Gujarat High Court
Maganlal Gulabchand Shah vs Union Of India And Ors. on 31 July, 1991
Equivalent citations: 1997(57)ECC75, 1992(59)ELT235(GUJ), (1992)2GLR116, (1992)2GLR920
Author: M.B. Shah
Bench: M.B. Shah
JUDGMENT M.B. Shah, J.
1. The Petitioner has challenged the order dated 31st January, 1981 (Annexure "G") passed by the Central Board of Excise & Customs in the custom appeal filed by the petitioner. In the said appeal the petitioner has challenged the order dated 30th September, 1980 passed by the Collector, Customs & Central Excise, Ahmedabad, u/s. 167(8) of the Sea Customs Act, 1878, whereby he has ordered to confiscate 30 gold bars with foreign markings weighing 300 tolas valued at Rs. 28,000/- as described in the panchnama dated 8th February, 1956.
2. Before dealing with the contentions of the petitioner, it would be necessary to narrate some facts pertaining to seizure of the gold from the petitioner and the subsequent proceedings. On 8th February, 1956 the petitioner alighted from a train at Navagadh Railway Station (Jetpur), Dist. Rajkot as P.S.I. Dada had received information that the petitioner was to bring gold, he waited at the railway station and after the petitioner alighted from the train, he got into the horse-carriage in which the petitioner sat along with his luggage. When they reached at the second Octroi Naka, the P.S.I. searched the baggage of the petitioner in the presence of panchas. It is alleged that before the P.S.I. started search, the petitioner tried to escape leaving the luggage in the horse-carriage. However, he was stopped by the police officers and the search of his person as well as baggage was taken in presence of two panchas named as Hemantsing Ramsing Garasia and Haridas Bomaji Lohana, 30 gold bars were found bearing the markings "N.M. Hotschild & Sons (RMR) 10 Tolas No. 999.0." It was valued at Rs. 28,000/-. Ultimately the police handed over the case-papers and muddamal gold bars to the Superintendent of Central Excise & Customs, Junagadh. The Superintendent of Central Excise & Customs, Junagadh, recorded the petitioner's statement on 22nd February, 1986. In the said statement the petitioner admitted that he came from Bombay on 8th February, 1986 and got down at Navagadh Station and the P.S.I. had taken search of his person and baggage. He also admitted the recovery of 30 bars of gold with the marks from his possession by the P.S.I., Jetpur in the presence of panchas with a clarification that he had not read the marks, therefore, he was not in a position to state exactly the marks on the said bars. He however, stated that the bars were having bank marks. He stated that he had purchased the said gold from Bombay but he was not having bill for its purchase. However, he stated that the vendor had promised to send the bill subsequently.
3. Thereafter on 24th April, 1956 a show cause notice was issued by the Collector of Customs & Central Excise, Baroda, asking the petitioner to show cause why 300 tolas of gold should not be confiscated under section 167(8) of the Sea Customs Act and further to show cause why penalty should not be imposed for the contravention of the provisions mentioned therein. In reply to the show cause notice the petitioner submitted his reply on 20th June, 1956 wherein he admitted that he came to Jetpur from Bombay on 8th February, 1956; from his possession 300 tolas of gold were seized by the P.S.I., Jetpur after taking search of his baggage at the Octroi Naka, Jetpur. He denied that it was imported by him and that he had no knowledge that it was smuggled gold. He stated that his father's firm known as "Gulabchand Valji" had dealings with the firm M/s. Kantilal Nanchand & Co., Mumbadevi Road, Bombay, in forward gold and silver. He wanted to invest his small capital in some commodity with a view to make some profits. Therefore, he purchased the gold by paying Rs. 28,000/- in cash in expectation that the price of the commodity may go up from Kantilal Nanchand of Bombay. He further admitted that because of the search by P.S.I. he was confused and made a statement to the police by giving the wrong name of Vrajlal as the person who sold him the gold. He admitted that he had no Ankda, bill or voucher for the purchase of gold seized from him. He sent his brother Mansukhlal to Bombay to get necessary Ankda on the next day from M/s. Kantilal Nanchand & Co. but his efforts failed. He himself went to Bombay and requested the aforesaid Kantilal to give him the necessary Ankda. He wrote letters from time to time to M/s. Kantilal Nanchand & Co. but without any avail. Subsequently he wrote a registered letter to M/s. Kantilal Nanchand & Co. on 12th April, 1956 by stating that they had cheated him in passing off smuggled gold bars. After giving an opportunity of personal hearing to the petitioner, the Collector of Central Excise, Baroda, passed the adjudication order on 7.9.1956 confiscating 300 tolas of gold bars under Section 167(8) of the Sea Customs Act. However, no penalty was imposed on him under the said section.
