1971 (2) TMI 41 - SC - Customs

Customs Act: Collector's Power is Quasi-Judicial

The Supreme Court affirmed that the power of the Collector of Customs under the proviso to Section 110(2) of the Customs Act, 1962 is quasi-judicial and ... Quasi-judicial function - opportunity to be heard - sufficient cause being shown - extension of seizure period - right to restoration of seized goodsQuasi-judicial function - opportunity to be heard - sufficient cause being shown - right to restoration of seized goods - Nature of the Collector's power under the proviso to Section 110(2) of the Customs Act and whether an opportunity to be heard must be given before granting extension of the seizure period. - HELD THAT: - The proviso to Section 110(2) empowers the Collector to extend the six months period for seizure 'on sufficient cause being shown' and limits extensions to an overall period not exceeding one year. The Court contrasted the language of sub-section (1) ('reason to believe') with the proviso's 'sufficient cause being shown', concluding that the proviso contemplates determination on materials placed before the Collector rather than mere subjective satisfaction. Because the right to restoration of seized goods accrues on expiry of the initial period, an order extending that period affects a civil right and therefore requires a judicial approach. Precedents recognising quasi-judicial character where statutory language and effects on rights are similar were applied. An ex parte extension order, made without giving the person from whom goods were seized an opportunity to correct or controvert materials relied upon, is not consistent with the requirement that the Collector determine on facts whether sufficient cause for extension exists. The Court rejected the view that disclosure necessary for such an opportunity would unduly prejudice investigation, noting that only limited, non-sensitive information need be placed before the Collector and that procedural protections are compatible with investigatory concerns. On these grounds the Division Bench's conclusion that the Collector's power under the proviso is quasi-judicial or at least requires a judicial approach and that an opportunity to be heard should have been given was upheld. [Paras 13, 14, 15, 16, 17]The Collector's power under the proviso to Section 110(2) is quasi-judicial or requires a judicial approach; an opportunity to be heard must be given before extending the seizure period, and the Division Bench was right to order restoration of the watches.Final Conclusion: The appeal is dismissed. The judgment of the Division Bench of the High Court is upheld and restoration of the seized watches to the respondent was correctly ordered. Issues Involved:1. Nature of the power of the Collector of Customs under the proviso to the second sub-section of Section 110 of the Customs Act, 52 of 1962.2. Whether the Collector can extend the period for giving notice under Section 124(a) of the Act after the initial period of six months or the extended period has already expired.Detailed Analysis:Issue 1: Nature of the power of the Collector of Customs under the proviso to the second sub-section of Section 110The Supreme Court examined the nature of the power conferred upon the Collector of Customs under the proviso to Section 110(2) of the Customs Act, 1962. The Court observed that the power of seizure under sub-section (1) requires a 'reason to believe' that goods are liable to confiscation. However, the proviso to sub-section (2) uses the term 'sufficient cause being shown,' indicating that the Collector must determine whether the facts warrant an extension of time.The Court emphasized that the power to extend time is not to be exercised mechanically or routinely but requires the Collector to be satisfied that the investigation could not be completed for bona fide reasons within the stipulated time. The burden of proof lies on the Customs Officer applying for the extension.The Court noted that the function of the Collector under the proviso is quasi-judicial or at least requires a judicial approach. The Collector must conduct some form of inquiry and determine whether the cause shown warrants an extension. The Court cited precedents, including Kraipak v. Union of India, to support the view that the power to extend time involves a civil right and requires a judicial approach.Issue 2: Whether the Collector can extend the period for giving notice under Section 124(a) after the initial period of six months or the extended period has already expiredThe Court addressed whether the Collector can extend the period for giving notice under Section 124(a) after the initial or extended period has expired. The Court held that the right to restoration of seized goods accrues to the person from whom the goods are seized upon the expiry of the initial six months. This right can only be defeated by an order of extension made within the stipulated time.The Court agreed with the Division Bench of the High Court that an ex parte determination by the Collector would be one-sided and potentially based on incorrect facts. Therefore, the power under the proviso should not be exercised without giving the person from whom the goods are seized an opportunity to be heard.The Court rejected the argument that the power to extend time is purely administrative and does not require a judicial approach. The Court emphasized that the extension of time affects a civil right, and the Collector must determine the existence of a sufficient cause based on facts presented before him.Conclusion:The Supreme Court upheld the judgment of the Division Bench, affirming that the power under the proviso to Section 110(2) is quasi-judicial or requires a judicial approach. Consequently, an opportunity to be heard must be given to the person from whom the goods are seized before extending the time for issuing a notice under Section 124(a). The appeal was dismissed with costs.