Calcutta High Court
Oyatape Fibres Pvt. Ltd. And Anr. vs Collector Of Customs on 16 September, 1994
Equivalent citations: 1995CRILJ1
Author: Tarun Chatterjee
Bench: Tarun Chatterjee
ORDER Tarun Chatterjee, J.
1. The writ petitioners are traders in various types of dyes, dye intermediaries and other chemicals. The writ petitioners brought from a foreign supplier 300 Kgs. of "Dispersed Dyes Pink" of German origin (hereinafter referred to as "the goods") to Calcutta on or about 12th December, 1993. Upon arrival of the goods at the Calcutta Airport, the writ petitioners filed a Bill of Entry for home consumption on 17th of December, 1993 under Section 46 of the Customs Act (hereinafter referred to as "the Act") before the Customs Authorities at Calcutta for clearance and release of the goods. The goods were, however, not released but were detained by the Intelligence Officer, Directorate of Revenue Intelligence, being the respondent No. 4 in this writ application, by passing an order of detention under Section 110 of the Act on December 23, 1993. On 30th of April, 1994, the writ petitioner received a draft show cause notice issued by the Customs Authorities ' without any number, date or signature. A reply to the draft show cause notice was filed on behalf of the writ petitioner. In reply it was, however, alleged that the draft show cause notice was neither dated nor signed. Without proceeding further on the draft show cause notice or on the reply to the same, submitted on behalf of the writ petitioners, another show cause notice was issued by the authorities on 9th of June, 1994 which was received by the writ petitioners on 24th of June, 1994. It is an admitted position that the aforesaid show cause notice was posted from the "Calcutta Airport Post Office on 22nd of June, 1994. It is also an admitted position that 22nd June, 1994 was the last date for giving the notice to show cause in terms of Section 124(a) of the Act. Against refusal on the part of the Customs Authorities to release the goods, to accept the valuation of the goods as declared by the writ petitioners in the Bill of Entry and to issue a detention certificate acceptable to the Calcutta Airport Authority in respect of demurrage and other import charges and expenses incurred in respect of the goods, this writ petition has now been moved at the instance of the writ petitioners.
2. The main question that I have to decide in this writ petition relates to interpretation of the word "Given" as occurring in Sections 110(2) and 124(a) of the Act. This arises in this way.
3. According to the learned Counsel for the writ petitioners, the word "given" in the context of the Customs Act must be interpreted to have meant that the show cause notice must have been received by the person or at least must have reached or tendered to the person against whom such show cause notice has been issued. Therefore, the learned counsel contended that as the show cause: notice had been received by the writ petitioners after the expiry of six months from the date of seizure, the writ petitioners were entitled to release of the goods under Section 110(2) of the Act. If the argument of the learned Counsel of the writ petitioners on the interpretation of the word "given" as occurring in Sections 110(2) and 124(a) of the Act is accepted, then direction must be given to release the goods in view of Section 110(2) of the Act. If this argument is not accepted, question of release of the goods, may not arise.
4. Mr. Basu, appearing for the Customs Authorities, on the other hand, however, submits that such interpretation cannot be given to the word "given". According to him, the word "given" as occurring in Sections 110(2) and 124(a) of the Act would clearly mean the date on which the notice has been issued by the Customs Authoprities. If this argument of Mr. Basu is accepted, then it must be held that the show cause notice was given within six months from the date of seizure and, therefore, the release of the goods shall not arise under Section 110(2) of the Act.
5. I have carefully considered the rival contentions of the parties. After carefully considering the contentions so raised by the learned counsel for both the parties, I am of the view that the submission of the learned Counsel for the writ petitioners must be accepted. Reasons are as follows :
Let me first consider whether Section 110(2) of the Act is a mandatory provision or not. To come to a finding whether Section 110(2) of the Act is mandatory in nature, it would be necessary to quote Section 110(1) and (2) of the Act. Section 110 runs as follows:
Section 110. Seizure of goods, documents and things.
(1) If the proper officer has reason to beheve that any goods are liable to confiscation under this Act, he may seize such goods:
XXX XXX XXX XXX (2) Where any goods are seized under Subsection (1) and no notice in respect thereof is given under Clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the 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 Collector of Customs for a period not exceeding six months.
