Customs, Excise and Gold Tribunal - Mumbai
Ambica Jewellers vs Collector Of Customs (Preventive) on 28 January, 1988
Equivalent citations: 1990(46)ELT103(TRI-MUMBAI)
ORDER K. Gopal Hegde, Member (J)
1. All these five appeals arise out of and are directed against Order-in-Original bearing No. 92/Addl. Collr./198 dated 29-11-82 passed by the Additional Collector of Ahmedabad.
2. As these appeals involved the common questions of law and facts and as they are directed against an order, they are clubbed together, heard together and hence this common order.
3. The brief facts necessary for the disposal of these appeals are : On 17-1-81, during the preventive round, the Customs Officers of Surat stopped a person, namely Kadarbhai Umerbhai Memon (in short Kadarbhai) who was proceeding on a bicycle. On suspicion this person was searched in the presence of Panchas as well as his other belongings which he was carrying on his bicycle. The search resulted in recovery of silver rods, old silver coins, totally weighing 20.956 kgs valued at Rs. 37,270/-. The statement of Shri Kadarbhai was recorded. He stated inter alia that silver rods and coins belonged to M/s. Ambica Jewellers and he was carrying them to his refinery for melting. He did not possess any transport voucher or bill. The Customs Officers had also seized the bicycle on the reasonable belief that the same was used for transport and carriage of silver liable to confiscation. The premises of Shri Kadarbhai was searched and nothing incriminating was found. During the course of further investigation the premises of M/s. Ambica Jewellers were also searched, which resulted in the recovery of raw silver rods, old silver coins and silver bars totally weighing 4.353 kgs valued at Rs 10,405/-. Shri Bherumal Khimchand Shah claimed those silver rods and coins as belonging to him. He, however, did not produce vouchers or bills for acquisition of the said bars, silver rods and coins. Therefore, the officers seized the said quantity of silver. Thereafter the statements of Shri Bherumal Khimchand Shah and Shri Mithalal Khimchand Shah, the partners of M/s. Ambica Jewellers were also recorded. They among other things stated that the silver rods and coins which were seized from Shri Kadarbhai belonged to the deceased brother-in-law and thay they were brought by their sister Smt. Magniben and gave them for sale. She had not given bills or vouchers. They also stated that they had given the silver rods and coins to Shri Kadarbhai for refining and that Shri Kadarbhai had promised to pay the amount for the said silver rods and coins. Smt. Magniben, the sister of the partners of the firm corroborated the version of the partners. She had stated in her statement that the silver rods and bars belonged to her late husband and that there was nobody at her in-law's house to look after her. She had come to her brother's residence and at that time she had brought the coins, bars and rods for disposal and she had given them to her brother for disposal.
4. After completion of the investigation, show cause notices were issued to the partners, firm, Shri Kadarbhai, two partners as well as Smt. Magniben alleging violation of the provisions of Chapter IV B and that the silver was being transported with a view to export illicitly and they were called upon to show cause as to why silver bars weighing 25.309 kgs valued at Rs. 47,675/- should not be confiscated and why penalty should not be imposed on them. It appears it was allegd in the show cause notices that the seized bicycle became liable to confiscation under Section 115 (2) of the Customs Act.
5. The Additional Collector of Customs, Ahmedabad, who held the enquiry, after consideration of the replies to the show cause notices and after affording personal hearing ordered confiscation of silver rods and coins totally weighing 25.309 kgs valued at Rs. 47,675/- under Section 113(1) but allowed clearance on payment of redemption fine of Rs. 20,000/-. He further ordered confiscation of bicycle under Section 115 but allowed release on payment of a redemption fine of Rs. 100/-. He imposed a penalty of Rs. 1,000/- on the firm, on each of the partners, on Shri Kadarbhai as well as Smt. Magniben. Hence these appeals.
