TARSEM KUMAR Vs. COLLECTOR OF CENTRAL EXCISE CHANDIGARH

JUDGEMENT

(1.) THE petitioner was intercepted near the Beas Bridge by the Customs Officers on august 23, 1970, at about 5. A. M while he was going in Ambassador Car No. DHA 567 to Amritsar side. The car was being driven by Gurnam Singh were taken to the customs House at Amritsar at about 6 A. M. The petitioner was found in possession of 10 gold guineas bearing the effigy of King Edward VII and Indian currency notes of different denominations amounting to Rs. 93,500 were found tied in a canvas bag from under the seat of the driver. The currency notes, the gold guineas, the canvas bag and fourteen documents recovered from the petitioner along with the car were taken into possession by the Superintendent customs by recovery memo, copy of which is Annexure 'a' to the writ petition. The value of the car was stated as Rs. 20,700. Two cases were registered against the petitioner-one under the Customs Act, 1962 and the other under the Gold Control act, 1968. The seizure of the goods mentioned above including the currency notes and the Ambassador car was made under Section 115 of the Customs Act. No notice was issued to the petitioner on or before February 23, 1971, on which date the period of "six months of the seizure of the goods" expired. It is alleged on behalf of the respondents that an order granting extension of time by a further period of two months i. e. up to April 22, 1971, for the issue of show-cause notice in respect of the aforesaid seized goods, was granted by the Collector, Customs and Central Excise Chandigarh, on February 17, 1971 i. e. before the expiry of six months from the date of the seizure of the goods. A similar order was passed extending the time under Section 79 of the gold Control Act, 1968, by the collector, Customs and Central Excise, Chandigarh on February 19, 1971. On march 9, 1971 the Collector, Central Excise and Customs, issued a notice to the petitioner to show cause why the request for the grant of extension of time should not be acceded to. The petitioner was directed to appear before the Collector central Excise and Customs, on March 18, 1971, for submitting his reply to the notice. This notice was also issued to various other persons, against whom the customs authorities were proceeding on the information alleged to have been supplied by the petitioner. This notice was issued in view of the judgment of their lordships of the Supreme Court in Asst. Collector of Customs, Calcutta v. Charan das Malhotra, (Civil Appeal No. 1056 of 1967), decided AIR 1972 SC 689. In this judgment, it was held by their Lordships as per the head note that "the power under the proviso to Section 110 (2) of the Customs Act, 1962, is quasi-judicial approach. While the power of seizure under sub-section (1) of Section 110 can be exercised on basis of reasonable belief on part of the concerned officer, the power of extending the period to give notice under Section 124 (a) is to be exercised only on 'sufficient cause being shown'. This expression envisages at least some sort of inquiry of facts placed before the authority and determination by him of those facts. Extension order is not to be passed mechanically. The power under sun-section (1) cannot be equated with the power under the proviso to sub-section (2)of Section 110. Since no opportunity was afforded to the petitioner for showing cause against the extension of time when order dated February 17, 1971, was passed, the issuance of this notice was considered necessary. The petitioner, of course, objected to the extension of time bit the Collector, Central Excise and customs, passed two orders on March 22, 1971, one under the proviso to Section 110 (2) of the Customs Act and the other under Section 79 of the Gold Control Act, 1968. On April 6, 1971, show-cause notices were issued to the petitioner under section 124 of the Customs Act, 1962, and Section 79 of the Gold Control Act, 1968. The petitioner the filed the present petition for quashing of the orders dated march 22, 1971, extending the time for issuance of notices up to April 15,1971 and the show-cause notices issued on April 6, 1971. It was further prayed that necessary orders or directions may be issued to the respondents for returning the indian currency notes and the Ambassador car to the petitioner and to restrain them from continuing the proceedings in pursuance of the show-cause notices. The written statement has been filed by respondent No. 1 to which a replication was filed by the petitioner. A reply has also been filed to the replication by respondent No. 1.

(2.) THE learned counsel for the petitioner has vehemently argued that the order of extension passed ex parte on February 17, 1971, under the proviso to Section 110 (2) of the customs Act was a nullity in view of the decision of their Lordships of the supreme Court in Charan Das Malhotra's case, AIR 1972 SC 689 (supra) as it had been passed without notice to the petitioner. It is admitted by the respondents that it is so and that is why notice dated March 9, 1971, was issued to the petitioner and others to show cause why the extension of time should not be allowed and the proper order was passed extending the time on March 22, 1971, extending time under the proviso to Section 110 (2) of the Customs Act is valid or nor and while determining that question 1971, has to be completely ignored as honest.

(3.) THE principal attack as to the validity and legality of the order of extension passed on March 22, 1971, under the proviso to Section 110 (2) of the Customs act is that it had been passed after the expiry of six months from the date of the seizure of the goods and was, therefore, not valid because immediately after the expiry of six months a vested right accrued to the petitioner to claim the return of the seized goods under Section 110 (2) of the Customs Act. That right could not be taken away by extension of time granted after the expiry of six months. Under sub-section (1) of Section 110, if a proper officer has "reason to believe" that any goods are liable to confiscation under the Act, he may seize such goods and under sub-section (2) a notice under clause (a) of Section 124 of the Act has to be given within that period, the goods "shall be returned to the person from whose possession they were seized". The proviso authorizes the extension of time for a period not exceeding six months and is in the following words:--