1. In this Application under Section 130(1) of the Customs Act, 1962, read with Section 131C thereof (the Act, for short) the Applicant requires the Tribunal to refer to the High Court certain questions, alleged to be questions of law, arising out of the Order No. 781/83-NRB of the Tribunal in a Revision Petition to the Government of India, transferred and heard by the Tribunal as an Appeal No. CD(DEL)(T)/A.No.514/82-NRB, pursuant to Section 131B of the Act.
2. The questions of law said to be arising out of the aforesaid order of the Tribunal are : (a) Whether, in view of the illegal show cause notice issued after six months without giving any opportunity to the petitioner to contest its extension, the Collector of Central Excise, had any jurisdiction to pass the impugned Adjudication Order, confiscating the seized goods and imposing the penalty of Rs. 20,000/- against the Petitioner? (b) Whether, in view of the Notification No. 35-Cus., dated 4-3-1972, the Collector of Central Excise, Allahabad had any jurisdiction to issue the show cause notice dated 27-1-1970 against the Petitioner? (c) Whether, in view of the Notification No. 35-Cus., dated 4-3-1972, the jurisdiction of the Deputy Collector of Central Excise, Allahabad stood divested in favour of the Collector of Customs, Indo-Nepal Border, Patna? (d) Whether, in view of the provisions of the Notification No. 33B-Cus., dated 24-2-1978 appointing Deputy Collector of Customs, Muzaffarpur, the Deputy Collector, Central Excise, Allahabad had any jurisdiction to pass the impugned Adjudication Order on 30-12-197$? (e) Whether, under the Facts and circumstances of the case, the personal penalty of Rs. 20,000/- imposed against the petitioner by the Deputy Collector of Central Excise, Allahabad, was legal and valid in law? 3. The relevant facts have all been set out in the aforesaid order of the Tribunal, reported in 1984 (16) ELT 404 Vishwanath Pandey v.Collector of Central Excise, New Delhi. It should, however, read Vishwanath Pandey v. Collector of Central Excise, Allahabad]. Briefly, they are as under :- (a) on a search of the Appellant's residence and interception of an insured parcel addressed to Smt. Pandey, some watches of foreign origin were recovered on or about 12-5-1969; (b) the aforesaid watches were seized by the Customs staff, under Section 110 of the Act, in the reasonable belief that they had been imported into India in contravention of the prohibitions under the Import & Export Control Act read with Section 11 of the Act; (c) a notice dated 27-1-1970 was issued to the Appellant, notwithstanding expiry of six months from the date of seizure, requiring the Appellant to show cause as to why the seized watches should not be confiscated under Section 111 of the Act and a penalty imposed under Section 112 ibid. The Collector had previously extended the period within which the aforesaid notice could be issued but without notice, as required, to the Appellant to show cause against the extension; (d) nearly eight years later a corrigendum dated 27-12-1978 was issued by the Assistant Collector, Lucknow, to show cause to the Deputy Collector, Allahabad; (e) two days later, in Adjudication, the Deputy Collector, Allahabad, by his order of 30-12-1978 - (i) confiscated the seized watches, under Section 111 of the Act; and (ii) imposed a penalty of Rs. 20,000/- on Shri Pandey under Section 112 of the Act; (f) in Appeal against the said order, it was upheld except for a reduction of the penalty to Rs. 10,000/-.
