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2015 (9) TMI 146 - KARNATAKA HIGH COURT

2015 (9) TMI 146 - KARNATAKA HIGH COURT - 2015 (330) E.L.T. 148 (Kar.) - Confiscation of Goods Service of notice Lapse of period Petitioner seeking quashing of communication/letter, Annexure- F, issued by third respondent, contending that non issuance of notice under Section 124 of Customs Act, 1962 within period prescribed under Section 110(2) has given right to petitioner to seek for return of seized goods Held that:- Section 110(2) indicate giving of notice within six months from date .....

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on 153 provides that notice issued under Act should be served in manner as provided under said Section It does not even remotely suggest that such person should be served with such notice to hold service of notice as complete Dispatching of notice by registered post would constitute valid service Thus, date of sending or dispatching notice by registered post is date of giving notice as contemplated under Section 110(2) Once authority concerned makes out case for confiscation within time- .....

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MENT Heard Sri. Nagendra Murthy. M, learned counsel appearing on behalf of Sri. V. R. Balasubramani for petitioner and Sri. Jeevan Neeralagi, learned panel counsel appearing for respondents. 2. Petitioner is praying for quashing of communication/letter dated 05.06.2014, Annexure- F, issued by third respondent, contending interalia that non issuance of notice under Section 124 of Customs Act, 1962 (for short the 'Act') within the period prescribed under Section 110(2) of the Act has given .....

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Abdulla Kunhi Abdul Rahaman, resident of Kannikkad House, No.05/386, Alampady, Kallakkatta Post, Kasargode District would be arriving at Bengaluru by Air India Flight No.A1 994 on 16.09.2013 and would attempt to smuggle gold without payment of applicable customs duty, had intercepted said passenger namely petitioner herein while he was attempting to exit himself through Green Channel of customs area and on verification of travel documents by the DRI Authorities it was found that petitioner was a .....

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via Goa through two domestic passengers namely, Sri.Haneefa and Sri.Abdul Khader, who had accompanied him in the same flight and were given pair of shoes during the flight and were asked to wear said shoes which sole was said to be concealed with a smuggled gold biscuits. 4. The DRI Officers with the assistance of petitioner intercepted above said two domestic passengers also at the exit of customs Green Channel area and after verification and enquiry and body search being conducted, as agreed .....

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of other shoes also gold biscuits were found not only from Sri.Haneefa but also from Sri.Abdul Khader. Accordingly, mahazar came to be drawn and statement of petitioner and other two persons came to be recorded under Section 108 of the Customs Act, 1962. 5. Notice under Section 110(2) of the Act came to be issued on 13.03.2014 to petitioner herein as to why said gold biscuits with foreign markings seized under the mahazar dated 16.09.2013, which was smuggled into India as indicated in the mahaza .....

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lly received Show Cause Notice on 17.03.2014, as per Annexures- B and C, which was beyond the period of six months stipulated under Section 110(2) of the Act. It is contended that on several representations made to the Authorities by petitioner to return the seized goods on the ground that show cause notice was not issued within six (6) months from date of confiscation, a reply is said to have been furnished by third respondent vide Annexure-F intimating the petitioner that Show Cause Notice iss .....

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ly received by the petitioner on 17.03.2014 as evidenced from the postal seal found in Annexures-B and C and as such, prescribed period of six months namely period stipulated under Sub-section (2) of Section 110 of the Act being violated petitioner would be entitled to seek for return of seized goods and as such it is contended that petitioner is entitled for relief sought for in the writ petition. 7. He would elaborate his submission by contending that authority who issued the show cause notice .....

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Collector of Customs and others reported in 1987(31) E.L.T. 30 (Cal.) 3. Biplab Rakshit Vs. Collector of Customs reported in 1996 (88) E.L.T. 654 (Gauhati) 4. Shyamilata Sharma Vs. Collector of Customs reported in 1992 (57) E.L.T. 415 (Tribunal) 5. Arvinder Singh Vs. Collector of Central Excise, Allahabad and another reported in 1988 (33) E.L.T. 642 (All.) 6. Kantilal Somehand Shah and another Vs. Collector of Customs & C. Ex., West Bengal and another reported in 1982 (10) E.L.T. 902 (Cal.) .....

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is within the period of six months as prescribed under Section 110(2) of Act which mandates issuance of such notice before expiry of the period of six months and the authorities, if for any reason, are unable to issue such notice within six months and intend to extend the period of seizure beyond six months, such authority would be entitled to extend the period by a further period of six months and in the event of show cause notice not being issued for confiscating the seized goods either within .....

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person is to reply to such Show Cause Notice and such person would not get an automatic right to seek for return of the goods if such show cause notice is issued in accordance with subsection (2) of Section 110 of the Act. Hence, he prays for dismissal of the writ petition. 9. Having heard the learned Advocates appearing for the parties and on perusal of the records, this Court is of the considered view that question which arises for consideration in this Writ Petition is with regard to validity .....

