Customs, Excise and Gold Tribunal - Calcutta
Shyamlata Sharma vs Collector Of Customs on 30 October, 1989
Equivalent citations: 1990ECR395(TRI.KOLKATA), 1992(57)ELT415(TRI-KOLKATA)
ORDER T.P. Nambiar, Member (J)
1. Being aggrieved by the Order No. 22-Cus. (P) 84 dated 24-7-1985 passed by learned Additional Collector of Customs (Preventive), Indo-Nepal Border, Muzaffarpur, imposing penalties under Section 112 of the Customs Act, 1962 on the above three appellants, and also ordering absolute confiscation of the properties seized in the case valuing at Rs. 2,87,341/-, the above mentioned appellants have presented the captioned three appeals, with a prayer to set aside the same. The appellant Shri Narayan Sharma appealed against the imposition of the penalty of Rs, 2000/- on him, and the appellant Shri M.M. Shastri appealed against the imposition of a penalty of Rs. 10.000/- against him and the appellant Smt. Shyam Lata Sharma appealed against the imposition of penalty of Rs. 50,000/- against her and also against the confiscation order of goods in question, valuing at Rs. 2,87,341/-.
2. Briefly stated, the facts of the case are that on the basis of prior intelligence that a consignment of smuggled watches procured by Smt. Shyam Lata Sharma was kept concealed in the safe and almirahs in the two rooms resided by Smt. Shyam Lata Sharma and family, the Assistant Collector of Customs (P. & I), Varanasi, issued a Search Warrant on 3-11-1983 under Section 105 of the Customs Act, 1962, for search of the premises at D.48/148 B. Misir Pokhra, Varanasi, occupied by Shri Madan Mohan Shastri, Smt. N.K. Sharma, her husband and family and in pursuance of the search warrant, the Customs Officers of Varanasi reached the residential premises at about 14.00 hrs. on 3-11-1983. Shri Madan Mohan Shastri and Smt. Shyam Lata Sharma, wife of Nand Kishore Sharma and one Shri Anwar Kasim, S/o Shri Shabbir Hasan residing at D. 50/244, Dalmandi, Varanasi, were found present in the aforesaid premises. The said Customs officers showed the search warrant to Smt. Shyam Lata Sharma and Shri Madan Mohan Shastri and got the same signed by them in token of having seen and read it, and in the presence of two independent witnesses searched the aforesaid residential premises. During the search, 1195 wrist watches of foreign origin worth Rs. 2,00,500/-, 1383 pcs. of electronic cells of foreign origin worth Rs. 2,766/-, 19 Citizen watch straps of foreign origin worth Rs. 95/-, 48 watch chains of foreign origin worth Rs. 480/-, 1 Stereo Tape Recorder of foreign origin worth Rs. 3000/-, 1 V.L. Tone Musical instrument of foreign origin worth Rs. 500/- and some diaries/loose papers were recovered. Out of the above goods, 1091 wrist watches worth Rs. 2,54,300/-, 572 pieces of electronic cells of foreign origin worth Rs. 1144/-, 19 pieces of Citizen watch straps worth Rs. 95/-, 28 pieces of watch chains worth Rs. 280/- and one Stereo Tape Recorder worth Rs. 3000/- were recovered from steel almirah in room No. 1 and 104 watches worth Rs. 26,200/-, 20 pieces of watch chains worth Rs. 200/-, 811 pcs. of electronic cells worth Rs. 1622/- and 1 Casio V.L. Tone Musical Instrument worth Rs. 500/- were received from the wooden almirah from room No. 2. A Panchnama were prepared in the presence of Smt. Shyam Lata Sharma and the witnesses. Since none of Smt. Sharma, Shri Shastri and Shri Anwar Kasim could give any proof of legal import/acquisition in respect of the aforesaid foreign goods, the same and diaries/documents were seized on 3-11-1983 under Section 110 of the Customs Act, 1962.
