Madras High Court
S. Kannan vs Assistant Collector Of Customs, Madras on 8 February, 1995
Equivalent citations: 1995(78)ELT419(MAD), 1996 A I H C 676, (1995) 78 ELT 419
ORDER
1. The writ petition is for the issue of certiorari to quash a show cause notice issued under Section 124 of the Customs Act, 1962, dated 11-11-1993, to the petitioner and 8 others.
2. The petitioner came to be implicated while making investigations against certain persons who were involved in the illegal export of sandalwood logs/billets etc. In the criminal cases directed against the said third parties, the matter had come up to this Court in Crl. O.P. Nos. 5540, 5542 and 5922 of 1993. While dismissing those petitions this Court had observed that it was better if the C.B.I. had taken up the investigation, because there was some suspicion as to the involvement of certain Customs officials also. It is under those circumstances that the impugned show cause notice came to be served on the petitioner calling upon him to submit his explanation. Similar show cause notice had been issued to the three persons who had filed the Crl. O.Ps. before this Court and certain others also. The show cause notice is challenged on two grounds. (1) The first respondent who issued the show cause notice has no pecuniary jurisdiction to issue the notice having regard to Section 122 of the Customs Act which prescribes the pecuniary limit of the officers. The second ground of attack is that when this Court had directed the C.B.I. to enquire into the matter, the show cause notice has been issued with a mixed motive to help the Customs officers, who might be involved in the case. The writ petition was admitted on 16-12-1993 and interim injunction was also granted. The respondents have filed a petition viz., W.M.P. No. 23695 of 1994 to vacate the interim injunction and in support of the petition have filed a detailed counter-affidavit. In the counter-affidavit it is stated that on specific intelligence gathered by the Special Investigation Branch of the Madras Custom House, an inspection was conducted in respect of two containers tendered for export. It was found that though the shipping bills had referred to the export of mica powder, the bulk of the containers carried sandalwood to the value of Rs. 64,27,715/- and peacock feathers to the value of Rs. 16,80,000/-. The goods were seized and on investigation the impugned show cause notice was issued. Regarding the points taken in the writ petition it is pointed out that the show cause notice specifically says that the explanation should be submitted to the second respondent-Collector of Customs who is the proper adjudicating authority under Section 122 of the Act. Regarding the second contention it is stated that the question of prosecution is totally different from adjudication proceedings under the Act and that there was no motive in issuing the show cause notice. While considering the miscellaneous petitions, the decision of Raju, J. in W.P. No. 7839 of 1994 [reported in 1995 (76) E.L.T. 539 (Mad.)] was brought to my notice and I had decided to take up the writ petition itself for final disposal. At the request of the counsel for the petitioner, I gave one adjournment to enable the petitioner to argue the case, elaborately.
3. According to the learned counsel for the petitioner, the decision of Raju, J., dated 29-11-1994 will not apply to the facts of the present case. Further the learned Judge has proceeded on the basis that the show cause notice had been issued under Section 122 of the Act, whereas the show cause notice actually related to initiation of adjudication proceedings. It was therefore contended that the views expressed by Raju, J., cannot be followed in this case. I will come to the correctness of this argument a little later after referring to the provisions of law and the arguments advanced by the learned counsel for the petitioner, on first principles.
4. The learned counsel for the petitioner has taken me to Sections 122, 124 and 110 of the Act besides the definition Clause 2(8) of the Act. Section 2(8) defines the Collector of Customs and says that the word includes the Additional Collector of Customs. It is not necessary for me to quote the relevant sections relied on by the petitioner except to say Section 122 relates to an adjudication of confiscations and penalties. Similarly, Section 124 relates to the issue of show cause notice before confiscation of goods or imposition of penalty. The reference to Section 110 is apparently a mistake for Section 113 because we are concerned with the question of smuggling while exporting of goods. The argument is that the adjudication proceedings under Section 122 of the Act has been entrusted with the Collector of Customs in respect of goods whose value exceeds Rs. 50,000/-. The issuance of a show cause notice forms part of the adjudication proceedings. Inasmuch as the subject show cause notice relates to value of goods which runs into lakhs of rupees, it is only the Collector of Customs who can adjudicate on the question of confiscation or penalty and consequently he alone can issue the show cause notice. Learned counsel for the petitioner has referred to Bailey or Jurisdiction. This is for the purpose of stating that while on the question of jurisdiction, the subject matter of the case has to be looked into. In other words, if the subject matter is looked into and if the value of the goods is more than Rs. 50,000/-, the show cause notice can be issued only by the Collector of Customs. Reference is then made to Rubinstein on Jurisdiction and Illegality. The argument is that the jurisdictional rule is applicable to the adjudicating proceeding also. Therefore, it is sought to be inferred that the issuance of a show cause notice is also part of the adjudication process and therefore part of the jurisdictional issue. In Rajmal Motiram Marvadi v. Krishna Valad Mahipati Hagadekar (I.L.R. XX Bombay 208) it is pointed out that service of notice is a condition precedent to the Court having jurisdiction. A perusal of the judgment shows that the above observation was made under totally different circumstances. They were considering the question whether an ex parte order can be set aside when cause is shown for the absence of the parties. Cause to the satisfaction of the authority means "to allege and prove sufficient cause". Finally, reference is made to Municipal Corporation, Raipur v. Ashok Kumar Misra for the argument that the decision making authority must give opportunity. Learned counsel for the petitioner also argues that there is no power of delegation and the respondents have not shown any such rule or regulation delegating the power of the Collector under Section 122 to any other authority. Therefore, it is argued that a fortiari the [sic] Assistant Collector will not get jurisdiction to issue the show cause notice. The second argument, as I have already noticed, is that the issuance of the show cause notice is motivated and is specifically with a view to avoid the investigation by the C.B.I. in accordance with the judgment of this Court. It is pointed out that the C.B.I. has not come up with any report regarding the involvement of the Customs officials. In this connection, learned counsel for the petitioner has referred to Wade and Administration Law 6th Edition for the proposition that where mixed motives are involved, the Court can infer mala fides for invalidating the show cause notice.