From a reading of Section 110(1) of the Act, it is clear to me that it confers power on a proper officer of the Customs office to seize any goods, documents and things if he has reasons to believe that such goods are liable to confiscation under the Act. Therefore, Section 110(1) of the Act confers power to the proper officer to seize goods, documents and things only on his reasonably believing that any goods are liable to confiscation. But it must be borne in mind that such power of the proper officer to seize goods, documents and other things under Section 110(1) of the Act has serious implications, as, such seizure could deprive the importer even if temporarily, the use of the goods consigned or the right to transact any business in respect thereof. Therefore, the power of seizure of the proper officer founded on mere reasonable belief must undoubtedly be considered as an extraordinary power. The precipitation of a period of limitation under Section 110(2) of the Act, therefore, in the context of the intention of the legislature is that the seizure should not last beyond reasonable limits i.e. six months from the date of seizure.
6-7. Section 110(2) of the Act, however, gives power to the Collector of Customssonly to extend the period of six months for another period of six months if he is satisfied that sufficient cause has been shown for such extension. Therefore, in view of proviso to Section 110(2) of the Act, it is only the Collector of Customs who can extend the period for another six months and not the proper officer who has been conferred with the power under Section 110(1) of the Act to confiscate the seized goods. "Proper Officer" has been defined in Section 2(34) of the Act which says that "Proper Officer" in relation to any function to be performed under the Act, means the Officer of the Customs who is consigned to perform those functions by the Board or the Collector of Customs. It is for this reason, the power of extension of the period for another six months from the date of seizure is vested in the "Collector of Customs", who is an officer superior in rank than the "Proper Officer" and who is also an appellate authority. On perusing the proviso to Section 110(2) of the Act, it also appears that the Collector of Customs is not conferred with any power to extend the period for more than one year from the date of seizure. If it is so, Collector of Customs loses his power to extend the period beyond one year from the date or seizure. As soon as the aforesaid period of six months from the date of seizure expires and in the case where extension is granted by the Collector of Customs but that too has expired, a vested civil right is accrued to the importer to get the seized goods released under Section 110(2) of the Act. The Supreme Court in (The Assistant Collector of Customs and Superintendent, Preventive Service Customs, Calcutta v. Charan Das Malhotra) clearly held that such vested civil right is conferred to the importer to get the seized goods released under Section 110(2) of the Act. In the said decision, the Supreme Court observed as follows:
The right to restoration of the seized goods is a civil right which accrues on the expiry of the initial' six months and which is defeated on an extension being granted, even though such extension is possible within a year from the date of the seizure. Consequently, such a vested civil right in the respondent cannot be defeated by an ex parte order of extension of time by the Collector. An opportunity to be heard should be available even in a case where extension is granted before expiry of the the initial six months, after which period alone the respondent can claim the right to return of the seized goods.
From the aforesaid observations of the Supreme Court, it also must be held that in the absence of any show cause notice being given to the importer within the period of six months or within a year, if extended by the Collector of Customs on sufficient cause being shown, from the date of seizure of the goods, the importer is entitled to release the goods as of right, as a civil vested right to get the goods released, is vested on the importer.
8. In view of the aforesaid discussions, the duty to give show cause notice under Section 124(a) of the Act must be construed strictly in terms of Section 110(2) of the Act. For the reasons aforesaid, it must be held that the provisions of Section 110(2) of the Act are mandatory in nature and, therefore, the question of extension of the period to give show casue notice under Section 124 of the Act shall not arise at all except in cases where the Collector of Customs condones the delay for another period of six months on being satisfied that there is sufficient cause for such condonation. In the present case, it is an admitted position that no such order condoning the delay has been passed by the Collector of Customs in exercise of his power under the proviso to Section 110(2) of the Act.
9. Let me now proceed with this in mind that there is no question to extend the period of six months if the show cause notice, under Section 124 of the Act, is found to have been given after the expiry of six months from the date of seizure.
10. Let me now come back to the question which relates to the interpretation of the word "given" as occurring in Sections 110(2) and 124 of the Act. In order to give a proper interpretation of the word "given" as occurring in the aforesaid Sections, it would also be necessary to say a few words on Section 153 of the Act read with Section 27 of the General Clauses Act, on which the learned Counsel, appearing for the Customs Authorities relied on. Section 153 read as follows:
Service of order, decision, etc. Any order or decision passed or any summons or Notice 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 or notice cannot be . served in the manner provided in Clause (a), by affixing it on the notice board of the customs house.
Mr. Basu, relying on Section 153 of the Act and also on Section 27 of the General Clauses Act, submitted that as the show cause notice was issued to the writ petitioners on 9th June, 1994, and posted on 22nd June, 1994 which was the last date for giving the notice under Section 124 of the Act, it must be held that the show cause notice was duly given in accordance with Section 110(2) of the Act. According to Mr. Basu, Section 153 of the Act would clearly show that it does not require that there should be an effective service on the addressee. He further sub-: mitted, relying on Section 27 of the General Clauses Act, that service shall be deemed to have been effected by properly addressing, numbering and posting the letter by registered post unless contrary is proved. In support of this contention, Mr. Basu relied on a single Bench decision of this Court reported in (1978) 82 CWN 270 (Jayantilal Morakhia v. Union of India). He also relied on a decision of the Madras High Court (B. Bhoormal Tirupati v. The Additional Collector of Customs House, Madras).
