Uma Rajeswarrao Patra v. Union of India — 1977 DIGILAW 269 (CAL)

JUDGMENT The judgment of the Court was as follows :–– This Rule is directed against an order in revision dated 29th August, 1971 passed by the Central Government tinder Section 131 of the Customs Act. The petitioner is a businessman dealing in various goods including camphor and cloves. 2. On 15th of January, 1956 the officers of Customs and Central Excise, Kakinada (Andhra Pradesh) seized eight bags of cloves from one Aminchand of Pithapuram (Andhra Pradesh). The said cloves were purchased by the petitioner from one Jaichand Lal Sethia of 9, Dacres Lane, Calcutta who dispatched the said goods to the petitioner by railway and the same was held by Aminchand as an agent of the petitioner. On 28th of February, 1965 the Inspector of the Customs and Central Excise, Sompeta (Andhra Pradesh) seized from the house of one Pydisathi Vignosham of Kanchili (Andhra Pradesh) eight bags containing Lion Brand camphor weighing 451-05 kgs. The petitioner purchased the said indigenous Lion Brand camphor from one Somchand Sanghvi of 3, Amratolla Street, Calcutta who booked the said goods to the petitioner and the same was kept by the petitioner in the house of his relative, the said Pydisathi Vignesham. On the 12th of November, 1965 the Superintendent of Customs issued a show cause notice calling upon the petitioner to show cause why the camphor would not be confiscated rendering the petitioner liable to penalty under section 112 of the Customs Act, 1962. A similar notice of show cause was issued on the 23rd of December, 1965 with respect to the cloves. On the 6th of April, 1966 the petitioner replied to the said show cause notices. On 23rd December, 1966 both the goods were confiscated by the Collector of Central Excise and Customs under section 111(d) of the Customs Act, 1962 and a personal penalty of Rs. 1000/- was imposed upon the petitioner. On the 24th of May, 1971 the petitioner preferred two appeals against those orders of confiscation and imposition of penalty. By an order dated 31st May, 1971 the Member of Central Board of Excise and Customs affirmed the order of confiscation but set aside the personal penalty of Rs. 1000/- imposed upon the petitioner. On the 6th August, 1971 the petitioner preferred a revisional application under section 131 of the Customs Act. By an order dated 31st May, 1971 the Member of Central Board of Excise and Customs affirmed the order of confiscation but set aside the personal penalty of Rs. 1000/- imposed upon the petitioner. On the 6th August, 1971 the petitioner preferred a revisional application under section 131 of the Customs Act. By an order dated 29th August, 1972 the Secretary to the Government of India, Ministry of Finance, Department of Revenue and Insurance rejected the petitioner's said application. The petitioner being aggrieved, moved this Court under Art. 226 of the Constitution and obtained the present Rules. An interim order was also granted to this effect that in the event the Rule succeeds ultimately, the respondents should be bound to refund the sale proceeds of the goods without recourse to a separate proceeding. 3. Mr. Datta, appearing on behalf of the petitioner has raised only one point. It is contended that in the instant case no notice under Section 124 of the Customs Act, 1962 was given within six months of the seizure of the goods. The said period of six months was also not extended under the proviso to Section 110 (2) of the Act. So, after the expiry; of the said six months, the retention of the seized good in the custody of the Customs was illegal and without jurisdiction as the same was in contravention of sub-section (2) of Section 110 of the Act. According to Mr. Datta, such goods which were illegally detained, could not be confiscated under Section 111 (b) of the Act, in an adjudication proceeding, upon a notice under Section 124 of the Act. The right to restoration of the seized goods is a civil right which accrues to the owner of the goods on the expiry of the six months, if within that period either no notice under section 124 is issued or the said period is not extended after giving the owner a reasonable opportunity of being heard under the proviso to section 110 (2) of the Act. The Customs Authority could not confiscate the said goods illegally which were liable to be returned under section 110(2) of the Act and thus would defeat the vested civil right of the petitioner. 4. Mr. Sanyal appearing on behalf of the respondents contended that two sections, section 124 and section 110 are independent. The Customs Authority could not confiscate the said goods illegally which were liable to be returned under section 110(2) of the Act and thus would defeat the vested civil right of the petitioner. 