Customs, Excise and Gold Tribunal - Mumbai
Abdullabin Ibrahim Arab vs Collector Of Customs (Prev.) on 25 July, 1991
Equivalent citations: 1992(41)ECR626(TRI.-MUMBAI)
ORDER P.K. Desai, Member (J)
1. The appeal is directed against the order-in-original No. 74/Addl Collr/1983 dated 18.1.1984 ordering absolute confiscation of 10,394 silver coins weighing 124.186 kgs. vide Section 113(c)(1) of the Customs Act, and also imposing personal penalty of Rs. 25,000/- vide Section 114 of the Act, on the appellant.
2. On the information received and under a search warrant issued by the Assistant Collector of Customs, Bhuj, the residential premises of the appellant were searched by the officers of the Customs Department on 30.3.1983, during which the officers recovered 10,394 pieces of silver coins totally weighing 124.186 kgs by digging up the bottom of one cupboard fixed in the wall of a room. The appellant expressed his inability to produce any documents in relation to the said coins, and in his statement, recorded under Section 108 of the Customs Act on 31.3.1983, stated that he himself was unaware of existence of those coins and knew only, when the customs officers found them out with the help of the metal detector and added that his father who died about 12 years back might have kept them under the bottom of cupboard in the wall of the house, and being unaware of the same, declaration thereof was not made. In his further statement recorded on 18.4.1983, the appellant stated that his father was bedridden since 1960, and died in 1971, and that before that he was shirestedar in the office of the Police Commissioner in the native State of Kutch. He also stated that the subject house was purchased ready built by his father and no alterations were made therein, and that he could not tell, since when those coins were lying imbedded in the bottom of the cupboard. He also stated that the cloth of the bags in which the coins were kept, had got rotten and in torn condition and coins had also got jammed with each other, and as such it could not be known whether the coins were kept by his father or by someone, at any earlier lime.
3. Show cause notice dt 12.9.1983, however came to be issued to the appellant calling upon him to show cause why the coins should not be confiscated vide Section 113(c) and 113(1) of the Customs Act, and also why penalty vide Section 114 should not be imposed. It was alleged that the silver coins were notified as specified goods under Section 11-H (e) and 11-I of the Chapter IV-B of the Customs Act, and that the inland area of 50 KM from the Coast of India, was declared as specified area, and the appellant had contravened the provisions of Sees 11-J, 11-K, 11-L & 11-M of the Act. The appellant, in reply to the said notice, reiterated the stand taken in his statement, and further pleaded that city of Bhuj, where his residential premises are situated, was not within the 50 KM periphery of Indian Coast and as such the same was not the specified area.
4. The adjudicating authority, recording that on the adjourned date for personal hearing, none appeared for making any submission, has adjudicated the matter on the record available with him, and has concluded that vide clarification given in Public Notice No. 3/1969 dt 10.1.1969 city of Bhuj is taken as falling within the specified area. Negativing the appellants' plea of his having no knowledge, the adjudicating authority has held that the very plea of the appellant that the information was given by some member of his family, indicated that the family knew about the same, and that the fact that the coins were concealed in the cavity, led to show that they were not ignorant.
5. Mr. H.N. Dhalokia, the Ld Advocate for the appellant pleaded that the coins recovered were the currency of the erstwhile State of Kutch and was in vogue till the merger of the State in Union of India in 1948, and that with no banking facilities then available, it was customary to store the wealth by concealment within the wall by making cavities. He also submitted that it was only with the help of metal detector that the place of concealment of coins was located, and that the bottom of the cupboard in the wall had to be dug to bring out the coins. He pleaded that the condition of coins and the container clearly indicated that they must have been buried within the floor of the cupboard and in the wall much earlier, and were not easily detectable. In his submission, the appellant has a small cutlery business, and has never indulged into any nefarious activity of smuggling. He submitted that because of on going family disputes, some members of the family might have given a tip off to the customs officers, under the assumption that because the father of the appellant was an influential person in the Police Commissioner's office, he must have amassed money and must have secreted them somewhere. He pleaded that the appellant, having had no knowledge, had no mens rea to violate the statutory provision and that mens rea was an essential ingredient to be proved before imposition of penalty, and for that purpose, he placed reliance on CEGAT NRB decision in M/s Merck Spares v. Collector of Central Excise 1983 ECR 1473D (CEGAT). In support of his contention that the existence of knowledge was essential, the Ld Adv relied upon this Bench decision is M/s Kantilal Nanalal Kansara v. Gold Control Administration 1983 ECR 1212D (Cegat) and on some observations of the Supreme Court in Ambalal v. Union of India 1083 ECR 1935D (SC) : ECR C Cus 118 SC.
6. Mr. B.P. Singh, the Ld JDR, however, while supporting the order of the authority below, pleaded that here was a clear case of possession of silver coins, a specified item, within the specified area, without compliance of statutory requirements laid down in Ch. IV-B of the Customs Act.
7. The factual aspect of finding of the silver coins, their weight and value are undisputed. It is duly pleaded and even otherwise, a judicial note can be drawn that "Kori" was the currency in the erstwhile State of Kutch and "Panchia", are the coins of "Five Kori". Note can also be taken as it is a matter of record of the Indian Government that "Kori" remained a valid currency till 1948 in that region.