11. I have carefully considered the sub-missi of Mr. Basu which was also contested by the learned Counsel appearing on behalf of the writ petitioner. After carefully considering the submissions, so made on this question, I am, however, unable to agree with the submission made by Mr. Basu.
12. Section 153 of the Act has been quoted hereinabove. It is clearly evident from it that it only provides the modes of service. Section 153(a) of the Act says that the service can be effected 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. Section 153(b) of the Act only says that if the order, decision, summons or notice cannot be served in the manner provided, in Clause (a), service of Notice to show cause can be effected by affixing it on the notice board of the Customs House. In the present case, I am concerned with the show cause notice which was sent by Registered Post. It is no doubt true that issuing notice by registered post is recognised mode of service but that would certainly not mean that only by sending the notice by registered post before expiry of the period of limitation, the Customs Authorities would be absolved from their duty to give the notice before expiry of the period, as prescribed in Section 110(2) of this Act.
13. One more significant factor at this stage is to be considered. It is true that one of the modes of service is sending the notice by registered post. Therefore, it is open to the Customs Authorities to say that if a show cause notice is sent by registered post to the importer in the correct address of the importer, it must be presumed to have reached the importer. But if we consider Section 110(2) along with Section 124(a) of the Act, it would be significant to note that either in Section 110(2) or in 124(a) of the Act the word "given" is used. If it was the intention of the legislature to say that only by sending the notice by registered post in accordance with Section 153 of the Act, the purpose of Section 110(2) of the Act would be achieved, then there was no reason for the legislature to use a different word "given" in Sections 110(2) and 124(a) of the the Act. As 1 have already held that a vested civil right to get the seized goods released in terms of Section 110(2) of the Act arises as of right to the importer if no notice under Section 124(a) is given within six months from the seizure of the goods, it must be held that the word "given", as used, in Section 110(2) and Section 124(a) of the Act must necessarily mean that it must have been received by the importer or at least it must have reached the importer and that giving of notice is not completed only by sending it by registered post.
14. In K. Narasimhiah v. H.C. Singri Gowda AIR 3966 SC 330 a question arose as to when a notice for calling a meeting contemplated by the provisions of Mysore Town Municipalities Act, 1951 could be said to have been given. The main contention before the Supreme Court was that sufficient notice of the Special General Meeting was not given and it was in that context that the Supreme Court held that sending of the notice amounted to giving the notice. The Supreme Court in paragraph 11 of the said decision observed as follows at page 332 of AIR:
Giving" of anything as ordinarily understood in the English language is not complete unless it has reached the hands of the person to whom it has to be given. In the eye of law, however, "giving" is complete in many matters it has been offered to a person but not accepted by him. Tendering of a notice is in law therefore giving of a notice even though the person to whom it is tendered refuses, to accept it. We can find however no authority or principle for the proposition that as soon as the person with a legal duty to give the notice; despatches the notice to the address of the person to whom it has to be given, the giving is complete. We are therefore of opinion that the High Court was wrong in thinking that the notices were given to all the Councillors on the 10th October. In our opinion, the notice given to five of the Councillors was of less than three clear days.
(Emphasis added) Relying on this observation of the Supreme Court and the interpretation given by the Supreme Court of the word "giving", a Division Bench of Gujarat High Court, -- Ambalal Morarji Soni v. Union of India in paragraph 7 at pages 129 and 130 observed as follows:
x x x x x x x x Giving of the notice contemplated by Section 124 of the Customs Act and Section 79 of the Gold (Control) Act means that the notice must have been received because as pointed out by the Supreme Court in Narasimhiah's case, (supra) the giving of the notice is not complete unless and until it reaches the person concerned or its actual tender to him. Merely despatching of the notice to the address of the person does not complete the giving of the notice, x x x x x x x (Emphasis supplied) A Division Bench of the Kerala High Court, in the case of CD. Govinda Rao's case while dealing with a case under Section 79 of the Gold (Control) Act held that if no notice was given within the specified period, the seized goods should be returned to the owner from whose possession the gold was seized. Second proviso to Section 79 of the Gold (Control) Act, which is similar to Section 110(2) of the Act, provides that where no notice is given within a period of six months from the date of seizure of the gold, conveyance or animal or such further period as the Collector of Central Excise or of Custom may allow, such gold, conveyance or animal shall be returned after the expiry of that period to the person from whose prossession it was seized. While considering Section 79 of the Gold (Control) Act, the aforesaid Division Bench of the Kerala High Court, in paragraph 11 at page 213 ; at page 733 of Cri LJ observed as follows:
x x x x x x x It is thus clear from the authoritative pronouncement of the Supreme Court that the giving of notice contemplated by Section 79 is not the same thing as sending the notice, x x x x x x".
