Customs, Excise and Gold Tribunal - Mumbai
Shah Champaklal And Balubhai vs Additional Collector Of Customs on 30 July, 1987
Equivalent citations: 1988(15)ECC137
ORDER
29-10-1986 K. Gopal Hegde, Member
1. The revision application filed before the Government of India against the order No. 181-86 of 1979 dated 30-7-1979 passed by the Central Board of Excise & Customs statutorily stood transferred to the Tribunal for being heard as an appeal.
2. Briefly stated, the Department's case is that the officers of the Surat mobile squad on information visited the premises of Champaklal Nagindas Jariwala of Bhut Sheri and verified the statutory accounts of silver. The register showed the last transaction of silver as having been done on 7-12-1973 for the stock on 4-2-1974, the day of the visit of the officers was shown as "nil". On physical verification of the stock the officers found ten silver slabs weighing in all 307.675 kgs., of the market value of Rs. 2,95,368. Having regard to the discrepencies between the physical stock and the register, one Madhusudan Vaidya, the person found in the shop was interrogated. Among other things, Madhusudan Vaidya stated that he was the representative of Champaklal Jariwala. The silver bars in question had come from the shop of Shah Champaklal Balubhai under a transport voucher voucher bearing No. 779 dated 4-2-1974. The silver bars were brought by Abdul B. Choksi of Shah Champaklal and it was received by him on behalf of Champaklal. The officers scrutinised the vouchers produced by Shri Madhusudan and the voucher disclosed that it was written in light delible pencil. But then the particulars regarding the weight of each slab and mark on the slab were not stated in the voucher and the voucher was also not countersigned by the Customs Officer. Thereafter the officers proceeded to the shop of Shah Chambaklal Balubhai and found the shop closed. Thereafter they proceeded to the residence of managing partner of Shri Shah Champaklal. They found a person by name Arun Kumar C. Shah, the younger brother of the managing partner, Shri Pravinchandra. Shri Arunkumar was asked to produce the silver register and the voucher book. On production, they noticed that the duplicate copy of the voucher number 779 of 4-2-1974 had been written in light delible pencil. The weights and marks of silver slabs individually were not shown. The voucher also was not countersigned by a Customs Officer. The silver register did not contain any entry regarding the transfer of silver slabs under voucher No. 779 dated 4-2-1974. On questioning, Arunkumar stated among other things that the ten silver bars were received from Varanasi under a transport voucher. The officers took possession of the voucher book as well as the register for further investigation. They also seized the ten silver slabs found in the premises of Champaklal Jariwala.
3. The investigation revealed that Shri Pravinchandra was the main partner of the firm "Shah Champaklal & Balubhai", the other partner was his uncle's wife. Arunkumar, Atul Balubhai, and Nutan who are closely related of Shri Pravinchandra were assisting him in the conduct of the silver business of the firm. It also revealed that Pravinchandra had gone out of Surat in the early morning of 4-2-1974. The shop was opened by Arunkumar and his cousin Atul. Ten silver slabs were received by them from Varanasi under voucher No. 27 dated 2-2-1974 without making any entry in the register. The slabs were taken by Atul in a rikshaw to the shop of Jariwala where Mr. Vaidya received the silver slabs and also the voucher. Arun after closing the shop returned to the house with the silver and coins register.
4. Shri Champaklal Jariwala in his statement inter alia stated that there was an unwritten agreement between him and Pravinchandra for the sale of silver slabs coming from the Varanasi side on commission basis. Shri Pravinchandra also confirmed such an unwritten agreement. All the persons concerned with the silver offered explanation as to the circumstances under which necessary entries could not be made in the registers.
5. After completion of the investigation show cause notices were issued to the firm of Shah Champaklal and Balubhai, M/s. Silver Centre of Varanasi, Shri Champaklal Nagindas Jariwala, Arun, Atul and Madhusudan.
6. The Addl. Collector of Customs, Ahmedabad on consideration of the various contentions urged on behalf of the persons against whom show cause notices were issued and the materials on record ordered absolute confiscation of the silver slabs under Section 113(c) and (1) of the Customs Act and he also imposed personal penalties of Rs. 20,000 on the firm M/s. Shah Champaklal and Balubhai, Rs. 20,000 on Pravinchandra Champaklal Choksi, Managing Partner of M/s. Shah Champaklal & Balubhai, Rs. 10,000 on M/s. Champaklal Nagindas Jariwala and Rs. 1,000 on Arunkumar, Atulkumar and Madhusudan Vaidya.
7. Being aggrieved by the order of the Addl. Collector, M/s. Champaklal & Balubhai, M/s. Champaklal Nagindas Jariwala as well as the four individuals preferred a joint appeal before the Central Board of Excise & Customs. The Board, while rejecting the appeals, set aside the penalty of Rs. 20,000 imposed on the managing partner, Shri Pravinchandra Choksi.
8. Feeling aggrieved by the order of the Board, M/s. Shah Champaklal & Balubhai, M/s. Champaklal Nagindas Jariwala, Shri Arunkumar, Atulkumar and Madhusudan Vaidya filed a common revision application before the Govt. of India which is under consideration as appeal before the Tribunal. Shri Koruthu appearing for the appellants vehemently contended that the order of confiscation of the silver as well as the imposition of personal penalties on the appellants are illegal and totally unjustified. He urged that admittedly the ten silver slabs which are the subject matter of this seizure were received by the firm M/s. Shah Champaklal and Balubhai from Varanasi under a valid voucher. The silver bars were received at about 8.30 a.m. Because of the unwritten agreement between Pravinchandra, the managing partner of Shah Champaklal & Balubhai and Champaklal Jariwala the silver slabs were sent to the shop of Jariwala under a voucher. The reason for not making the necessary entries regarding the receipt of silver bars from Varanasi as well as sending the silver bars to M/s. Champaklal were sufficiently explained before the Addl. Collector as well as before the Board. Both the authorities have totally ignored the explanation. Shri Koruthu submitted that admittedly the managing partner, Shri Pravinchandra was not present when silver slabs were received. Arunkumar and Atul who opened the shop having regard to the tense situation prevailing in the locality were more concerned with the sending of silver slabs to Champaklal Nagindas than making entries in the registers. However, they had taken care to see that a voucher is prepared. The only allegation against the appellant was that the voucher was in delible pencil and the weight of each slab had not been entered, but the authorities disregarded to appreciate that Madusudan who had received the slabs on behalf of Champaklal Jariwala had acknowledged the receipt of silver slabs on the duplicate voucher in ink. If there was any intention to indulge in illegal transaction the vouchers would not have been prepared and the original voucher would not have been left with Champaklal and no acknowledgement would have been obtained. Shri Koruthu submitted that the department's case that they rushed to the shop of Champaklal Nagindas Jariwala on information about the storage of contraband silver in the shop of Champaklal Nagindas is a make believe story. When the silver slabs were sent from Varanasi under a countersigned voucher the officer who countersigned the voucher would send the intimation to the officers at Surat and because of this intimation the officers had gone to the shop of M/s. Champaklal Nagindas Jariwala and not because the had information that contraband silver are stored in the shop. If there had been any intention to illegally export the silver, it is highly improbable that the silver would be sent from Varanasi under a valid voucher and that Arunkumar would prepare another voucher before sending it to M/s. Champaklal Nagindas Jariwala. Shri Koruthu contended that the silver bars which were received from Varanasi did not contain any marks and numbers and therefore the question of Arunkumar entering number and marks in the voucher prepared by him would not arise. The only irregularity committed by him was non-mentioning the weight of each bar but then he had mentioned the total weight. Shri Koruthu contended that abnormal conditions were prevailing in Surat. Stone-throwing, arson and looting were frequently resorted to by the crowds without notice and apparently without provocation and in the tense situation if Arunkumar and Atulkumar who were more interested in the safety of the silver bars had not made any entries in the register or had failed to enter in the voucher the weight of each bar it cannot be contended that there was any mala fide intention. He further submitted that the conduct of the parties assumed great importance. Shri Arunkumar was aware that entries are required to be made in the register. Therefore after hurriedly closing the shop he took the register as well as voucher book to the house so that Nuthankumar who makes the entry in the register could make necessary entries. Shri Koruthu also submitted that even though the officers did not have any search warrant when they came to the residential premises of Pravinchandra they co-operated with the officers, allowed them to conduct the search, made available the registers as well as the vouchers which would not be the conduct of persons who indulge in illegal export.
