Full Judgment
2. Brief facts of the case are that a certain quantity of primary gold was seized by the officers of the Central Excise, Kanpur Collectorate after a search of the applicant's residential premises at Etawah, U.P.The search was conducted between the last week of March, 1969 and April, 1969 and the gold seized under the provisions of Sections 8 and 16 of the Gold Control Act, 1968. A SCN was issued to the present applicant on 6-9-1969. In his reply to the SCN dated 15-11-1969 the present applicant challenged the validity and the legality of the search. The Collector, who adjudicated the matter, by order dated 5/18-12-1973 confiscated the gold and imposed a penalty of Rs. one lakh upon the petitioner (present applicant). The present applicant filed an appeal against the said order of the Collector before the Gold Control Administrator which was dismissed by the Gold Control Administrator by his order dated 17-5-1977. Against the said order of the Gold Control Administrator a revision application was filed before the Special Secretary, Government of India under Section 82 of the Act. The Special Secretary by his order dated 8-8-1979 dismissed the revision petition.
The present applicant moved an application for reconsidering of the order of the Special Secretary. According to the ld. Counsel no order in writing has been received by the present applicant in response to the said petition. Subsequently, the present applicant moved the Hon'ble Allahabad High Court in Writ Petition under Article 226 of the Constitution seeking the quashing of the order of the Special Secretary, Government of India dated 8-8-1979, the order of the Gold Control Administrator dated 17-5-1977 and the order of the Collector, Kanpur dated 5-12-1973 on the ground that the entire proceedings were vitiated inasmuch as the SCN to the present applicant was issued beyond the period of six months as provided under Section 79 of the Act. The Hon'ble High Court by order dated 30-3-1993 allowed the petition and quashed the order of the Special Secretary to the Government of India dated 8-8-1979 and directed the Central Government to decide the revision application afresh in the light of the observations made in the order and in accordance with law.
3. In the application filed on behalf of the present applicant dated 10-10-1994 it has been stated that since the Revision Authority in the matter was now the CEGAT, the application was being filed before the North Regional Bench of the CEGAT for considering the matter in the light of the observations made by the Hon'ble Allahabad High Court in its order dated 30-3-1993.
4. Shri K.P. Bhatnagar, ld. Counsel who appeared for the applicant submitted that the issue in the present application revolved around the question of limitation for issuing SCN under Section 79 of the Gold Control Act as it stood on 6-10-1969, the date on which the SCN was issued. According to the ld. Counsel the seizure of the gold was made between 26-3-1969 and 3-4-1969. The six months period provided in the second proviso to Section 79 of the Act prescribed a period of six months for issuing a SCN from the date of seizure of the gold failing which the seized articles should be returned to the petitioner.
According to the ld. Counsel, taking 3-4-1969 as the last date of seizure, the six months period provided under proviso (ii) to Section 79 expired on 3-10-1969. The applicants received the notice of show cause only on 9-10-1969. which was beyond the period of limitation and, therefore, the petitioner was entitled to the return of the seized gold. Ld. Counsel further contended that no doubt the second proviso to Section 79 of the Act provided for the extension of the period for issuing notice under certain conditions. However, there is nothing on record to show that the requirements of the said provision had been complied with. The SCN as well as the proceedings initiated thereunder was, therefore, wholly unauthorised and illegal under law. He referred to the order of the Hon'ble Allahabad High Court dated 30-3-1993 in which the factual position in relation to the issue of the SCN has been gone into by the Hon'ble High Court. The ld. Counsel submitted that as per the record which was not in dispute, the SCN was signed by the Collector of Central Excise, Kanpur on 4-10-1969, but on the top of the first page of the SCN, the date given was 6-10-1969. In paragraph 7 of the Notice, the Collector had stated that the necessary sanction for extension of time for issue of notice beyond six months had been accorded as provided under the second proviso to Section 79 of the Gold Control Act. The Department had in its counter-affidavit filed before the Hon'ble High Court stated that the SCN had been signed by the Collector on 10-9-1969 and the date at the end after the signature of the Collector should be taken as 10-9-1969 and not 4-10-1969. There was no dispute on the point that the notice was issued on 6-10-1969 and served on the present applicant on 9-10-1969. The counter-affidavit further stated that in the notice it had been stated that the period for issuing the SCN had been extended and, therefore, the notice could be served within the extended period of six months. On the basis of the submissions and the affidavit/counter-affidavit filed by the parties, the Hon'ble High Court had made the following observations :- "It is, therefore, clear that the main defence of the petitioner was that the notice had been given to him after expiry of the period of limitation. Since it is admitted in the counter-affidavit that the notice was served upon the petitioner on 9-10-1969, it is obvious that the same was done after expiry of the period of limitation. The limitation could, however, be saved in case a valid order for extension of period of limitation had been passed by the Collector of Central Excise in accordance with the Second proviso to Section 79 of the Act. The stand of the department on this point is not very clear. Firstly, in the counter-affidavit it is stated that the Collector signed the show cause notice on 10-9-1969. If this was so, it means that the Collector signed the notice well within the period of limitation, which would have expired on 3-10-1969. In such a situation, there was no occasion for passing any order of extension of time. Paragraph 7 of the notice reads as follows : "Necessary sanction for extension of time for issue of SCN beyond 6 months was accorded as provided under proviso to Section 79(ii) of Gold Control Act, 1968".