6. Appearing for the appellants Shri Mehta contended that the Additional Collector who held the enquiry exonerated the charge of attempted export. The offence if any committed is only technical breach which did not warrant confiscation or imposition of heavy fine or penalty. He submitted that admittedly the silver rods and coins seized from Shri Kadarbhai belonged to Smt. Magniben who had given to her brother for sale and the brother in turn gave to Shri Kadarbhai for refining and thereafter to pay the price. There was no transaction of sale by the firm. The transaction in question was purely a private transaction with a view to assist the widowed sister. In the circumstances and particularly when the Additional Collector was satisfied that there was no attempted export on penalty should have been imposed and even if the goods are liable to confiscation having regard to the technical nature of the offence, a nominal fine would have met the end of justice.
7. As regards the silver from the shop Shri Mehta submitted that the total value was only Rs. 10,405/- which being less than Rs.15,000/- question of violation of Chapter IV B does not arise. He also challenged the confiscation of the bicycle.
8. Shri Senthivel, appearing for the Collector, however, submitted that there was clear violation of the provisions of Chapter IV B particularly Section 11 (J), (K) and (L). He submitted that Smt Magniben, when she brought silver rods and silver coins valued more than Rs. 15,000/- to the specified area required to possess a transport voucher and admittedly she did not possess any transport voucher. Therefore, she had committed an offence under Section 11(K). Shri Senthivel also submitted that Shri Kadarbhai was trasporting silver coins and rods, the value of which exceed Rs. 1,000/- within the specified area and he required transport voucher. But then, he did not possess any voucher and therefore, he also contravened the provisions of Section 11(K). It was also urged by Shri Senthivel that the firm as well as the partners did not issue any transport voucher and, therfore, abetted the transport of silver by Shri Kadarbhai and there by contravened Section 11(K). Shri Senthivel, further, submitted that the firm as well as the partners did not send intimation of the storage of silver and thereby contravened Section 11 (J). The firm as well as the partners, according to Shri Senthivel, also did not maintain accounts and as such they contravened Section 11(L). In the circumstances, all the appellants were rightly penalised.
8A. As regards confiscation Shri Senthivel urged that in respect of silver carried by Shri Kadarbhai there was contravention of Section 11(K) by him and there was contravention of Section 11(J), (K) and (L), by the firm and partners and therefore, the Additional Collector was justified in ordering confiscation and giving an option for released on payment of a redmption fine of Rs. 20,000/-. As regards the seizure of 4.353 kgs of silver valued at Rs. 10,405/- Shri Senthivel submitted that the same is liable to confiscation since it was not evidenced by transport voucher and accounts not maintained as required under Section 11 (L). It was also submitted by Shri Senthivel that the bicycle was used in the carriage of smuggled goods and in that connection Shri Senthivel referred to the definition of the expression "smuggling" given in sub-section 39 of Section 2 of the Customs Act.
9. I have considered the submissions made on both the sides and perused the records of the case. The questions which appropriately arise in these appeals are :
(1) Whether the Additional Collector had committed an error in ordering confiscation of silver weighing 4.353 kgs valued at Rs. 10,405/- seized from the shop premises of the firm M/s. Ambica Jewellers.
(2) Whether the Additional Collector was unjustified in ordering confiscation and imposing a fine of Rs. 20,000/- in lieu of confiscation in respect of silver weighing 20.956 kgs valued at Rs. 37,270/- seized from the possession of Shri Kadarbhai.
(3) Whether the Additional Collector committed an error in law in ordering con- fiscation of the bicycle.
(4) Whether the Additional Collector was unjustified in imposing penalty of Rs. 1000/- on all the appellants.
