TMI Blog2019 (7) TMI 1433X X X X Extracts X X X X X X X X Extracts X X X X ..... tend such period to a further period not exceeding six months and inform the person from whom such good were seized before the expiry of the period so specified. The change in the statute, in the opinion of this court, is a significant one. The previous provision required the Commissioner to show sufficient cause, which meant that such cause had to be based on objective considerations. The amended provision merely requires the Commissioner to record the reasons in writing and inform the person from whom such good were seized before the expiry of the period so specified . In this court s considered view, the amended provision deliberately sought to overbear the previous view that a notice before extension was necessary. Now two conditions are to be satisfied: one, the Commissioner has to record his reasons in writing, why the extension is necessary, and two, inform the person from whom such good were seized before the expiry of the period so specified. The latter condition is equally important, in the opinion of this court, because it is a pre-requisite for the exercise of the power of extension. The pre-amended provision was silent on this aspect. This Court is of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STAT that they were not issued the show cause notice and given opportunity to be heard before extending the time limit for issuance of show cause notice under provisions of the Act. Reliance was placed upon the decision of the Supreme Court in I.J. Rao, Assistant Collector of Customs Vs. Bibhuti Bhushan Bagh - 1989 (42) ELT 338 (SC) which held that the Commissioner could not extend the period of six months period for issuance of show cause notice without hearing the affected parties (in this case, the appellants). I.J. Rao (supra) also referred to post decisional hearing by the Collector but only in such cases where service of notices were evaded. It was argued that even after the impugned order of extension the time limit for issue of show cause notice was passed the respondents were not granted even post decisional hearing although a request was made in writing by them. 5. The respondents also relied on Harbans Lal Vs. Collector of Customs - 1993 (67) ELT 20, which held that before extending the time limit under Section 110 (2), owners of seized goods were entitled to notice, as such goods on the expiry of six months had to be returned to them and if that p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 163 of the speech of the Finance Minister, with respect to the amendment, which it reproduced. The relevant part of the speech is as follows: I also propose to make certain change to the Customs Act, 1962 to further improve ease of doing business in cross border trade, and to align certain provisions with the commitments under the Trade Facilitation Agreement. To smoothen dispute resolution processes and to reduce litigation, certain amendments are being made, to provide for pre-notice consultation, definite timelines for adjudication and deemed closure of cases of those timelines are now adhered to. Clause 90 of the Bill seeks, to amend Section 110 of the Customs Act so as to give power to extend the period for issuing show cause notice in case of seized goods by a further period of six months to case in cases where no order for provisional release of goods has been passed. 8. The CESTAT noticed that a coordinate bench in S.R.K. Metal Industries Pink Commercial (Final Order No.75047-75048/ 2018, dated 17.1.2019) which held as under: Our attention was also drawn towards the decision of Sardar Kulwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a period not exceeding six months and inform the person from whom such goods were seized before expiry of the said period. Careful analysis of the provision makes it clear that the right of issuance of the Show Cause Notice for the extension of the period of six months as prescribed under said sub- Section of Section 110 (2) remains same from which the emanate right of Show Cause Notice to the affected party in furtherance of Principle of Natural Justice as his rights are being prejudicially affected. The amendment will not obliterate the aforesaid position of issuance of Show Cause Notice has discussed above, even after insertion of with new sentence in the provisions of Section 110 (2) of the Act. In fact, we are of the view that after amendment not only the Show Cause Notice is required to be issued by the Adjudicating Authority, but he has also to give a reasoned order after hearing the Investigation Officer and also taking view of the affected party from whom seizure has been made as his personal right is being deprived of which emanate from the Section 110 (2) of the Act that entitled him to got the goods returned which has been seized from his possession. This is also cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the impugned orders and allow appeals with consequential relief as per law. In view of that decision in S.R.K. Metal Industries (supra) , the CESTAT allowed the respondents appeals. 