4. Mr. Sanyal appearing on behalf of the respondents contended that two sections, section 124 and section 110 are independent. Section 110 is restricted to the seizure and detention of the goods for a period specified and has nothing to do with the power conferred on the authority under section 124 of the Customs Act. He relied upon a decision of a Division Bench of the Madras High Court, (1) The Collector of Customs and Central Excise, Somajiguda, Hyderabad v. Amruthalakshmi and others, AIR 1975 Mad. 43 . Mr. Sanyal has also relied upon a decision of a single Judge of this court in (2) All India General Transport Corporation v. Collector of Central Customs & ors, 79 CWN 663. 5. In All India General Transport Corporation's case the order of confiscation was not challenged but it was contended that the entire proceeding was illegal and without jurisdiction inasmuch as the show came notice itself was issued on an extension of time granted under an ex-parte order of the Collector made under the proviso to section 110 (2) of the Act and the petitioner's appeal before the Central Board of Revenue had wrongly been dismissed for non-fulfilment of an obligation imposed as a result of an ex-parte order refusing the petitioner's prayer for relief under the proviso to section 129 (1) of the Act. In that case Anil K. Sen, J. observed that section 110 is under Chapter XIII which deals with only search seizure and arrest. Sub-section (1) of Section 110 authorizes the proper officer to seize any goods which he has reason to believe are liable to confiscation having been imported illegally and in contravention of a prohibition. This is an ancillary power to the power of conducting searches under the other provisions of the said Chapter. Sub-section (2) in order to bring in a balance between the authorities' power of search and seizure and individual's right to the goods seized, lays down a limitation that the goods so seized, are liable to be returned on the expiry of six months from the date of the seizure, if in the meantime, a notice under section 124 (1) for confiscation had not been issued. Time so specified, is not a time limit for initiation of a proceeding for confiscation or imposition of penalty; it is, on the other hand, a limit of time up to which goods can be held back without issuing a notice under section 124(a). Proviso to Section 110 (2) when it speaks of extension by order, only means extension to validate the detention of the goods and not for any other purpose. Provisions for the proceeding for confiscation and imposition of penalty are in a different chapter, namely, Chapter XIV. Neither section 111 which imposes the liability for confiscation nor section 112 which imposes the liability for penalty provides for any limitation. Neither does section 124 itself provides any limitation for a proceeding thereunder. As a matter of fact the statute no where contemplates any limitation in respect of enforcement of these liabilities and it would not be proper to read the limitation prescribed by Section 110(2) as a limitation for a proceeding under section 124. 6. The Division Bench of the Madras High Court held in AIR 1975 Madras 43, that a notice under section 124(a) as contemplated by section 110(2) of the Customs Act has to be given within six months of the seizure of the goods which period can be extended by the Collector for another six months. If the notice is given during this period or if the notice is otherwise invalid the department cannot retain the goods. But that does not take away the power of the department to proceed on with confiscation and penalty proceedings under section 124 or to lodge a prosecution in a criminal court. Two sections are independent. Section 110 is restricted to the seizure and detention of the goods for the period specified and has nothing to do with the power conferred upon the authority under section 124 or other provisions of the Act. 7. In that case it was urged that extending the period of notice under the proviso to section 110 was not in accordance with law and as such further proceedings taken by the Collector of Custom, under section 124 of the Customs Act was illegal and without jurisdiction. 7. In that case it was urged that extending the period of notice under the proviso to section 110 was not in accordance with law and as such further proceedings taken by the Collector of Custom, under section 124 of the Customs Act was illegal and without jurisdiction. The learned single Judge set aside the order of confiscation of 450 wrist watches and imposition of penalty upon the view that a vested right has been created in favour of the owner of the goods when a show-cause notice was not given within six months. On Appeal the order of the learned single Judge was set aside by the Division Bench. 8. In (3) Bholanath Karmaker v. Union of India, 1976 CHN 889, the question for determination was, whether the seized gold could be confiscated under section 79 of the Gold (Control) Act when notice under section 71 of the Act was not given within the period of six months from the date of the seizure of the gold in view of second proviso to section 79 of the Act. Section 79 of the Gold (Control) Act is in terms identical with the provisions of section 110 read with section 124 of the Customs Act. 9. It is well settled after the decision of the Supreme Court in (4) Charandas Malhotra's case ( AIR 1972 SC 689 ) that section 110 (2) 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 goods and not the validity of the notice under section 124. 