1. The common contention in these two appeals is that the show cause notice issued to the appellant in two cases is not valid inasmuch as it has been issued by the Assistant Collector of Customs, Special Investigation Branch. According to the appellant, the authority who is entitled to adjudicate on confiscation and penalty, is the Collector of Customs as the value of the goods in both the cases is much more than Rs. 50 lakhs. Our attention is drawn to Section 122 of the Customs Act, which is in the following terms:--
Adjudication of confiscation and penalties:--In every case under this Chapter in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged,--
(a) Without limit, by a Collector of Customs or a Deputy Collector of Customs;
(b) Where the value of the goods liable to confiscation does not exceed (fifty thousand rupees), by an Assistant Collector of Customs;
(c) Where the value of the goods liable to confiscation does not exceed two thousand five hundred rupees, by gazetted officer of customs lower in rank than an Assistant Collector of Customs.
2. It is further contended that the provision for issue of show cause notice contained in Section 124 of the Act must be read independently and that has nothing to do with Section 122 of the Act which relates to adjudication proceedings. Learned counsel submits that the purpose of Section 124 of the Act is entirely different and that cannot be confused with the provisions of Section 122 of the Act. The further contentions of learned Counsel are as follows: In the present case, the show cause notice itself shows that it has been issued only under Section 122 of the Act. The reasoning of counsel is that the headlines and the body of the show cause notice read as if it is issued under Section 122 of the Act. Secondly, it is said that the notice calls upon the appellant to show cause to the Collector of Customs and, therefore, the notice could be only under Section 122 of the Act and not under Section 124 of the Act. There is no substance in this contention. A reading of Sections 122 and 124 of the Act shows that both must be read together. While Section 122 of the Act prescribes the hierarchy of authorities on the basis of the monetary value of the goods liable to be confiscated, Section 124 of the Act prescribes the procedure. While Section 122 of the Act states that the particular authority must adjudicate with regard to confiscation or penalty, Section 124 of the Act provides that such confiscation and penalty cannot be imposed unless a notice is given in writing before the proceedings are initiated. One section cannot be read independent of the other and it cannot be contended that two sections are intended for two different purposes. Hence, there is no substance in the contention that the show cause notices issued in the present case is [are?] under Section 122 of the Act only and not under Section 124 of the Act.
3. The second contention of learned Counsel is that the show cause notice is part of the adjudication proceedings and inasmuch as Section 122 of the Act prescribes that the Collector is the authority concerned, the show cause notice should have been issued only by the Collector. According to learned Counsel, Section 124 of the Act does not set out the authorities by whom show cause notice should be issued and in the absence of such a provision, the necessary inference is that under Section 122 of the Act, the adjudicating authority should issue the show cause notice. There is no merit in this contention also. As pointed out already, Sections 122 and 124 of the Act must be read together and while the procedure is prescribed under Section 124 of the Act, there is no limitation that a notice should be issued only by a particular authority. Particulary, in this case, the notice clearly calls upon the appellant to show cause to the Collector of Customs and not to the authority who has issued the notice. That itself shows that the adjudication is going to be made only by the Collector of Customs, who admittedly, is the appropriate authority to adjudicate.