8. Considering first the averments made in the show cause notice, though the reference is made to Section 11-J, 11-K, 11L and 11M of the Customs Act, the allegation levelled against the appellant, reads thus:
It appears in the present case, the goods seized were in the form of silver coins and Bhuj (Kutch) falls within the specified area as stated above and Abdullabin Ibrahim Arab appear to have not observed the provisions of Chapter IV-B of the Customs Act, 1962 as detailed above.
As such, there is no mention as to which specific provision of law, has been violated or not complied with. However, considering the factual averments made in the show cause notice, the harp is on violations of the provisions of Section 11J. Section 11K pertains to transport of specified goods under cover of a voucher. Section 11-L provides for maintenance of account for the transactions in specified goods, and Section 11M deals with steps to be taken by the person selling or transferring the specified goods. Thus those Sections, namely Sees 11K, 11L and 11M obviously did not get attracted.
9. Vide Section 11J of the Act, declaration is to be made by the person who "owns" possesses or controls or even "acquires" the specified goods and though the word "knowingly" or any allied word is not used, the same has to be implied as only conscious ownership, possession, control or acquisition could enable the person to make contemplated declaration. A person who himself has no knowledge about the same, obviously cannot make any such declaration.
10. It has to be therefore examined as to whether the appellant knowingly possessed the specified goods. In other words, whether ownership/possession was conscious. The appellant has, right from the initial stage, been declaring that he did not know about the concealment of the silver coins and knew about it only when the officers of the Customs detected. The officers searching also could not detect them by a mere search but had to use metal detector. The coins were buried in the wall below the bottom of the cupboard fixed in the wall, where a special cavity existed. The top of the cavity was not such which could be opened, as the panchnama mentions that digging had to be done. The panchnama is silent on the issue, whether the covering over the cavity was fresh or made within a reasonable past. The bags in which the coins were kept, also appeared old, rotten and in torn condition. The coins, as stated by the appellants, in his statement had also got stuck up with each other. It is also significant to note that the coins found were valid currency in the erstwhile State of Kutch till its merger in Union of India in 1948. Unfortunately the investigating authority has not specified, the year of minting of those coins, as impressed on those coins. This could have shown how old they were, system of storaging of wealth by imbedding them within a wall, so as to avoid detection, has to be recognised as existing in India, and plea that these coins might have been so concealed by either the father of the appellant or the prior occupant cannot be brushed aside. Under the circumstances the plea of the appellant that he himself was not aware of the coins and as such had no conscious possession, cannot be rejected as just an afterthought.
11. The adjudicating authority has laid much stress on the say of the appellant, that some of his relative might have given a tip, to infer that such a tip off could be possible only if possession of silver coins was known. The adjudicating authority, however, does not seem to have examined what the information given gathered by the department was. It is true that the information received is treated as confidential. However, what is to be treated as confidential is the source of information and the name of the informant and not that the actual information received be also treated as confidential. When the adjudicating authority has not examined the information received, drawing of an inference imputing knowledge, merely on the suspicion shown by the appellant, is therefore unwarranted.
12. The appellant has, in his statement dt 31.3.1982, stated that he was admitting act of contravention of provisions of the Customs Act Such a statement, however, has to be read in conjunction with other part of the statement Though admitting that breach of the provisions of Customs Act is committed, the appellant has, at all the times, and even while accepting the contravention, maintained that he was unaware of existence of the coins. The statement accepting the breach, under the circumstances, cannot be taken as an admission or confession on his part.
13. The department, on whom the burden of proof lies, has merely relied upon the factual position and the plea raised by the appellant in his defence, but has not adduced any other evidence, to establish conscious ownership/possession of the appellant.
14. When the department has failed to adduce any positive evidence of the appellant having consciously possessed the silver coins and having violated the statutory provisions of Section 11J of the Customs Act, and when the theory raised in defence that appellant was unaware of the existence of concealed coins in his premises gains support from the circumstances surrounding search and seizure, the benefit thereof has to go to the appellant, and as such the personal penalty imposed on the appellant vide Section 114 of the Customs Act cannot be sustained.
15. The question that then requires to be examined is whether confiscation of the seized silver coins is justified. Both, the show cause notice and the final order invoke the provisions of Section 113(c) and 113(1) of the Customs Act for confiscating the seized coins. Section 113(c) makes the goods "brought near land frontier or Coast of India" and "for the purpose of being exported", liable to confiscation. For the purpose of ordering confiscation under this provision, therefore, two ingredients are required to be proved (1) the goods are brought and (2) purpose of such bringing is to unauthorisedly export. The appellant is native of Kutch and resides in Bhuj. The coins are found concealed in his house, and there is no evidence that they were brought from outside for the purpose of export. The coins seized were valid currency in the erstwhile State of Kutch till 1948, and finding of such currency from within the Kutch region cannot provide an adequate data to presume that they were brought from outside, and that they were meant to be exported. Presumption and shifting the burden on the otherside, available vide Section 123 of the Act is restricted only to the goods imported, as the very wordings of the said section suggest. In that case, the burden to prove contravention and liability of seized coins to confiscation vide Section 113(c) being on the department, and the department having failed to discharge the same, and even when the circumstances indicate otherwise, the confiscation ordered vide Section 113(c) of the Customs Act, cannot be sustained.