10. With respect, I agree with the view of A.K. Sen, J. in All India Transport Corporation's case (supra), that the times so specified in Section 110(2) is not a time limit for initiation of the proceedings for imposition of penalty; it is on the other hand, a limit of time upto which the goods can be held back without issuing notice under section 124(a). 11. In the instant case the real question for determination is that, where detention of the goods are unlawful, whether such goods could be confiscated in an adjudication proceeding. 12. Section 110(2) has been incorporated in the 1962 Act. There was no such provision in the Old Sea Customs Act of 1878. 11. In the instant case the real question for determination is that, where detention of the goods are unlawful, whether such goods could be confiscated in an adjudication proceeding. 12. Section 110(2) has been incorporated in the 1962 Act. There was no such provision in the Old Sea Customs Act of 1878. Upon the reasonable belief that certain goods are liable to confiscation, an Officer of the Customs has given power to seize such goods from any person. That power of seizure founded on mere reasonable belief is obviously an extraordinary power. Six months time are given to complete the enquiry and to collect evidence and materials in support of the said officer's reasonable belief that seized goods are liable to confiscation. If within that period prima facie evidence for confiscation is not collected, but at the same time if the proper officer thinks that further investigation into the matter is necessary, the Collector of Customs, an officer superior in rank, under proviso to section 110(2), has been given the power to extend the period for further six months. In dealing with the said powers under the proviso, the Supreme Court observed in Malhotra's case that such power is quasi judicial and at any rate one requiring a judicial approach. 13. While the power of seizure in sub-section (1) of section 110 can be exercised on the basis of reasonable belief on the part of the concerned officer but the power of extending the period to give notice under section 124(1) is to be exercised only "on sufficient grounds to be shown." The expression envisages at least some sort of an enquiry on facts to be placed before the authority and determination by him on those facts. Extension order is not to be passed mechanically. The power under sub-section (1) cannot be equated with the power under the proviso to sub-section (2) of section 110. 14. The object of enacting section 110(2) of the Act is that a citizen should not be deprived of his right to property indefinitely upon mere reasonable belief of an officer of the Customs that his property might be confiscated under the Act. Accordingly, six months time was fixed by the Legislature to make out a prima facie case for the purpose of confiscation of the goods. Accordingly, six months time was fixed by the Legislature to make out a prima facie case for the purpose of confiscation of the goods. If within that period the concerned officer fails to make out a prima facie case in support of his reasonable belief that the goods are liable to confiscation, in that case, the goods shall be returned to the person from whose possession they were seized. 15. The power of confiscation is not restricted only to the seized goods. In sections 111, 112 and 124 the words "any goods" and "any person" are used. These words cannot be given a restricted meaning. Moreover, an order of confiscation rests on the theory of "offending goods". Where the goods have been unlawfully imported, those goods become the "offender" and they might be confiscated without finding out the actual importer. But for the purpose of confiscation of the goods physical existence of the goods are necessary. When seized goods are returned to the owner, in that case, the returned goods lose the character of "offending goods" and as such these goods could not be confiscated. It is true that section 110 and section 124 are two independent sections and time-limit as specified in sub-section (2) of section 110 does not control the issue of notice under section 124. But even then there is a connecting link between the notice of confiscation of the goods and retention of the seized goods. 16. In Charandas Malhotra's case, AIR 1972 SC 689 , the Supreme Court observed that the right to restoration of the seized goods is a civil right which accrues on the expiry of initial six months and which is defeated on an extension being granted, even though such extension is possible within a year from the date of the seizure of the goods. Consequently, such a vested civil right in the respondent cannot be defeated by an ex-parte order of extension of time by the Collector. 