(a) the retention of the confiscated goods in question was illegal and without jurisdiction in consequence of the Collector's failure to extend the period of six months (for the issue of a show cause notice) after notice to the Applicant in terms of Section 110(2) of the Act; (b) similarly the notice to show cause dated 27-1-1970 was itself illegal and without jurisdiction for the same reason; (c) once the goods themselves were not liable to confiscation because of the illegal notice to show cause, there is no question of a levy of penalty under Section 112 of the Act; (d) the corrigendum dated 27-12-1978 to the notice to show cause issued beyond 6 months from the date of seizure was without jurisdiction; (e) the Adjudication order dated 30-12-1978 passed by Deputy Collector of Central Excise, Allahabad was wholly without jurisdiction, in view of the divestiture of the territorial jurisdiction of the Collector of Allahabad over the District of Lucknow by Notification No. 35, dated 4-3-1972 where under the Collector of Customs (preventive), Patna was appointed to be Collector of Customs for the District of Lucknow; (a) in terms of the decision of the Supreme Court in A.I.R. 1972 S.C. 689 [= 1983 ELT 1477 - Assistant Collector of Customs v. Charan Dass Malhotra] and the High Courts in 1982 ELT 902 and 1983 ELT 17 15, the confiscation of the goods cannot be sustained and accordingly the goods are to be returned to the Appellant within three months from the date of communication of our order; (b) nevertheless, the corrigendum issued to the show cause notice cannot be said to be without jurisdiction. The corrigendum merely asked the Appellant to show cause to the Deputy Collector in whose power the case fell instead of the Collector. There is no irregularity, impropriety or illegality in this; (c) likewise, the penalty imposed, in terms of Section 112 of the Customs Act, cannot be rendered illegal or unsustainable because the power of confiscation and levy of penalty in adjudication is not lost, when for a fact the goods were liable to be confiscated in terms of Section 112 of the Act, although, it may be, they may not be physically available for such confiscation; [Reliance on A.I.R. 1975 Mad. 43] (d) on a construction of Notification No. 37, dated 1-2-1968 together with Notification No. 35, dated 4-3-1974, it appeared that the Collector of Customs, Patna who was appointed to be the Collector of Customs for the district of Lucknow in U.P. was to adjudicate cases falling within his power, and not those which fell in the power of the lower authorities such as the Deputy Collector, as in this case. The lower authorities would continue to have jurisdiction to adjudicate cases falling within their respective powers. This apart, Notification No. 35/72 did not, on its terms, supersede or modify the Notification No. 37/63.
6. Dissenting from the majority, I had held on the issue of juris:ion, that - (a) it was not merely Notification No. 35-Cus., dated 4th March, 1972 that had to be construed but another Notification No. 33B-Cus., dated 24-2-1978 appointing the Deputy Collector of Customs, Muzaffarpur to be the Deputy Collector of Customs within the jurisdiction of the Collector of Customs (Preventive) Patna, as well; (b) so construed, both the Notifications make it clear that it was not only that there was divestiture of the jurisdiction of the Collector of Central Excise, Allahabad but that of the Deputy Collector who was appointed to adjudicate in the instant case as well; (c) it was not necessary that Notification No. 35-Cus. should have been issued in modification or supersession of the earlier notification constituting the Collector of Central Excise, Allahabad to be the Collector of Customs within his jurisdiction. It is axiomatic in law that if a later Notification or order is so repugnant and inconsistent with the provisions of an earlier one that the two cannot stand together the earlier is abrogated by the later. When, therefore, the Collector of Customs (Preventive), Patna has been appointed to exercise jurisdiction over the district of Lucknow it cannot be that the Collector of Central Excise, Allahabad continued to exercise any such jurisdiction specifically vested in the Collector of Customs, Patna. Similarly, with the appointment of the Deputy Collector of Customs, Muzaffarpur on 24-2-1978, the jurisdiction of the Deputy Collector of Central Excise, Allahabad had been taken away. Accordingly, the Adjudication by Deputy Collector of Central Excise, Allahabad on or about 30-12-1978 was without any jurisdiction and hence a nullity in law.
7. Thus, while the majority had decided upon setting aside the order of confiscation and confirming the levy of penalty, it was held, in dissent, that in consequence of the order of Adjudication, itself, being without jurisdiction and hence a nullity in law, the levy of penalty cannot also sustain. No opinion was expressed in the dissenting order on the other issues.
8. In the hearing of the instant Application, it was contended for the Applicant, inter alia, that - (a) once the continued detention of the goods beyond 6 months was held to be illegal, in the facts and circumstances of the case, it would follow that the levy of penalty cannot also sustain, inasmuch as - (i) the notice to show cause issued under Section 124 of the Act was itself illegal and consequently the penalty proceedings are themselves vitiated [Reliance on 1977 Cr.L.J. 1331 (A.P.) - The Appellate Collector of Central Excise, Madras v. T.N. Khamibati and AIR 1975 Allahabad 533 - Mohd. Hanif v. Collector]; (ii) when a right for the release and return of the goods accrued to the Applicant, in consequence of the failure of the Respondent to issue a proper notice in terms of Section 124 of the Act within the period or extended period, as the case may be, prescribed in terms of Section 110(2) ibid, it cannot be defeated by a continued detention of the goods. Nor can the goods which ought to have been released be described as goods liable to confiscation in terms of Section 112(a) of the Act. When they had become returnable, they ceased to be liable to confiscation any longer; (b) consequent upon the issue of the Notification No. 35-Cus., dated 4-3-1972, the Collector of Central Excise, Allahabad, ceased to have any jurisdiction to issue any corrigendum dated 27-12-1978 to the show cause notice dated 21-7-1970; (c) on a proper construction of Notification Nos. 35-Cus., dated 4-3-1972 and Notification No. 33B-Cus., dated 24-2-1978, it would appear that neither the Deputy Collector Central Excise, Allahabad nor the Collector of Central Excise, Allahabad, had any jurisdiction in regard to the proceedings in adjudication. The Adjudication order was accordingly, a nullity.