9. The revenue argues that the CESTAT fell into error in not considering the fact that the change in the statute was meant to bring about a substantial change in regard to the regime regarding procedure for extension of time under Section 110 (2). Whereas, the pre-amended law required the official to ensure that there was sufficient cause for extension of time, the amended provision now merely requires the reasons (for extension) to be recorded in writing and informed to the assessee. It was argued that CESTAT, erred in holding that even after the amendment, a show cause notice is necessary. Mr. Ranka, learned counsel, relied on the Supreme Court s decision in Designated Authority v Holdor Topse 2000 (120) ELT 11 (SC) to submit that the order extending time to issue show cause notice was administrative and that it is not necessary to issue a show cause notice before passing such order. 10. Counsel for the respondents urged that pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hotra AIR 1972 SC 689 considered the interplay between Sections 110 and 124 of the Customs Act and held as follows: Section 124 provides that 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 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. The Section does not lay down any period within which the notice required by it has to be given. The period laid down in Section 110(2) affects only the seizure of the goods and not the validity of the notice. 13. This view was again applied and followed in J.K. Bardolia Mills v Dy. Collector and Ors. 1994 (5) SCC 332. Thus, there is no time limit for issuing a show cause notice, under Section 124 of the Customs Act. However, in case a show cause notice is not issued, for some reason, Section 110 would operate. Section 110 (2) states that goods cannot be detained for more than six months, unless a show cause notice (i.e. under Section 124) is issued; the proviso clothes the revenue with the power of extending the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized becomes immediately entitled to the return of the goods. It is that right to the immediate restoration of the goods upon the expiry of six months from the date of seizure that is defeated by the extension of time under the proviso to S. 110 (2). When we speak of the right of the person being prejudiced or placed in jeopardy we necessarily envisage some damage or injury or hardship to that right and it becomes necessary to inquire into the nature of such damage or injury or hardship for any case to be set up by such person must indicate the damage or injury or hardship apprehended by such person. In the present case, one possibility is that the person from whose possession the goods have been seized may want to establish the need for immediate possession, having regard to the nature of the goods and the critical conditions then pre- vailing in the market or that the goods are such as are required urgently to meet an emergency in relation to a vocational or private need, and that any delay in restoration would cause material damage or injury or hardship either by reason of some circumstance special to the person or of market conditions or of any particular qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expiry of the original period of six months. It is possible that while notice is issued before the expiry of that period, service of such notice may not be effected on the person concerned in sufficient time to enable the Collector to make the order of extension before that period expires. Service of the notice may be postponed or delayed or rendered ineffective by reason of the person sought to be served attempting to avoid service of notice or for any other reason beyond the control of the Customs authorities. In that event, it would be open to the Collector, if he finds that sufficient cause has been made out before him in that behalf to extend the time beyond the original period of six months, and thereafter, after notice has been served on the person concerned, to afford a post decisional hearing to him in order to determine whether the order of extension should be cancelled or not. Having regard to the seriousness and the magnitude of injury to the public interest in the case of the illicit importation of goods, and having regard to considerations of the damage to economic policy underlying the formulation of import and export planning, it seems necessary to reconcile the nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... important, in the opinion of this court, because it is a pre-requisite for the exercise of the power of extension. The pre-amended provision was silent on this aspect. 16. There are other reasons for this court to hold that the amendment brought about a radical change in the law. Parliament had knowledge or is deemed to have knowledge of the existing state of law, which required notice, before extension. Therefore, the change of terminology is significant; the amendment has resulted in only two conditions, being insisted upon- primarily that the Commissioner should record his reasons, before the expiry of the period of limitation and should inform those reasons to the party concerned. 17. Besides, this court also notices that Parliament, aware of difficulties that might be faced by importers of goods, which might be seized, also provided, through an amendment in 2006, the facility of provisional release. Section 110A, enacted for this purpose, reads as follows: 110A. Provisional release of goods, documents and things seized pending adjudication .-Any goods, documents or things seized ..... X X X X Extracts X X X X X X X X Extracts X X X X
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