1976 (12) TMI 61 - HC - Customs

Customs Act, 1962: Invalid Confiscation Proceedings Due to Procedural Failures

The court held that the confiscation and penalty proceedings under the Customs Act, 1962 were invalid due to the failure to issue a show cause notice ... Confiscation - Illegal search and seizure - Adjudication Issues Involved:1. Validity of confiscation and penalty under the Customs Act, 1962.2. Legality of the extension of time for issuing a show cause notice without giving an opportunity to the affected person.Detailed Analysis:1. Validity of Confiscation and Penalty under the Customs Act, 1962:The Customs Officers raided the residence of the writ petitioner and recovered 31 articles of alleged foreign origin on 27th June, 1970. The show cause notice was not issued within six months as required by Section 110 of the Customs Act. The Collector extended the period to issue the show cause notice up to 26th June, 1971, without affording any opportunity to the writ petitioner. The actual show cause notice was issued on 22nd June, 1971, and the petitioner submitted his explanation on 23rd July, 1971. The Deputy Collector of Customs concluded that the seized goods were prohibited articles and passed an order confiscating the articles and imposed a penalty of Rs. 1,000 on 22nd March, 1972. The writ petitioner appealed to the Collector, Madras, who confirmed the order of confiscation and penalty on 8th November, 1973. The writ petitioner then filed W.P. No. 2176 of 1974 seeking a writ of certiorari or mandamus to quash the orders and direct the release of the seized articles.The court examined the material provisions of the Customs Act, specifically Sections 100, 110, 111, 112, 123, and 124. It was noted that the idea of confiscation is inherently connected with search and seizure. The court emphasized that confiscation cannot occur without seizure, as seizure forms an integral part of the confiscation process. The period of six months provided under Section 110(2) for issuing a show cause notice is intended to allow the concerned officers to investigate the matter. If no notice is issued within this period, the goods must be returned to the person from whom they were seized. The court concluded that the procedure laid down under Section 110 must be followed for confiscation and imposition of penalty, and any deviation from this procedure vitiates the confiscation and penalty proceedings.2. Legality of the Extension of Time for Issuing a Show Cause Notice without Giving an Opportunity to the Affected Person:One of the principal contentions urged by the writ petitioner was that the extension of time given by the Collector without giving any opportunity to him was invalid. The Collector is empowered to extend the time only when satisfied that there is sufficient cause for extension, which necessarily implies an inquiry. Since no inquiry with notice to the petitioner was held, the extension was deemed invalid. The court agreed with this contention, relying on the Supreme Court decision in Assistant Collector, Customs v. Malhotra, which held that the power to extend time under the proviso to Section 110(2) is quasi-judicial and requires a judicial approach. The extension order must not be passed mechanically and must be based on sufficient cause shown through an inquiry.The court found that the extension order dated 16th December, 1970, was made ex parte, without any inquiry or opportunity given to the writ petitioner. This vitiated the confiscation and penalty proceedings. Additionally, the order extending the time did not indicate any sufficient cause, further invalidating the extension. Consequently, the notice under Section 124 and the subsequent confiscation and penalty proceedings were deemed invalid.The court dismissed the writ appeal with costs, agreeing with the lower court's decision to quash the orders of the Deputy Collector and the Collector of Excise and directing the return of the seized articles.