9. It was then contended by Shri Koruthu that the Customs Act or the Specified Goods (Prevention of Illegal Exports) Rules, 1969 (which will be hereinafter referred to as the Rules) did not prescribe that the vouchers should be in triplicate or it should be prepared with the indelible pencil using carbon. Shri Koruthu also urged that as per the Rules the counter-signature would not be required if the transport takes place between 9.00 a.m. and 8 p.m. If there was any intention to indulge in illegal export, Shri Arunkumar as well as Atulkumar would have waited for another 15 minutes for sending the silver to Jariwala and if they had waited till 9.00 a.m. the requirement of counter-signature could not have been there. The Addl. Collector and the Board failed to appreciate the situation that was prevailing at Surat on that day. The authorities below, according to Shri Koruthu, made much of non-entry in the register forgetting that Arunkumar and Atulkumar had never done any entries in the register and the conduct of Arunkumar in taking register as well as the voucher book to the residence clearly established bona fide to get necessary entries made in the register. The law did not stipulate that the entries should be made instantaneously. All that the law required is that there should not be undue delay in making the entries but then before any entry could be made the officers came and had taken possession of the register and voucher book. In the said circumstances the two authorities below were wholly unjustified in drawing unwarranted inferences. It was further submitted by Shri Koruthu that though transactions were being carried out by the merchants in Surat town in spite of disturbances the shopkeepers used to pull down their shutters whenever they noticed any disturbance in the locality or near about the shop without waiting for the crowd to attack their own shop. There was uncontroverted affidavits and paper cuttings regarding the tense situation prevailing at the locality on 4-2-1984 at about 8.30 a.m. The authorities below totally disregarded the paper cuttings as well as the affidavits and gave reasons which are not at all concerning and no weight should be attached to their reasons. The authorities below, according to Shri Koruthu failed to appreciate the urgency demanded by the prevailing situation. If the authorities had considered the facts placed in their proper perspective no action could have been taken against any of the persons and no confiscation could be ordered. The reasoning of the Addl. Collector for not believing the version of Arunkumar regarding the non-availability of the space is again erroneous. The Addl. Collector failed to notice that no question had been put to Shri Arunkumar at the time of taking his statement and therefore Arunkumar had no occasion to tell them regarding the non-availability of space.
10. Shri Korathu further submitted that the contraventions referred to by the Addl. Collector even accepted as true would not be sufficient even to draw an inference that the transport of silver was to facilitate export. The interpretation of the Addl. Collector of Section 113(c) is totally erroneous. The silver in question are not export goods. In the said circumstances, the confiscation under Section 113(c) is bad in law.
11. Shri Koruthu further contended that the Board's order is not a speaking order. It did not consider the various contentions urged and therefore that order is liable to be set aside. It was also contended by Shri Koruthu that in the prosecution launched against the appellants they were all acquitted and the fact of acquittal should be taken into consideration in considering the alleged contraventions. Finally, Shri Koruthu submitted that the facts did not justify the absolute confiscation and imposition of penalties. The Board having rightly set aside the penalty imposed on Pravinchandra Champaklal ought to have set aside the penalty imposed on M/s. Shah Champaklal and Balubhai as well as Champaklal Nagindas Jariwala. Shri. Koruthu prayed that the confiscation of silver as well as the imposition of penalty on all may be set aside.
12. Shri Pattekar, appearing for the Collector, supported the orders passed by the Addl. Collector and the Board for the reasons stated in their orders. He further submitted that if as contended by the appellants there was disturbance and tense situation the appellants could have directed the Varanasi party not to send the silver but then no such action bad been taken. The Rules required making of entries immediately on the acquisition of silver but admittedly the entries were not made. Shri Pattekar submitted that before sending the silver to M/s. Champaklal Nagindas Jariwala, necessary entries should have been made in the register. There was oblique motive in making pencil entry in the voucher. Shri Pattekar also submitted that normal activities were taking place in Surat town, rikshaws were plying and in the said circumstances, tense situation and the disturbances which were put forward for not making entries should not be believed. Shri Pattekar finally submitted that the adjudication and the criminal prosecution are two independent proceedings, the finding in one is not binding on the other. He, therefore, prayed that the appeal may be rejected.
13. We have carefully considered the submissions made on both the sides and perused the records of the case. The points that fall for determination are:
(i) Whether the finding of the Addl. Collector that the silver slabs seized became liable to confiscation under Clause (c) of Section 113 is erroneous.
(ii) Whether the finding of the Addl. Collector that there has been contravention of provisions of chapter 4-B and the Rules made thereunder in the facts and circumstances of the case are unjustified?
(iii) Whether the order of absolute confiscation of silver in the facts and circumstances of the case was unjustified and unwarranted?
(iv) Whether the imposition of penalty on the appellants was harsh, improper and unwarranted?
14. In order to appreciate the contention urged on both the sides, it would be necessary to set out certain facts which are either admitted or in respect of which there is no controversy. The show cause notice dated 27-7-1974 was issued to the present appellants and Shri Pravinchandra Champaklal Shah who was the managing partner of the firm M/s. Champaklal & Balubhai. The contraventions alleged in the show cause notice are that the silver bars were transported within the specified area without a cover of a valid transport voucher; thus there has been a contravention of provisions of Sections 11-L and 11-K of the Customs Act (for short the Act). The said silver bars were in possession of (1) Arunkumar, (2) Atulkumar, (3) Madhusudan Vaidya, (4) M/s. Champaklal Nagindas Jariwala, (5) M/s. Shah Champaklal Balubhai and (6) M/s. Silver Centre, Varanasi, within the specified area, without making a true and complete account of the said silver and thereby contravening Section 11(1) of the Act.
The abovesaid silver bars were brought near the coast of India without complying with the provisions of chapter IV-B of the Customs Act for the purpose of being exported from a place other than a Customs Port contrary to the provisions imposed under the Imports and Exports (Control) Act and Customs Act and thereby the silver became liable to confiscation under Section 113(c) and (1) of the Act.
That the persons and the firms became liable to personal penalty under Section 114 as their acts or omission and abetment had rendered the above silver liable to confiscation under Section 113.
