KARSANDAS POPATLAL DHINOJA Vs. UNION OF INDIA

JUDGEMENT

(1.) BY the impugned order dated January 25, 1973 as per Annexure 'A' passed by the Collector of Customs and Central Excise, Ahmedabad, primary gold totally weighing 1598.400 gms. valued at about Rs. 35,100/ - at the time of the seizure thereof on February 12, 1971 was ordered to be confiscated under section 71 of the Gold Control Act, 1968 for the violation of section 8(1), section 11 and section 27 of the Act. A penalty was also imposed against the persons from whose possession the gold was seized, (penalty of Rs. 10,000/ - was imposed on petitioner No. 1 and Rs. 4000/ - on petitioner No. 2 and Rs. 2000/ - each on petitioners Nos. 3, 4 and 5). It is this order of confiscation and imposition of penalty which has been challenged by the petitioners under Article 226 of the Constitution of India. The petitioners have also challenged the appellate order dated January 24, 1976 passed by the appellate authority and the revisional order dated June 21, 1978 as per Annexure 'C' passed by the Central Government. The impugned order as confirmed by the appellate and the revisional authorities is challenged on the following two grounds : - (1) That the show cause notice of adjudication and confiscation and penalty was illegal inasmuch as it was not issued within the period of six months but was issued during the extended period without affording any opportunity to the petitioners to show cause against the proposal to extend the period of six months. (2) That the competent authorities have not taken into consideration the explanation offered by the petitioners.

(2.) THE facts are not in dispute. The premises of the petitioners were raided on February 12, 1971. Primary gold and gold ornaments in excess of the quantities mentioned in the statutory registers (G.S. 13) were found from the premises. The extent of the excess was 2335.729 gms. A show cause notice was issued by the competent authority on October 15, 1971 and the petitioners were afforded an opportunity to show cause why the excess gold in respect of which the relevant provisions of the Act had been violated should not be confiscated and why penalty should not be levied. By the impugned order as per Annexure 'A' the Collector of Customs came to the conclusion that sufficient cause was shown for the release of gold ornaments weighing 737.300 gms. He was, however, of the opinion that so far as primary gold weighing about 1598.400 gms. was concerned, a violation of the relevant provisions had in fact taken place and in exercise of powers under section 71 he ordered the confiscation of the primary gold to that extent. It will be seen that the notice calling upon the petitioners to show cause against confiscation and penalty was issued on December 15, 1971 i.e. about 10 months and 3 days after the date of the seizure. It is in the context of these facts that the first submission has been urged. It is not in dispute that the Collector of Customs had extended the period for issuing the show cause notice in exercise of powers under the second proviso to section 79 which reads as under : - '79. No order of adjudication of confiscation or penalty shall be made unless the owner of the gold, conveyance, or animal or other person concerned is given a notice in writing - (i) informing him of the grounds on which it is proposed to confiscate such gold, conveyance or animal or to impose a penalty; and (ii) giving him a reasonable opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the confiscation or imposition of penalty mentioned therein and, if he so desires, of being heard in the matter : Provided that the notice and the representation referred to in this section may, at the request of the owner or other person concerned be oral : Provided further that where no such notice is given within a period of six months from the date of seizure of the gold, conveyance or animal or such further period as the Collector of Central Excise or of Customs may allow, such gold, conveyance or animal shall be returned after the expiry of that period to the person from whose possession it was seized.'

(3.) IT is the use of the expression 'on sufficient cause being shown', in proviso to Section 110 of the Customs Act and absence of such an expression in Section 110(1) that weighed with the Supreme Court in coming to the conclusion that the power to extend time given to the Collector of Customs under Section 110 of the Customs Act, was quasi -judicial. In Section 79 of the Gold Control Act the position has been reversed whereas sub -section (1) specifically required notice to the party concerned before adjudication, confiscation or penalty. Such requirement is absent in the proviso where even an expression similar to a sufficient cause being shown appearing in Section 110 of the Customs Act, has not been used. This section as it stands does not require any adjudication or judicial determination of facts before the time mentioned in the proviso is to be extended. We are accordingly of the opinion that there is nothing in Section 79 which implies that the power given to the Collector Central Excise for extending the period of six months for retention to goods seized under Section 79 of the Gold Control Act is to be exercised in a quasi -judicial manner. It is not necessary that the person from whose possession articles have been seized under Section 66 of the Act, should be given an opportunity for being heard before the Collector decides to extended by the period of six months. As notice under Section 79 of the Gold Control Act has already been issued to the petitioners within the period as extended by the Collector Central Excise they are not entitled to the return of the goods as long as proceedings under Section 79 are not concluded.' We are in entire agreement with the reasoning of the Allahabad High Court. Second proviso to section 79 of the Gold Control Act empowers the competent authority to extend the period without engrafting any limitation on his powers to do so. It is not incumbent on him to take a decision to do so. It is not incumbent on him to take decision for extension only provided he is in a position to show that sufficient cause exists for extending the period. Since the power to extend has been conferred on the Collector of Customs and it has been exercised in accordance with the second proviso, it cannot be said that the show cause notice issued by the competent authority before passing the order of adjudication (ordering confiscation and penalty) was illegal or void. Apart from the difference in the language, the observations made by the Supreme Court in paragraph 15 Malhotra's case shows that the Supreme Court has based its decision mainly on the circumstances that the proviso empowers the Collector acting under the Customs Act to decide the question about extension provided and only provided existence of sufficient cause is established. This is evident from the circumstance that the Supreme Court has in terms observed that since the Collector has on facts to decide on the existence of a sufficient cause, although his decision as to sufficiency of materials before him may be within his exclusive jurisdiction, it is nonetheless difficult to comprehend how he can come to his determination unless he has before him the pros and cons of the question. Further onward the Supreme Court has observed that it cannot be said that the determination of the Collector that a sufficient cause exists is just and fair if he has before him only a one -sided picture without any means to check it unless an opportunity is afforded to the other side to correct or controvert it. It is only when such an opportunity is afforded that the enquiry into the sufficiency or otherwise of the material before the Collector for his determination on the question of extension can by tested. This is the essence of the decision which has mainly turned on the wording of the said proviso. Since no similar rider as regards the existence of sufficient cause has been engrafted on the powers of the Collector of Central Excise or of Customs acting in exercise of powers under section 79 of the Gold Control Act, it is futile to contend that the show cause notice issued by the competent authority beyond a period of six months but within the extended period is void.