10. Point No. 1. - In his order the Additional Collector proceeded on the footing that all the appellants were guilty of contravention of the provisions of Section 11(J), (K), (L) and (M) of Chapter IV B in respect of the seizure of silver from Shri Kadarbhai as well as from the shop. He did not make any distinction between the two seizures. It is not clear how the Additional Collector could hold Shri Kadarbhai or Smt. Magniben for the contravention, if any, by the firm or its partners in respect of the silver seized from the shop. The contravention, if any, could be either by the firm or its partners and not strangers like Shri Kadarbhai or Smt. Magniben, who are in no way concerned in the business of the partnership firm. Thus a total non-application of the mind on the part of the Additional Collector is evident. In his order, the Additional Collector did not separately consider the liability of the silver seized from the shop for confiscation. He had not spelt out which provision of Chapter IV B was contravened in respect of the silver seized from the shop premises. Admittedly the value of the silver seized from the shop was only Rs. 10,405/- which is less than Rs. 15,000/-, but seizure was not at the time of transport of the said quantity. The seizure was when they were in the shop premises. Therefore, there is no scope to invoke Section 11(K). Since the value of the silver is less than Rs. 15,000/- neither Section 11(J) nor Section 11(L) is attracted. There is no scope to invoke Section 11 (M) because there was no sale or transfer of the silver seized from the shop premises. In the circumstances, the order of confiscation of 4.353 valued at Rs. 10,405/- of silver rods and coins seized from the shop premises is wholly illegal and the same is liable to be set aside and accordingly I set aside the same.
11. Point No.2. - Admittedly, I say because the department did not dispute that the silver coins and rods weighing 20.956 kgs valued at Rs. 37,270/- at the relevant time belonged to Smt. Magniben, the wife of Late Tejpal Shah. Her statement that she had brought them to her brothers' place for disposal was also not disbelieved. Undisputedly Shri Mithalal Khimchand Shah as well as Bherumal Khimchand Shah are the direct brothers of Smt. Magniben. They also stated in their statements that the seized silver coins and rods were brought by their sister and she wanted them to be disposed of and accordingly they had sold it so Shri Kadarbhai who was to refine in the first instance and thereafter to make the payment. From the statements of the above three, it is clear that the transaction cannot be considered as the transaction of the firm or on behalf of the firm. In the said circumstances, there was no obligation on the part of the firm to comply with any of the provisions of Section 11 (J), (K), (L) or (M) of Chapter IV B. When that being the case the firm cannot be said to have contravened the said provisions and accordingly no penalty could have been imposed on the firm. The Additional Collector had not thought fit to consider the liability of each and every person to whom the show cause notice was issued. In the same brush he turnished one and all. Since there had been no contravention of Chapter IV B by the firm a penalty imposed on the firm requires to be set aside and accordingly I set aside the same.
12. According to the statement of Shri Kadarbhai the silver rods and coins were seized from his possession were given to him by Shri Mithalal Khimchand Shah. It is true that it was given to him in the premises of the firm. The partner Shri Bherumal Khimchand Shah in his statement also stated that the silver coins and rods belonged to his sister were given to Shri Kadarbhai for refining and sale. Both the brothers acted for and on behalf of their sister and it was not intended to be their transaction. In the circumstances, it is difficult to accept the Additional Collector's finding that the two brothers contravened the provisions of Chapter IV B. The silver in question did not belong to them. They cannot be considered as the persons owned or possessed or controlled. They had temporary custody. At the relevant time the silver was owned by their sister. In the circumstances, the Additional Collector, in my opinion, was unjustified in imposing penalty on two partners.
13. Since Shri Kadarbhai did not possess transport voucher it could be said that the silver had become liable to confiscation as there was violation of the provisions of Section 11(K). It could also be said that Smt. Magniben who had brought the silver of the value exceeding Rs. 15,000/- to the specified area without transport voucher there was contravention of Section 11(K) in respect of the seized silver and on that ground also it could be said that the silver became liable to confiscation. It could also be said that the silver was sold to Shri Kadarbhai though payment was to be made after refining, the sale vouchers were required and since admittedly there were no vouchers it could be said that the silver became on that ground also liable to confiscation. In the circumstances, the order of confiscation as such cannot be seriously challenged. The only question that remains for consideration is whether the Additional Collector was justified in imposing fine of Rs. 20,000/- in lieu of confiscation. The fine of Rs. 20,000/- was in respect of the silver weighing 25.309 kgs valued at Rs. 47,675/-. I have held that the silver weighing 4.353 kgs valued at Rs. 10,405/- was not liable to confiscation. In view of the said finding there should be automatic reduction in the quantum of fine. That apart it was not the case of the department that the firm or partners or Smt. Magniben were indulging in sale transactions of silver coins and rods. As stated earlier the statements of Smt. Magniben as well as her brothers that the silver rods and coins originally belonged to the husband of Smt. Magniben and after his death she brought those to her brothers' place for disposal was not disbelieved. If in the circumstances, there was some contravention of Chapter IV B either by Smt. Magniben or by Shri Kadarbhai the same did not require imposition of fine of Rs. 20,000/- or the proportionate fine by excluding the value of 4.353 kgs. The ends of justice require that there should be considerable reduction in the quantum of fine. I, accordingly, while upholding the order of confiscation, reduce the fine from Rs 20,000/- to Rs. 5,000/-.