15. The firm Shah Champaklal & Balubhai is a partnership firm. Pravinchandra is the managing partner and Balubhai is a widow who is not looking after the affairs of the firm. The appellants Arunkumar and Atulkumar were assisting Pravinchandra in the transaction of the business of the firm M/s. Champaklal and Balubhai. They are not the partners nor the employees of the said firm. The firm M/s. Champaklal Nagindas Jariwala appears to be a proprietory concern of which Champaklal Jariwala is the sole proprietor. Shri Madhusudan Vaidya was not the partner or the employee of the firm of M/s. Champaklal Nagindas Jariwala. He, was, however, doing certain jobs entrusted to him by Champaklal Jariwala.
16. The ten silver slabs weighing 307.675, kilograms were admittedly sent by the firm M/s. Silver Centre, Varanasi to M/s. Shah Champaklal and Balubhai of Surat under a voucher dated 2-2-1974 which was countersigned by the Superintendent of Central Excise, Varanasi. The silver bars and the voucher were received by the appellants Arunkumar and Atulkumar on 4-2-1974 at about 8 20 a.m. or so. This voucher of 2-2-1974 though countersigned by the Supdt. of Central Excise officers did not contain all the particulars required to be mentioned by the Rules.
17. On the receipt of ten silver slabs the appellant Arunkumar prepared a voucher dated 4 2-1974 in favour of the firm M/s. Champaklal Nagindas Jariwala. In this voucher he did not mention the marks, the number and the weight of each slab but only mentioned the total weight of all the ten slabs. The voucher in question was also not countersigned by a Central Excise or a Customs officer. The silver bars were transported in an autorikshaw by Atul to the shop of M/s. Champaklal Nagindas Jariwala and in the absence of Champaklal Jariwala, Shri Madhusudan Vaidya received the silver bars and the voucher and acknowledged in ink on the duplicate copy.
18. Neither Arunkumar nor Atulkumar who had received the ten silver slabs had entered the receipt of silver slabs in the register. Similary they did not make any entry when they sent the silver slabs to the firm M/s. Champaklal Nagindas Jariwala.
19. Shri Madhusudan Vaidya, who received the silver slabs in the shop premises of M/s. Champaklal Nagindas Jariwala also did not enter the receipt of the silver slabs in the register.
20. One of the allegations in the show cause notice against the appellants and M/s. Silver Centre, Varanasi was that the silver slabs were brought near the coast of India for the purpose of being exported from a place other than a customs port contrary to the provisions imposed under the Imports and Exports (Control) Act and the Customs Act and thereby the silver became liable to confiscation under Section 113(c) of the Act. The part played by M/s. Silver Centre, Varanasi was to send ten silver slabs to M/s. Shah Champaklal Balubhai, Surat under a voucher dated 2-4-1974. They did not do any other act in connection with the said silver slabs. It is not clear how the department could issue a show cause notice to M/s. Silver Centre alleging that their act or omission rendered the silver liable to confiscation under Section 113(c). This clearly indicates the non-applicability of the mind on the part of the authority who issued the show cause notice. The Addl. Collector did not penalise M/s. Silver Centre, Varanasi. He also did not record any finding that their act or omission rendered the silver slabs liable to confiscation under Section 113(c). He had observed in his order that the transport voncher was issued by M/s. Silver Centre was defective inasmuch as it did not contain the marks and numbers of each individual slabs but then since the voucher had been countersigned by the departmental officer the said firm would not be liable to penalty under Section 114. The Addl. Collector nowhere stated that the Silver Centre, Varanasi was in any way concerned in the attempted export of the ten slabs of silver. His finding regarding the liablity of silver to confiscation under Section 113 is based on the following facts:
(a) The provisions of Sections 11-K and 11-L were contravened.
(b) The export of silver was prohibited under the Export (Control) Order, 1968 issued under the provisions of Section 3 of Imports & Exports (Control) Act read with Section 11 of the Customs Act.
(c) The seized silver would constitute export goods as defined in the Customs Act and would attract liability to confiscation under Section 113(1) in view of the contraventions of provisions of Sections 11-K and 11-L read with the Rules. In the course of his order, the Addl. Collector observed:
They have only argued the very fact that silver was found in the shop of Champaklal Jariwala would indicate that no intention of exporting the silver (sic), I am afraid, the arguments of the Advocate in this regard are the outcome of wrong interpretation of 113(c) of the Act. What this section contemplated was the bringing of silver for the purpose of being exported and not for the purpose of exporting. It was not necessary for the department to establish that silver was to be actually exported by any one of the opponents involved in this case. It was only to say that the object of bringing silver was for illicit export. In other words such illicit export may be effected by a third agency other than the opponents involved in this case. Against this back ground one has to view the various omissions and commissions of the silver dealers of Surat. It was a fortituous circumstance that the officers were in time to effect the seizure of the silver on the day in question. As pointed out earlier, the real intention of the silver dealers in effecting movement of silver under a patently invalid voucher and in omitting entries in the prescribed register is a matter within the personal knowledge of the persons concerned.--Therefore, the argument that their bona fides were clearly indicated by the finding of silver in the shop of Jariwala, is, in my opinion, totally irrelevant. I have been guided by the fact that the contraventions have taken place in rapid succession and in close proximity. The so called transaction is not supported by any written agreement. The books of Champaklal Nagindas Jariwala do not show any transaction in specified goods, viz., silver, after December, 1973. The books further indicate that Champaklal Jariwala had at no time entered into such big transaction. Champaklal Jariwala had also failed to instruct Madhusudan about the possible receipt of silver from the firm of Champaklal & Balubhai. These facts do not, in my opinion, speak in favour of innocence of the opponents involved. On the contrary, they clearly show the so called transfer of silver was not actually prompted by genuine consideration of business. As such, in my opinion, these omissions and commissions on the part of the two silver dealers, were clearly motivated by an attempt to manipulate the records. And such manipulation can only be for the purpose of diverting the silver for illicit export. It is not necessary for the department to establish positively that illicit export would have been done by any of the opponents. My earlier observations about the huge demand from the smugglers of Dandi and Daman for such silver, would be of relevance, in this context.
I, therefore, hold the department had clearly established that the object of bringing silver from the shop of Shah Champaklal and Balubhai to the shop of Champaklal Nagindas Jariwala was to make available the silver for illicit export. All the essential ingredients of Section 113(c) are met in this case and hence, the seized silver is liable for confiscation under the said section.
21. The definite finding of the Addl. Collector was that it is not necessary for the department to establish positively that illicit export would have been done by any of the appellants herein. His further finding was that such illicit export may be effected by other agency other than the opponents involved in the case. He also recorded a finding that the object of bringing silver from a shop of Shah Champaklal and Balubhai to the shop of Champaklal Nagindas Jariwala was to make available silver for illicit export. In the show cause notice issued to the appellants and others it was alleged that the silver slabs were brought near the coast of India for the purpose of being exported from a place other than a Customs port contrary to the prohibitions imposed in the above Act and thereby rendering the silver liable to confiscation under Section 113(c) and (1) of the Customs Act. There was no allegation in the show cause notice that the transport of silver from the firm of Shah Champaklal Balubhai to M/s. Champaklal Nagindas Jariwala [was] with a view to facilitate illegal export by a third party. In other words, there was no allegation of abetment of attempted export made against the appellants or any one of them in the show cause notice. Though we find such allegation in the show cause notice for imposing a penalty under Section 114 of the Customs Act.