4. Subsequently the petitioner filed Special Civil Application No. 1/60 before the Civil Judge (S.D.) Gondal, Dist. Rajkot, for the declaration that the order passed by the Collector, Customs, was illegal null and void as it was based upon no evidence.
5. The Trial Court decreed the suit filed by the petitioner and directed the respondents to return 30 bars of gold or its price, viz. Rs. 35,100/- with interest at 4% from the date of the suit in realisation.
6. That judgment and decree was challenged by the respondents by filing First Appeal No. 584/64. By the judgment and order dated 6/8th November, 1971 the Division Bench of this Court partly allowed the said appeal. The decree passed by the Trial Court with regard to return of gold bars in question or in the alternative payment of amount of Rs. 35,100/- with interest was set aside. It was declared that the order dated September 7, 1956 confiscating the gold bars in question was nullity with a further direction that it would be open for the Customs Authority to adjudge afresh on the question of confiscation of these gold bars, unless they decide to return the gold bars without any enquiry. The judgment and order passed by this Court is produced at Annexure "C" to the petition.
7. It seems that as no further section was taken by the respondents for sometime, the petitioner filed Miscellaneous Civil Application No. 119/80 before this Court for Contempt of Court committed breach of the undertaking given by the respondents by giving assurance. It was also prayed that appropriate order be passed directing the respondents to purge themselves of the contempt committed by them by returning 30 gold bars which were lying with the respondents or to give the present market value thereof to the petitioner at the time of hearing of the matter, learned Standing Counsel appearing for the respondents stated that adjudication will be completed within four months from the date of the order and that reasonable opportunity will be given to the petitioner of leading evidence in adjudication proceedings.
8. In view of the aforesaid statement the Court disposed the Miscellaneous Civil Application and discharged the notice.
9. Thereafter a memorandum was issued to the petitioner on 7th April, 1980 by the Collector of Customs stating that the Collector of Customs & Central Excise will consider the case de novo in pursuance of the proceedings started with the show cause notice issued on 26th April, 1956. The petitioner was asked to tender his reply if he desired and to state whether he wished to be heard in person. In pursuance of the said memorandum the petitioner sent his detailed reply dated 27th August, 1980.
10. After considering the reply tendered by the petitioner and after giving an opportunity of hearing to the petitioner, Collector, Customs & Central Excise, Ahmedabad, inter alia arrived at the following conclusions :
(1) 30 bars of gold, viz. 300 tolas were seized by the Police Sub-Inspector, Jetpur, from the possession of the petitioner on 8th February, 1956. This is not disputed by the petitioner.
(2) These 30 gold bars bore foreign markings "N. M. Hotschild & Sons (RMR) 10 Tolas No. 999.0." For this he has placed reliance on the panchnama dated 8th February, 1956 and the evidence of panch Haridas Somaji Lohana who was cross-examined by the learned Advocate of the petitioner. Even in 1980, i.e., after a lapse of 24 years the panch has stated that the panchnama was correctly recorded as per the events that took place in his presence.
(3) It is not the case of the petitioner that he was having any permission from the Reserve Bank of India to import the said gold as per Foreign Exchange Regulation Act, 1947.
(4) The petitioner has falsely stated that he has purchased the said gold from Varjlal. Thereafter he stated that he purchased the said gold from Kantilal Nanchand of M/s. Kantilal Nanchand & Co. of Bombay.
(5) He was not having any bill, voucher of chit (Ankda) for the purchase of the said gold from Kantilal Nanchand. Kantilal Nanchand has denied that he has sold the said gold to the petitioner.
(6) Kantilal Nanchand in his statement dated 25th October, 1956 had stated that he had not received Rs. 28,000/- from the petitioner for sale of the said gold and there is no entry in his rojmal with regard to Rs. 28,000/- either on 7th February, 1956 or on 8th February, 1956.
