Sinha, C.J. - (1.) The facts in this case are shortly as follows : The appellant Charan-das Malhutra carried on business under the name and style of "Wallton Watch Company" as the sole proprietor thereof at No. 12. Chow-ringhee Road, Calcutta. In the petition it has been stated that the appellant used to carry on another business under the name and style of "Welcon Watch Co." at No. 170, Mahatma Gandhi Road, Calcutta, which business was closed in the year 1965 and its stock-in-trade was transferred to the appellant's present business On the 19th of March, 1963 the respondents nos. 1 and 2 caused a search to be conducted by their Rummaging Staff at the appellant's place of business as aforesaid at No. 12, Chowringhee Road. Calcutta. It is said that the search was conducted from 10-30 A.M. till midnight of 19th March. 19R3 As a result of the said search, 218 watches of foreign make were found in the appellant's shop. On scrutiny of documents produced, 87 watches were released and the balance 181 watches were seized. On that date, a statement was taken from the appellant, a copy whereof is set out at page 12 of the paper book. In that statement he inter alia said as follows: "I have produced Bills against some of the watches for your Inspection. I am however, very unwell and I am not in a position to produce further vouchers or receipts against watches shown in the Inventory. I shall however, produce the same for your inspection as early as possible. I do state that I purchased twenty four watches from the Custom House Sales in the year 1957 or 1958. Out of this quantity I have sold all except two watches which I have produced to you and which I surrender herewith to you." On the 28th March, 1963 the appellant wrote to the Assistant Collector of Customs etc. asking him as to when he could attend with the necessary documents for verification and release of the seized articles As there was no reply to this, a reminder was given on the 8th April, 1963 complaining that owing to seizure of the watches normal business could not be resumed. To this also there was no reply, and on the 17th April. 1988 another reminder was Riven stating that the appellant's business had come to a standstill. On the 4th May, 1963 the appellant wrote another letter which contained the following statement : "This is to state that most of the watches seized are very old stock some of which were owned by my other concern, Welcon Watch Co., 170. Mahatma Gandhi Road which was closed in the year 1955 and its stock-in-trade was transferred to the allied concern. Purchase vouchers for (sic) other vouchers are being submitted to you and you are requested to please expedite release of the watches." (2) There was another letter dated 6th May, 1963 which refers to one voucher being shown which was destroyed by white ants. With the letter, the appellant submitted 52 vouchers and other documents in respect of 131 watches seized on the 19th March, 1963. It is stated that the vouchers related to 126 watches. On the 21st of June 1968 the Rummaging Inspector wrote to the appellant as follows:-- "Please refer to your letter dated 6th May, 1963 forwarding vouchers, bills, invoice, etc. relating to the seized watches. These vouchers, however, do not cover all the watches seized from you and your representative Shri Sunderlal Lala who came to deliver the abovementioned vouchers assured that the remaining vouchers would be submitted as soon as possible hut none of them has since been forwarded. You are accordingly requested to send the wanting vouchers immediately and at least within a week hereof. You are also requested to produce your Stock Book within the same period for verification of your Stock of watches." There is a letter dated 26th June, 1963 by Messrs. Benson Watch Company relating to three Benson Watches which were seized. They stated that these watches were sold long time back and it was not possible for them to trace out such old documents They however certified that for many years. Welcon Watch Co. was a regular customer of theirs and they had bought watches with the brand name, "Benson" They had never come across any suspected smuggled watches with brand name "Benson" On the 5-7-1963 the appellant wrote to the Rummaging Inspector with regard to one watch with brand name "Emes" which was purchased long ago from Messrs. M. S. Watch Co., 138. Radha Bazar Street, Calcutta. He said that he had lost the purchase vouchers but had asked the sellers to look up their record. A request was made that the customs authority should contact the seller for certification as to whether in fact the watch was sold to the appellant by them. On the 18th of September. 1963, 11 more watches were released and on the 27th of February, 1964, 10 more watches were released. Ultimately, a show cause notice dated the 6th March, 1964 was issued upon the appellant which is the subject matter of this application. Before we deal with the show cause notice, it will be necessary to deal with certain provisions of the Customs Act, 1962 (Central Act 62 of 1962) (hereinafter referred to as "said Act") The said Act is an Act to consolidate and amend the law relating to customs. Under Section 160(1) of the said Act, several statutes were repealed, including the whole of the Sea Customs Act, 1878 and the Land Customs Act, 1924. Section 111(d) of the said Act provides that any goods which are imported or attempted to be imported or are brought within the Indian Customs waters for the purpose of being imported, contrary to any prohibition imposed by or under the said Act or any other law for the time being In force, from a place outside India, were liable to confiscation. It Is not disputed that watches were prohibited goods if imported without proper licence. Section 110 of the said Act Is important and the relevant part thereof is set out below:-- "110(1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act. he raay seize such goods."