16. The other provision invoked for ordering confiscation is Section 113(I) of the Act which relates to contravention of the provisions contained in Ch. IV-B of the Act. The provisions of Ch. IV-B of the Act go with the individual and not with the commodity. To clarify, they do not make the existence of any specified goods within the specified area per se illegal, but put restrictions and impose conditions on the person owning, possessing or acquiring specified goods within specified area, and violations of such conditions makes the specified goods liable to confiscation vide Section 113(1) of the Act, and the persons violating the provisions, to penalty vide Section 114 of the Act. Here, as discussed hereinabove, the appellant cannot be held to have contravened the provisions of Section 11-J, and as observed earlier, provision of Section 11-K, 11-L and 11M cannot, in the set of circumstances, be invoked. In that view of the matter, confiscation of coins ordered vide Section 113(I) of the Act can also not be sustained.
17. Be it mentioned here that Section 11J of the Act deals with not only owning, possessing or controlling of the specified goods, but also provides for declaration and intimation on acquisition of the same, before its acquisition. Here, however, conscious acquisition of the seized coins is only at the time when the departmental officers dug them out. He however did not have any opportunity to intimate beforehand. Further, immediately the proceedings were initiated against the appellant, leaving no time for him to give any declaration. Thus, it can also not be alleged that the appellant had, in any case, contravened the provisions of Sub-Sec (2) of the Section 11J of the Act.
18. Now that the order of confiscation is being held as not sustainable, the appellant may comply with the statutory formalities meant for acquisition, and the department shall not object to the same, for alleging time lag, as the coins were till now, involved in proceedings against the appellant and the issue was sub-judice.
19. It is also significant to note that, as per the averment in the panchnama drawn at the time of seizure, the seizure was under the reasonable belief of the coins were the smuggled goods i.e. they were clandestinely brought into India. The show cause notice and the adjudication proceedings have however progressed on entirely different grounds. For what is discussed above, however, consideration of this point becomes redundant.
20. Similarly, the issue whether the city of Bhuj falls within the specified area, too becomes redundant. The appellant has, without challenge, pleaded that the location of Bhuj is not within periphery of 50 kms. from any Indian Coast. Adjudicating authority has however stated that by virtue of Public Notice No. 3/1969 dt 18.1.1969 Bhuj is also included in specified area. The question, whether, an area could be declared as a specified area by a Public Notice, when Section 11H, Clause (c), requires issuance of a notification in the instant case becomes unnecessary to be answered, as, in view of our findings as hereinabove, the order even otherwise not sustainable. We may however add that such a Public Notice by itself cannot enlarge the specified area.
21. Under the circumstances discussed above, the appeal has to be allowed.
22. Before parting however, we observe that the decision given is in relations of the allegations levelled in the show cause notice, and there could be no bar in initiating proceedings, under any other provisions of any contemporaneous legislations.
23. In the result, we allow the appeal and set aside the order of adjudicating authority both in relation to confiscation and imposition of penalty. Consequential reliefs to follow.
Sd/- (P.K. Desai) Member (Judicial) R. Jayaraman, Member (T)
24. While agreeing with the learned Brother, Shri P.K. Desai that the proceedings under the Customs Act resulting in confiscation of the silver coins and imposition of the penalty on the appellant cannot be legally sustainable under the provisions of the Customs Act, it is necessary for me to record a separate note on the question of release of the silver coins to the appellant taking into account the stand taken before us as well as before the adjudicating authority by the appellant. The appellant stated that the silver coins might have been kept by his father, of which he was not aware. He also stated that the subject house was purchased ready built by his father and no alterations were made therein, and that he could not tell, since how long the coins were lying underneath the cupboard. He came to know of the existence of the silver coins only when the Customs officers found them out with the help of the metal detector. Going by this version it is quite probable that the coins might have been buried, since long, even before the purchase of the house by his father. Hence, the ownership of the coins seized is not found to have been clearly established. Under Section 125 of the Customs Act, where the goods ordered confiscation are to be released on payment of redemption fine, that can be done by giving option to the owner of the goods. In this case, even if it is held that confiscation under the Customs Act may not be legally sustainable, release of the coins to the appellant, treating him as the owner, calls for further satisfactory and acceptable evidences. From the averment made by the appellant, he is not even sure, whether his deceased father had kept them and he has acquired them by way of inheritance. Apart from that it is also not clear that, whether the coins recovered would attract the provisions of Treasure Trove Act/Income Tax Act. Though my Ld. Brother has referred to this position in para 23 of the order recorded by him, it is necessary for me to put it succinctly that release of the coins would depend on these circumstances. However, in so far as the penalty is concerned, the position is clear that the appellant cannot be imposed with penalty. Thus holding the confiscation of the coins under the Customs Act is not legally sustainable, the Department is at liberty to deal with the disposal of the coins recovered, in the light of the aforesaid observations.