Narendra Kumar alias Munnalal vs Asstt.Collector of Customs (T), Indo Nepal Border, Patna and another

S.N. Sahay, J.—This is a petition under Article 226 of the Constitution for a writ of certiorari to quash the notice dated 27th September 1979 (Annexure7) issued by the Assistant Collector of Customs (T), Indo Nepal Border, Patna, respondent No. 1.

The petitioner Narendra Kumar alias Munna Lal carries on bullion business in the City of Bahraich. On 21st February 1973, search of the residential premises of the petitioner was conducted by the Customs Authorities. They seized certain articles such as primary gold, gold articles, gold ornaments, Nepalise silver coins and foreign gold. The Collector of Customs (Preventive) IndoNepal Border, Patna issued a notice dated 18th July 1973 to the petitioner to show cause why (1) gold weighing 73 grams of foreign origin should not be confiscated under Section 111 of the Customs Act, 1962 read with Section 23A of the Foreign Exchange Regulations Act, 1947 and penalty imposed under Section 112 of the former Act, (2) gold articles and ornaments mentioned in the notice be not confiscated under Section 71 of the Gold Control Act, 1968 and penalty imposed under Section 74 thereof, and (3) why the silver coins unlawfully imported into India contrary to the prohibitions and Restrictions imposed by or under the Foreign Exchange Regulations, 1947 should not be confiscated under the provisions of Section 111 of the Customs Act, 1962 read with Section 23A of that Act. Upon receipt of the aforesaid show cause notice, the petitioner submitted his reply in due course. The reply of the petitioner was duly considered by the Collector of Customs (Preventive), who passed adjudication order dated 23rd January 1974. He ordered confiscation of gold weighing 73 grams with foreign markings and Nepalese silver coins (including cut pieces) under Section 111 of the Customs Act. He further ordered confiscation of gold articles and ornaments under Section 71 of the Gold (Control) Act, 1968 as amended. He also imposed penalty of Rs. 8,000/ under Section 74 of the Gold (Control) Act as amended and personal penalty of Rs. 2,000/ under Section 112 of the Customs Act. The petitioner preferred an appeal against the order dated 23rd January 1974 passed by the Collector of Customs (Preventive). The appeal was decided by the Central Board of Excise and Customs on 29th August 1975. The Board set aside the penalty of Rs. 2,000/ imposed on the petitioner and upheld the confiscation of gold with foreign markings and Nepalese currency. The Collector''s order was modified to that extent and the appeal was otherwise rejected. The Appellate Authority, namely, the Gold Control Administrator passed a separate order dated 28th June 1979 in respect of the appeal preferred by the petitioner in the matter of action taken against him under the Gold (Control) Act. It was held that the order of imposing penalty and confiscating the articles and ornaments for contravention of Section 16(1) of the Gold (Control) Act is not according to law. Therefore, the order passed by the Collector in so far as it relates to the contravention of the provisions of Gold (Control) Act was set aside. The Gold Control Administrator further observed that this order is without prejudice to any action which Collector may take according to the other provisions of the Gold (Control) Act in respect of the seized gold. After the passing of the aforesaid appellate order, the impugned show cause notice dated 27th September 1979 was issued by respondent No. 1. By means of this notice, the petitioner was required to show cause to the Additional Collector of Customs (P) IndoNepal Border, Patna as to why the disputed quantity of primary gold articles and ornaments as indicated in the said notice should not be confiscated under Section 71 of the Gold (Control) Act, 1968 and penalty imposed under Section 74 of that Act.

3 The validity of the impugned show cause notice has been challenged by petitioner on the ground that the disputed articles were seized on 21st February, 1979 and in view of the appellate order, which did not order for any fresh adjudication, it was not competent for the respondents to issue a fresh showcause notice asking the petitioner to submit his reply in respect of the alleged violation of Sections 8(1), 16(7) and 16(11) of the Gold (Control) Act. The petitioner has urged that in fact there is no violation of any provision of the Act mentioned in the impugned notice as found by the Appellate Authority and in view of the provisions of Section 79 of the Act, it is not competent for the respondents to proceed with the matter after the expiry of six months. Section 79 reads as follows :

"79. Giving of an opportunity to the owner of gold, etc.