22. In order to confiscate silver under Section 113(c) it is necessary to establish:
(i) that the silver was brought near the coast of India,
(ii) that silver was brought near the coast of India for the purpose of being exported, and
(iii) that the silver was so brought for the-purpose of being exported from a place other than a land Customs station or a Customs port appointed for loading of such goods.
23. In the instant case, the evidence did not disclose that the silver was brought near the coast of India. The evidence also did not disclose that silver was brought for the purpose of being exported and further it was not established that the export was to take place from a place other than the customs land station or a customs port appointed for loading of the silver. The evidence disclosed that ten slabs of silver were originally sent from Varanasi under a voucher countersigned by the Central Excise Superintendent. It was meant for M/s. Shah Champaklal and Balubhai of Surat. The silver was received at Surat for and on behalf M/s. Shah Champaklal & Balubhai. Till that stage, the silver cannot be considered as an "offended goods". The silver was, however, transported from the shop premises of M/s. Shah Champaklal & Balubhai to the shop premises of M/s. Champaklal Nagindas Jariwala. The Customs Act did not prohibit transport of silver from a dealer to another dealer or to any other person. The Customs Act only required that the transport should be covered by a valid transport voucher. There was a voucher but it was held to be not valid--firstly because it was not countersigned by the central excise or customs officer, secondly that it did not contain the weight of each slab, and mark and number. So far as mark and number is concerned, they were not found even when the slabs were transported from Varanasi to Surat. Even then the countersigning officer had countersigned the transport voucher. Therefore, the omission to mention mark and number by Arunkumar in the voucher of M/s. Champaklal Nagindas Jariwala in the circumstances, cannot be considered as deliberate violation of the provisions of the Act or Rules. The transport effected was within the Surat town from the shop premises of M/s. Shah Champaklal to M/s. Champaklal Nagindas Jariwala. It was made clear during the hearing that the distance between the shops of these two firms is about one kilometer. If the transport of silver from Varanasi to Surat is not considered as bringing silver near the coast of India then the transport from the shop premises of M/s. Shah Champaklal and Balubhai to M/s. Champaklal Nagindas Jariwala also cannot be considered as bringing the silver near the coast of India. The Addl. Collector made no distinction between "specified place" and "the coast of India". He proceeded on the footing that bringing of silver to "the specified area" tantamounts to bringing the silver to near the coast of India. Assuming that Surat is near the coast of India, even then the silver cannot be ordered to be confiscated because the department has to establish by satisfactory evidence that silver was brought for the purpose of being exported. According to the finding of the Additional Collector, the appellants themselves did not intend to export the silver. The acts or omissions on the part of the two firms could at best establish preparation to export and not attempt to export. The intention, however evil, is not made an offence. What is made an offence under the Act is the act or omission which rendered the goods liable to confiscation and not the intention. The non-entry in the register or the voucher being not in conformity with the provisions of the chapter IV-B or the Rules made thereunder would not be sufficient to hold that the silver was transported to the shop premises of M/s. Champaklal Nagindas Jariwala for the purpose of being exported to a port other than a Land Customs station or a Customs port appointed for the landing of silver. On careful consideration of all the aspects, we set aside the order of confiscation of silver made under Section 113(c) of the Act. We have referred only to the order of the Collector because the Board did not give any reason other than given by the Collector. As a matter of fact, as has been rightly contended by Shri Koruthu the Board's order can be characterised as a non-speaking order.
25. Admittedly, there was contravention of Sections 11-K and L by the firm M/s. Shah Champaklal and Balubhai. Under Section 11-L the firm is required to maintain a true and complete account of the specified goods and it has to enter every transaction of purchase and sales as and when the firm acquires or parts with any specified goods. Admittedly, Arunkumar and Atulkumar did not enter the receipt of silver from Varanasi. Similarly, they did not make any entry in the register when the silver slabs were sent to the firm M/s. Champaklal Nagindas Jariwala. Further, the firm M/s. Shah Champaklal & Balubhai also contravened the provisions of Section 11-K inasmuch as the transport voucher did not contain the particulars regarding the weight of each slab and it was also not countersigned by the proper officer. But then we are unable to hold that the firm M/s. Champaklal Nagindas Jariwala had committed contravention of the provisions of Sections 11-K and 11-L. The said firm did not transport silver. Therefore, it was not required to issue any transport voucher. The allegation against that firm was that the receipt of silver under the voucher was not entered in the register. Admittedly the proprietor was not present when the silver was received. Within 15 minutes after the receipt of silver, the officers of the customs had visited the firm's shop premises and had taken the register for verification. No other transaction had taken place between the receipt of silver and the inspection of the register by the officers. If during the short interval if no entry had been made it cannot be said that there was contravention of Section 11-L or the Rules made under chapter IV-B.
26. On behalf of the firm M/s. Shah Champaklal and Balubhai as well as on behalf of Arunkumar and Atulkumar it was contended that the situation at Surat was tense and disturbing and therefore Arunkumar and Atulkumar after sending silver to Champaklal hurriedly closed the shop and took the register and voucher book to the residence with a view to making necessary entries in the register. But then the Collector as well as the Board did not accept their contentions that the situation was such which prevented them from making the necessary entries in the register. If Arunkumar could prepare a voucher as well as a duplicate voucher for the purpose of sending silver slabs to M/s. Shah Champaklal Nagindas Jariwala he could have as well made an entry in the register without waiting for the managing partner or Nuttankumar or munim. If there had been disturbances or the situation was tense, Arun and Atul need not have transported silver slabs in a hurry to the firm of M/s. Champaklal Nagindas Jariwala. It was contended that there had been not enough space in the locker to keep the silver slabs. If the safety was the reason for sending silver slabs to M/s. Champaklal Nagindas Jariwala they could have as well taken the slabs to their house and made necessary entries and vouchers. We are not satisfied that the entries in the registers were not made for the reasons urged by the appellants. Similarly there was clear violation of the provisions of Section 11-K in as much as there was no countersignature of the proper officer to the transport voucher and the particulars regarding the weight of each slab had not been mentioned. If Arunkumar, who prepared the voucher, had time to prepare a duplicate he could have as well entered all the particulars in the voucher as required by law. If the situation was tense or disturbing there was no need to send the silver slabs in a hurry to M/s. Champaklal. Therefore, that explanation of the appellant is unacceptable.
27. The next question for our consideration is whether the contravention of the provisions of Sections 11-K and 11-L by the firm M/s. Shah Champaklal Balubhai justifies the absolute confiscation of the seized silver. Silver as such is not a prohibited good. The restriction contained in chapter IV-B of the Act is to prevent illegal export of specified goods. The acquisition of silver by the firm M/s. Shah Champaklal and Balubhai is a legal acquisition. The contravention committed by them is in not making an entry in the register and the transport voucher being not in accordance with the Rules. Though under Section 113(c) the silver is liable to confiscation for the contravention of provisions of Chapter IV-B, having regard to the nature of the contraventions we are of the view that absolute confiscation was unjustified. The Collector ordered absolute confiscation because of his finding that the silver was brought near the coast of India for the purpose of being exported but then we had held that that finding of the Collector was not warranted from the facts established in the case. We, therefore, set aside the absolute confiscation of the seized silver. We direct the release of the silver on payment of fine of Rs. 2,95,368, which was the market value at the time of seizure. The appellants shall exercise this option within a period of 45 days from the date of receipt of this order.
