9911796707
TMI Blog2009 (9) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... rn as such or would sell it after converting the same into fabrics. It is claimed that the petitioner-Company has neat and clean track record of importing goods. During the last five years the Custom Officers never raised any objection at the time of clearance of their goods. It has been averred that it has always complied with the requirements of Sections 17, 46 and 47 of the Customs Act, 1962 (for brevity, 'the Act'). These provisions relate to assessment of duty, entry of goods on importation and clearance of goods for home consumption. 3. During the later part of 2008 the petitioner-Company imported goods, which were cleared after passing of an assessment order under Section 47 of the Act. As per prescribed procedure under the Act before permitting clearance of goods for home consumption, goods are physically examined, samples are drawn and assessment order is passed under Section 17 read with Section 47 of the Act. However, on23-1-2009, the officers of the Directorate of Revenue Intelligence (DRI) conducted a search of the business premises as well as residence of the Director of the petitioner-Company. The DRI alleged that the petitioner-Company has mis-declared the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 100% A Boucle Yarn RW'. It has further been pointed out that the samples drawn from different lots of detained consignment of 18360 Kgs., after testing in the Central Revenue Control Laboratory,New Delhi, have been found to be composed of Acrylic and are special type of yarn having complex construction. The claim of the petitioner-company that the detained Yarn was purchased from Shri Karan Chaudhary of M/s. Excel Packages,Ludhiana, who purchased the same in an auction conducted by the port authorities of Punjab State Warehousing Customs (PSWC), has also been turned down on that premise. It has further been mentioned that the seized goods could be provisionally released under Section 110A of the Act after submitting bond with such security and conditions as the Competent Authority may prescribe. 6. The petitioner-Company has also claimed that under Section 110(A) of the Act the respondents were required to follow the procedure as envisaged under Section 110(1B) of the Act, whereas they have detained/seized the goods under Section 110 of the Act. It has been submitted that under Section 110 of the Act the goods could be seized only if the seizing officer has reasons to belie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details regarding modus operandi of such importers, investigation conducted by the DRI and unearthing of hawala transaction and channel etc. 10. The factual matrix regarding search made on 22/23-1-2009 on the business/residence premises of the directors of the petitioner-Company under Section 105 of the Act, detaining of goods, records, cash of Rs. 1.50 lacs, mutual fund receipts etc. and passing of seizure orders dated18-3-2009and23-3-2009, has been admitted. However, it has been submitted that the petitioner-Company could not produce any documentary evidence in support of purchase of yarn and blankets in question lying in the factory-cum-godown premises at the time of search/investigation by the officers of the DRI on 23-1-2009. It has been denied that the seized material includes 18360 Kgs. 100% Boucle Yarn. In that regard test reports of the laboratory have been referred which are to the effect that detained yarn was composed of Acrylic and special type of yarn having complex construction. 11. It has also been denied that any directions were issued to the bankers of the petitioner-Company to stop operation of the bank account and the only direction issued was to freeze the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner-Company has again purchased the goods. 13. A short affidavit dated 3-8-2009, has also been filed by Shri H.N. Meena, Deputy Director, DRI, Ludhiana, stating that a show cause notice for extension was issued by DRI on 15-7-2009, which was personally handed over to Shri Padam Dalmia, Director of the petitioner Company on 16-7-2009. In response to the said notice, counsel for the petitioner appeared on20-7-2009and filed written submissions before the Commissioner of Customs,Amritsar. The Commissioner of Customs, Amritsar, after hearing the petitioner adjudicated the matter and passed an Order-in-Original, bearing No. 08/CUS/09, dated 20-7-2009, issued vide C. No. VIII (Hqrs.)10/CUS/ Order/24/09/4653-56, dated21-7-2009, and extended the time period for issuance of show cause notice by a period of six months i.e. upto20-1-2010, as per the provisions of sub-section (2) of Section 110 of the Act. However, along with the said affidavit copies of the show cause notice dated15-7-2009and order dated20-7-2009were not placed on record. The averments already made in the written statement were also reiterated in the affidavit dated3-8-2009. 