9. (a) It would appear that there is some conflict between the decisions in 1983 ELT 1715, AIR 1975 All 533, 1977 Cr.L.J. 1331, 1977 (2) CLJ 266, and 1982 ELT 273 on the one hand and AIR 1975 Mad. 43, 1981 ELT 3, and an unreported ruling of the D.B. of the Delhi High Court in Hemanta Bahadur Lamba v. Union of India, 1982 (10) ELT 872 (Del.), on the other hand. While, in 1983 ELT 1715, for example, it was categorically laid down that there could not be any decision in an Adjudication proceeding under the Act, if inherent nullity lieseat the root of the said proceedings (passage extracted in para 12 of the order of the majority in the Appeal giving rise to the instant Application), the Madras High Court in AIR 1975 Mad. '+3 saw no objection not only in the commencement of Adjudication proceedings but the levy of penalty as well, notwithstanding the release of the goods from detention in consequence of the illegality in the extension of time for the issue of a show cause notice; (b) Section 112(a) speaks of goods rendered "liable to confiscation".
When the goods had to be released from detention, it can plausibly be urged, they ceased to be liable to confiscation. Release from detention is a negation of their liability to confiscation. Confiscation, in absentia, is as meaningless as it is futile. Once, therefore, they had to be released from detention, they are no longer liable to confiscation. If they were not liable to confiscation, there could not be any levy of a penalty; (c) on the other hand, it could also be urged that Section 111 of the Act envisages that the accused person by an Act of commission or omission should have rendered the goods liable to confiscation under Section 111 or abets such act of commission or omission [Sub-section (a)] or he should be found to have indulged in one or more of the activities specified in Sub-section (b) in relation to such goods knowing or having reason to believe that the goods are liable to confiscation under Section 111. It is not envisaged that the goods should in fact be confiscated. If the adjudicating officer comes to a finding that the goods are liable to confiscation under Section 111, the person referred to in Sub-section (a) or Sub-section (b) may be appropriately visited with a penalty under Section 112. In this view, the fact that the goods, though liable to confiscation, were ordered to be released because of non-compliance with the requirements of Section 110 would not render the penalty illegal; (d) right through the proceedings, it was Section 112 that was cited as the provision enabling the levy of penalty and not specifically either Clause (a) or (b) of the said provision. In relation to Clause (b) of Section 112, if that were intended to justify the levy of a penalty, the question arises if there is any evidence on record to establish that the Applicant acquired possession or was in any way concerned in keeping etc. the goods in question knowing or having reason to believe that they are liable to confiscation; (e) the issue of competency and jurisdiction of the Deputy Collector of Central Excise, Allahabad to adjudicate and levy the penalty also is a question of law.
10. It would, consequently, appear to us that questions of Law do arise from the aforesaid order of the Tribunal. The questions framed by the learned counsel for the Applicant however, require to be recast. We have accordingly, recast them as under - (a) Whether, in the facts and circumstances of the case, and on a true construction of Sections 110, 124, 111 and 112 of the Act, the notice to show cause was rendered illegal only in respect of confiscation? (b) Whether, in the facts and circumstances of the case, the goods in question ceased to be liable for confiscation in terms of Section 1 12(a)? (c) Whether, in the facts and circumstances of the case, and on a true construction of the aforesaid provisions, no notice of adjudication at all could have been issued or adjudication commenced even in respect of penalty? (d) Whether in the facts and circumstances of the case, and on a true construction of the aforesaid provisions, the illegality of the notice rendered the adjudication and levy of penalty as well null and void? (e) Whether in the facts and circumstances of the case and the evidence on record, it had been established that the Applicant, acquired possession or was in any way concerned in keeping etc. the goods in question 'knowing or having reason to believe that they are liable to confiscation? (f) Whether the issue of corrigendum dated 27--12-1978 or the Adjudication pursuant thereto was without jurisdiction and hence null and void? (g) Whether in She facts and circumstances of the case and on a true construction of Notifications Nos. 37, dated 1-2-1963, 35-Cus., dated 4-3-1974 and 33IV-Cus., dated 24-2-1978, the Adjudication was itself, without jurisdiction, null and void, 11. In the premises, the Application is allowed and the questions set out supra are referred to the High Court at Allahabad, as the questions of Law arising out of the order of the Tribunal dated 23-12-1983 for its considered opinion.