28. The only other question that remained for consideration is the imposition of penalty on the two firms and three individuals. So far as the firm M/s. Champaklal Nagindas Jariwala is concerned, we had held that it was not required to prepare any transport voucher and not making of an entry in the register could not be considered as violation having regard to the time factor. In the said circumstances, no penalty could be imposed either on M/s. Champaklal Nagindas Jariwala or Shri Madhusudan Vaidya. We, therefore, set aside the penalties imposed on M/s. Champaklal Nagindas Jariwala and Madhusudan Vaidya.
29. As regards M/s. Shah Champaklal Balubhai is concerned, the firm did commit the contravention of Sections 11-K and 11-L but having regard to our finding, that the silver was not an offended good, or a prohibited good, we reduce the penalty from Rs. 20,000 to Rs. 1,000 (Rupees One thousand only). As regards Arunkumar and Atulkumar, admittedly they are not the partners nor the employees of the firm. Therefore they are not obliged to make any entries in the register or to prepare vouchers. They were only assisting the managing partner. The act attributed to Atulkumar was to carry silver in an autorikshaw from the firm's premises to another firm's premises under a defective voucher. He had not contravened either the provisions of the Act or the Rules. Therefore, no penalty could be levied on him. We accordingly set aside the penalty imposed on Atulkumar. As regards Arunkumar, no doubt he had prepared the defective voucher. But then his act was for and on behalf of the firm M/s. Shah Champaklal and Balubhai. Since we had imposed a penalty on the firm M/s. Shah Champaklal no separate penalty need be imposed on Arunkumar. We accordingly set aside the penalty imposed on Shri Arunkumar.
30. In the result, we allow the appeal in part. The order of absolute confiscation of the seized silver is set aside. The firm M/s. Shah Champaklal and Balubhai is given an option to redeem the silver on payment of a fine of Rs. 2,95,368. They shall exercise this option within a period of 45 days from the date of communication of this order. The penalties imposed on M/s. Arun-kumar, Atulkumar and Madhusudan Vaidya are set aside. The penalty if paid shall be refunded to them. The penalty imposed on the firm Champaklal Nagindas Jariwala is set aside. The penalty if paid shall be refunded. The penalty of Rs. 20,000 imposed on M/s. Shah Champaklal Balubhai is reduced to Rs. 1,000 (Rupees One thousand only). The firm shall be granted the consequential relief by way of refund.
23-3-1987 K.S. Dilipsinhji, Member I have very carefully gone through the order brother Hegde proposes to deliver. While I agree with some of his findings, I do not agree with the others and hence this differing order in respect of such findings. Brother Hegde has elaborately set out the facts of the case and the arguments advanced by both the sides. It is, therefore, not necessary for me to repeat them here. After examining the contentions of the appellants and the respondents, Brother Hegde sets out four points for determination by the Tribunal in terms of Section 129-B of the Customs Act vide para. 13 of his draft order. I propose to follow the same pattern in the interest of facility of reference. My findings on these are dealt with ad seriatim as under:--
I. Whether the finding of the Addl. Collector that the silver slabs seized became liable to confiscation under Clause (c) of Section 113 is erroneous?
After examining the matter at length, Brother Hegde has come to the conclusion that the silver bars in question are not liable to confiscation under Section 113(c) of the Customs Act. I am in entire agreement with this aspect of his findings. I, therefore, hold that the silver bars are not liable to confiscation under Section 113(c) of the Customs Act, and accordingly I set aside this part, of the Addl. Collector's order as confirmed by the Board.
II. Whether the finding of the Addl. Collector that there has been contravention of provisions of Chapter IV-B and the Rules made thereunder in the facts and circumstances of the case are unjustified?
Brother Hegde has answered this query against the appellants after a detailed discussion of the arguments advanced by both sides. He has held that there had been a contravention of Sections 11-K and 11-L and the notifications issued under chapter IV-B. Accordingly, he has held that the silver bars are liable to confiscation under Section 103(1) of the Customs Act. I agree with Brother Hegde's finding in this behalf also.
III. Whether the order of absolute confiscation of silver in the facts and circumstances of the case was unjustified and unwarranted ?
Brother Hegde has replied to this query in the affirmative after holding that silver was not prohibited goods. Accordingly he has allowed redemption of the confiscated silver on payment of a fine of Rs. 2,95,368 which was the market value of the silver at the time of seizure. So far as this aspect of Brother Hegde's order is concerned, I am in disagreement with him for the reasons which follow. Though Brother Hegde has not explicitly stated why the Additional Collector's order of absolute confiscation of silver under Section 113(1) requires modification and why an option should be given under Section 125 for redeeming the confiscated silver, it appears that Brother Hegde has been guided by his own observation that silver as such is not prohibited goods. This is in stark contrast with the Additional Collector's finding. The Additional Collector has held that the export of silver is banned under the Exports (Control) Order, 1977 and hence he has not given any option to redeem the confiscated silver in terms of Section 125 of the Customs Act. I observe that the Additional Collector's findings are quite legal. The silver in question was in the form of bars. This is covered by serial No. 47 of Schedule I to the Exports (Control) Order, 1977 and under Clause 3 thereof, its export out of India is prohibited. This prohibition is made under Sub-section (1) of Section 3 of the Imports & Exports (Control) Act, 1947 and under Sub-section (2) the prohibition is deemed to have been made under Section 11 of the Customs Act, attracting all the provisions of this Act accordingly. Therefore, there is no doubt that the silver is within the definition of prohibited goods under Section 2(33) for the purposes of Section 125 of the Customs Act, and the Additional Collector's order of absolute confiscation of the siver bars is correct. Therefore, there was no legal compulsion on the Additional Collector under Section 125 to offer redemption of the confiscated silver to the owner on payment of a fine. While dealing with this aspect, it is necessary for me to refer to the decision of the Reference Bench in a complementary case of appeal relating to contravention of provisions of Chapter IV-A of the Customs Act. The Reference Bench in their order No. M-322/86-E (sic) [should be Order No. M-322/86-D] dated 4-12-1986 in the appeal No. CD. BOM. 186/86 filed by M/s. Hasmukh Dalpatrai Ganatra and M/s. Export Enterprises ruled that 79 takkas of man-made fabrics which violated the provisions of Chapter IV-A of the Customs Act were not prohibited goods, as defined in Section 2(33) of the Customs Act, and their importation was not prohibited under the Customs Act or any other law for the time being in force; and therefore they held that under Section 125 of the Customs Act, it was mandatory for the adjudicating authority to give an option for redeeming these confiscated goods on payment of a fine. In arriving at the aforesaid conclusion, the learned Brothers who constituted the Reference Bench took into account the judgment of the Allahabad High Court in the case of Modi Rayon & Silk Mills 1978 ALJ 855 and the Supreme Court's judgment in the case of Shaikh Mohamed Omer AIR 1973 SC 293. In the first case, the Allahabad High Court had held that the goods in identical circumstances were not prohibited goods. However, in the second case, the Supreme Court held