Cus - Waiver of SCN was in expectation of expeditious adjudication - Petitioner not to be bound by such waiver after the expiry of time limit u/s 110 (2) of Act - seized goods to be released forthwith: High Court
By TIOL News Service
NEW DELHI, APR 13, 2016: THE grievance of the Petitioneris that despite the imported goods (i.e. car accessories) being seized from it on 4th April 2015, and no show-cause notice having been given to it u/s 110 (2) of the Customs Act 1962 for over six months thereafter, the seized goods have not been released to the Petitioner till date.
The plea of the Customs Department is that in the course of the investigation following the seizure of the goods in question, a statement was voluntarily made on 29th June 2015 by the Sole Proprietor of the Petitioner, inter alia that "I do not want any show cause notice and any personal hearing and matter may be decided on merit in my absence." It is therefore contended that there was no requirement to give a SCN to the Petitioner within six months. Further, since there is no time limit prescribed for completion of the adjudication, the Petitioner cannot invoke Section 110 (2) of the Act and seek unconditional release of the seized goods.
Placing reliance on the decisions in HarbansLal v. Collector of Central Excise and Customs, Chandigarh (1993) 3 SCC 656, Auto Creaters v. Union of India = 2012-TIOL-989-HC-DEL-CUS, JatinAhuja v. Union of India = 2012-TIOL-986-HC-DEL-CUS & Board Circular 290/6/97-CX dated 20th January 1997 and 7/2013-Cus. dated 19th February 2013 it is submitted that the importer cannot be worse off for having waived the right to be given a SCN under Section 124 (a) of the Act, in anticipation of the adjudication being expedited;that in the present case not only was the SCN not given to the Petitioner within six months from the date of seizure, but there was no adjudication order either passed even a year thereafter. Inasmuch as the seized goods were illegally detained notwithstanding the expiry of one year after their seizure with neither an SCN being issued nor an adjudication order being passed.
The Counsel for the Revenue submitted that on account of the failure by the Petitioner to cooperate with the Customs Department, an adjudication order could not be passed;that after appearing once, the Sole Proprietor of the Petitioner did not turn up and that if the Court so permits, the Customs Department is prepared to pass an adjudication order in a time-bound manner. Reliance is placed on the decisions in S.N. Ojha v. Commissioner of Customs = 2016-TIOL-20-HC-DEL-CUS & Surjeet Singh Chhabra v. Union of India = 2002-TIOL-158-SC-CUS in support.
The High Court observed that the following two substantial questions arise for consideration -
(i) Whether there could be any valid waiver of the right to be given a SCN under Section 124 (a) of the Act; and
(ii) If the answer to (i) above is in the affirmative, is there a corresponding obligation on the Customs Department to pass an adjudication order within a reasonable period and what is the consequence of the Customs Department failing to do so?
After extracting the relevant provisions of Sections 110 and 124 of the Customs Act, 1962 and the ratio of the decisions in Commissioner of Customs, Mumbai v. Virgo Steels = 2002-TIOL-1572-SC-CUS-LB, K.I. Pavunny v. Assistant Collector (HQ), Central Excise Collectorate, Cochin 2002-TIOL-739-SC-CUS-LB, Surjeet Singh Chhabra v. Union of India (supra),& the Board Circulars (supra), the High Court observed -
16. The above circulars acknowledge that although there is no time limit provided under Section 124 (a) of the Act for the issuance of an SCN, the release of goods for non-compliance of provisions of Section 110 (2) of the Act "is bound to create complications like difficulties in realization of duty leviable on goods under reference and of fine and penalty amounts." Therefore, it is stated that SCN is to be issued to the owner of the goods or such person under Section 124 (a) of the Act within six months from the date of seizure or within the extended period in terms of the proviso to Section 110 (2) of the Act.
17. The net result of the above discussion is that except where offences of serious nature or high stakes and/or legal questions are involved, it is permissible for the Customs Department to act upon the statement made under Section 108 of the Act waiving the right to be given a SCN under Section 124 (a) and have the adjudication proceedings expedited.
In the matter of the second substantial question, the High Court, inter alia observed -
++ Even if it were to be taken that the Petitioner validly waived the right to be given an SCN, an adjudication order had to be passed within a reasonable time after the seizure. Here, not only has the initial period of six months after the date of seizure lapsed, but the next six months also has without any order having being passed in respect of extension of the period of six months for the reasons indicated in Section 110 (2) of the Act. Merely because there was a waiver by the Petitioner of the right to be given an SCN, it did not mean that the Respondents could indefinitely postpone the adjudication order without which the Respondents cold not have, in terms of Section 124 (a) proceeded to confiscate the seized goods.
++ The waiver by the Petitioner of the right to be given an SCN was in the expectation of expeditious adjudication. …The Petitioner is right in contending that it cannot be worse off for having waived the right to be given an SCN under Section 124 (a) of the Act. That waiver was plainly in the expectation of expeditious adjudication. However, as a result of the inaction of the Respondents, the Petitioner has been denied the release of the seized goods indefinitely.
++ If, despite the waiver of the right to be given an SCN, no adjudication order is passed within the period of six months from the date of seizure, the person waiving the right to be given an SCN can no longer be held bound by such waiver. The consequence would be the same as is envisaged by Section 110 (2) of the Act i.e., the immediate unconditional release of the goods in favour of the person from whom the goods have been seized.
The seized goods were directed to be forthwith released unconditionally to the Petitioner.
The petition was allowed.
(See 2016-TIOL-754-HC-DEL-CUS)