14. Point No. 3. - The Additional Collector had ordered confiscation of the bycycle under Section 115. The confiscation was ordered for the carriage of silver which became liable to confiscation. It may be pointed out here that initially there were two charges against the appellants. Firstly, attempted export of silver and secondly, violation of Chapter IV B. The Additional Collector had rightly found that the materials placed did not warrant to hold that there was attempted export. The violation attributable to Shri Kadarbhai and Smt. Magniben in respect of the seized silver from Shri Kadarbhai was under Section 11(K) of the Customs Act. The violation of Section 11(K) would not by itself convert the silver into smuggled goods though for violation of Section 11(K) the confiscation could be ordered having regard to Section 113 (L). Neither the Customs Act nor the Rules made thereunder define the expression "smuggled goods". Shri Senthivel placed reliance on sub-section (39) of Section 2 of the Act. That sub-section only gives the definition of "smuggling" and not "smuggled goods". Smuggled goods is normally understood as the goods which is imported into India without payment of duty or in violation of restrictions of prohibition as to the entry of the goods into India. There is no evidence that the silver in question was brought into India without payment of duty or in violation of the restrictions or prohibition relating to the entry into India. In the circumstances, the seized silver cannot be considered as smuggled goods. Once it is held that the seized silver is not smuggled goods, there is no scope to invoke Section 115 (2). Therefore, the order of confiscation of the bicycle and consequently the fine levied in lieu of confiscation are bad in law and accordingly, the same are set aside. The fine, if paid, shall be refunded. The bicycle shall be released to Shri Kadarbhai.
15. Point No. 4. - The only other aspect that remained is the penalties imposed on the appellants. While discussing Point No. 1,I had already held that no penalty should be imposed either on the Firm or on the partners. I, therefore, set aside the penalty on the Firm and the partners. The only other persons remained are Shri Kadarbhai and Smt. Magniben. The Additional Collector had imposed a penalty of Rs. 1,000/- each. As observed earlier the department did not bring on record that either Smt. Magniben or her brothers had at any time indulged in sale transaction of the silver coins and rods. If a widow, after the death of her husband decided to dispose of old coins and rods which were no more useful to her and in the process if some minor contravention of Chapter IV B had taken place, though in law penalty could be imposed, having regard to the nature of the offence committed the Additional Collector ought to have considered whether any penalty should be imposed on them. Facts and circumstances in this case, in my opinion, did not warrant imposition of penalty on these persons. Accordingly I set aside the penalties on those two persons also.
16. In the result while maintaining the order of confiscation of 20.956 kgs of silver coins and rods seized from Shri Kadarbhai I reduce the fine from Rs. 20,000/- to Rs. 5,000/-. Smt. Magniben is given an option to redeem the silver on payment of fine of Rs. 5,000/-. She shall exercise this option within a period of two months from the date of communication of this order. The confiscation if silver weighing 4.353 kgs valued at Rs 10,405/- is hereby set aside. The silver shall be returned to M/s. Ambica Jewellers. The confiscation of the bicycle is hereby set aside. Consequently the fine levied in lieu of confiscation of the bicycle also set aside. The bicycle be released to Shri Kadarbhai if not released already. Fine, if any paid, by him, shall be refunded to him. The penalties imposed on all the appellants are hereby set aside. Penalty, if paid, shall be refunded to them.