that the mare imported by Shri Shaikh Mohamed Omer was prohibited on import. But since the import related to 1964 which was prior to the introduction of chapter IV-A in the Customs Act with effect from 3-1-1969 the Reference Bench held that the ratio of the Supreme Court's decision would not apply to the case of appeal of Shri H. D. Ganatra and another; and accordingly came to the conclusion that the man-made fabrics in question were not prohibited goods for the purposes of Section 125. With great respect to the learned Brothers, I find that their findings are wholly erroneous. Man-made fabrics are covered by serial number 56.07 of Schedule I to the Imports (Control) Order, 1955, as amended. Under Clause (3) of the Order, the import of the fabrics into India is prohibited. This prohibition is made by virtue of Section 3(1) of the Imports and Exports (Control) Act, 1947. Under Sub-section (2) of Section 3, the prohibition is deemed to have been made in terms of Section 11 of the Customs Act, 1962 and all the provisions of that Act are attracted accordingly. Therefore, for the purposes of Section 125 of the Customs Act, the import of the fabrics was prohibited, both under the Customs Act as well as under the Imports & Exports (Control) Act. The absolute confiscation of the fabrics was legal in terms of Section 125 of the Customs Act. Apart from this fact, the Supreme Court in the case of Shaikh Mohamed Omer was interpreting inter alia the term "prohibited goods" and there was no relevance to this interpretation to Chapter IV-A of the Customs Act. Therefore, in my opinion, the learned Brothers of the Reference Bench need not have drawn a distinction between "prohibited goods" as defined under the Customs Act prior to the introduction of Chapter IV-A and subsequent thereto in examining the question in this matter which related to scope of Section 125 of the Customs Act which was not affected by the amendment of 1969. The Supreme Court's judgment in the case of Shaikh Mohamed Omer provided interpretation of the term "prohibited goods" for the purposes of the Customs Act. This interpretation provides true meaning of the law as it has always been, and no artificial or invidious distinctions can be made in interpreting it for the periods prior or subsequent to the amendment in 1969. Apart from this, if at all any further authority of the Supreme Court is required for interpretation of the term "prohibited goods" for the purposes of the Customs Act, one is readily available in the case of Ram Kirpal Bhagat AIR 1970 SC 951. This decision was handed down by the Supreme Court after 1969 and this would overrule the objections felt by the learned Brothers of the Reference Bench in the case of Hasmukh Dalpatrai Ganatra. In view of the aforesaid pronouncements of the Supreme Court which lay down the law of the land, I am firmly of the view that silver in the present case comes within the category of goods, the export of which is prohibited under the Customs Act as also under the allied Act as discussed above, and in terms of Section 125 of the Customs Act, the Additional Collector's order is fully legal and valid. Apart from this legal situation, it is also worthwhile to note that the discretion whether to offer redemption of confiscated goods on payment of fine or not is squarely that of the adjudicating officer. This has been made amply clear by the Calcutta High Court in the case of Shaikh Mohamed Omer . In view of this legal pronouncement, I would loathe to interfere with the Additional Collector's order of absolute confiscation of silver and offer the redemption of confiscated goods on payment of fine. As against these legal aspects, I find that even on merits, the Additional Collector's order is quite proper and does not require any interference. In the earlier paras, of his order, he has set out the various circumstances which have led to the silver being smuggled out of the country and Surat and its neighbourhood attracting notoriety in this behalf. While the general conditions, though mentioned by the Additional Collector, cannot provide any evidence in a specific matter, I am relying on the Additional Collector's specific findings that the two appellants, namely, M/s. Shah Champaklai and Balubhai and M/s. Champaklal Nagindas Jariwala had come to the adverse notice of customs authorities in Surat and they were known to be indulging in smuggling of silver outside the country. Considering this background, the Additional Collector was fully justified in not giving an option for redeeming the silver by them as in that case it would have been possible for the appellants to manipulate their accounts after the release of silver in such a way as to export the same illegally. Apart from this, the Customs Authorities had booked a case of seizure of silver against the appellant M/s. Champaklal & Balubhai not even three months earlier on 23-11-1973 and the same was a subject matter of appeal to the Tribunal vide CD(T)Bom. 314/83. It was, therefore, quite normal for the Additional Collector to rely on the past conduct of the offender and deny him the option of redeeming the confiscated silver on payment of fine. Apart from this, the redemption fine of Rs. 2,95,368 as per Brother Hegde's order would give an unmerited bonanza to a known smuggler as the value of the silver at the present market rate is Rs. 14,54,960 approximately. This would be putting a premium to an illegal act by the unsocial elements. I, therefore, find that there are no reasons for interfering with the Additional Collector's order of absolute confiscation of silver under Section 113(1) and I confirm the same.
IV. Whether the imposition of penalty on the appellants was harsh, improper and unwarranted.
The Addl. Collector imposed a penalty of Rs. 20,000 on M/s. Shah Champaklal & Balubhai under Section 114. This has been confirmed by the Board. But Brother Hegde's order proposes reduction of penalty to Rs. 1,000 only. I have great reservation in accepting Brother Hegde's order. As mentioned above, M/s. Shah Champaklal & Balubhai had came to the adverse notice of the Customs authorities of Surat and the Addl. Collector for indulging in smuggling of silver. The silver was valued at Rs. 2,95,368. Compared to the value of silver, the penalty of Rs. 20,000 is not harsh, improper or unwarranted. Apart from that, the same firm has been dealing in silver for a period of years and was well aware of the requirements of law. The fact that they used delible pencil to write the transport voucher 779 dated 4-2-1974 and also the fact that they did not make entry for the receipt of the silver from M/s. Silver Centre, Varanasi, nor the entry for the transfer of silver to M/s. Champaklal Nagindas Jariwala in the statutory records would show their malafide. In these circumstances, no leniency is called for towards M/s. Champaklal & Balubhai. Accordingly, I confirm the Addl. Collector's order of levy of penalty of Rs. 20,000 (Rupees twenty thousand only) on them.
So for as the Addl. Collector's order of imposing a penalty of Rs. 10,000 on M/s. Champaklal Nagindas Jariwala under Section 114 is concerned, I agree with Brother Hegde that not much time was available for this firm to make an entry of the receipt of silver in their statutory records. Only about twenty minutes were available between the point of time when M/s. Champaklal N. Jariwala received the silver bars and the visit of Customs officer who seized the silver. Besides, they signed the transport voucher in ink. I therefore find that there had been no effective opportunity to M/s. Champaklal N. Jariwala for making the entries. In these circumstances, the levy of penalty of Rs. 10,000 on them is not justified and I set aside the same.
The Addl. Collector levied a further penalty of Rs. 1,000 on Shri Madhusudan Vaidya. Shri Vaidya was in M/s. Jariwala's shop at the time of receipt of silver and he had accepted the same. Since I have held that no penalty is available on M/s. Champaklal N. Jariwala, I set aside the Addl. Collector's order of penalty of Rs. 1,000 on Shri M. Vaidya.