If the notice had really been signed on 10-9-1969 there was no occasion for the Collector to have accorded sanction for extension of time as the limitation would have expired on 4-10-1969. Neither the copy of the order extending the period of limitation has been filed along with the counter- affidavit, nor the date of passing of the order has been mentioned. This being the fundamental ground of challenge to the confiscation proceedings, it was obligatory upon the respondents to come out with a clear case and file the copy of the order by which limitation is alleged to have been extended or to have at least given full details thereof including the date of passing of the order. For the reasons best known to the respondents, no clear averments in this regard have been made in the counter-affidavit." 5. After discussing the judgment of the Hon'ble Apex Court in the case of Manick Chand v. Union of India, AIR 1984 SC 1249 in which the provisions of Section 79 was considered, the Hon'ble High Court observed that the language used in the second proviso to Section 79 was clear and unambiguous and it was couched in a mandatory form providing that where no notice is given within the period, the seized gold shall be returned to the person from whose possession it was seized. The Hon'ble High Court further observed: "Therefore, if the notice is not given within the period of limitation, the authority has no option in the matter but to return the gold. It is well settled that a plea of limitation goes to the root of the matter. Therefore, no order for confiscation of the said seized gold could be passed under Section 71 of the Act if the notice had not been given within the prescribed period".
The Hon'ble High Court had further observed that since the Collector as well as the Revisionary Authority did not at all consider the legal plea relating to limitation, the orders passed by the authorities were not in accordance with law. Accordingly, the Revisionary Authority was directed to decide the revision afresh. The operative part of the Hon'ble High Court's judgment reads as follows :- "The authority will consider as to whether really any order of extension of period of limitation by the Collector, Central Excise had been passed and if such an order exists, whether it is a legal and valid order in the eyes of law. The authority shall also ascertain the exact date of seizure of the articles and also the date of giving notice as that would be relevant for finding out whether the notice had been given within the period of limitation." 6. It is seen from the record of the proceedings before the Tribunal after the Revision Application was filed before the Tribunal that when the matter came up on 19-4-1996 the Tribunal had directed the Commissioner to make available the relevant case file for verifying the question whether the time for issue of notice was extended by the Collector. The matter was adjourned to 3-7-1976. Subsequently, the hearing was adjourned to 27-9-1996, 31-10-1996, 16-12-1996,14-2-1997,14-4-1997, 5-8-1997,21-8-1997,18-9-1997 and 24-9-1997. On 24-9-1997 when the matter was taken up, the ld- DR submitted that even with their best efforts the Department had not been in a position to obtain any document relating to the sanctioning of the extended period of limitation. Ld. DR, however, contended that the Collector was under no obligation to conduct quasi-judicial proceedings while exercising his powers under the second proviso to Section 79 of the Act since the power was to be exercised pursuant to the administrative discretion given to him. He also submitted that as far as the order of confiscation was concerned, there was no invalidity in the order of the lower authorities and the penalty imposed was also sustainable in law. Ld. DR relied on the following case law in support of his submissions :- 3. Mohan Lal D. Choksi v. M.P. Mohta, 1988 (37) E.L.T. 528 (Bombay High Court); and 4. Ambica Traders v. Union of India, 1992 (60) E.L.T. 188 (Calcutta High Court).
7. Ld. Counsel in reply submitted that since the matter has not come up in appeal on merits but on directions of the Hon'ble High Court in the Writ Petition filed by the present applicant, there was no question of considering the question on merits.
8. We have considered the submissions of both sides and have perused the record. We find that the issue raised in the instant case is not on the merits of the case. As submitted by the ld. Counsel the issue for consideration and decision by the Tribunal is on the short question whether the notice has been given within the period of limitation. The Hon'ble Allahabad High Court while disposing of the Writ Petition had directed the Revisionary Authority to consider "whether really any order of extension of period of limitation by the Collector of Central Excise had been passed and if such an order exists, whether it is a legal and valid order in the eyes of law. The authority shall also ascertain the exact date of seizure of the articles and also the date of giving notice as that would be relevant for finding out whether the notice had been given within the period of limitation". The point which are not in dispute are that the last date of seizure was 3-4-1969. The date of issue of SCN as per the first page of the notice of show cause was 6-9-1969. Paragraph 7 of the SCN had stated that the necessary sanction for extension of time for issue of SCN beyond the six months was accorded as provided under proviso to Section 79(ii) of the Gold Control Act, 1968. The Collector had signed the SCN on 4-10-1969. The question was whether there was any material to show whether the Collector had obtained the necessary sanction for extension of time for issuing the SCN as recorded by him in paragraph 7 of the SCN. The same point was agitated before the Hon'ble High Court. The Department had not been able to produce any material to show that the sanction had in fact been obtained for extension of the limitation period beyond six months. In the proceedings before the Tribunal also, in spite of a number of adjournments and opportunities given to the Department to produce material to support the Collector's claim that necessary sanction had been obtained for extension of time, nothing has been brought on record. The inevitable conclusion therefore is that there is no material to support the claim of the Collector made in para 7 of the SCN dated 6-10-1969 that necessary sanction under Section 79(ii) of the Gold Control Act, 1968 had been obtained before issuing the SCN. The SCN was therefore clearly time barred and consequently, in the eyes of law, invalid. In view of these facts we hold that the SCN issued to the present applicant was beyond the period of limitation as provided in Section 79 of the Gold Control Act, 1968 and all the proceedings flowing therefrom and the order of confiscation and penalty are bad in law. The case law referred to by the ld. DR does not help the Department's case since the matter is being disposed of on the preliminary ground of limitation. The applicant will, therefore be entitled to the return of the seized goods.
9. The revision application filed by Shri Badri Prasad pursuant to the direction of the Hon'ble High Court of Allahabad dated 30-3-1993 is disposed of in the above terms.