3. Thereafter, the investigation proceeded. The statements of the abovenamed appellants, Anwar Kasim, S/o Shabbir Hasan, Shri Ram Lakhan Pandey, Shri Rajaram, S/o Bachu and others were recorded under Section 108 of the Customs Act. After investigation it was revealed to the Customs officers that the foreign goods seized from the premises at D-48/14 B Pokhra, Varanasi, on 3-11-1983, appeared to be imported illegally into India in contravention of the provisions of restrictions imposed under Section 3(1) of the Import and Export (Control) Act, 1947 and Import (Control) Order, 1955 (amended from time to time) read with Section 11 of the Customs Act, 1962 and it is alleged that illegal import was done by the persons referred to in this para and para 21 and it is also alleged that the seized watches of foreign origin out of the said foreign goods recovered from the premises occupied by Smt. Shyam Lata Sharma, Shri Nand Kishore Sharma, Shri Narain Sharma and Shri Madan Mohan Shastri, contravened the provisions of Section 11C, 11D and HE of the Customs Act, 1962, inasmuch as the aforesaid persons did not give any intimation to the proper officer as provided under ll-C nor the necessary precautions as provided under ll D were taken by the said persons, nor the necessary accounts as provided under Section HE were maintained by the said persons. Accordingly, a show cause notice dated 28-4-1984 was issued to Smt. Shyam Lata Sharma, Shri Narayan Sharma, Shri N.K. Sharma, Shri Madan Mohan Shastri, Shri Damodar Sharma and Shri Banwari Lal Singh directing them to show cause why the contraband wrist watches collectively valued at Rs, 2,87,341/- seized in this case should not be confiscated under Section 111(d) of the Customs Act, 1962 for having been imported into India in violation of I.T.C. Order, 1955 issued under Section 3(i) of the Import and Export (Control) Act, 1947 and further read with G.I.M.F. Notification No. 76-Cus/65 dated 19-6-1965 issued under Section 11 of the Customs Act, 1962 and why penalty should not be imposed on each one of them under Section 112 of the Customs Act, 1962 for being concerned in the smuggling of contraband goods in question.
4. Thereafter, the reply to the Show Cause Notices were received from the various parties and adjudication proceedings resulted in the abovesaid order, which is the ject matter of appeal before us as mentioned above. The learned Advocate Shri Mukhopadhyay and learned Consultant Shri K. Chatterjee appearing for the appellants made two-fold contentions to the effect that the imposition of the penalty is not in accordance with law and that the confiscation of goods is illegal as the Show Cause Notice was issued after the expiry of six months in this case and there was no instructions obtained in this regard from the proper authorities.
5. In support of their contentions, the learned Counsels relied on the following decisions:-
(1) AIR 1972 Punjab & Haryana 444 - Tarsem Kumar v. Collector of C.E., Chandigarh (2) Order No. 274/Cal/85-2315 CEGAT, Calcutta -Kamrup Industries v. Collector of Customs & Central Excise, Shillong (3) Order No. 386/Cal/83-2305 CEGAT, Calcutta - Shri Ram Dhyan v. Collector of Customs (P) INB, Patna (4) Order No. 387/Cal/85-3223 CEGAT, Calcutta - Ganesh Prasad v. Collector of Customs (Prev.), Patna (5) Order No. 316/Cal/86-1975 ERB, Calcutta - Shri Balveer Singh v. Collector of Customs & C.E, Bhubaneswar (6) Order No. 35/Cal/89-35 ERB, Calcutta - T. Krishnaveni v. Collector of Central Excise & Customs, Bhubaneswar (7) 1982 (10) ELT 902 (Cal.) - Kantilal Somchand Shah and Anr. v. Collector of Customs & Central Excise (8) 1983 (14) ELT 1715 (Del.) - Shantilal Mehta v. U.O.I. (9). 1988 (33) ELT 642 (All.) -Arvind Singh v. Collector of Customs & Central Excise, Allahabad.
6. The learned SDR Shri M.N. Biswas stated that while the notice was admittedly served after the expiry of the time limit prescribed under Section 110, since the goods were not returned and were available for confiscation at the time of adjudication the adjudicating officer could order their confiscation. He would like to emphasise in this connection that Section 110 and Section 122 are independent and there is no time limit prescribed for initiating and conducting adjudication proceedings as such.