(2.) Where any goods are seized under Sub-section (1) and no notice in respect thereof is given under Clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized : Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Collector of Customs for a period not exceeding six months" The only other provision that requires to be considered is Section 124, the relevant part whereof is set out below :-- "124. No order confiscating any Roods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person - (a) is Riven a notice in writing inform ing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty; (b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c) is given a reasonable opportunity of being heard in the matter" I have already stated that 131 watches were seized on the 19th March, 1963 and the show cause notice was given on the 6th March, 1964 Between these two dates there were two extensions in terms of the proviso to Section 110(2) of the said Act. They were made as follows : The first extension was made on the 19th September, 1963 in an affidavit affirmed by M. L Wadhawan, Assistant Collector of Customs (Preventive) it is stated in paragraph 17(b) as follows :-- "On 19-9-63 an extension of time initially for 4 months was sought and granted by the Additional Collector of Customs on the ground that on conclusion of local enquiry it was necessary that enquiries in respect of 85 watches out of 131 watches seized were to be made at Delhi and Bombay. Although the enquiries at Delhi and Bombay were concluded within the extended period, there was hardly any time left to complete these reports of enquiry and to draw up the show cause Notice within the said period As such a further extension of time for a period of further two months was sought whtch was granted by the Additional Collector of Customs thus extending the time till 17th March, 1964."
(3.) What happened was that on the 18th September, 1963 an ex parte application was made for extension of time for four months without any reference to Ihe appellant and on the 19th September, 1963 the prayer was granted by the Additional Collector of Cus-toms The four months' extension would have expired on the 19th January 1964 On the 3rd January 1964 a second extension for two months was applied for by Shri S N Gupta This was also done ex parte and without reference to the appellant On the 20th February, 1964 the Collector of Customs granted a further extension of two months With regard to the second extension. Shri Sachhida-nanda Banerjee in his affidavit affirmed on 16th December 1965 states as follows in paragraph thereof. "As the enquiries could not be completed within the said extended time, a further four months' time was prayed for on 3rd January 1964 and on 20-2-64 the Additional Collector nf Customs granted further two months' extension for serving show cause notice. The enquiries were thereafter complet- ed and a show cause notice was issued on the petitioner on flth March 1964." It will be observed that the two statements made by two Customs Officers, mentioned above are directly contradictory. Wadhawan said that the second extension was necessitated because, although the enquiries were concluded there was no time left to complete the reports or to draw up a show cause notice. Banerjee states that as the enquiries could not be completed within the extended time, a second extension was found necessary and that the enquiries were thereafter completed and show cause notice issued on 6th March 1964. On the 6th March, 1964 a show cause notice was issued by the Additional Collector of Customs and Superintendent of Preventive Service a copy whereof is set out at pages 25 and 26 of the paper book The relevant part thereof is set out below : "In course of search on 19 3-1963 of the shop of M/s. Wallton Watch Co 218 Gents & Ladies watches of foreign origin, were found The Proprietor of the shop Shri Mal-hotra could not. however, produce on the spot documents to cover legal importation of 131 watches and made a statement that he would produce the vouchers and the receipts as early as possible. The watches i.e. 131 pcs were accordingly seized and brought to Cus-tom House. 2.. On 7 5-63 M/s Walllon Watch Co produced a number of vouchers to cover 126 pcs. of watches and assured that they would produce vouchers in respecl of the remaining 6 watches later on but the party failed to da so in spite of repeated reminders. 3. On scrutiny of these vouchers and on completion of enquiries so far made, 21 pcs of watches have been released to the party. In case of most of the remaining watches, the parties or firms from whom the watches in question were bought by M/s. Wallton Watch Co. either dn not exist or they stated to have destroyed their old records and are. therefore, not in a position to furnish the particulars of legal importation of the watches sold by them. 4 Importation of the watches without a valid Import Trade Control Licence is prohibited under Section II of the Customs Act, 1962 read with Section 3(1) of the Imports & Exports (Control) Act. 1947 and in accordance with the provisions laid down in para 2 of Section 123 of the Customs Act. 1962, the burden of proving that the watches are not smuggled shall he on the person from whose possession the watches were seized M/s. Wall-Ion Watch Co have failed to prove the legal Importation nf the remaining 110 pcs of watches. 5 M/s Wallton Watch Co are accordingly directed to explain within a week from the date of receipt of this Notice why the aforesaid 110 pcs of watches should not he confiscated under Sec. tll(d) of the Customs Act. 1962 read with Section 3(2) of the Imports & Exports (Control) Act and the notifications Issued thereunder. Th"y should also explain within the same period why penal action also should not be taken against them in accordance with provision of Sec. 112 of the Customs Act, 1962.";