4. This question has been considered by the Calcutta High Court in Tarak Nalh v. Union of India . A single Judge of that Court held that the framing of a charge by an officer other than the adjudicating authority will not prejudice a person who is asked to show cause and there will be less chance of bias or formation of any prior opinion by the adjudicating authority. It is also pointed out that Section 124 of the Act does not specifically provide that the person who passes the adjudication order must issue the show cause notice. A similar view is expressed by a Division Bench of the Gujarat High Court in M.B. Patel v. Kaul . After discussing the matter at length, the Bench observed as follows:
Shri Nanavati's contention that the requirement of issuing a show cause notice contemplated by Section 124 of the Act is a part and parcel of the proceedings of adjudication contemplated by Section 122, is also not acceptable. The provision as regards show cause notice which is incorporated in Section 124(a) is, as already stated above, in compliance with the rules of natural justice. The rules of natural justice require that the person against whom the proceedings of confiscation and imposition of penalty are proposed to be undertaken should know the exact grounds on which these proceedings are contemplated to be undertaken. These grounds would be best known to the officer who conducts the proceedings of seizure under Section 110 as it is that officer who proposes to confiscate the goods and who, therefore, ultimately seizes the goods under Section 110. Therefore, that officer would be in a better position to know the grounds on which the goods are seized on the footing that they are liable to confiscation. Under the circumstances, it would not be correct to state that proposal to confiscate the goods and to impose penalty should come only from an officer who is authorised to conduct the adjudication proceedings under Section 122 of the Act. Issuance of a show cause notice is a distinct step which is preliminary to the adjudication proceedings which are to follow. The adjudication proceedings are dependent upon the grounds mentioned in the show cause notice, but not vice versa! It is therefore, not correct to say that the proceedings for a show cause notice form part and parcel of adjudication proceedings. The scheme of the Act as revealed from Sections 110, 124 and 122 is that after a 'proper officer' forms a reasonable belief that certain goods are liable to be confiscated, he would seize these goods under Section 110, within six months from this seizure a notice contemplated by Section 124(a) should be given to the person from whose possession these goods are seized, calling upon him to show cause why the goods should not be confiscated. Such a notice under Section 124(a) can be given by any Officer who is competent to act. Ordinarily, the officer who has seized the goods after forming a belief that they are liable to be confiscated would be best fitted to issue the required show cause notice and to give information as regards the grounds on which the confiscation is proposed to be made, but there is nothing in Section 124 to prevent any other competent officer from issuing such a notice after studying the facts of the case. It is significant to note that legislature had advisedly refrained from providing in Section 124 as to who is competent to issue show cause notices under Clause (a). The purpose of not making any specific provision on this point is that the issuance of a show cause notice being a formality which is quite distinct and separate from the actual adjudication proceedings under Section 122, such a formality can be undertaken by any officer who is conversant with the facts of the case, and also has authority to take steps under the provisions of the Act. Thus the show cause notice staling grounds of confiscation amounts practically to a charge-sheet submitted by the police relating to an accused who is sought to be tried before a Court of law. Adjudication proceedings which follow pursuant to the show cause notice under Section 124(a) furnish the last step which may result in actual confiscation and penalty. From this analysis of the scheme there emerges nothing to show that the issuance of a show cause notice under Section 124(a) is part and parcel of adjudication proceedings held under Section 122.
14. What Section 122 of the Act does is merely to make, a suitable distribution of pecuniary jurisdiction to adjudicate as amongst different ranks of customs officers. Different officers authorised to act under this Section may or may not be having first hand knowledge about the circumstances under which goods are seized under Section 110. They can therefore supply the grounds for confiscation in a show cause notice under Section 124(a) only after studying materials placed before them. It would therefore be a mistake to held that they are the only authorities who can issue show cause notices under Section 124(a).
We agree with the above view.
5. The next contention of learned Counsel is that when a statute prescribes an authority to issue notice and if some other authority issues notice, it will be violation of the provisions of the statute. According to learned Counsel, the position will be the same when the statute does not prescribe the specific authority as to who should issue such a notice. It is contended that in such a case, the adjudicating authority is the authority who must issue notice as the notice as will be forming part of the adjudication proceedings. This contention is more or less the same as the earlier contention which we have rejected. But, in support of this contention, learned Counsel for the appellant places reliance on certain passages found in Bally on Jurisdiction (Volume I) at Page 3 and Jurisdiction and Illegality by Arnman Rubinstein at page 155. We have gone through the passages. In our opinion, neither pf them has any relevance in the present case. They have nothing to do with the question, which we are considering al present.
6. Learned Counsel invites our attention to the judgment of the Supreme Court in Municipal Corporation, Raipur v. Ashok Kumar Misra . Learned Counsel has referred to a contention urged by learned Counsel for the appellant in that case which was set out in paragraph 2 to the effect that the person concerned who was on probation must be deemed to have been confirmed after the expiry of a period of two years and thereafter, the only power Which the employer had was to terminate the service of the said person in accordance with Classification, Control and Appeal Rules after conducting an enquiry and giving him reasonable opportunity, that too for misconduct. That contention was actually rejected on the facts of the case as it was held by the Court that there was automatic confirmation after the expiry of period of two years as probationer as1 per the Rules which required specific order declaring such confirmation. Hence, the Court rejected the argument of learned Counsel and held that the service could be terminated without adopting such a procedure.