7. During the course of arguments, the learned SDR relied on the following decisions in support of their contentions :-
(1) 1988 (37) ELT 528 (Bom.) (2) 1982 (10) ELT 872 Delhi High Court (3) 1988 (34) ELT 428 Delhi High Court
8. The learned SDR further stated that in support of his contention that goods could be confiscated and penalty could be imposed even in cases where the notice was issued after six months after the expiry of the time limit prescribed under Section 110, he would also draw attention towards a three-Member Bench decision in 1987 (27) ELT 107 (Tribunal). In this case, there was initially a difference of opinion between the members and the matter was referred to a larger Bench and decided keeping in mind the view of the majority.
9. In response to a Court question regarding the liability of the department to return the goods after expiry of the prescribed period, the learned SDR stated that since somehow the goods had not been actually returned and that stage got crossed and reached adjudication stage, therefore, the goods could still be confiscated and penalty could still be imposed.
10. The learned Counsel, speaking in reply, stated that the cases cited by him may be taken into account inasmuch as the basic principle, which the departmental representatives very fairly agreed is that if the notice is not issued within the time limit prescribed under Section 110, the goods would become returnable. If so, they should be returned instead of being confiscated.
11. It was also his mission that although different views had been held by different authorities from time to time in this matter, the leading judgment is that of 1988 (33) ELT 642 in the case of Arvind Singh v. Collector of Customs & Central Excise, Allahabad. In this case, the Hon'ble Allahabad High Court has relied on the Supreme Court judgment in the case of Charan Das Malhotra and mitted that the learned SDR has incorrectly distinguished the case. He would also like to draw pointed attention to another leading case of Shantilal Mehta mentioned supra, in which it has been observed that retention beyond the time limit is illegal. In this case, it has been observed by the Hon'ble High Court inter alia, that seized goods must be returned if no prima facie case is made out without confiscation within the period prescribed under Section 110. It has been further observed that confiscation is illegal if seized goods are not returned within the prescribed period and in this judgment it has also been observed that the fact of invalid detection was that detection, adjudication and confiscation of the goods becomes bad and they have emphasised on the words "Shall be returned". This case is important because it takes notice of the different schools of thought and specifically discussed a judicial conflict.
12. The learned Counsels for the appellants also drew attention to the judgment of the Calcutta High Court in the case of Kantilal Scmchand wherein it has been held that confiscation is illegal if the goods have been retained illegally by the Customs authorities and it has been squarely observed that the Customs authorities cannot take advantage of their own illegality.
13. In a rejoinder the learned SDR stated the penalty has been imposed in this case keeping in mind the absolute confiscation of the goods. If the officer had considered the goods as returnable and had allowed them to be returned he would have in all probability imposed a much higher quantum of penalty. Therefore, if the goods are returned at this stage the net effect would be that the appellant would get away both with the goods and a lighter amount of penalty.
14. The learned Counsels stated that in the cases of Narayan Sharma and M.M. Shastri, it has been accepted that the goods do not belong to them but belonged to one Damador Sharma. This mission of the appellant was, however, not believed by the adjudicating authority. At the same time, there is no finding to the effect that the appellants were owners. It was the contention of the appellants that they had neither smuggled those goods nor were they otherwise concerned with any other illegal activity and had not committed any violation of the Customs Act, 1962. The goods were undoubtedly recovered from the custody and possession of Shyam Lata Sharma. The appellant M.M Shastri is the Father-in-law of Shayam Lata Sharma and the appellant Narayan Sharma is the son of Shyam Lata Sharma from whose custody the goods were recovered. They being inmates of the house simply happened to be present. Hence, they were not liable to any penalty. It was also their contention that the charge against appellants at SI. Nos. (2) & (3) viz. Narayan Sharma and M.M. Shastri are vague inasmuch as only Section 112 was mentioned and the Sub-clause 'A' or 'B' have not been mentioned and in such circumstances, the imposition of penalty was not correct in law. The learned Counsels prayed that the order of the learned Additional Collector may be set aside.
