TMI Blog1989 (10) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... Sharma appealed against the imposition of penalty of Rs. 50,000/- against her and also against the confiscation order of goods in question, valuing at Rs. 2,87,341/-. 2. Briefly stated, the facts of the case are that on the basis of prior intelligence that a consignment of smuggled watches procured by Smt. Shyam Lata Sharma was kept concealed in the safe and almirahs in the two rooms resided by Smt. Shyam Lata Sharma and family, the Assistant Collector of Customs (P. I.), Varanasi, issued a Search Warrant on 3-11-1983 under Section 105 of the Customs Act, 1962, for search of the premises at D.48/148 B. Misir Pokhra, Varanasi, occupied by Shri Madan Mohan Shastri, Smt. N.K. Sharma, her husband and family and in pursuance of the search warrant, the Customs Officers of Varanasi reached the residential premises at about 14.00 hrs. on 3-11-1983, Shri Madan Mohan Shastri and Smt. Shyam Lata Sharma, wife of Nand Kishore Sharma and one Shri Anwar Kasim, S/o Shri Shabbir Hasan residing at D. 50/244, Dalmandi, Varanasi, were found present in the aforesaid premises. The said Customs officers showed the search warrant to Smt. Shyam Lata Sharma and Shri Madan Mohan Shastri and got the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harma, Shri Narain Sharma and Shri Madan Mohan Shastri, contravened the provisions of Sec. 11C, 11D and 11E of the Customs Act, 1962, inasmuch as the aforesaid persons did not give any intimation to the proper officer as provided under Sec. 11-C nor the necessary precautions as provided under Sec. 11D were taken by the said persons, nor the necessary accounts as provided under Section 11E were maintained by the said persons. Accordingly, a show cause notice dated 28-4-1984 was issued to Smt. Shyam Lata Sharma, Shri Narayan Sharma, Shri N.K. Sharma, Shri Madan Mohan Shastri, Shri Damodar Sharma and Shri Banwari Lal Singh directing them to show cause why the contraband wrist watches collectively valued at Rs. 2,87,341/- seized in this case should not be confiscated under Section 111(d) of the Customs Act, 1962 for having been imported into India in violation of I.T.C. Order, 1955 issued under Section 3(i) of the Import and Export (Control) Act, 1947 and further read with G.I.M.F. Notification No. 76-Cus/65 dated 19-6-1965 issued under Section 11 of the Customs Act, 1962 and why penalty should nut be imposed on each one of them under Section 112 of the Customs Act, 1962 for being conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) 1982 (10) E.L.T. 872 Delhi High Court (3) 1988 (34) E.L.T. 428 Delhi High Court 8. The learned SDR further staled that in support of his contention that goods could be confiscated and penally could be imposed even in cases where the notice was issued after six monlhs after the expiry of the time limit prescribed under Section 111), he would also draw attention towards a three-Member Bench decision in 1987 (27) E.L.T. 107 (Tribunal) = 1987 (10) ECR 336 CEGAT, (ERB). In this case, there was initially a difference of opinion between the members and the matter was referred to a larger Bench and decided keeping in mind the view of the majority. 9. In response to a Court question regarding the liability of the department to return the goods after expiry of the prescribed period, the learned SDR stated that since somehow the goods had not been actually returned and that stage got crossed and reached adjudication stage, therefore, the goods could still be confiscated and penalty could still be imposed. 10. The learned Counsel, speaking in reply, stated that the cases cited by him may be taken into account inasmuch as the basic principle, which the departmental representatives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsels stated that in the cases of Narayan Sharma and M.M. Shastri, it has been accepted that the goods do not belong to them but belonged to one Damador Sharma. This submission of the appellant was, however, not believed by the adjudicating authority. At the same time, there is no finding to the effect that the appellants were owners. It was the contention of the appellants that they had neither smuggled those goods nor were they otherwise concerned with any other illegal activity and had not committed any violation of the Customs Act, 1962. The goods were undoubtedly recovered from the custody and possession of Shyam Lata Sharma. The appellant M.M. Shastri is the Father-in-law of Shayam Lata Sharma and the appellant Narayan Sharma is the son of Shyam Lata Sharma from whose custody the goods were recovered. They being inmates of the house simply happened to be present. Hence, they were not liable to any penalty. It was also their contention that the charge against appellants at Sl. Nos. (2) (3) viz. Narayan Sharma and M.M. Shastri are vague inasmuch as only Section 112 was mentioned and the sub-clause A or B have not been mentioned and in such circumstances, the imposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade 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 : Provided that the notice referred to in Cl. (a) and the representation referred to in Cl. (b) may, at the request of the person concerned, be oral. 17. A plain reading of Section 110(2) clearly reveals that if a show cause notice as contemplated under Section 124(a) is not given to the person from whose possession it is seized within six months of the seizure the goods shall then be returned to that per son unless the time of six months is extended by the Collector on sufficient cause. In the present case before us there is no such extension obtained by the authorities concerned and the authorities were under a mandate to return the goods to the owner as the words used in the section are shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 (b) an opportunity of being heard against the penalty and confiscation must be given to the owner and under Section 124(c) he must be given an opportunity of being heard. In that opportunity of being heard if the position turns out that the detention of goods is illegal in view of Section 110(2) of the Customs Act for want of a valid extension then the goods shall be returned to that person and the chapter ends there as far as the confiscation of the goods is concerned. But the validity of the notice as far as the imposition of the penalty is concerned is still there. It is on that context the Supreme Court held that the period laid down in Section 110(2) affects only the seizure of the goods and not the validity of the notice. 