Court upholds validity of Customs Act notice extension, emphasizes reasons recording, no prior hearing required.

The court allowed the appeal, setting aside the order that quashed the extension of the period for issuing a Show Cause Notice under Section 110(2) of the Customs Act, 1962. The court held that the extension order dated 24.06.2020 was valid as it complied with the amended proviso, recording reasons in writing and informing the concerned party. The court emphasized that the amended proviso did not mandate a prior hearing before extending the notice period, dismissing the writ petition challenging the extension.

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Issues Involved:
1. Legality of the extension of the period for issuance of Show Cause Notice under Section 110(2) of the Customs Act, 1962.
2. Requirement of adherence to the principles of natural justice before extending the period for issuance of Show Cause Notice.
3. Impact of the amendment to the proviso to Section 110(2) of the Customs Act, 1962.
4. Validity of the order dated 24.06.2020 extending the period for issuance of Show Cause Notice.

Detailed Analysis:

1. Legality of the Extension of the Period for Issuance of Show Cause Notice under Section 110(2) of the Customs Act, 1962:
The appeal by the Directorate of Revenue Intelligence (DRI) challenged the order dated 14.09.2020, which quashed the extension of the period for issuing a Show Cause Notice under Section 110(2) of the Customs Act, 1962. The court had to determine whether the extension was legally valid post the amendment to the proviso to Section 110(2).

2. Requirement of Adherence to the Principles of Natural Justice Before Extending the Period for Issuance of Show Cause Notice:
The writ petitioners argued that the extension order was passed without granting them an opportunity to be heard, which was arbitrary and illegal. They relied on the Supreme Court decisions in Charan Das Malhotra and Bibhuti Bhushan Bagh, which mandated adherence to the principles of natural justice, including providing an opportunity of hearing before extending the period for issuance of a Show Cause Notice.

3. Impact of the Amendment to the Proviso to Section 110(2) of the Customs Act, 1962:
The amendment to the proviso to Section 110(2), effective from 29.03.2018, altered the requirements for extending the period for issuance of a Show Cause Notice. The amended proviso required the authority to record reasons in writing and inform the person from whom the goods were seized, but did not explicitly mandate a prior hearing.

The court noted that the amendment brought a significant change, doing away with the requirement of "sufficient cause being shown" and instead requiring reasons to be recorded in writing and informing the person before the expiry of the specified period. The court held that the amended proviso did not necessitate a prior hearing, as the legislative intent was to exclude such a requirement.

4. Validity of the Order Dated 24.06.2020 Extending the Period for Issuance of Show Cause Notice:
The court evaluated whether the order dated 24.06.2020, extending the period for issuance of the Show Cause Notice, complied with the amended proviso to Section 110(2). The order recorded reasons in writing, referring to the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, which extended the time limit for issuing notices due to the COVID-19 pandemic.

The court concluded that the order fulfilled the twin conditions of recording reasons in writing and informing the person from whom the goods were seized. Therefore, the extension was valid and did not violate the principles of natural justice.

Conclusion:
The court allowed the appeal, setting aside the order passed in the writ petition and dismissing the writ petition. The court clarified that the judgment would not prejudice the respondents' right to challenge the final adjudication order dated 21.09.2020, except on the issue addressed in this appeal. The court emphasized that the amended proviso to Section 110(2) did not require a prior hearing before extending the period for issuance of a Show Cause Notice.

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