15. In view of the above contentions raised by both the sides, the following points emerge out for our decision in this case :-
(i) (a) Whether the confiscation of the seized goods is in accordance with law;
(ii) (b) If the answer to Point (a) is in the negative and if the goods are sold by the department, whether appellant is entitled for the seizure value of the goods as claimed;
(iii) (c) Whether the imposition of penalty on the appellants is in accordance with law ?
16. It is now an admitted fact that the goods were seized from the possession of Smt. Shyam Lata Sharma. Show Cause Notice was served six months after the statutory period prescribed under Section 110 of Customs Act. But the contention of the learned SDR is that since the goods were not returned and were available for confiscation at the time of adjudication, the adjudicating officer could order their confiscation. In this connection, he emphasised that Section 110 and Section 124 are independent and there is no time limit prescribed for initiating and conducting adjudication proceedings as such. In order to appreciate the rival contentions it is necessary for us to reproduce Section 110 and 124 of the Customs Act, 1962, which are as follows :-
Section -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 not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer.
(2) Where any goods are seized under Sub-section (1) and no notice in respect thereof is given under clause (a) of 124 within six months of 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.
Section -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 informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;
(b) is given an opportunity of making 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.
17. A plain reading of Section 110(2) clearly reveals that if a show cause notice as contemplated under Section 124(a) is not given to the person from whose possession it is seized within six months of the seizure the goods shall then be returned to that person unless the time of six months is extended by the Collector on sufficient cause. In the present case before us there is no such extension obtained by the authorities concerned and the authorities were under a mandate to return the goods to the owner as the words used in the section are "shall be returned" and not may be returned. There is nothing in the section to indicate that such a return of the property is ject to the condition that the owner makes a claim for the same. A civil right has accrued to the owner of the goods after the prescribed period of six months to get back the goods as per the mandate contained in Section 110(2) of the Act. The right to goods accrues to the owner whether he asks for them or not. Such a vested civil right cannot be defeated by an illegal detention of goods, by not returning the same against the mandate contained under 110(2) of the Customs Act, and sequently confiscating the illegally detained goods, by an order of adjudication, and intimate the owner that as the confiscation is done it cannot be returned to him as he is late in making his claim. It is not for the owner of the goods to stake his claim under the Act. But it is for the authorities to return the goods after the prescribed period of six months unless that period is validly extended under the proviso to Section 110(2) of the Act. That is why the words "shall be returned" is used in Section 110.
18. In the case of Charandas Malhotra reported in AIR 1972 SC Page-689, the Court observed as follows :
"The right to restoration of the seized goods is a civil right which accrues on the expiry of initial six months and which is defeated on an extension being granted, even though such extension is possible from the date of seizure."
The Supreme Court further held in the above decision that the "extension power under the proviso is not to be exercised without an opportunity of being heard given to the person from whom the goods are seized." Hence the Court upheld the decision of the Calcutta High Court in ordering restoration of the watches to the possession of malhotra. It is no doubt true that in Malhotra's ease the Supreme Court further held as follows :
"The section (Section 124) 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." It is no doubt true that the notice may be valid. The real question is about the retention of the seized goods being kept in custody of the department illegally against an accrued civil right of the owner. That is why under Section 124(b) an opportunity of being heard against the penalty and confiscation must be given to the owner and under Section 124(c) he must be given an opportunity of being heard. In that opportunity of being heard if the position turns out that the detention of goods is illegal in view of Section 110(2) of the Customs Act for want of a valid extension then the goods shall be returned to that person and the chapter ends there as far as the confiscation of the goods is concerned. But the validity of the notice as far as the imposition of the penalty is concerned is still there. It is on that context the Supreme Court held that "the period laid down in Section 110(2) affects only the seizure of the goods and not the validity of the notice."
