Customs seizure and show cause notice upheld, but ex parte extension of time for notice was struck down for want of hearing.

An ex parte extension of time for issuing customs notice was held unsustainable because the proviso required a quasi-judicial approach and hearing of the affected person; the later release arrangement did not amount to waiver. The seizure of the nickel consignment was upheld because objective material, including doubtful origin and absence of lawful import documents, furnished reason to believe that the goods were liable to confiscation. The show cause notice was also sustained: clearance for home consumption did not create estoppel against statutory enforcement, and an erroneous clearance did not bar action under the Customs Act. The appellate result was partial relief only on the extension order.

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Issues: (i) whether the ex parte order extending time under the Customs Act was valid; (ii) whether the seizure of the nickel consignment was supported by a valid reason to believe; (iii) whether the show cause notice under the Customs Act was sustainable despite the plea based on import licence conditions and clearance for home consumption.

Issue (i): whether the ex parte order extending time under the Customs Act was valid.

Analysis: The proviso to the relevant seizure provision was treated as requiring a judicial approach, and the person affected was entitled to be heard before extension of time was granted. The order made without notice was therefore not sustainable. The contention based on waiver failed because the later release arrangement was not a consent order in the strict sense and did not amount to abandonment of the objection to the extension order.

Conclusion: The ex parte extension order was invalid and was rightly set aside, in favour of the assessee.

Issue (ii): whether the seizure of the nickel consignment was supported by a valid reason to believe.

Analysis: The customs officer received information that the consignment was of doubtful origin, found foreign-origin goods at the premises, and the factory authorities could not produce documents showing lawful import or origin. These circumstances furnished objective grounds for the belief that the goods were liable to confiscation. The seizure was therefore treated as an actual seizure under the statutory power and not merely as a prohibitory order.

Conclusion: The seizure was valid and was upheld, against the assessee.

Issue (iii): whether the show cause notice under the Customs Act was sustainable despite the plea based on import licence conditions and clearance for home consumption.

Analysis: The notice alleged import without a valid licence because the goods were said to be of a country of origin not covered by the licence, and on that footing the customs machinery could be invoked. The argument that clearance for home consumption barred further action was rejected, because such clearance did not create an estoppel against enforcement of statutory duties, and an erroneous clearance could not prevent proceedings under the Act. The challenge based on the limitation argument also failed because the injunction had not been granted against the customs authorities.

Conclusion: The show cause notice was valid and could proceed, against the assessee.

Final Conclusion: The appellate court sustained the seizure and the show cause proceedings, but it set aside the extension of time order for issuing notice.

Ratio Decidendi: An extension of time for issuing customs notice under the seizure provision cannot be granted ex parte where the power is quasi-judicial in character and requires hearing, but a customs seizure is valid if supported by objective grounds amounting to reason to believe, and erroneous clearance for home consumption does not bar statutory proceedings or create an estoppel.

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