No order of adjudication or confiscation or penalty shall be made unless the owner of the gold, conveyance, or other person concerned is given a notice in writing :

(i) informing him of the grounds on which it is proposed to confiscate such gold conveyance or animal or to impose a penalty; and

(ii) giving him a reasonable opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the confiscation or imposition of penalty mentioned therein and if he so desires, of being heard in the matter :

Provided that the notice and the representation referred to in this section may, at the request of the owner or other person concerned, be oral:

Provided further that where no such notice is given within a period of six months from date of the seizure of the gold, conveyance or animal or such further period as the Collector of Central Excise or of Customs may allow, such gold, conveyance or animal shall be returned after the expiry of that period to the person from whose possession it was seized.

Explanation.Where any fresh adjudication is ordered under this Act, the period of six months specified in the second proviso shall be computed from the date on which order for fresh adjudication is made."

In the counteraffidavit, it is stated on behalf of the respondents that fresh show cause notice has been issued in view of the order made in appeal by the Gold Control Administrator, according to which the order had been made without prejudice to any action which the Collector may take in accordance with other provisions of Gold (Control) Act in respect of the seized gold. It is further stated that the impugned notice has been issued for violation of Section 16(7) and 16(11) of the Gold (Control) Act as the petitioner has failed to declare gold articles weighing 1952.5 grams. It is also stated that according to explanation to Section 79 of the said Act, the period of six months is to be computed from the date of order adjudicating fresh adjudication and the impugned show cause notice has been issued on the direction of the Appellate Authority. Thus, it is asserted the impugned notice dated 24th September 1979 has been issued according to law and is valid.

It will appear from a perusal of provisions of Section 79, which has been quoted above, that no order of adjudication or confiscation or penalty shall be made unless a notice is given to the owner of the gold. The object of issuing a notice is to inform the owner of all grounds on which it is proposed to confiscate the gold, conveyance or animal in question or to impose a penalty and to give him a reasonable opportunity of making a representation against the confiscation or imposition of penalty mentioned therein and if he so desires of being heard in the matter. The issue of notice served the purpose of observing the rule of natural justice that no person shall be condemned unheard. There is no express provision which fixes the time limit for issuing the notice, but the second proviso to Section 79 lays down by necessary implication that the notice is to be given within a period of six months from the date of the seizure of gold, conveyance or animal. This is so, because the second proviso deals with the return of the seized gold etc. and where no such notice is given within a period of six months from the date of seizure of the gold, conveyance or animal the same shall be returned to the person from whose possession it was seized. The provisions regarding the return of the concerned article are mandatory. The period of six months may be extended by the Collector of Central Excise or of Customs. Therefore, it may be held on the basis of the provisions of the second proviso to Section 79 that the notice under that Section may be issued within a period of six months from the date of the seizure of the gold or such further period as may be allowed by the Collector of Central Excise or of Customs.

The explanation to Section 79 lays down a rule with regard to the computation of the period of six months referred to in the second proviso to that Section. As stated above, the period of six months is normally to be computed from the date of the seizure of the gold. But where any fresh adjudication is ordered under the Act, the period of six months specified in the second proviso shall be computed from the date on which the order for fresh adjudication is made. The condition precedent for the applicability of the explanation to Section 79 is that "fresh adjudication is ordered under this Act." Therefore, if it is intended to invoke the provisions of the explanation and to take its advantage in any case, the onus will be on the party invoking the provisions of the said explanation to establish (1) that fresh adjudication has been made under the Act. It is then alone that the period of six months specified in the second proviso to Section 79 shall be computed from the date on which order for fresh adjudication is made.

