TaxTMI 
TaxTMI 
2009 (9) TMI 38
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.... Co. for a sum of Rs.9,29,89,400/. The machine met with an accident in or about January 2007. The respondent no.3 reported the accident to the insurance company. After the inspection, the insurance company was of the view that the machine could not be repaired and brought back to its original condition and was required to be discarded. The insurance company settled the claim of the respondent no.3 on a total loss basis and paid the settled amount to the respondent no.3 after deducting its scrap/residual value with permission to respondent no.3 to sell. The respondent no.3 accordingly sold to the petitioner the machine for Rs. 24,00,000/. According to the respondent nos.1 and 2, the machine was allowed to be imported without payment of duty on condition that the importerrespondent no.3 would use it for its own use for a period of 5 years. Since the machine, though met with an accident, was sold within a period of 5 years of the import, the condition for a duty free import was breached and was liable for confiscation under section 111(o) of the Customs Act, 1962 (for short "the Act"). The respondent no.2 accordingly seized the machine from the premises of the petitioner on 14th Novem....
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....ision Bench of this Court, to which one of us (Rebello, J.) was a party, has held that the notice under section 110(2) of the Act is required to be given within 6 months with a power to the Commissioner for sufficient cause to further extend the period of 6 months from the date of seizure. There is however no provision to extend the period beyond 6 months and notice under section 110(2) must be given in any event within 12 months from the date of seizure. The notice mentioned under section 110(2) is a show cause notice to be issued in pursuance of section 124(a) of the Act. Section 124 says 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 of the grounds on which it is proposed to confiscate the goods and impose the penalty and is given an opportunity of making a representation and is given a reasonable opportunity of being heard in the matter. 6. Mr. Jetly, learned counsel appearing for the respondent, submitted that though notice in the present case was not given to the petitioner, it was given to the respondent no.3 who was the ownerimporter of th....
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....n, be extended by the [Commissioner of Customs] for a period not exceeding six months." [Other subsections, being not relevant, are not quoted.] "124. Issue of showcause notice before confiscation of goods, etc. - 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- (a) 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; (b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c) is given a reasonable opportunity of being heard in the matter." Though it is the contention of the petitioner that on purchase of the machine by payment of Rs.24 lakhs it became the owner thereof and it is the contention of the respondents that the petitioner is not the owner of the machine as there was prohibition for sale under the exemption notification and the sale in contravention of the said prohibition did not confer any title on the goods, we do not consider ....
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....ods are being transferred in breach of any condition prohibiting the transfer. The transferee, who has bonafidely purchased the imported goods for consideration without notice of any breach of condition of import or violation of any prohibition, may be in possession of the goods. Though section 110 confers a power on the customs authorities to seize the goods from possession of such transferee even without notice, subsection (2) of section 110 read with section 124 of the Act cast an obligation on the customs authorities to issue a show cause notice within 6 months or extended period of further 6 months to show cause why the order of confiscation of the goods should not be made. Opportunity must be given to the person in possession of the goods because their confiscation would affect his civil right to possess the goods which were seized from his custody. It is for this reason that section 124 uses the expression "the owner of the goods or such person" and says that no order of confiscating the goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is given a notice in writing informing him the grounds on which it is proposed to confi....