The Addl. Collector levied penalties of Rs. 1,000 each on Shri Arun Kumar C. Chokshi and Shri Atulkumar B. Chokshi under Section 114 of the Customs Act. Brother Hegde has set aside the order of penalty on these two persons on the ground that they were neither partners nor the employees of M/s. Shah Champaklal & Balubhai. It is, however, seen that when silver was received from M/s. Silver Centre, Varanasi by the firm of M/s. Shah Chamklal & Balubhai on 4-2-1974, these two persons were in the business premises, had accepted the silver on behalf of the receiver, had issued the voucher in delible pencil, arranged a rikshaw to convey the silver from the premises of M/s. Shah Champaklal & Balubhai, to the premises of M/s. N.C. Zaveri, etc. The acts on behalf of the firm amounted to contravention of chapter IV-B. This has been upheld by Brother Hegde and myself. Therefore these two persons have done acts or omitted to do acts in terms of Section 114 which rendered the goods liable to confiscation under Section 113 and abetted the doing or the omissions of the acts. It is not neeessary that for the purposes of levying penalties, these persons should have been partners or employees of the firm. Therefore, the penalty of Rs. 1,000 on each of them levied by the Addl. Collector is in order. Considering also the parts played by each in this case, and the value of the silver involved, I hold that the penalty of Rs. 1,000 is not excessive. Accordingly, I confirm the Addl. Collector's order and reject the appeals of Shri Arun Kumar and Atul.
24-3-1987 Since there has been differences of opinion between Member (J) and Member (T), the following points are referred to the President in terms of Section 129 C (5) of the Customs Act:
(1) Whether the Addl. Collector's order of absolute confiscation of silver is unjustified and unwarranted and the confiscated silver should be permitted to be redeemed on payment of a fine of Rs. 2,95,368 as held by Member (J) or whether the Addl. Collector's order of absolute confiscation is valid and proper and should be confirmed as held by Member (T)?
(2) Whether in the facts and circumstances of the case, the penalty of Rs. 20,000 levied on M/s. Shah Champaklal and Balubhai should be reduced to Rs. 1,000 as held by M (J) or whether the same should be maintained as held by M(T)?
Whether in the facts and circumstances of the case, the penalty of Rs. 1,000 each on Shri Arun Chamapaklal Chokshi and Shri Atul Kumar Balubhai Chokshi is improper and unwarranted and therefore, [should be] set aside as held by Member (J), or is legal and justified and should be confirmed as held by Member (T) ?
28-7-1987 Opinion P.C. Jain, Member
1. There has been difference of opinion between learned brothers Shri K. S. Dilipsinhji, Member (Technical) and Shri K. Gopal Hegde, Member (Judicial). President of the Tribunal under Section 129 C (5) of the Customs Act, 1962 (hereinafter called the Act) has referred the matter to me for hearing on points of difference.
2. The facts of the case have been narrated extensively in the opinion of brother Shri K. Gopal Hegde which have been accepted by brother Shri K.S. Dilipsinhji in his opinion. The facts would, however be, referred to wherever necessary, although they need not be repeated here.
3. The following points of difference have been referred to me for my opinion:
(i) Whether the Addl. Collector's order of absolute confiscation of silver is unjustified and unwarranted and the confiscated silver should be permitted to be redeemed on payment of a fine of Rs. 2,95,368 as held by Member (J) or whether the Addl. Collector's order of absolute confiscation is valid and proper and should be confirmed as held by Member (T)?
(ii) Whether in the facts and circumstances of the case, the penalty of Rs. 20,000 levied on M/s. Shah Champaklal and Balubhai should be reduced to Rs. 1,000 as held by Member (J) or whether the same should be maintained as held by Member (Technical)?
(iii) Whether in the facts and circumstances of the case, the penalty of Rs. 1,000 each on Shri Arun Kumar Champaklal Chokshi and Atulkumar Balubhai Chokshi is improper and unwarranted and therefore, [should be] set aside as held by Member (J) or is legal and justified and should be confirmed as held by Member (Technical)?
4. In considering the first question brother Hegde has discussed as follows:--
Silver as such is not a prohibited goods. The restriction contained in Chapter IV-B of the Act is to prevent illegal export of specified goods. The acquisition of silver by the firm M/s. Shah Champaklal and Balubhai is a legal acquisition. The contravention committed by them is in not making an entry in the register and the transport voucher being not. in accordance with the Rules. Though under Section 113(1) the silver is liable to confiscation for the contravention of provisions of Chapter IV-B, having regard to the nature of the contraventions we are of the view that absolute confiscation was unjustified. The Collector ordered absolute confiscation because of his finding that the silver was brought near the coast of India for the purpose of being exported but then we had held that that finding of the Collector was not warranted from the facts established in the case. We, therefore, set aside the absolute confiscation of the seized silver. We direct the release of the silver on payment of fine of Rs. 2,95,368 which was the market value at the time of seizure.
5. On the other hand brother Shri K.S. Dilipsinhji has stated that "Brother Hegde has been guided by his own observation that silver as such is not prohibited goods. This is in stark contrast with the Addl. Collector's finding. The Addl. Collector has held that the export of silver is banned under the Exports (Control) Order, 1977 and hence he has not given any option to redeem the confiscated silver in terms of Section 125 of the Customs Act. I observe that the Addl. Collector's findings are quite legal." Accordingly brother Dilipsinhji has held that the Addl. Collector's order of absolute confiscation of the silver bars is correct. The learned Member (Technical) has also endorsed the Additional Collector's findings that the two appellants, namely, M/s. Shah Champaklal & Balubhai and M/s. Champaklal Nagindas Jariwala had come to the adverse notice of customs authorities in Surat and they were known to be indulging in smuggling of silver outside the country. He has also referred to a case of seizure of silver against the appellants herein by the Customs authorities which became the subject-matter of appeal to the Tribunal vide CD(T) (Bom) 314/80. Learned Member (Technical) has, therefore, held that the Addl. Collector relying on the past conduct of the appellants has rightly confiscated the silver absolutely. He has also hinted at the bonanza being reaped by the appellants if the silver was allowed to be redeemed against redemption fine of Rs. 2,95,368 as against the present market value of Rs. 14,54,960 approximately.
6. Learned advocate for the appellant (M/s. Shah Champaklal and Balubhai) Shri M.G. Karmali (with Shri H. D. Mehta, Advocate) has made the following submissions which are dealt with seriatim:
The seizure of silver took place on 4-2-1974. Silver was under ban so far as exports were concerned from 3-1-1969 to 18-2-1974. Ban was thereafter lifted on 19-2-1974. Ban on export of silver has again been reintroduced on 20-2-1979. On the date of passing of the adjudication order by the learned Addl. Collector, i.e, on 18-8-1975, there was no ban on export of silver and, therefore, the learned adjudicating authority was duty-bound in terms of Section 125 of the Customs Act to allow redemption of the goods on payment of fine. In support of his proposition he has relied on an unreported judgment of Bombay High Court (copy given in the course of heariug) in criminal revision application No. 1046 of 67 filed by the State v. Laxman Anant Kolvekar. In that case a higher punishment had been provided under the erstwhile Gold Control Rules. The proceedings for prosecution had also been launched under the Gold Control Rules. In the meantime Gold (Control) Act, 1968 had been enforced and in terms of Section 85 there was a provision for lesser punishment. The Hon'ble Court held that the accused was entitled to the lesser punishment as provided under the Gold (Control) Act, when the prosecution proceedings was finalised. I have gone through the order produced by the learned Counsel for the appellants. I do not think that any reliance can be placed on that order for the proposition put forward by the learned Counsel, inasmuch as Gold (Control) Act provided a saving clause for the action taken under the Gold Control Rules and it was also provided in the said saving clause (Section 116) that any action taken under the Gold Control Rules in so far as it is not consistent with the provisions of this Act, such action shall be deemed to have been taken under the Gold Control Act. Such a situation does not prevail in the instant case. The goods were prohibited as on 4-2-1974 when the seizure was made on the appellants' own admission during the course of hearing before me.