5. Per contra, Mr. C. A. Sundaram, learned counsel for the respondents refers to Section 2(39) of the Act which defines "smuggling". It means, any act or omission which will render the goods liable to confiscation under Section 111 of Section 113. According to the learned counsel, the provisions of the Act as contained in Chapter 14 come into play only where there is smuggling. As already pointed out, Section 113 provides for confiscation of goods attempted to be improperly exported. Section 122 refers only to the question of the adjudicating process and the limits of the officers. But it is only Section 124 which says that before confiscating the goods or imposing any penalty, a show cause notice should be given to the person concerned. It is in this context that the learned counsel for the respondents says that the judgment of Justice Raju cannot be distinguished and it is directly on the point. Learned counsel for the respondents also argues that but for Section 124, it might have been possible to say that Section 122 alone provides for adjudication and therefore the principles of natural justice must be read into the said Section 122. Looked from this angle it may be possible to say that the officer prescribed under Section 122 alone can issue show cause notice. He then refers to P. V. Srinivasa Sastry v. Comptroller and Audit General . That was a case relating to the initiation of the disciplinary proceedings and the necessity to pass final orders by the appointing authority. This is the safeguard provided under Article 311 of the Constitution of India. Even so, the Apex Court has held as follows :-
"Although Article 311 of the Constitution does not speak as to who shall initiate the disciplinary proceedings but, as already stated above, that can be provided and prescribed by the Rules. But if no Rules have been framed, saying "as to who shall initiate the departmental proceedings, then on basis of Article 311 of the Constitution it cannot be urged that it is only the appointing authority and no officer subordinate to such authority can initiate the departmental proceeding. In the present case, it was not brought to our notice that any Rule prescribes that the Accountant General, who is the appointing authority, alone could have initiated a departmental proceedings."
6. It appears to me that there is no escape from the proposition that a show cause notice can be issued by the first respondent, but the adjudication can be done only by the authority prescribed under Section 122 of the Act. To some extent this is, in pari materia, to a case of disciplinary proceeding. In disciplinary proceedings also, it is stated that the punishment can be imposed by the appointing authority or some other authority prescribed by the Rule. That would not prevent a lower authority from initiating the disciplinary proceeding so long as the Rule does not prescribe the same. In the same way, under the Customs Act also Section 122 only says that the adjudication can be made only by the Collector of Customs, if the value exceeds Rs. 50,000/-. It nowhere says that the show cause notice should not be issued by a lower authority. In this connection, learned counsel for the respondents has taken me through show cause notice and paragraphs 56(a) and 56(d) of the show cause notice. The recitals therein clearly indicate that the addressees are called upon to show cause to the Collector of Customs meaning thereby that it is the Collector of Customs who will adjudicate upon the matter. I have no hesitation in holding that the impugned show cause notice issued by the first respondent is perfectly valid and not liable to be set aside on any ground raised in the writ petition. In this sense, I am in respectful agreement with the views expressed by Raju, J., in W.P. No. 7839 of 1994. The text books referred to by the petitioner do not in any way advance the case of the petitioner and do not go to the root of the matter because we are specifically governed by Section 122 of the Act.
7. The argument that without the C.B.I. completing the enquiry, the issuance of the show cause notice is motivated is not also acceptable As rightly pointed out by the learned counsel for the respondents, Chapter 16 relating to offence and penalties is totally different from Chapter 14 relating to confiscation and imposition of penalties. The two things lie in two separate compartments and one does not overlap the other. This is the view expressed by Venkataswami, J. (as he then was) in N. Jayathilakan v. Additional Secretary [1987 (31) E.L.T. 47]. That apart, I am also of the view that the issuance of the show cause notice will not absolve any Customs Officer who is found to be involved in the case and who is implicated by the C.B.I. authorities. Conversely the fact that the C.B.I. authorities implicate some Customs Officers as being involved in the case, will not absolve the petitioner or other persons against whom show cause notice have been issued.
8. In fine, I find that there is no substance in the writ petition and it is accordingly dismissed. There will be no order as to costs.