(7) In the registered letter written to M/s. Kantilal Nanchand & Co., of Bombay on 10th April, 1956 it was alleged by the petitioner that he was cheated by Kantilal Nanchand in passing off smuggled gold.
By taking into consideration the aforesaid circumstances he held that it was conclusively proved that 30 gold bars seized from the petitioner were doubtless smuggled gold and were liable to confiscation under Section 167(8) of the Sea Customs Act, 1878. He also further arrived at the conclusion that the petitioner was found connected with dealing in smuggled gold and that even after his import he dealt with it with the knowledge that it was smuggled gold and that he was not an innocent purchaser. For this purpose he relied upon the conduct of the petitioner to run away when the Police Sub-Inspector, Jetpur, attempted to search the luggage of the petitioner and that the petitioner gave false name of the person who sold him the gold, i.e., he gave the name of Vrajlal to the Police Sub-Inspector with a view to misdirect the investigation. He finally passed an order of confiscation of 30 gold bars but he was not imposed any penalty. That order was confirmed in appeal.
11. The learned Advocate General appearing for the petitioner vehemently submitted that -
(1) The order passed by the Collector, Customs & Central Excise, is illegal and perverse as there is no evidence on record to show that the petitioner purchased smuggled gold bars. Before passing the order of confiscation it was the duty of the respondents to prove that gold bars which were seized by the petitioner were smuggled gold bars or that the petitioner purchased them with the knowledge that they were gold bars; and (2) As the memorandum or the show-cause notice was issued on 7th May, 1980, i.e., after nearly 9 years from the date of the judgment and decree passed by the Court, the proceedings initiated by the respondents are initiated beyond reasonable time and therefore they are nullity.
12. In our view, both these submissions are without any substance. It should be noted that under Article 226 of the Constitution this Court is not exercising appellate jurisdiction over the orders passed by the Customs Authority under the provisions of the Customs or under the provisions of the Sea Customs Act, 1878. This Court's jurisdiction under Article 226 is limited and unless the order passed by the authority below is illegal, perverse or devoid of common sense or contrary to rules of natural justice, the Court would not interfere with the said order. Further, in our view, it is not necessary to discuss in detail the judgments relied upon by the learned Counsel for the petitioner in this case because all those cases are considered by the Supreme Court in detail in the case of Collector, Customs. v. B. Bhoormull AIR 1974 Supreme Court 859.
13. In that case the Court has observed that smuggling is clandestine conveying of goods to avoid legal duties, secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts in cast on the person concerned; an adverse inference of facts may arise against him. With regard to Section 167(8) of the Sea Customs Act the Court observed that it is enough if the Department furnished prima facie proof of the goods being smuggled stocks. The Court clarified that with regard to imposition of the penalty under the said provision, the Department has to prove that the person proceeded against was concerned in the smuggling. The relevant observations of the Court are as under :
"Smuggling is clandestine conveying of goods to avoid legal duties, secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish or explain those facts is cast on the person concerned; and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebute the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in Law of Evidence (12th Edn. Article 320 page 291), the "presumption of innocence is, no doubt, presumptio juris; but every day's practice shows that it may be successfully encounted by the presumption or guilt arising from the recent (unexplained) possession of stolen property," though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may suffice.
Another point to be noted is that the incidence, extent and nature of the burden of proof for proceedings for confiscation under the first part of the entry in the 3rd column of Clause (8) of Section 167, may not be the same as in proceedings when the imposition of the other kind of penalty under the second part of the entry is contemplated. We have already alluded to this aspect of the matter. It will be sufficient to reiterate that the penalty of confiscation is a penalty in rem which is enforced against the goods and the second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In the case of the former, therefore, it is not necessary for the Customs Authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough if the Department furnished prima facie proof of the goods being smuggled stocks. In the case of the latter penalty, the Department has to prove further that the person proceeded against was concerned in the smuggling."
Before making the aforesaid observations even with regard to burden in criminal prosecution, the Court has observed that the Department is not required to prove its case with mathematical precision to a demonstrable degree, for, in all human affairs absolute certainty is a myth and all exactness is a fake. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue.