(Emphasis added) Similar is the view expressed by another Division Bench of the Allahabad High Court which is (Prem Nath Khanna v. Collector of Central Excise, Allahabad. The Gujarat High Court in the decision (Ambalal Morarji Soni v. Union of India) while considering Section 153 of the Act, observed as follows in paragraph 8 at page 130:
We may mention that even apart from the decision of the Supreme Court in Narasimhiah's case, (supra), on a pure grammatical construction of Section 124 of the Customs Act and Section 79 of the Gold (Control) Act, it is clear that what the Legislature contemplated in each of these two cases is that the person concerned has to be given the notice so that he may be informed of the ground on which it is proposed to confiscate the goods or impose the penalty on him and further so that he may be given an opportunity of showing cause against the grounds of such confiscation or penalty. Looking to the object for which the notice is to be given, it is clear apart from authority that the notice must be given, in the sense that the notice must reach the person concerned before the expiry of six months. If that is not done, it cannot be said that the notice has been given to him. Further, it, may be pointed; out that under the provisions of Section 153 of the Customs Act and 113 of the Gold (Control) Act, it is open to the authorities concerned to tender the notice in question to the person concerned without necessarily sending it by registered post in each and every case. The consequences of not accepting the notice when tendered by the postal authorities are very serious because then under Section 153 of the Customs Act and Section 113 of the Gold (Control) Act, it would be open to the authorities to serve the notice merely by pasting it on their own notice board and it is not likely that any citizen would refuse to accept the notice tendered by the Postal Authorities when the consequences of non-acceptance would be to have the notice pasted on the notice board and the goods confiscated or the penalty imposed on him, ordinarily without his knowing as to what the grounds of confiscation or imposition of penalty are and without his getting an opportunity of showing cause against such grounds.
(Emphasis supplied)
15. In view of my discussions made hereinabove and relying on the interpretation of the word "given" made by the Supreme Court in the aforementioned decision and also by the different High Courts in India, as mentioned hereinabove, I, therefore, come to this, conclusion that the word "given" as occurring in Section 110(2) of the Act would mean that the show cause notice must have been received by the person to whom it has been sent by registered post or at least it must have reached the said person.
16. Before parting with this branch of submission, it would be necessary to deal with the cases relied on by the learned counsel for the Customs Authorities.
17. So far as the case reported in (1978) 82 CWN 270 (Jayantilal Morakhia v. Union of India), on which reliance was placed on behalf of the Customs Authorities, is concerned, I am of the view that the facts of that case are clearly distinguishable. In that case, certain goods were seized on 9th of June, 1970 and the show cause notice was issued on 27th Nov. 1970. According to the importer in that case, as the show cause notice was received by him on 20th March, 1971, which was admittedly beyond the period of six months from the date of seizure of the goods, the same must be released under Section 110(2) of the Act. But from the affidavit-in-opposition filed by the Customs Authorities in that case, it appeared that a show cause notice was issued to the writ petitioner on 27th of Nov. 1970 by registered post but as it was not received by the writ petitioners, the postal authorities returned the same with a remark "Out of Calcutta hence left". In the background of this fact, the learned counsel, who appeared in that case, relied on Section 153 of the Customs Act and submitted that the show cause notice was sent on the writ petitioners within the period prescribed in Section 110(2) of the Act. In the aforesaid reported decision, admittedly, the record had shown that the show cause notice which was sent by registered post was tendered well within the period of six months from the date of seizure of the goods. That being the position, I do not find any application of the aforesaid single Bench decision in the facts and circumstances of this case, in the case in hand, admittedly, the show cause notice was issued on the last date and it was tendered to the writ petitioners after the expiry of the period prescribed in Section 110(2) of the Act. That apart, in view of the decision in (K. Narasimhiah v. H.C. Singri Gowda) in which the interpretation of the word "given" has been' found to the in receipt of the show cause notice by the person to whom it was sent, I am unable to follow the aforesaid single Bench decision of this Court.
18. Before parting, I also note that the decision of the Madras High Court (B. Bhoormal Tirupati v. The Additional Collector of Customs, Customs House, Madras) on which Mr. Basu relied, was also followed in (1978) 82 CWN 270 (Jayantilal Morakhia v. Union of India). In view of the aforesaid distinguishing features as noted above, it is not necessary to go into details in respect of the aforesaid Madras High Court decision.