7. Reliance is placed upon a judgment of a Division Bench of the Bombay High Court in Ragmal Motirain Maivadi v. Krishna Valod Mahipati Hagadekar ILR 20 Bombay 208 The Court had to consider the amendment of the expression "show cause" occurring in paragraph. The Court held that the expression meant to allege and prove sufficient cause and not comply to object. In the course of arguments, learned Counsel who appeared for the plaintiff contended that the Subordinate Judge had no jurisdiction to dispose of the matter especially when notice of the defendant's objections had not been duly served on the plaintiff and that service of notice Was a condition precedent to the Court having jurisdiction. The Court did not consider the said contention but went on to construe the expression "show cause" occurring in the section and dispose of the case. The ruling has no relevance whatever in the present case.
8. It is next argued that a show cause notice is not [an] empty formality and it should be an adequate notice setting out all the relevant facts on which proposed proceedings are taken. Reference is made to the judgment in Madiunilan Syntext Pvt. Ltd. and Anr. v. Union of tndia and Anr. : The Court said that a show cause notice, as a necessity, envisages something more than a mere notice and it is not an empty formality. It .was held that it postulates the opportunity of showing cause to be adequate and not merely enabling a party to make a mere representation, but, offering him an opportunity of showing cause which meant an opportunity of leading evidence in support of one's allegations and controverting the charge or allegations are made against the person concerned. The principle has no application here. We are not concerned with the question whether the show cause notice is sufficient. The only contention before us is that it has been issued by the wrong authority and, therefore, invalid.
9. It is next argued that in the absence of any specific rule prescribing the authority by whom the notice has to the issued, it is only the adjudicating authority who has to issue the notice and he cannot delegate the power to any other authority. The question of delegation docs not arise here as it is not the case of anybody that has been delegated by the Collector or Assistant Collector. There is no statutory provision prescribing any authority to issue notice. In the present case we are not concerned with the question whether the notice issued by the Assistant Collector will meet the requirements of the statute. Hence, it is not necessary to refer to the rulings cited by learned Counsel in Barnard and Ors. v. National Dock Labour Board and Ors. (1953) 2 QB 18 and in Dr. Ramesh Chandra Tyagi v. Union of India .
10. Reliance is placed on the judgment of a Full Bench of the Allahabad High Court in Laxmi Narain Anand Prakash v. Commissioner of Sales Tax 46 STC 71. A notice in that case issued under Section 21 of the U.P. Sales Tax Act was served on A, who had no concern with the asscssee's firm. The assessee, however, appeared on the date of hearing in the proceedings and the question was whether the service of notice on a third party was immaterial and whether the initiation of proceedings was valid. The Court held that the section contemplates proceedings only after the issue of notice and in the absence of service of notice on the assessee concerned, the proceedings were not valid. The ruling has no relevance in the present case. In this case, notice has been served on the appellant who is the right party and not on any third party.
11. It is next contended that the principles of natural justice can be satisfied only if the notice is issued by the adjudicating authority. It is also argued that if the notice is issued by a person other than the adjudicating authority, the latter will not be in a position to read the mind of the authority who issued the notice and there will be difficulty in conducting the proceedings. We do not see any merit in this contention and we reject the same. It is next contended that the proceedings are mala fide. We do not propose to consider this contention here. It is open to the appellant to raise that contention before the concerned authority.
12. The learned Single Judge has in the judgment in W.P. No. 21919 of 1993 placed reliance on the judgment of the Supreme Court in P.V. Srinivasa Sastry v. Comptroller and Auditor General . That was a case in which the disciplinary proceeding was taken and was initiated by a person who was subordinate to the appointing authority who was competent to do so. The Court upheld the validity of the proceedings and laid down that the proceedings could be initiated by a subordinate authority, but, the ultimate orders shall be passed only by the appointing authority in order to meet the requirements of article 311 of the Constitution of India. Learned Counsel for the appellant seeks to distinguish the said judgment on the ground that in the present case, a civil right is involved as the goods are likely to be confiscated and a service matter cannot be equated with the matter which arises under the Customs Act. There is no necessity for us to consider this aspect of the matter.
13. The learned judge relied upon that judgment only by way of analogy. In our opinion, even without referring to the judgment of the Supreme Court, we can come to the conclusion, by reading Sections 122 and 124 of the Customs Act, that the notice issued by the Assistant Collector of Customs is valid and the adjudication proceedings can continue before the Collector of Customs as contemplated by Section 122 of the Act.
14. In the result, all the contentions urged by learned Counsel for the appellant fail and the writ appeals are dismissed. No costs.