Requirement of issuing Show Cause Notice under Section 124 of the Customs Act, 1962 to the owner of goods within stipulated period of six months of the seizure of goods or during extended period - Release of seized goods in case of non-compliance of same under provisions of Section 110(2) of the Customs Act, 1962 - Regarding. - Customs - 07/2013

Circular No. 7/2013-Cus. F. No. 711/04/2013-Cus. (AS) Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi dated 19-2-2013 Subject : Requirement of issuing Show Cause Notice under Section 124 of the Customs Act, 1962 to the owner of goods within stipulated period of six months of the seizure of goods or during extended period - Release of seized goods in case of non-compliance of same under provisions of Section 110(2) of the Customs Act, 1962 - Regarding. Attention is invited to Section 110(2) of the Customs Act, 1962 which envisages completion of the enquiry within a period of six months from the date of seizure and if such an enquiry is not completed within that period and a notice under Sec. 124(a) is, therefore not given, the person from whom the goods are seized becomes entitled to their restoration. However, in cases where investigation may not be completed owing to some difficulties, the Commissioner has power to extend the time limit on two conditions, namely, (i) total period of issue of Show Cause Notice (SCN) does not exceed one year, and (ii) sufficient cause is shown by Commissioner while extending the time-limit. 2. The Commissioner, obviously, is expected not to pass extension orders mechanically or as a matter of routine, but only on being satisfied that there exists facts which indicate that the investigation could not be completed for bona fide reasons within the time laid down in Section 110(2) and that, therefore, extension of that period has become necessary. The burden of proof in such an inquiry is clearly on the Customs officer applying for extension and not on the person from whom the goods are seized. The words sufficient cause being shown must mean that the Commissioner must determine based on materials placed before him that they warrant extension of time. 3. It has been the considered practice of field formation that in cases where seized goods have been provisionally released by the competent authority under Section 110(a) and investigations in the matter are still pending there is no need for notice under Section 124(a) of the Customs Act and that a Show Cause Notice can be issued in such cases of provisional release on completion of investigations. For this, reliance was placed on the Hon ble Bombay High Court judgment in writ petition No. 316 of 2008 (reported in Jayant Hansraj Shah v. Union of India - 2009 (1) Bom. CR 474 and 2008 (229) E.L.T. 339 (Bom.) to say that whenever the power to issue show cause notice is preserved, and a request is made, to release the goods taken into custody, there would be no question of unconditional release, by operation of Section 110(2) of the Act. 4. However, recently Hon ble Delhi High Court in WP(C) No. 2952/2012 in the case of Jatin Ahuja v. DRI, vide decision dated 4-9-2012 [2013 (287) E.L.T. 3 (Del.)] had held that - Section 110A does not absolve or override provisions of Section 110(2) - Though seized goods are released provisionally under Section 110A , if no Show Cause Notice is issued within stipulated time under Section 110(2) , goods shall be returned . 5. While, the department is in the process of filling SLP against the said order, the matter has been examined in the Board. Accordingly, the following instructions are issued for strict compliance by the field formations :- (1) While, Section 110(2) provides for unconditional release of the goods on non-issue of notice within the stipulated period, there is no time limit provided for issue of Show Cause Notice under Section 124 and that the proceedings of confiscation of goods and or imposition of penalty on the offender do not attract any time limit. However, release of goods for non-compliance of provisions of Section 110(2) is bound to create complications like difficulties in realisation of duty leviable on goods under reference and of fine and penalty amounts. (2) The investigating officers should, therefore, exert to complete the investigations at the earliest and submit draft Show Cause Notice to the adjudicating Authority who should ensure that the Show Cause Notice is issued to the owner of the goods or such person under Section 124 of the Customs Act, 1962 within six months of the date of seizure of goods or within the period extended by the Commissioner of Customs in terms of Proviso to Section 110(2) . This is necessary in order to avoid the play of unconditional release of seized goods to the person from whom the goods were seized. (3) The field formations should invariably report all cases (including seizure cases) pending investigation in Annexure-IV of Customs MTR on Anti-smuggling Performance giving reasons for pendency of instigation wherever, the pendency is more than 3 months. All Chief Commissioners / Commissioners should monitor the position of cases under investigation (including cases involving seizure of goods through the MTR and otherwise) and take steps for Issue of Show Cause Notices within the time limit prescribed under Section 110(2) of the Customs Act, 1962 . 6. Any deviation from the above stated procedure would be viewed seriously in view of possible loss of Revenue to the Government Exchequer.