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2016 (4) TMI 408 - DELHI HIGH COURT

2016 (4) TMI 408 - DELHI HIGH COURT - 2016 (336) E.L.T. 415 (Del.) - seeking release of seized goods - Waiver of right to be given a SCN under Section 124(a) of the Act - Non-issuance of SCN under Section 110(2) of the Customs Act 1962 for over six months and also no adjudication order passed in next six months - Department contended that petitioner made a statement that “I do not want any show cause notice and any personal hearing and matter may be decided on merit in my absence”, therefore, it .....

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ue to detain the goods seized - Therefore, it is directed that the goods seized be forthwith released unconditionally to the petitioner and this will, however, not preclude the respondents from proceeding under Section 124 of the Act ad passing an adjudication order in accordance with law. - Decided in favour of petitioner - W. P. (C) 11641/2015 - Dated:- 6-4-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mrs. Anjali J. Manish, Advocate For the Respondents : Mr. Rahul Kaushik, S .....

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5] being seized from it on 4th April 2015, and no show-cause notice ( SCN ) having being given to it under Section 110 (2) of the Customs Act 1962 ( Act ) for over six months thereafter, the seized goods have not been released to the Petitioner till date. 3. The plea of the Customs Department (Respondents herein) on the other hand, is that in the course of the investigation following the seizure of the goods in question, a statement was voluntarily made on 29th June 2015 by Mr. Ujjawal Pugalia, .....

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nsideration: (i) Whether there could be any valid waiver of the right to be given a SCN under Section 124 (a) of the Act; and (ii) If the answer to (i) above is in the affirmative, is there a corresponding obligation on the Customs Department to pass an adjudication order within a reasonable period and what is the consequence of the Customs Department failing to do so? 5. It is submitted by Mrs. Anjali J. Manish, learned counsel for the Petitioner, that the statement recorded of the Sole Proprie .....

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al Excise and Customs, Chandigarh (1993) 3 SCC 656 she submitted that Sections 110 and 124 are independent, distinct and exclusive of each other, resulting in the survival of the proceedings under Section 124, even though the seized goods might have to be returned, or stand returned, in terms of Section 110 of the Act, after the expiry of the permissible period of seizure. 6. Mrs. Manish also referred to the decision of this Court in Auto Creaters v. Union of India 2015 (325) ELT 49 (Del) where .....

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could be issued under Section 124 even after an unconditional release of goods under Section 110 (2) of the Act. 7. The running theme of the above submissions was that the importer cannot be worse off for having waived the right to be given a SCN under Section 124 (a) of the Act, in anticipation of the adjudication being expedited. In the present case not only was the SCN not given to the Petitioner within six months from the date of seizure, but there was no adjudication order either passed ev .....

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ring once before the Customs Officer, the Sole Proprietor of the Petitioner did not turn up. Mr. Kaushik submitted that if the Court so permits, the Customs Department is prepared to pass an adjudication order in a time-bound manner. 9. Referring to the decision in S.N. Ojha v. Commissioner of Customs 2016 (331) ELT 33 (Del), Mr. Kaushik submitted that the Petitioner would be bound by the statement made by its Sole Proprietor under Section 108 of the Act and such statement, even if subsequently .....

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t made to them him under Section 108 of the Act, even though retracted, would be binding on the maker of the statement. 10. In order to examine the above submissions, it is necessary first to refer to the relevant provisions of the Act. The relevant portions of Sections 110 and 124 read 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 .....

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zed: 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. (3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act. (4) The person from whose custody any documents are seized under sub-section (3) shall be entitled to make copies thereof or take extract therefrom in the presence of a officer of .....

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aking 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 of the person concerned be oral. 11. It requires to be noticed at the outset that an order confiscating the illegally imported goods .....

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g a representation in writing within such reasonable time. Thirdly, under Section 124 (c) of the Act, such owner or person should be given a reasonable opportunity of being heard. 12. The proviso to Section 124 makes it possible for both the notices under Section 124 (a) and the representation under Section 124 (b) of the Act to be oral at the request of the person concerned. Therefore, it is possible that there might be a waiver by the owner or person of the right to be given an SCN in writing .....

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ion and Development which would give the importer exemption from payment of import duty. However, after placing an order upon M/s. Virgo Steels ('Virgo'), the ACC decided to abandon the work of expansion, and therefore, the licence obtained by Virgo under the above Deemed Export Scheme (DES), in terms of which the import of billets and lead ingots was made on a duty free basis, became invalid. In an investigation subsequently undertaken by the Department of Customs, it was found that the .....

