TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 1433
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....d for further investigation on 8.8.2018 under Section 110 of the Customs Act, 1962 (hereinafter referred to as " the Act") on reasonable belief that the they were liable for confiscation under Section 111 of the Act as the IEC holder, allegedly was found not to be the actual importer and a true declaration were not made as stipulated by Section 46 of the Act. 3. Show cause notices were not issued to the respondents before 25.10.2018 i.e. within six months from the date of detention of the goods. The DRI requested for extension of the period of issuing show cause notice by another six months under the proviso to Section 110 (2) of the Act for the reasons outlined in a letter- dated 12.10.2018 to the Commissioner of Customs, Jaipur. The DRI informed the Commissioner of Customs, Jaipur of various difficulties and impediments in not issuing the show cause notice within the prescribed time of six months from the date of detention and seizure of the goods. Being aggrieved by these orders, the respondents appealed to the Customs Excise and Service Tax Appellate Tribunal (hereafter referred to as 'CESTAT'). 4. The respondents argued before CESTAT that they were not issued the show cause ....
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....extending six months with a condition that the Commissioner had to inform the person concerned from whom such goods were seized before the expiry of period so specified. The revenue's position therefore was that the requirement for issuance of show cause notice before extending the time period by another six months was done away with and there was no infirmity in the order of the Commissioner in these cases. On being asked, he also made available the investigation file before the Bench. The revenue also stated that investigation could not be completed due to the various reasons including the overseas enquiries and therefore, the DRI requested the Commissioner to extend the time period for issuance of the show cause notice. Therefore, according to the revenue, the Commissioner after applying his mind and considering the surrounding circumstances extended the time period for issue of show cause notice by another six months. 7. In the impugned order, the CESTAT compared the provisions of the pre-amended Section 110 (2) with the amended provision, and further relied on Para 163 of the speech of the Finance Minister, with respect to the amendment, which it reproduced. The relevant part....
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.... of a person are likely to prejudicially affected, he is entitled to opportunity to put forwarded his case before the Adjudicating Authority. Therefore, the person from whom the goods have been seized, is entitled to notice of the proposal before Adjudicating Authority for the extension of original period of the six months under Section 110 (2) of the Customs Act subject to the restriction that he is not entitled to the information about the investigation which is in possession of the Investigating Agency as there can be no right in any person to be informed whose goods during the investigation material collected against him and there is no need for maintaining the investigation proceedings. This view has been affirmed in the I G Rao case referred(supra). The provisions of Section 110 (2) before and after the amendment is as identical but for "on sufficient cause being shown has been replaced with reasons to be recorded in writing extends such period", for a period not exceeding six months and inform the person from whom such goods were seized before expiry of the said period. Careful analysis of the provision makes it clear that the right of issuance of the Show Cause Notice for t....
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.... Commissioner of Income Tax (Central-1) New Delhi, v Vatika Township [(2014) 0 SCC 670], Hon'ble Supreme Court has held that law enacted in absence of a provision in the statue about the same being with of retrospective effect in the Clause of Finance Act, the amendment will have prospective effect only. In view of that also we find that the impugned order is not sustainable as the new amended provision has been applied for the seizure made during period when the amendment was not there in the statue." 14. In view of above our analysis as above, we are of the considered opinion that there is no legality for dispensing with the Show Cause Notices to the affected party even under the amended provisions of Section 110 (2) of the Act. The Adjudicating Authority has erroneously held that this is no need of issue of Show Cause Notice in the cases of extension at hand. 15. Accordingly, we set aside the impugned orders and allow appeals with consequential relief as per law." In view of that decision in S.R.K. Metal & Industries (supra), the CESTAT allowed the respondents' appeals. 9. The revenue argues that the CESTAT fell into error in not considering the fact that the change in the....
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.... returned to the person from whose possession they were seized: "Provided that the Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend such period to a further period not exceeding six months and inform the person from whom such good were seized before the expiry of the period so specified: Provided further that where any order for provisional release of the seized goods has been passed under section 110A, the specified period of six months shall not apply". 12. The Supreme Court in The Asstt. Collector of Customs and Ors. v. Charan Das Malhotra AIR 1972 SC 689 considered the interplay between Sections 110 and 124 of the Customs Act and held as follows: "Section 124 provides that no order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty. The Section does not lay down any period within which the notice required by it has to be given. The period laid down in Section 110(2) affects only the seizure of the ....
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....opardy unless he is heard in the matter. It cannot be disputed that S. 110 sub- s. (2) contemplates either notice (within six months from the date of seizure) to the person from whose possession the goods have been seized in order to determine whether the goods should be confiscated or the restoration of the goods to such person on the expiry of that period. If the notice is not issued in the confiscation proceedings within six months from the date of seizure the person from whose pos- session the goods have been seized becomes immediately entitled to the return of the goods. It is that right to the immediate restoration of the goods upon the expiry of six months from the date of seizure that is defeated by the extension of time under the proviso to S. 110 (2). When we speak of the right of the person being prejudiced or placed in jeopardy we necessarily envisage some damage or injury or hardship to that right and it becomes necessary to inquire into the nature of such damage or injury or hardship for any case to be set up by such person must indicate the damage or injury or hardship apprehended by such person. In the present case, one possibility is that the person from whose po....
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....lated as the maximum period of extension is a short period, but Parliament has contemplated an original period of six months only and when it has fixed upon such period it must be assumed to have taken into consideration that the further detention of the goods can produce damage or injury or hardship to the person from whose possession the goods are seized. We have said that notice must go to the person, from whose possession the goods have been seized, before the expiry of the original period of six months. It is possible that while notice is issued before the expiry of that period, service of such notice may not be effected on the person concerned in sufficient time to enable the Collector to make the order of extension before that period expires. Service of the notice may be postponed or delayed or rendered ineffective by reason of the person sought to be served attempting to avoid service of notice or for any other reason beyond the control of the Customs authorities. In that event, it would be open to the Collector, if he finds that sufficient cause has been made out before him in that behalf to extend the time beyond the original period of six months, and thereafter, after no....
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....t's considered view, the amended provision deliberately sought to overbear the previous view that a notice before extension was necessary. Now two conditions are to be satisfied: one, the Commissioner has to record his reasons in writing, why the extension is necessary, and two, inform the person from whom such good were seized before the expiry of the period so specified. The latter condition is equally important, in the opinion of this court, because it is a pre-requisite for the exercise of the power of extension. The pre-amended provision was silent on this aspect. 16. There are other reasons for this court to hold that the amendment brought about a radical change in the law. Parliament had knowledge - or is deemed to have knowledge of the existing state of law, which required notice, before extension. Therefore, the change of terminology is significant; the amendment has resulted in only two conditions, being insisted upon- primarily that the Commissioner should record his reasons, before the expiry of the period of limitation and should inform those reasons to the party concerned. 17. Besides, this court also notices that Parliament, aware of difficulties that might be fac....