19. Section 124 and 110 of the Customs Act cannot be read in isolation of each other for the simple reason that Section 110(2) refers to the limitation of notice to be issued under Section 124(a) of the Act. It is an established principle of law that in interpreting the various provisions of an Act a harmonious construction is to be taken. If the view that Section 124 does not lay down any limitation is stretched very far then the provisions of Section 110(2) becomes meaningless. It is an accepted principle of law that no party, whether a citizen or State shall be allowed to reap the fruits of its own illegality, gained by violating the express provisions of law and its mandate. Hence by violating the express mandate contained in Section 110(2) of the Customs Act by not returning the goods to its owner and by keeping them in its possession, the respondent cannot be allowed to reap the fruits thereof by confiscating the goods. Law is not devoid of justice and it remains the same, whether it is in favour of the citizen or is in favour of the State. There cannot be any distinction in between these two.
20. This view of ours find support by a large number of decisions of the various High Courts and also of the Tribunal. In the case relied on by the learned Advocate for the appellants reported in 1983 (14) ELT page 1715 (Shantilal Mehta v. U.O.I. ) the Delhi High Court in Paras 52 and 53 held as follows :-
"The fact remains that seizure of goods which was by lawful authority at its inception becomes illegal after the expiry of six months in this case. The continued detention of goods beyond six months is illegal. This illegality enters into the adjudication proceedings and vitiates the confiscation order. The independent school condones this illegality, as it were, by resorting to Section 124. To them the facts are nothing and interpretation is everything. Cases holding that the two sections are independent show this. This case vividly illustrates how the owner can be deprived of the protection of the law and how the due and orderly administration of the law can be diverted into a new course, which may serve as an evil precedent in future.
As the practice of search raises many issues as to the liberty of the individual the practice of seizure raises many issues as to his right to property. Illegal exercises of search and seizure results in unauthorised confiscation of goods. The law is deeply concerned for the rights of the individual. In the end the personality of the judge is the only guarantee of justice, as Ehrlich has said."
21. Further, in the decision reported in 1982 (10) ELT Page 902 in the case of Kantilal Somchand v. Collector of Customs & Central Excise, W.B., the Calcutta High Court held at Para-25 Page-913, as follows :-
"In the instant case, it appears that no notice under Section 124 of the Act was issued within six months from the date when the goods were seized. The Collector of Customs also did not extend the six months time after affording the owner of the goods a reasonable opportunity of being heard. Undoubtedly where seized goods are to be retained, the authority concerned must take recourse to the two conditions mentioned in Section 110 of the Act. The two conditions are: (a) when notice under Section 124 is given within the period of six months from the date of seizure of the goods; (b) when the Collector after hearing the owner of the goods seized extends the said period of six months. Apart from these two conditions, there is no other provisions in the Act which empowers the Customs to retain the seized goods. The provisions of Section 110(2) are mandatory - the goods "shall" be returned to the person from whose possession they were seized. Where under the law the confiscated under the provisions of the Act. The goods which ought to have been returned under the law were retained by the customs in the instant case, contravening the mandatory provisions of Section 110(2) of the Act. It is well settled that a statutory authority exercising statutory powers cannot act contrary to law. There cannot be any decision in adjudication proceedings under the Act, if any inherent nullity lies at the very root of the said proceedings. A quasi-judicial authority in exercising quasi-judicial powers cannot take advantage of its own illegality. The whole object of Section 110(2) of the Act becomes nugatory and meaningless if by contravening the mandatory provisions of the Statute, the Collector of Customs confiscates the goods seized which he has no right to retain and must have been returned to the owner long before."
22. In another decision reported in AIR 1972 Punjab and Haryana, Page-444 (Tarsem Kumar v. Collector of Central Excise Chandigarh) it was held as follows :
"The words "at any time" are not to be found in the proviso to Section 110 (2) of the Customs Act and thus a vested right accrues to the person from whom the goods were seized to claim the return of these goods after the expiry of the period of six months prescribed by the legislature and that right cannot be defeated by extending the period of six months after its expiry. In my opinion because of the accrual of the right to the person from whom the goods were seized, when the period of six months expires the Customs authorities has no choice except to return the goods to him according to the mandate of the legislature as clearly expressed in Section 110 (2) of the Customs Act....It is a cardinal principle of Interpretation of Statute that a statute should be interpreted if possible as to respect vested right, and such a construction should never be adopted, if the words are open to another construction which will have the effect of defeating that right."
