Case: I.J. Rao, Assistant Collector Of Customs &amp; Ors Vs. Bibhuti Bhushan Bagh &amp; Anr

2. On May 5, 1966, noticing an advertisement in a newspaper offering imported manual and electric typewriters, adding and calculating machines, the customs authorities raided the premises of Messrs Typewriters and Stationery Operation Private Limited, Calcutta, on the same day and recovered fifteen typewriters, adding and calculating machines. The machines had been sold to the company by R. N. Bagh, who in turn disclosed that he had purchased them from the crew members of some vessels. On May 7, 1966, the Customs Officers searched the residence and business premises of Messrs Central Typewriter Company and recovered several typewriters and calculating and adding machines. From some documents seized during the raid and statements recorded, it appeared that there was a conspiracy between the respondents and some of the crew members of certain vessels where it was agreed that the respondents would look after and maintain the families of the crew members in India while they were abroad, would advance them money and the crew members would draw their wages abroad in foreign currency and purchase with those moneystypewriters, adding and calculating machines and then bring them to India and deliver them to the respondents after clearance under the concessions provided in the Baggage Rules in order to circumvent the restrictions imposed under the Import Trade Control Regulations. It appeared that during the period 1961 to 1965 about 200 pieces of typewriters, adding and calculating machines had been acquired by the respondents for a sum of about Rupees one lakh and out of which>3. The goods were seized on May 5/7, 1966 and notices were due to issue under Section 124(a) of the Customs Act, 1962 within six months from that date. Meanwhile, the Subordinate Officers, Customs Department, showed cause to the Additional Collector of Customs, Calcutta (who has the same powers under the Act as the Collector) for granting an extension of time for serving the show cause notice. On November 3, 1966, the Additional Collector granted an extension of time for a further six months in terms of the proviso to Section 110(2) of the Customs Act,On December 6, 1966 the Assistant Collector of Customs issued notice to each of the respondents calling upon him to show cause why the said seized machines should not be confiscated under Section 111(d) and Section 111(o) of the Customs Act, 1962 read with Section 3(2) of the Import and Export Control Act, 1947 and why penal action should not be taken against the respondents under Section 112 of the Customs Act,On April 18, 1967, the respondents filed a writ petition in the High Court at Calcutta challenging the proceedings initiated against them by the customs authorities including the seizure of the machines. On December 11, 1968 a learned Single Judge of the High Court repelled the contention of the appellants that the proceeding was administrative in nature and held that the order of extension to be made under Section 110(2) of the Customs Act was aorder and as the order had been made ex parte and without notice to the owner of the goods it was in breach of the principles of natural justice and therefore void. He observed that as the order, moreover, was not communicated to the respondents before the expiry of six months from the date of the seizure, the order of extension was invalid and the respondents had become entitled as of right to the return of the goods. The writ petition was allowed, and the proceedings initiated by the respondents against the appellants were quashed by the learned Single Judge by his judgment and order dated December 11,The appellants appeared to the Appellate Bench and the Appellate Bench of the High Court by judgment dated July 31, 1970 allowed the appeal in part, quashing the order of extension dated November 3, 1966 and directing the appellants to restore the machines and documents seized from the respondents. The custom authorities were permitted to initiate and complete such other proceedings against the respondents as were open to them inThe appellants now appeal to this Court insofar as the judgment and order of the Appellate Bench proceeds against them

Court's reasoning:
9. It is apparent that goods liable to confiscation may be seized by virtue of Section 110(1) but that those goods cannot be confiscated or penalty imposed without notice, opportunity to represent and to be heard to the owner of the goods or the person on whom penalty is proposed. This notice must be given within six months of the seizure of the goods, as envisaged by Section 110(2) of the Act, and if it is not, the goods must be returned to the person from whom the goods were seized. The proviso to Section 110 (2) of the Act allows the period of six months to be extended by the Collector of Customs for a period not exceeding six months on sufficient cause being shown to him in thatIn our opinion, the person from whose possession the goods have been seized is entitled to notice of the proposal before the Collector of Customs for the extension of the original period of six months mentioned in Section 110(2) of the Customs Act, and he is entitled to be heard upon such proposal but subject to the restrictions referred to earlier in regard to the need for maintaining confidentiality of the investigation proceedings