7. Learned Counsel has further pleaded that both the learned Members, viz., Member (Technical) and Member (Judicial) have already agreed that the silver was not liable to confiscation under Section 113(c) of the Customs Act. It was this liability of silver which compelled the Addl. Collector of Customs to absolutely confiscate the goods. Once this liability is taken away, as has been held by both the learned Members, there is no ground for absolutely confiscating the goods, particularly when the silver had been received from Varanasi under a valid transport voucher which has also been upheld by both the learned Members brothers Hegde and Dilipsinhji. Learned Counsel has also further stated that non-prohibition of silver is not the only ground given by learned Member (Judicial) for releasing silver on payment of fine in lieu of confiscation. He has also stated that non-entry of silver in the account book despite a genuine voucher by the appellants should not lead to the harsh penalty of absolute confiscation of silver, as has been held in a number of decisions of the Tribunal. In particular, he mentioned a decision dated 6-3-1984 in the case of Jugraj Kantilal & Co. v. Collector of Customs, Bombay [GC(T)(Bom) A. No. 20 of 79]. He has also relied on order No. S/14-5-13/69 Pint, dated 25-2-1971 of Addl. Collector of Customs in the case of seizure of 74 silver bars valued at about Rs. 10 lakhs from M/s. Nainmal Champlal & Co., Bombay, wherein provisions of chapter IV-B (Section 11J) were held to have been contravened and an option to redeem the silver on payment of fine in lieu of confiscation was allowed, despite the fact that silver was seized on 13-4-1969 when Chapter IV-B had been introduced a few months earlier in the Customs Act. I am inclined to agree with the plea of the learned advocate for the appellants that absolute confiscation of silver is not justified on the peculiar facts and circumstances of this case, inasmuch as the silver was duly received by the appellants under a valid transport voucher from Varanasi and which voucher had been duly countersigned by the Superintendent of Central Excise, Varanasi. In view of this fact, it cannot be urged that the appellant could have any mala fides to export the silver illegally. This is further supported by the fact that the appellants' representative had made a transport voucher while transporting the silver to M/s. Champaklal Nagindas Jariwala and that voucher had been duly acknowledged in ink by the representative of the said firm.
8. One of the other grounds, namely, allowing redemption of silver on payment of 100% fine equivalent to the value of silver on the date of seizure would lead to a bonanza to the appellants, cited by learned Member (Technical) in support of his finding for absolute confiscation, to my mind, with great respect, is not quite relevant to the issue. It is not the fault of the appellants if the proceedings take a long time in coming to a finality. Redemption fine, permissible under the law or under the facts and circumstances of the case, must relate to the value of the goods on the date of seizure.
9. Another ground urged for absolute confiscation is that the appellants' conduct in the past had been shady' and in that connection appeal before the Tribunal vide CD(T) (Bom) 314/80 has been cited. Learned advocate has given a copy of the order dated 24-4-1986 of the Tribunal in that case under which the appellants have been totally exonerated. Keeping this final decision in view, this ground urged by the learned Brother Dilipsinhji no longer holds good. Accordingly, on the basis of facts and circumstances of this case, I hold that the Addl. Collector's order of absolute confiscation of silver is unjustified and unwarranted and the confiscated silver should be permitted to be redeemed on payment of a fine of Rs. 2,95,368 as held by Member (Judicial) (Shri K. Gopal Hegde).
10. Having regard to my findings on facts and circumstances of the case regarding redemption of silver on payment of fine in lieu of confiscation, I also agree with Member (Judicial) regarding reduction of penalty from Rs. 20,000 to Rs. 1,000 on M/s. Shah Champaklal & Balubhai.
11. As regards point No. 3, the learned advocate appearing for the two appellants, namely, Arun Kumar Champaklal and Atul Kumar Balubhai, has made sincere attempts to show that the action of both Arun Kumar Champaklal and Atul Kumar Balubhai in not making proper entries in the register or not transporting the goods under a valid transport voucher was under extremely accentuating circumstances. While that may be so, but I also observe that they have committed acts or omitted to do acts and rendered the goods liable to confiscation as discussed hereinafter. The token penalty of Rs. 1,000 on each of them, therefore, is not unjustified. I am inclined to agree with learned Member (Technical) on this point. He has righty held the aforesaid two persons were in the business premises, had accepted the silver on behalf of the receiver and issued the voucher in delible pencil, arranged to transport the silver from the premises of M/s. Shah Champaklal & Balubhai to the premises of M/s. Champaklal Nagindas Jariwala. The acts on behalf of the firm M/s. Shah Champaklal & Balubhai amounted to contravention of chapter IV-B making them liable to penalty in terms of Section 114 of the Act inasmuch as these two persons have committed acts or omitted to do acts in terms of that section which rendered the goods liable to confiscation under Section 113. Only reason given by learned brother Shri Hegde for not imposing penalty on M/s. Shri Atul Kumar Balubhai and Arun Kumar Champaklal is they are neither the partners nor the employees of the firm, and therefore they are not obliged to make any entries in the register or to prepare vouchers. I observe that while they may not be either partners or employees of the firm, they have undertaken work on behalf of the firm M/s. Shah Champaklal & Balubhai, as pointed out by the learned Member (Technical) and therefore they are to be treated as persons concerned in rendering the goods liable to confiscation under Section 113 and, therefore, liable to penalty under Section 114.
31-7-1987 Final Order By the Bench The points of difference between the 2 Members of this Bench were referred by the President to the third Member Shri P. C. Jain who has since recorded his findings. In terms of the provisions of Section 129-C(5), the joint appeal of M/s. Shah Champaklal & Balubhai and others is to be decided on the basis of majority opinion wherever there were differences of opinion. In terms of the provisions of Sections 129-B and 129-C the Addl. Collector's order of confiscation of the silver bars under Section 113(c) of the Customs Act is set aside. Insofar as his order of confiscation of the silver under Section 113(1) of the Customs Act is concerned, the same is upheld. But the absolute confiscation of the silver bars is set aside and the confiscated silver is permitted to be redeemed on payment of a fine of Rs. 2,95, 368 (Rupees two lakhs ninty five thousand three hundred and sixty eight only). The Addl. Collector's order of levy of penalty of Rs. 20,000 on M/s. Shah Champaklal & Balubhai is modified and the amount of penalty is reduced to Rs. 1,000 (Rupees one thousand). His order of imposition of the penalty of Rs. 10,000 on Shri Champaklal Punjaji Shah under Section 114 is set aside. Similarly the Addl. Collector's order of levy of penalty of Rs. 1,000 on Shri Madhusudan Vaidya under Section 114 is also set aside. However, his orders of levy of penalty of Rs. 1,000 each on Shri Arun Kumar Champaklal Chokshi and Shri Atul Kumar Balubhai Chokshi under Section 114 of the Customs Act are upheld.
The common appeal of the aforesaid appellants is disposed of accordingly.