23. The same view is taken by the Tribunal of the Eastern Regional Bench in the following cases which are relied on by the learned Advocate for the appellants :-
(i) Order No. 386/Cal/83-2305 (Cegat, Calcutta) Shri Ram Dhyan v. Collector of Customs (P), I.N.B. Patna
(ii) Order No. 274/Cal/85-2315 (E.R.B. Calcutta) Kamrup Industries v. Collector of Customs & Central Excise, Shillong
(iii) Order No. 387/Cal/85-3223 (Cegat, Calcutta) Ganesh Prasad v. Collector of Customs (P), Patna
(iv) Order No. 316/Cal/86-1975 (ERB, Calcutta) Shri Balveer Singh v. Collector of Customs & Central Excise, Bhubaneswar
(v) Order No. 35/Cal/89-33 (ERB, Calcutta) T. Krishnaveni v. Collector of Central Excise & Customs, Bhubaneswar In the latest decision reported in 1988 (33) ELT Page-642 (All.) -Arvind Singh v. Collector of Customs, the Allabahad High Court at page 644, Paras 7 and 8 held as follows :-
"In Assistant Collector, Customs v. Malhotra (A.I.R. 1972 C. 689) it was observed by the Supreme Court in paragraph 11 of the judgment that:
"As already stated, Sub-section (1) of Section 110 authorises seizure, the only requirement being a reasonable belief on the part of the concerned officer at the time of seizure. The power of seizure founded on a more reasonable belief being obviously an extraordinary power, second sub-section envisages completion of the enquiry within a period of six months from the date of seizure. But it provides that, if such an enquiry is not completed within that period and a notice under Section 124(a) is, therefore, not given, the person from whom the goods are seized become entitled to their restoration...."
Relying on the principle laid down by the Supreme Court in the said decision, a Division Bench of this Court, while dealing with a seizure under Section 79 of the Gold (Control) Act, 1968 (of which provisions are in pari materia) held that:
"It is significant that the statute requires that the notice must be given within six months which clearly implies that the notice under Section 79 has to be despatched within six months...."
These decisions indicate unmistakenly that in case notice is not given to the person from whom the goods are seized within six months of the date of seizure, that person becomes entitled to the return of the goods, except where the period is duly extended under the proviso to Section 110(2).
24. As against these decisions the learned SDR Shri M.N. Biswas relied on a decision reported in 1988 (37) ELT 528 (Bom.) in the case of Mohanlal Devdanbhai Choksey and Ors. v. M.P. Mondkar and Ors. wherein at page 190 the Bombay High Court held as follows :
"There is nothing in these provisions to indicate that the goods in respect of which an order of confiscation or penalty can be passed under Sections 111 and 112 of the Act must be goods seized under the provisions of Section 110 of the Act. The period of six months mentioned in Section 110 relates only to seizure of the goods and not validity of the notice under Section 124 of the Act. Section 124 does not lay down any period within which the notice required by it has to be given."
25. Reference was further placed on a decision reported in 1982 (10) ELT Page 872 (Hemant Bahadur Lama v. Union of India and Ors.) wherein at Para-8 it was held as follows :-
"The two sections, i.e. Section 110 and Section 124 are independent. There is nothing in the language of Section 110 of the Act to indicate that a fetter of limitation is imposed upon power of the competent authority to initiate proceedings under Section 124 of the said act. A notice issued after the period of six months does not invalidate the proceedings initiated on such notice even though it was issued on an extension of time illegally made ex parte".
26. Reliance was further placed on a decision reported in 1988 (34) ELT Page 428 (Shah Chaganlal v. Union of India) wherein at Para 11 it is held as follows :-
"Firstly Section 110 has nothing to do with the ultimate confiscation of goods. The action under Section 124 is not dependent upon the action having been taken under Section 110".
27. Lastly, he relied on the decision of CEGAT reported in 1987 (27) ELT 107 (Tribunal) Sat Pal v. Collector of Customs & Central Excise, Chandigarh wherein at page-347 it was observed as follows :-
"In the circumstances it appears to us that the proper answer to the question referred to us would be that the proceedings under Section 110 and 124 of the Customs Act are independent of each other and not interdependent."
