Customs detention extension requires recorded reasons and prior hearing; invalid notice service cannot sustain confiscation proceedings.

An extension of the notice period under the proviso to Section 110(2) of the Customs Act is valid only where the authority records sufficient cause, acts quasi-judicially, and gives the affected importer an opportunity to object before expiry of the statutory period. An ex parte extension without reasons or fair hearing is invalid, and later consent cannot cure a lapse after time has expired. Where goods have already been cleared and the notice is served only on the clearing agent after that role has ended, confiscation proceedings against the importer cannot be sustained on the same invalid detention. The department may, however, issue a fresh notice in accordance with law.

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Issues: (i) Whether the extension of time for issuing notice under the proviso to Section 110(2) of the Customs Act, 1962 was valid when made ex parte without hearing the importer, without recording sufficient cause, and without proper communication, and whether alleged later consent cured the defect; (ii) Whether the show cause notice and further confiscation proceedings could be sustained after the goods had been cleared and the notice was served on the clearing agent.

Issue (i): Whether the extension of time for issuing notice under the proviso to Section 110(2) of the Customs Act, 1962 was valid when made ex parte without hearing the importer, without recording sufficient cause, and without proper communication, and whether alleged later consent cured the defect?

Analysis: The proviso to Section 110(2) contemplates an inquiry on sufficient cause before the period for issuing notice under Section 124 is extended. The power is not mechanical or routine, but quasi-judicial in nature and requires application of mind, reasons, and observance of fair procedure. An affected person must be given an opportunity to object before extension is granted. On the facts, no opportunity of hearing was given, the alleged extension was not properly shown to have been made by a reasoned order, and the purported consent was only after expiry of the prescribed period. Such retrospective consent could not validate an extension that had already lapsed.

Conclusion: The extension was invalid and conferred no authority to continue detention of the goods; this issue is decided in favour of the assessee.

Issue (ii): Whether the show cause notice and further confiscation proceedings could be sustained after the goods had been cleared and the notice was served on the clearing agent?

Analysis: Once the goods had been assessed and cleared, and later seized while in the importer's custody, the clearing agent's role had already ended for that consignment and service on the agent could not amount to service on the importer. In the absence of a valid extension under Section 110(2), the importer acquired the right to return of the goods after expiry of the statutory period. The notice alleging under-invoicing could not sustain confiscation proceedings against goods that were already cleared and in respect of which the statutory precondition for further detention had failed. At the same time, the Court preserved the department's liberty to issue a fresh notice to the importer in accordance with law.

Conclusion: The impugned proceedings could not be sustained against the petitioner on the existing notice and seizure; this issue is also decided in favour of the assessee.

Final Conclusion: The seizure and detention had to be revoked and the goods released forthwith, while leaving open the department's right to proceed afresh by issuing a proper notice to the importer and affording due opportunity.

Ratio Decidendi: Under the Customs Act, 1962, an extension of the notice period after seizure can be made only on recorded sufficient cause by a quasi-judicial order made before expiry of the statutory period and after fair opportunity to the affected person; without such valid extension, the seized goods must be returned and proceedings founded on the invalid detention cannot be sustained.

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