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tion 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 can 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 passage of time, constraints of storage space for th .....

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re an inventory of such goods containing such details relating to their description, quality, quantity, mark, numbers, country of origin and other particulars as the proper officer may consider relevant to the identity of the goods in any proceeding under this Act and shall make an application to a Magistrate for the purpose of - (a) certifying the correctness of the inventory so prepared; or (b) taking, in the presence of the Magistrate, photographs of such goods and certifying such photographs .....

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person from whose possession they were seized: Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Commissioner of customs for a period not exceeding six months. 123. Burden of proof in certain cases.- (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be- (a) in a case where such seizure is made from t .....

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cial Gazette, specify. 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 oppo .....

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ice issued under this Act, shall be served,- (a) by tendering the order, decision, summons or notice or sending it by registered post to the person for whom it is intended or to his agent; or (b) if the order, decision, summons of notice cannot be served in the manner provided in clause (a), by affixing it on the notice board of the customs house. 11. A bare perusal of Section 110(2) of the Act would indicate giving of notice as contemplated under Section 124(a) of the Act within six months from .....

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h goods from such person. The power of seizure is available to the proper officer if he has reason to believe. If the goods so seized are perishable or its value would deplete due to passage of time or there being constraints for its storage, the Central Government is empowered to issue notification specifying the goods or class of goods for disposing of such goods as per Section 110(1A) and proper officer after following the procedure prescribed under Section 110(1B) would b empowered to take s .....

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tice is issued under clause (a) of Section 124 within the time prescribed under Section 110(2). The consequence of non-initiation of proceedings within the time set out in the Section would result in return of the goods from whom they were seized. It would indicate that failure to show cause under clause (a) of Section 124 of the Act within the prescribed time of six (6) months will only result in obligation on the part of the proper officer to return the goods to the person from whose possessio .....

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yed in Section 124 of the Act is clear and precise and no restriction or limitation or even a fetter is imposed as regards the time when proceeding may be initiated by issue of a Show Cause Notice. A plain reading of Section 124 of the Act would indicate that competent officer would be empowered to pass an order of confiscation of goods or imposition of penalty on any person after issuing a notice in writing informing the grounds on which it is proposed to confiscate the goods or impose a penalt .....

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e the penalty on the owner of the goods or person from whom goods were seized by extending an opportunity to submit a representation in writing, within such reasonable time as may be specified in the notice itself. However, the owner or such person is also to be extended a reasonable opportunity of being heard in the matter. A perusal of these three conditions prescribed under Section 124 of the Act does not even remotely suggest that there is any restriction or limitation or even a fetter as re .....

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s issued to the person from whose possession of goods were seized and whether such notice is within the time limit prescribed under sub-section (2) of Section 124 and if not whether owner or person from whose possession the goods were seized is entitled for return of goods. 14. It would be apt at this juncture itself to refer to the decisions relied upon by the learned counsel appearing for the petitioner namely in the case of Purushottam Jajodia Vs. Dir. Of Revenue Intelligence, New Delhi repor .....

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ent of the Delhi High Court is undisputedly pending adjudication before the Hon'ble Apex Court in Civil Appeal No.3122/15. 15. A perusal of the said judgment would indicate that judgment rendered by the Hon'ble High Court of Madhya Pradesh in the matter of Commissioner Vs. Ram Kumar Aggarwal reported in 2012 (280) ELT 13 (M.P.) has been distinguished. The High Court of Madhya Pradesh in Ram Kumar Aggarwal's case while interpreting Sections 110(2) and 124 of the Act has held issuance .....

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en affirmed by the Hon'ble Apex Court in Special Leave Petition (Civil) No.28186/2011 by judgment dated 21.10.2011. Thus, judgment rendered by the Madhya Pradesh High Court in Ram Kumar's case has reached finality and in the judgment rendered by the Delhi High Court appeal is yet to be disposed of by the Hon'ble Apex Court. Hence, this Court is of the considered view that judgment rendered by the High Court of Madhya Pradesh in Ramkumar's case referred to supra is more persuasive .....

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seizure of goods as contemplated under Section 110(2) of the Customs Act. 17. Section 110(2) indicates where goods are seized under section 110(1) and no notice in respect thereof is given under Section 124(a) within six (6) months of the seizure, such goods are to be returned under Section 124(a) of the Act. No confiscation of goods imposition of penalty can be passed or levied without issuance of notice in writing unless waived by person concerned. In the instant case goods came to be confisc .....

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postal seal dated 15.03.2014. Thus, petitioner cannot be heard to contend that postal article containing show cause notice-Annexure-A was actually delivered to him only on 17.03.2014 and six (6) months time limit prescribed under Section 110(2) of the Act had lapsed by the time show cause notice was delivered and therefore he would be entitled to return of seized goods. 18. Section 153 of the Act provides that notice issued under the Act should be served in the manner as provided under said Sect .....