14. On 4-8-2009, when the case was taken up f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents produced original file of Case No. VIII (Hqrs.)10/CUS/ Order/24/09. A bare perusal of the file shows that the show cause notice for extension of time period beyond six months in respect of seizure of goods and cash, bearing DRI F.No. 856(3)LDH/09/Pt-I/1727, dated15-7-2009, is available at page No. 25 of the file. In para 11 of the show cause notice, the noticee-petitioner Company was called upon to appear for personal hearing on 20-7-2009 at 1400 hrs before the Commissioner of Customs, Amritsar, to explain their stand. However, in para 13 it has been mentioned that "if no cause is shown against the action proposed to be taken within a week of the receipt of this notice of (or?) if they do not appear before the adjudicating authority on dates when the case is posted for hearing, the case will be decided on merits and on the basis of materials available on record''. It is claimed that the said notice was served upon the petitioner-Company by hand on16-7-2009. At page No. 8 of the file, a sheet containing 'record of personal hearing' is available, which shows that on 20-7-2009, Shri Naveen Bindal, Advocate, had put in appearance on behalf of the petitioner-Company. It has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eply. However, the Commissioner without extending the time or waiting up to23-7-2009, passed the impugned Order-in-Original on20-7-2009itself. 19. Learned counsel then submitted that the goods were detained on 22/23-1-2009 and since the period of six months was going to expire on 21/22-7-2009, therefore, the respondents were in a hurry to pass the order extending the period for another six months. He has emphasised that the period of six months is to be reckoned from the date of detention of goods and not from the date of passing of seizure orders dated 18/23-3-2009. He has emphatically stated that the Order-in-Original was never communicated to the petitioner-Company within a period of six months, which makes it incomplete and ineffective. He has maintained that no order could assume the character of a government order unless it is communicated to the party concerned. In that regard reliance has been placed on a judgment of Hon'ble the Supreme Court in the case of Bachittar Singh v. State of Punjab, AIR 1963 S.C. 395. According to him the date of order is to be construed the date on which it is made known to the affected party. In support of his arguments, learned counsel has pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, as has been done in the present case. In support of his submissions, learned counsel has placed reliance on the judgment of Madras High Court in the case of Pro Musicals v. Joint Commissioner of Customs (Prev.), Mumbai, 2008 (227) E.L.T. 182 (Mad.). 22. From the pleadings of the parties and the rival contentions raised by their respective counsel we are of the view that the following questions of law would emerge for determination of this Court :- (A) Whether the goods in question continues to attract the provisions of the Customs Act, 1962 after the petitioner-Company had relinquished its title under Section 23(2) of the Act and purchased the goods from the auction purchaser after the same were auctioned in an open auction conducted by the port authorities of Punjab State Warehousing Customs (PSWC) after obtaining permission from its proper officer? (B) Whether in the facts and circumstances of the case, order dated23-7-2009, granting extension beyond the period of six months could be passed without communicating the same to the petitioner-Company as per the requirement of Section 153 of the Act? Re : Question No. (A) : 23. In orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 deals with 'clearance of warehoused goods for home consumption'. There are two provisos to Section 68, which provide for relinquishment of title. These two provisos in terms are similar to Section 23(2) and its proviso. Accordingly it follows that there can be relinquishment of title in respect of warehoused imported goods also. 26. When the aforesaid provisions are applied to the facts of the present case, it becomes evident that the petitioner-Company had relinquished the title of the imported goods in question. It is evident that such a relinquishment of title could have been declined by the revenue if the importer had committed an offence under the Act. The fact remains that the petitioner-Company relinquish title without demur. It is entirely different matter that thereafter auction was held and the goods were purchased back from the auction purchaser by the petitioner-Company. The aforesaid factual position has been disclosed by the respondents in the preliminary objections of their written statement. The relevant extract of the preliminary objections reads thus :- "1.......It is submitted here that as per documents, the goods were originally imported by the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; arms and ammunition may be sold at such time and place and in such manner as the Central Government may direct. Explanation.- In this section, "arms" and "ammunition" have the meanings respectively assigned to them in the Arms Act, 1959 (54 of 1959)." 28. A perusal of the aforesaid provision shows that once the goods are not cleared for home consumption or warehoused then such goods after notice to the importer and with the permission of the proper officer, who has control over such goods under Section 62 of the Act, could be sold by the person having the custody thereof. It is, thus, obvious that the petitioner-Company had imported the goods in question, the goods were warehoused, then it relinquished the title and the goods were sold by the PSWC with the permission of the proper officer. Those goods were purchased by a close relation of the petitioner and in turn purchased by the petitioner-Company. The question would be whether such goods could continue to retain the character of 'imported goods'. According to the definition of 'imported goods' as given in Section 2(25) of the Act, the 'imported goods' are those goods which have been brought to India from a place outs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng question No. (A) in the aforesaid manner, there was hardly any need to answer question No. (B). Arguments, however, have also been addressed in respect of question No. (B), therefore, we proceed to answer the aforesaid question as well by assuming that the petitioner-Company continues to retain its character as importer of the goods and not as purchaser from an auction purchaser. 