In Para-25 of the order the learned Members of the CEGAT observed that one aspect for them to come to that conclusion is that it is the view taken by Punjab and Haryana High Court in the case of Muni Lal v. Collector of Central Excise, Chandigarh reported in AIR 1975 Punjab and Haryana 130, that a reference in such cases was to be made to that High Court as the proceedings before the Bench arose within the jurrsdic-tion of that High Court.
28. However, it is clear that there are two schools of thought in this matter. We are of the opinion that since the show cause notice was served beyond six months the confiscation proceedings are not in accordance with law and the appellant is entitled for the return of the goods in question. We are also of the view that the decision of Supreme Court in Charandas Malhotra's case lends support to our view as already discussed by us. The High Court of Calcutta has taken this view in the case of Kantilal Somchand Shah v. Collector of Customs, reported in 1982 (10) ELT Page 902 (Cal.), relied upon by the learned Advocate for the appellants and referred to by us earlier. The Calcutta High Court had also taken the same view in an earlier decision reported in CENCUS 1978/235D (Uma Rajeswarrao Patra v. Union of India and Ors. , wherein at Para-22 it was held as follows :-
"Where under the law the goods "shall be returned", in my view, such goods retained unlawfully, could not be confiscated under the Act. The goods which must have been returned under the law were retained by the Customs contravening the mandatory provisions of Section 110(2) of the Act. A statutory authority exercising statutory powers cannot act contrary to law. There could not be any decision in an adjudication proceedings under the Act if inherent nullity lies at the very root of the said proceedings. A quasi-judicial authority in exercising quasi-juducial powers cannot take advantage of its own illegality. The whole object of Section 110(2) of the Act becomes nugatory and meaningless, if by contravening the mandatory provision of the statute the Collector of Customs confiscates the seized goods which he has no right to retain and must have been returned to the owner long before."
29. Hence, in our considered view Section 124 has a larger ambit and provides for initiation of adjudication proceedings not only with reference to detained or seized goods but with reference to all the alleged offences irrespective of whether they involved seizure (detention) or not and it not only provides for confiscation of seized goods but also for imposition of penalty for violation of any of the provisions of the Customs Act.
30. That apart, Section 110 makes a specific reference to the Notice under Section 124. These aspects taken together go to show that proceedings initiated under Section 124 are independent of Section 110 in so far as question of imposition of penalty is concerned, but they are linked to the provisions of Section 110 in so far as the question of confiscation of seized goods is concerned. We are, therefore, entirely in agreement with the views expressed in the aforesaid High Court judgments and hold that issue of a notice under Section 124 within the period prescribed under Section 110 was mandatory and the officers of the department were duty bound to comply with the same in case they intended to proceed against seized goods and if the officers do not comply then the retention becomes illegal and any further proceedings would not be maintainable. The department could not be allowed to doubly spite the law - first by violating Section 110 and then to make an attempt to retain the fruits of this illegality; and deny the citizens the vested right which accrued to him under Section 110.
31. It is noteworthy that return of goods and confiscation of goods are diametrically opposite actions and it could not be the intention of the legislature to take away under Section 124 what was given under Section 110. It is well-known that an Act has to be read as a whole and the doctrine of harmonious construction is required to be applied; And if we do so we will notice that while reading Section 110 and Section 124 together we also have to take note of the Clauses therein and cannot consider ourselves free to ignore the same and allow the consequences that flow therefrom.
32. We consider that a proceedings under Section 124 could be initiated and continued with reference to the goods which have not been detained or seized under Section 110, would otherwise become available for confiscation by a voluntary entry thereof. The proceedings under Section 124 can also be continued with reference to an offence which may be disclosed as a result of a reference to various records and could be established on its own merits. Therefore, in our own opinion if an order is passed under Section 122 with reference to Section 110 and 124 and other allied sections then proceedings would stand vitiated only in so far as they relate to seized goods regarding which notice has not been issued under Section 110 but remained valid in so far as they relate to question of imposition of penalty and nothing prevents the authority from imposing penalty even with reference to those goods which have been returned, it could be established by reference to evidence and other material available on record that they would have been liable to confiscation (and would have been confiscated) but for their return.