17. In (5) A. M. Soni v. Union of India, AIR 1972 Guj. Consequently, such a vested civil right in the respondent cannot be defeated by an ex-parte order of extension of time by the Collector. 17. In (5) A. M. Soni v. Union of India, AIR 1972 Guj. 126 , a Division Bench of the Gujarat High Court following the decision of the Supreme Court in Charandas Malhotra's case held that a right to get back the seized goods was vested in the petitioner and as such it was not open to the authorities to proceed with the confiscation or imposition of penalty under the Customs Act or the Gold (Control) Act upon the show-cause notices. It was further held that the petitioner was entitled to the return of all the seized goods and accordingly a writ of Mandamus was issued directing the respondents to hand over the possession and the custody of the seized goods to the petitioner. 18. Following the above decision of the Gujarat High Court, in Bholanath Karmakar's case (Supra), I quashed the order of confiscation and directed the respondents to handover possession and custody of the seized gold to the petitioner. I, however, did not quash the personal penalty imposed upon the petitioner. In my opinion, even when the goods are returned to a person from whose possession the goods were seized under section 110(2) of the Act, there is no bar to issue a notice under section 124 of the Act and impose a personal penalty or any other penalty upon the petitioner. A notice under section 124 can be issued either for penalty or for confiscation. Unless the goods are available, they could not be confiscated. But in such a case there is no bar in imposing personal penalty upon the petitioner. 19. It appears that against my decision in Bholanath Karmakar's case, an appeal was preferred by the Union of India to the Appeal Court. The Division Bench of this Court allowed the appeal and discharged the Rule on another ground, viz. that without taking recourse to an appeal as provided in the Act, the petitioner's application under Article 226 of the Constitution was not maintainable. My decision, however, has not been set aside by the said Division Bench. 20. With due respect I am unable to share the view of the learned Judges of the Division Bench of the Madras High Court. 21. My decision, however, has not been set aside by the said Division Bench. 20. With due respect I am unable to share the view of the learned Judges of the Division Bench of the Madras High Court. 21. Now coming to the facts of this case, it appears that no notice under section 124 was given within six months of the seized goods. The Collector of Customs also did not extend the period after giving the owner of the goods a reasonable opportunity of being heard. Two conditions have been laid down in Section 110 when the seized goods can be retained. (a) When notice under Section 124 is given within a period of six months from the date of the seizure of the goods. (b) When the Collector after hearing the owner of the goods extends the period of six months. Besides these there is no other provision in the Act which empowers the Customs to retain the seized goods. The provisions of Section 110(2) are mandatory––the goods "shall" be returned to the person from whose possession they were seized. 22. Where under the law the goods "shall be returned", in my view, such goods retained unlawfully, could not be confiscated under the Act. The goods which must have been returned under the law were retained by the Customs contravening the mandatory provisions of Section 110(2) of the Act. A statutory authority exercising statutory power cannot act contrary to law. There could not be any decision in an adjudication proceeding under the Act if inherent nullity lies at the very root of the said proceeding. A quasi-judicial authority in exercising quasi-judicial powers cannot take advantage of its own illegality. The whole object of Section 110(2) of the Act becomes nugatory and meaningless, if by contravening the mandatory provisions of the statute the Collector of Customs confiscates the seized goods which he has no right to retain and must have been returned to the owner long before. 23. For the above reasons, the impugned order of confiscation made by the Collector of Central Excise and Customs, the appellate under passed by the Central Board of Excise and Customs and the revisional order passed by the Secretary to the Government of India under Section 131 of the Customs Act are quashed by a Writ of Certiorari. 24. 23. For the above reasons, the impugned order of confiscation made by the Collector of Central Excise and Customs, the appellate under passed by the Central Board of Excise and Customs and the revisional order passed by the Secretary to the Government of India under Section 131 of the Customs Act are quashed by a Writ of Certiorari. 24. Let a Writ of Mandamus be issued directing the respondents to refund the sale proceeds of the goods to the petitioner. Let the operation of the order remain stayed for a period of four weeks from the date as prayed for.