19. Section 124 and 110 of the Customs Act cannot be read in isolation of each other for the simple reason that Section 110(2) refers to the limitation of notice to be issued under Section 124(a) of the Act. It is an established principle of law that in interpreting the various provisions of an Act a harmonious construction is to be taken. If the view that Section 124 does not lay down any limitation is stretched very far then the provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 124 of theAct was issued within six months from the date when the goods were seized. The Collector of Customs also did not extend the six months time after affording the owner of the goods a reasonable opportunity of being heard. Undoubtedly where seized goods are to be retained, the authority concerned must take recourse to the two conditions mentioned in Section 110 of the Act. The two conditions are: (a) when notice under Section 124 is given within the period of six months from the date of seizure of the goods; (b) when the Collector after hearing the owner of the goods seized extends the said period of six months. Apart from these two conditions, there is no other provisions 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. Where under the law the confiscated under the provisions of the Act. The goods which ought to have been returned under the law were retained by the customs in the instant case, contravening the mandatory provisions of Section 110(2) of the Act. It is well settled that a statutory authority exercising statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector of Central Excise Customs, Bhubaneswar In the latest decision reported in 1988 (33) E.L.T. Page-642 (All.) - Arvind Singh v. Collector of Customs, the Allabahad High Court at page 644, Paras 7 and 8 held as follows :- In Assistant Collector, Customs v. Malhotra (A.I.R. 1972 S.C. 689) it was ob served by the Supreme Court in paragraph 11 of the judgment that : As already stated, sub-section (1) of Section 110 authorises seizure, the only requirement being a reasonable belief on the part of the concerned officer at the time of seizure. The power of seizure founded on a more reasonable belief being obviously an extraordinary power, second sub-section envisages completion of the enquiry within a period of six months from the date of seizure. But it provides that, if such an enquiry is not completed within that period and a notice under Section 124(a) is, therefore, not given, the person from whom the goods are seized become entitled to their restoration...... Relying on the principle laid down by the Supreme Court in the said decision, a Division Bench of this Court, while dealing with a seizure under Section 79 of the Gold (Control) Act, 1968 (of which provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 87 (10) ECR Page 336 (NRB) Sat Pal v. Collector of Customs Central Excise, Chandigarh wherein at page-347 it was observed as follows :- In the circumstances it appears to us that the proper answer to the question referred to us would be that the proceedings under Section 110 and 124 of the Customs Act are independent of each other and not interdependent. In Para-25 of the order the learned Members of the CEGAT observed that one aspect for them to come to that conclusion is that it is the view taken by Pubjab and Haryana High Court in the case of Muni Lal v. Collector of Central Excise, Chandigarh reported in AIR 1975 Punjab and Haryana 130, that a reference in such cases was to be made to that High Court as the proceedings before the Bench arose within the jurisdiction of that High Court. 28. However, it is clear that there are two schools of thought in this matter. We are of the opinion that since the show cause notice was served beyond six months the confiscation proceedings are not in accordance with law and the appellant is entitled for the return of the goods in question. We are also of the view that the decision of Supreme Court in Charandas Malhotra s case lends su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 110 was mandatory and the officers of the department were duty bound to comply with the same in case they intended to proceed against seized goods and if the officers do not comply then the retention becomes illegal and any further proceedings would not be maintainable. The department could not be allowed to doubly spite the law - first by violating Section 110 and then to make an attempt to retain the fruits of this illegality; and deny the citizens the vested right which accrued to him under Section 110. 31. It is noteworthy that return of goods and confiscation of goods are diametrically opposite actions and it could not be the intention of the legislature to take away under Section 124 what was given under Section 110. It is well-known that an Act has to be read as a whole and the doctrine of harmonious construction is required to be applied; And if we do so we will notice that while reading Section 110 and Section 124 together we also have to take note of the Clauses therein and cannot consider ourselves free to ignore the same and allow the consequences that flow therefrom. 32. We consider that a proceedings under section 124 could be initiated and continued w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et value of the properties, but they would only pray for the seizure value. He also drew our attention to another case of the Tribunal (S.R.B.) reported in 1988 (4) ECR 98. But the learned SDR contended that there is no provision in the Act for payment of sale proceeds or seizure value of the goods. 37. We have bestowed our thoughts on the abovesaid matter. We had already held that in the circumstances of the case the appellant is entitled for the return of the goods as per Section 110 of the Customs Act, 1962. If the goods are sold by the department then the same is at their risk. But the party cannot be made to suffer on that account when there is accrued civil right in favour of the appellant. If the goods are sold by the department which are to be returned to the appellant, justice and good conscience requires that the Respondent should be directed to pay the appellants the seizure value of the property, which was the value arrived at by them during the seizure. Hence, as per Point No. 2, we hold that if the goods in question are already sold by the department, the Respondent shall pay the seizure value of the goods to the appellant in a sum of Rs. 2,87,341.00 (Rupees two lak ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