31. In order to answer question (B), it may be necessary at the outset to refer to the relevant statutory provisions of the Act. Accordingly, Section 110, 110A, 124 and 153 of the Act are reproduced as under :- "110. Seizure of goods, documents and things - (1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods : Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. (1A) The Central Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 110, may, pending the order of the adjudicating officer, be released to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require." _____________ "124. Issue of show-cause notice before confiscation of goods, etc. - No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person - (a) is given a notice in writing with the prior approval of the officer of customs not below the rank of a Deputy Commissioner of Customs, 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 clause (a) and the representation referred to in clause (b) may at the request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of notice as per the language of para 13 and accordingly it was submitted that time was very short and week's time was not sufficient. It is, thus, evident that the order dated20-7-2009granting extention of time suffers from patent defect. The show cause notice vide para 13 has granted a week's time from the date of receipt of notice stipulating that if no cause is shown then adjudicating authority shall proceed to decide the matter on merit and on the basis of the material available on record. The show cause notice was received on16-7-2009and the order granting the extension was passed on20-7-2009, which is legally unsustainable. The petitioner-Company is entitled to sit back and think that no order would be passed for one week from the date of receipt of the show cause notice but order has been passed within four days. Moreover, the petitioner-Company has not been granted any opportunity by supplying the documents, which included the test reports of the goods and copy of the reasons for search under Section 105 of the Act etc. along with others. All these developments have taken place after the filing of the petition which was filed in May 2009. On this count alone, the order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and unless it is communicated to the petitioner as per the prescribed mode. The aforesaid proposition of law has been laid down by a Constitution Bench in Bachittar Singh's case (supra) on which reliance has been rightly placed by the learned counsel for the petitioner-Company. Therefore, as on date the period of six months has expired from the date of detention of the goods i.e. 22/23-1-2009. Once the period of six months has expired then time barred order cannot be re-opened by passing any fresh order. In any case, no such new order has been passed. Accordingly, the provisions of Section 110(2) of the Act would come in operation which provides for extension of period of six months by another period of six months. It is well settled that the order extending the period of six months is required to be passed and communicated to the petitioner when initial period of six months had not expired. In that regard reliance may be placed on the principles laid down by Hon'ble the Supreme Court in the case of S.S. Gadgil v. Ms. Lal Chand and Company, AIR 1965 SC 171 and a Division Bench judgment of this Court rendered in the case of Shreyans Industries Ltd. v. State of Punjab, (2008) 18 VAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicially in dealing with matters entrusted to them. "An obligation to act judicially may also in some cases, be inferred from the scheme of the relevant statute and its material provisions. In such a case, the authority or body must act in accordance with the principles of natural justice before exercising its jurisdiction and its powers; the obligations to follow the principles of natural justice need not be expressly imposed. Power to determine questions affecting the rights of citizens, would impose the limitation that the power should be exercised in conformity with the principles of natural justice." 36. Similar principles have been followed by the Division Bench judgment ofGujaratand Delhi High Courts in the cases of Vadilal Industries Ltd. (supra) and Neha Cosmetics (supra) in respect of similar provisions of Section 37(C)(a)(b) & (c) of the Central Excise Act, 1944. However, there is a direct judgment of Madras High Court in the case of Redington India Limited (supra) in respect of Section 153. 37. The argument of the learned counsel for the revenue is that the period of six months has to be counted from the date of seizure. He has vehemently contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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