CHUHARMAL versus UNION OF INDIA & ORS.

Citation: [1988] 3 S.C.R. 797 · Decided: 02-05-1988 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed

Judgment (excerpt)

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CHUHARMAL 
v. 
UNION OF INDIA & ORS. 
MAY 2, 1988 
[SABYASACHI MUKHARJI ANDS. RANGANATHAN, JJ.] 
Customs Act, 1962: Sections 110(2), 111(2), 111, 112, 123 and 
124-Goods seized under the Act-Extension of period of six months · 
from date of seizure~Cannot be ordered ex parte by Collector~ To be 
preceded by notice to affected party-Value of goods seized-
Determination of for purposes of levy of penalty-Quantum of 
penalty-Not to be arbitrary or excessive. 
On or about 12th May, 1973 the Superintendent of Central Excise 
issued search warrant under s. 105 of the Customs Act, 1962 authoris-
ing an Inspector of Central Excise to search the residential premises of 
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the petitioner. A search was made and 565 foreign wrist watches were 
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recovered from the premises. The petitioner was given a notice to show-
cause why the period of six months fixed by s. 110(2) should not be 
extended. 
On December 26, 1975 the Collector of Central Excise passed an 
order directing confiscation of 565 wrist watches ·Seized from the 
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petitioner's possession on May 12, 1973 under Sectiiln lll, and the 
imposition of penalty of Rs.2 lacs under section ll2 of the Act. 
The petitioner's appeal to the Central Board of Excise and 
Customs, and revision to the Government of India having been dismis-
sed, the petitioner challenged the order of the Collector in a writ peti-
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lion to the High Court. 
The High Court dismissed the writ petition, on the ground that 
the Collector was justified in passing the order of confiscation of the 
watChes and imposing a penalty of Rs.2 lacs, as the petitioner had not 
refuted the facts alleged .in the show•cause notice by availing of the 
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opportunity given to him at the enquiry. 
In the Special Leave Petition to this Court it was contended that: 
(1) the notice dated May 4, 1974 issued under section 124 of the Act was 
issued beyond the period of six months of the seizure of the goods and as 
such the entire proceedings were invalid for this reason; and that the 
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SUPREME COURT REPORTS 
[1988] 3 S.C.R. 
extension of the period of six months by another period of six months in 
accordance with the proviso to section 110(2) could not he made 
ex-parte without notice to the petitioner, (2) there was no evidence to 
determine the value of watches, so the quantum of penalty could not be 
determined for want of such evidence, and (3) the quantification of the 
penalty was very high. 
Dismissing the Special Leave Petition, this Court, 
HELD: I(i) Extension of time takes away a valuable right of a 
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party whose goods are proposed to he seized. Such deprivation of the 
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valuable right must be upon notice, otherwise it violates the principles 
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C ofnaturaljustice. [802D-E] 
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(ii) An ex-parte determination by the Collector would expose his 
decision to be one sided and perhaps one based on an incorrect state-
ment of facts. [802F] 
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(iii) Whether a notice was given or not within a stipulated time 
for extension as contemplated under s. 110(2) is a question of fact. The 
onus that the order was passed without notice is on the person who 
asserts it to be so and this is a question of fact. [802H; 803 Al 
In the instant case, a notice has been given. There was an asser-
E lion to this effect in the Collector's order. The assertion remained un-
controverted by any specific evidence and also by failure to urge this 
point. In that view of the matter, the inference drawn by the High Court 
that such notice was given as contemplated under section 110(2), was 
not unwarranted. [803A-B I 
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2. The value of the watches was mentioned as one of the particu-
lars in the show-cause notice given to the petitioner and this value was 
not refuted by the petitioner in his reply. The petitioner did not avail 
himself of the opportunity at any stage to oppose the extension of time 
or to refute the allegations made in the show-cause notice given thereaf-
ter. The petitioner thus failed to discharge the burden of proof cast on 
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him by section 123oftheAct. [803C-D] 
3. The qnantmn of penalty should not be arbitrary or excessive. [804E] 
In the instant case, the value of the smuggled goods was 
Rs.87,455. The penalty permissible is upto five times the value of the 
H goods. The Collector imposed the penalty of Rs.2 lacs by his order in 
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CHUHARMAL v. U.0.1. [MUKHARJI, J.[ 
799 
1975, Admittedly, for about ten years, the amount of penalty had not 
been paid by 

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