19. For the reasons aforesaid, it must be held that "the notice is given" contemplated by Section 110(2) of the Act is not the same thing as sending the notice and "the notice is given" as occurring in Section 110(2) of the Act would mean that either the show cause notice was received by the importer or at least it had reached him. Admittedly, in this case, the show cause notice was received by the writ petitioners after the period of six months from the date of seizure as prescribed in Section 110(2) of the Act. It is not the case of the Customs Authorities that the notice was even tendered to the writ petitioners on any date before the expiry of the period of limitation, as prescribed in Section 110(2) of the Act. It is also not the case of the Customs Authorities that any other mode of service, as contemplated in Section 153 of the Act was effected on the writ petitioners on any date prior to the expiry of the period of limitation. At this stage, it would also be necessary to consider another argument of Mr. Basu, appearing for the Customs Authorities, that as a draft show cause notice, as noted earlier, was issued before the expiry of the period of limitation and a reply to the same was filed by the writ petitioners, it must be held that the show cause notice was served within the period of limitation, as contemplated in Section 110(2) of the Act. I am unable to accept the argument of Mr. Basu on this question. From the records, it would appear that the respondents themselves did not take any step in terms of the draft show cause notice. Although the draft show cause notice was served on the writ petitioners, even then the Customs Authorities did not proceed with the same and finally issued a fresh show cause notice on the writ petitioners and that would, in my view, mean that the draft show cause notice which was served on the writ petitioners prior to issuance of the present show cause notice, stood waived and or withdrawn.
20. Apart from that, the first show cause notice was only a draft and was unsigned and undated. From the above, at this stage, in my view, therefore, it would not be open to the Customs Authorities to rely on such draft show cause notice. Hence I have no hesitation in taking the view that the period of six months from the date of seizure, as mentioned in the Section 110(2) of the Act would be calculated from the date of receiving the fresh notice under Section 124(a) of the Act by the writ petitioners and not from the date the draft notice was received by the writ petitioners. Accordingly, this argument of Mr. Basu, in my view, has no substance and is, therefore, rejected.
21. In view of the aforesaid discussion, I am, therefore, of the view that the show cause notice, not having been given within the period of six months as prescribed in Section 110(2) of the Act, which is mandatory in nature, the writ petitioners are entitled to release of the goods seized by the Customs Authorities.
22. Now the question would be whether in view of the admitted position that show cause notice was not given within the period of limitation, proceedings initiated under Section 110(1) of the Act for confiscation of the goods should also be quashed.
23. So far as quashing of the confiscation proceeding is concerned, I do not agree with the submission of the learned counsel for the petitioners that only because the show cause . notie was served beyond the period of limitation, the proceeding initiated under Section 110(1) of the Act must be quashed. In a recent decision of the Supreme Court , (M/s. J.K. Bardolia Mills v. M.L. Khunger, Dy. Collector), the Supreme Court after considering the scope of Sections 110(2) and 124 of the Act held in paragraph 8 at page 519 as follows:
x x x x x x When the goods are seized under Section 110(1) of the Act that amounts to seizure of the goods under the Act and one of the conditions for invoking the provisions of Section 123 of the Act are satisfied by the mere factum of seizure. The effect of non-compliance of the provisions of Section 110(2) would only be that the seized goods are returned to the person from whose possession they were seized. It would not render the intitial seizure of the goods illegal. We, therefore, hold that the seizure of the, goods under Section 110(1) by itself is sufficient to comply with'ihe requisite condition under Section 123 of the Act. What happens to the goods thereafter is of no consequence.
In view of the aforesaid decision of the Supreme Court, I cannot, but hold that proceedings for confiscation initiated under Section 110(1) of the Act cannot be quashed on the ground that the show cause notice under Section 110(2) of the Act has been served beyond the period of limitation, as mentioned in Section 110(2) of the Act.
24. For the reasons aforesaid, the writ petitioners are entitled to release of the goods seized. Accordingly, I issue a writ of mandamus directing the respondents to handover possession and custody of the seized goods to the writ petitioners within a fortnight from this date positively on payment of customs duty, as assessed by the Customs Authorities, and to issue a requisite detention certificate acceptable to the Airport Authorities in respect of demurrage and other Airport charges and expenses incurred in respect of the subject imported goods from the date of filing of the Bill of Entry till the actual release thereof.
25. Accordingly, the writ application is allowed in part and there will be no order as to costs.
26. All parties are to act on xerox signed copy of this judgment upon usual undertaking.