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of Virgo notice as a token of their commitment. It was also stated by them that they do not want any show cause notice and personal hearing in the matter. 13.2 The Collector of Customs nevertheless proceeded to pass an order against Virgo demanding customs duty and penalty. Virgo's appeal allowed by the Customs, Excise & Gold (Control) Appellate Tribunal holding that the non-issuance of SCN to Virgo under Section 28 of the Act had vitiated the proceedings initiated by the Collector of C .....

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ted has any right for such a notice. Thus, this right of notice being personal to the person concerned, the same can be waived by that person. 14. Although Mrs. Manish sought to distinguish the above decision on the ground that the statement made in the instant case was under Section 108 of the Act, the Court finds that the latter statement, even if retracted, can be acted upon by the Customs Department, although in the present case there is no such retraction. In K.I. Pavunny v. Assistant Colle .....

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acted. 15. Circular 290/6/97- CX dated 20th January 1997 issued by the CBEC emphasized that where prima facie offences of serious nature or high stakes and/or legal questions are involved, the SCN must not be permitted to be waived. However, where a party requires expeditious adjudication for any reasons, they may file their replies and request for their case to be heard expeditiously. In the subsequent Circular No. 7/2013-CUs dated 19th February 2013, reference was made to the decision of this .....

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ance of an SCN, the release of goods for non-compliance of provisions of Section 110 (2) of the Act is bound to create complications like difficulties in realization of duty leviable on goods under reference and of fine and penalty amounts. Therefore, it is stated that SCN is to be issued to the owner of the goods or such person under Section 124 (a) of the Act within six months from the date of seizure or within the extended period in terms of the proviso to Section 110 (2) of the Act. 17. The .....

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n order within a reasonable period and what is the consequence of the Customs Department failing to do so? This Court in Jatin Ahuja v. Union of India (supra) held that the effect of non-compliance with the provisions of Section 110 (2) of the Act would be that the seized goods would be released unconditionally to the person from whose possession the goods were taken. The Bombay High Court, in Jayant Hansraj Shah v. Union of India 2008 (229) ELT 339 (Bom) held that it was only where no order is .....

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months period mandated by Section 110 (2) of the Act. The conclusion was that the time limit under Section 110 (2) for giving a SCN to the person from whose goods was seized, is mandatory in nature. There are two time limits: an initial period of six months and, an extension by a further period of six months on sufficient cause being shown. For such extension of time the provision requires application of mind by the Customs Department to the facts of the case and being satisfied that for bona fi .....

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his possession. These were immediately seized. Just prior to the expiry of six months from the date of seizure, i.e, on 27th August 1970, the Collector, Central Excise and Customs, on his own, passed an ex parte order extending the seizure period by a further period of six months, i.e, upto 19th March 1971. On 4th March 1971, an SCN was issued to the Appellant under Section 124 (a) of the Act. Negativing the challenge by the Appellant to the above order dated 27th August 1970, the High Court hel .....

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distinct and exclusive of each other, resulting in the survival of the proceedings under Section 124, even though the seized goods might have to be returned , or stand returned, in terms of Section 110 of the Act, after the expiry of the permissible period of seizure. 21. In the instant case, the stage of issuing the SCN has not been crossed. Even if it were to be taken that the Petitioner validly waived the right to be given an SCN, an adjudication order had to be passed within a reasonable ti .....

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have, in terms of Section 124 (a) proceeded to confiscate the seized goods. 22. The waiver by the Petitioner of the right to be given an SCN was in the expectation of expeditious adjudication. At this juncture it requires to be noticed that the Petitioner imported three consignments under three different B/Es. In respect of all the three B/Es, the Petitioner waived the right to be given an SCN. In respect of two of the B/Es an adjudication order was passed, and the Petitioner paid the demand wit .....

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the proceedings and passing an adjudication order within a reasonable time. The Petitioner is right in contending that it cannot be worse off for having waived the right to be given an SCN under Section 124 (a) of the Act. That waiver was plainly in the expectation of expeditious adjudication. However, as a result of the inaction of the Respondents, the Petitioner has been denied the release of the seized goods indefinitely. 23. Considering that the time limits for issuance of an SCN in terms o .....

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