reasons to be rational and sufficient to support the extension. The court also noted that the pandemic situation justified the extension, as it had impacted the investigation process.

5. Compliance with procedural requirements for extending the period:
The court addressed the appellants' contention that the extension order should have been served within the initial six-month period. The court held that the order of extension should be made within the initial period, but the service of such order can be within the extended period. The court found that the order of extension was passed on 11.03.2020, within the initial period, but was not communicated to the appellants. However, since the appellants approached the court before the expiry of the extended period and the Department produced Annexure R1(a) in their statement, the court deemed the service and information of the reasons for extension to be satisfied.

Conclusion:
The court upheld the judgment of the learned Single Judge, finding no illegality, irrationality, or procedural defect in the extension order. The appeal was rejected, and the parties were left to bear their respective costs.

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