In order to appreciate the nature and scope of the expression "order for fresh adjudication under the Act," it will be necessary to bear in mind that any gold in respect of which the provisions of the Act or any rule or order made thereunder has been or is being or is attempted to be contravened by any person is liable to be seized by a Gold Control Officer under Section 66 and liable to be confiscated under Section 71. The person who does or omits to do any act which act or omission would render the gold liable to confiscation shall be liable to pay penalty also under Section 74. He shall also be liable to any other punishment which may be inflicted under the Act. But no gold can be confiscated without adjudication. That is clearly indicated by the proviso to Section 71(1) and expressly provided in Section 78. The marginal heading of Section 78 is adjudication and it provides that "any confiscation may be adjudged or penalty may be adjudged under this Act" and specifies the conditions under which this may be done. Confiscation of gold or imposition of penaly under the Act is the result of the process of adjudication which may be made by a Gold Control Officer or the Collector of Central Excise or of Customs. Any person aggrieved by an order or decision of the adjudicating authority may prefer an appeal to the Collector (Appeals) under Section 80 or as the case may be, to the Appellate Tribunal under Section 81. In appeal the Collector (Appeals) under Section 80A(3) and the Appellate Tribunal under Section 81 A(1) may pass an order "confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority with such directions as he may think for fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. This means that when the appellate authority passes an order annulling the order or decision of the adjudicating authority arid considers that the matter should not be closed, the appellate authority would refer the case back to the adjudicating authority for fresh adjudication, giving such directions as it may think fit. The appellate authority may also exercise its powers under Sec. 82(4) when an application is made to it in pursuance of the directions issued by the Administrator or Collector of Central Excise or of Customs exercising revisional powers under Section 82. The result of the above discussion is that the expression "fresh adjudication is ordered under this Act" used in the explanation to Section 79 would imply that the order or decision of the adjudicating authority regarding confiscation of gold or imposition of penalty has been annulled by the appellate authority and it has been further ordered by the appellate authority under Section 80A(3) or 81 A(1) that the case is referred back to the to the adjudicating authority for fresh adjudication. In the absence of such an order having been clearly passed under Section 80 A(3) or 81 A(1) it cannot be said that an order for fresh adjudication has been made under the Act and in that case the provisions of the explanation to Section 79 will not apply.

It is well known that in legal parlance the word "adjudication'''' connotes a judicial determination of the matter in dispute. There can be no adjudication unless the matter in dispute is dealt with Judicially. (The cases reported in AIR 1914 P. C. 66, AIR 1962 Rajasthan 109, AIR 1977 Orissa 63, AIR 1982 Gujarat 254 and 1981 ALJ 1255 may be usefully referred to for a proper appreciation of the meaning of the word "adjudication") So when the explanation to Section 79 says "where any fresh adjudication is ordered under this Act it envisages that the matter in dispute remains the same but the process of adjudication which may result in the confiscation of gold or imposition of penalty is to be applied afresh for dealing with the matter judicially. Viewed in this light, the order dated 28th June/4th July 1979 passed by the appellate authority cannot be said to be an order for fresh adjudication under the Act. The operative portion of the decision of the appellate authority reads as follows :

"The order of imposing penalty and confiscating the article and ornaments for contravention of Section 16(1) is not according to law 1. therefore, set aside the order passed by Collector in so far as it relates to the contravention of the provisions of Gold (Control) Act. This order is without prejudice to any action which the Collector may take according to the other provisions of the Gold (Control) Act in respect of the seized gold."

It will be seen that the appellate authority has not referred the case back to the adjudicating authority with any direction for fresh adjudication or decision. He has annulled the decision and order of the adjudicating authority. He has left it open that the order annulling the decision of the adjudicating authority is without prejudice to any action which the Collector may take according to the other provisions of the Gold (Control) Act in respect of the seized gold. This cannot be said to be direction for fresh adjudication. It has been stated in clear terms that the Collector may take action according to the other provisions of the Act and it must refer to the provisions other than those relating to adjudication. We are, therefore, of the opinion that it is not open to the respondents to take advantage of the provisions of explanation to Section 79. The notice has been admittedly issued after six months from the date of seizure and is, therefore, illegal and without jurisdiction being against the provisions of the second proviso to Section 79 of the Act. The contention of the petitioner must be upheld that the impugned notice is liable to be quashed.

It may be noted that in Nagmanieam Setty v. Collector Central Excise Writ Petition No. 1774 of 1980, decided on March 23rd 1983 a learned Single Judge of the Karnataka High Court has also taken the view that the explanation to the second proviso to Section 79 applies to a case of remand and does not apply to all orders made by the Appellate or Revisional Authority.

For the reasons given above, the writ petition is allowed and the impugned notice dated 27th September 1979, contained in Annexure7 to the writ petition and all proceedings pursuant thereto are hereby quashed. No order as to costs.