33. In our opinion, therefore, the goods could not be confiscated and were liable to be returned to the owner thereof in terms of Section 110. There is, however, one practical difficulty which arises from this section that the goods are required to be returned to the person from whose custody they were seized.
34. In so far as the learned SDR's arguments is concerned that if allowed to be returned, the appellant would get away with lighter amount of penalty, we cannot help it for the department has not made out any case for enhancement of penalty and has not filed any cross objection in this regard.
35. In that view of the matter, as per Point No. 1 we hold that the confiscation of the goods in this case is not in accordance with law and they are liable to be returned to the appellant Shyam Lata Sharma (appellant in Appeal No. C-435/85-Cal).
36. Point No. 2 : As far as this Point is concerned, the learned Advocate Shri Mukhopadhyay stated that the appellants have learnt that the goods have already been sold and hence a direction may be given to the effect that an amount equal to the seizure value may be given to the appellant. It was his mission that the Calcutta High Court in a case reported in 1986 (26) ELT Page 719 (Cal.) U.O.I, v. Shambhunath Karmakar has gone to the extent of holding that the parties were entitled to the market value of the properties, but they would only pray for the seizure value. He also drew our attention to another case of the Tribunal (S.R.B.) reported in 1988 (4) ECR 98. But the learned SDR contended that there is no provision in the Act for payment of sale proceeds or seizure value of the goods.
37. We have bestowed our thoughts on the abovesaid matter. We had already held that in the circumstances of the case the appellant is entitled for the return of the goods as per Section 110 of the Customs Act, 1962. If the goods are sold by the department then the same is at their risk. But the party cannot be made to suffer on that account when there is accrued civil right in favour of the appellant. If the goods are sold by the department which are to be returned to the appellant, justice and good conscience requires that the Respondent should be directed to pay the appellants the seizure value of the property, which was the value arrived at by them during the seizure. Hence, as per Point No. 2, we hold that if the goods in question are already sold by the department, the Respondent shall pay the seizure value of the goods to the appellant in a sum of Rs. 2,87,341.00 (Rupees two lakhs eighty-seven thousand three hundred and forty-one).
38. Point No. 3 : While dealing with Point No. 1, we have already held that the proceedings in respect of imposition of penalty under Section 112 of the Customs Act is valid and that will not be affected by the issue of the show cause notice even after a period of six months, if it could be established by reference to the stantial evidence in the case, and other materials on record that the goods were liable for confiscation but for the fact that the show cause notice was issued after the period of limitation prescribed under Section 110 of the Customs Act, 1962. Admittedly, the goods were seized from the possession of Shyam Lata Sharma and these are notified goods. They were seized under Section 123 of the Customs Act on a reasonable belief that they were smuggled in India. These goods have foreign makings. The burden thus shifted to the appellants to prove that they are licitly imported which is not done by the appellants. The learned Counsel for the appellants also did not seriously challenge this aspect of the case and no grounds are made out for our interference with the order passed by the learned adjudicating authority in imposing the penalty under Section 112 of the Customs Act. But the learned SDR Shri Biswas contended that penalty imposed by the learned Additional Collector was on the lenient side and that it was influenced by the fact that the goods were confiscated and if it is held that the goods in question are to be returned to the appellant Shyam Lata Sharma, it will have the effect that the appellants will be getting away with a lighter amount of penalty. But we cannot help it as the department has not made out any case for enhancement of penalty by way of filing cross objection in these appeals. Point No. 3 is decided accordingly.
39. Hence, the appeal filed by Smt. Shyam Lata Sharma (Appeal No.C-435/85-Cal.) is partly allowed by holding that the seized goods be returned to her and in case if they are sold by the department, its seizure value of Rs. 2,87,341.00 be paid to the appellant within three months from the date of receipt of this order. Her appeal, and the appeals filed by appellants Narayan Sharma in Appeal No. CD(Cal)453/85, and MM.. Shastri in Appeal No. CD(Cal)434/85, with reference to the imposition of penalty are hereby dismissed.