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ending or dispatching the notice by registered post is the date of giving the notice as contemplated under Section 110(2) of the Act. 19. Though Delhi High Court was persuaded by the dicta laid down by the Apex Court in the case of Jayanthi for construing the plain and simple meaning of the word "given" to extend the said meaning to sub-section (2) of Section 110, the High Court of Madhya Pradesh has taken note of the fact that Hon'ble Apex Court was not construing the word "g .....

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ointly with the words found in Section 153 of the Act which provides or enables the authorities to effect service of order, decision and notice to be issued under the Act by tendering it through registered post or by affixture where it is not possible or feasible to be served in the manner provided in clause (a) of Section 153 i.e., by affixing it on the notice board of the customs house. 20. Thus, a conspectus reading of Section 153 of the Act would clearly indicate that it does not contain the .....

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g effect: "The committee are of the view that if any goods are seized proceedings in the nature of Show Cause Notice should be started within six months of the seizure but this period may be on sufficient cause being shown to be extended by the Collector for Customs for a further period of six months. If Show Cause Notice is not issued within a specified period, the goods should be returned to the person from whom they were seized. The Committee also feels that in order to …in himsel .....

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intly. The object in setting the time limit under Section 110(2) of the Act was not to harass the citizen from whom goods have been seized and keep the kettle boiling, but to ensure that proceedings are commenced or started within six (6) months from date of such confiscation. 23. Section 79 of the Gold Control Act which is similar to Section 110 of the Customs Act would indicate that the purpose of issue of notice is two fold namely: (i) to intimate concerned person the grounds on which confisc .....

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s been prescribed by the Legislature, to enable the authority concerned to make out a prima facie case for confiscation of the goods already seized. In other words, if the authority fails to make up its mind to confiscate the goods within six months from the date of its seizure, such goods are required be returned to the person from whose custody they were seized. Thus, the object of Section 110(2) can be discerned from the very provision itself viz., in the event of the authorities intend to co .....

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ould be how to issue or give such notice and what are the ingredients required to be adhered to by the authorities to ensure such notice is valid. In order to examine said issue Section 153 of the Act will also have to be looked into and it is the only provision under the customs Act which provides the mode and the manner under which effecting service of notice is provided. A reading of Section 110(2) of the Act would clearly indicate that the legislature while providing issuance of notice under .....

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s were seized by serving such notice in the manner provided under Section 153 of the Act. If the intention of the legislature was otherwise namely to provide for effectuating service of notice in a different manner, it would have said so in Section 153 itself. In the absence of any other provision indicating the mode and the manner of service of notice the only provision which will have to be referred to would be Section 153 of the Act. It is in this background the words used in Section 153 name .....

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997 (91) E.L.T. 51 (Cal.) to the following effect: "13. We may successfully refer to the Division Bench decision of the High Court of Calcutta in the case of Union of India v. Kanti Tarafdar [(1997 (91) E.L.T. 51 (Cal.)]. While dealing with Section 110(2), 124 and 153 of Customs Act, 1962, it has been observed: 28. Therefore, the real object of the notice under Section 110(2), which is required to be issued in writing as provided in Section 124 and which is required to be given within six m .....

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ion 153 of the Act gave a clear mandate that any notice issued under the Act should be served in the manner provided in the section. 31. The legislature, while providing that a notice tinder Section 110(2) must be given within the time as specified in the said section did not provide in the section itself as to how such notice should be given, but as the same time provided that a notice under Section 110(2) should be a notice "issued" under Section 124 of the Act and "any notice&q .....

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of the Act and the words "Any...notice issued" in Section 153 of the Act. 32. It is also our duty to harmonise the provisions of the Act to find out the real legislative intent. It we fail in doing so and do not harmonise these three sections then we have to read in Section 153 "any notice", "except notice contemplated under Section 110(2), issued under the Act" shall be served in the manner provided for in Section 153, which unfortunately, we cannot do as that will .....

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e under Section 124, which is a general provision, while Section 153 provides the mode of giving of such notice, which is a special provision. Applying the maxim "Generalia specialiabus non-derogent", which means special provision will prevail upon general provision, we are of the view that special procedure for service of notice as provided for in the Act should prevail over the general enactment of giving of notice. 35. We, therefore, conclude that Section 153 of the Act controls Sec .....

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y personal delivery (tender) or by putting it into transmission by registered post in case both are possible. 38. Thus, the logical conclusion would be that service of a notice will be complete either by tendering or by sending the same by registered post, since the legislature has equated both the situations by using the word "or". 39. In the event of the notice is tendered, the date on which the same was tendered should be taken as the date of giving of notice, but if the other optio .....

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