14. Keeping the aforesaid principles in view, in our view the circumstances considered by the Collector of Customs & Central Excise in his order dated 30th September, 1980 which are set out by us in the previous paragraph of this judgment, prove that the gold bars which were found from the petitioner were smuggled gold bars. The petitioner has admitted that the said gold bars were seized from his possession. His initial say that he purchased them from Vrajlal was false. His further say that he purchased them from Kantilal Nanchand of M/s. Kantilal Nanchand & Co. is not proved. There is no bill, voucher or chit for his purchase. The petitioner himself had written to Kantilal Nanchand that he had cheated him in passing off smuggled gold. Kantilal Nanchand denies that he had sold the same to the petitioner. Kantilal has also stated that there is no entry in his rojmal to the effect that he received Rs. 28,000/- for the sale of the said gold bars from the petitioner. The petitioner, therefore, has failed to explain their possession. The said gold bars were having foreign markings, viz. "N. M. Hotschild & Sons (RMR) 10 Tolas No. 999.0." There is no reason to disbelieve the say of the panch that when the gold bars were seized, they bore the aforesaid markings. There is, therefore, no reason to disbelieve the facts narrated in the panchnama. From the aforesaid circumstances if the Collector of Customs & Central Excise has drawn an inference that the said gold bars were smuggled gold bars, it cannot be said that his finding is in any way unreasonable or without any evidence. In any set of circumstances, from the aforesaid circumstantial evidence if the inference is drawn by the Collector of Customs & Central Excise that there was enough material to establish that the gold bars were smuggled gold bars, then also it cannot be said that the said finding is without there being any evidence on record which would justify any interference by this Court in exercise of jurisdiction under Article 226 of the Constitution of India.
15. At this stage we may mention that in the aforesaid judgment of the Supreme Court the Court has dealt with the judgment in the case of Ambalal v. Union of India, A.I.R. 1961 S.C. 264, and has held that considering the peculiar facts of that case the Court has decided the matter. The Court further observed that it was not proper to read into the observations of the Supreme Court to the effect "If Section 106 of the Evidence Act is applied, then by analogy the fundamental principles of criminal jurisprudence must be invoked," more than what the context and the peculiar facts of the case demanded. The Court has further observed as under :
"These fundamental principles, shorn of technicalities, as we have discussed earlier, apply only in a broad and pragmatic way to proceedings under Section 167(8) of the Act. The broad effect of the application of the basic principle underlying section 106 of Evidence Act to cases under Section 167(8) of the Act, is that the Department would be deemed to have discharged its burden if it adduces only so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of the facts sought to be proved. Ambalal's case (1961) 1 SCR 933=(AIR 1961 SC 264=1961 (1) Cri (J 326) was a case of no evidence. The only circumstantial evidence, viz., the conduct of Ambalal in making conflicting statements, could not be taken into account because he was never given an opportunity to explain the alleged discrepancies. The status of Ambalal, viz. that he was an immigrant from Pakistan and had come to India in 1947 - before the customs barrier was raised-bringing along with him the goods in question, had greatly strengthened the initial presumption of innocence in his favour. Ambalal's case thus stands on its own facts." In this view of the matter, there is no substance in the first contention of the learned Counsel for the petitioner."
16. It was also contended that there is delay in initiating the proceedings for confiscating the goods. It should be noted that for deciding the said contention it would be necessary to narrate the fact that show-cause notice for adjudication was issued on 24th April, 1956. The Collector of Customs & Central Excise has passed the order on 7th September, 1956 confiscating the gold bars but he has not imposed any penalty under Section 167(8) of the Sea Customs Act. That order was challenged by the petitioner by filing Special Civil Suit in 1960 and thereafter the decree was passed by the Trial Court in favour of the petitioner. Against that order the Department had preferred First Appeal before this Court. That First Appeal was partly allowed and the order of confiscation was set aside with the direction that it would be open to the respondents to adjudge afresh on the question of confiscation of gold bars. It should be noted that the Court has not set aside the show-cause notice issued by the Collector of Customs & Central Excise on 24th April, 1956 but has set aside the final order passed by the Authority confiscating the gold bars for the reasons recorded in the judgment. Therefore, it cannot be said there is any delay in initiation of the proceedings by the Department. Therefore, the reliance placed by the learned Advocate General on the decision of this Court in the case of Ambalal Morarji v. Union of India 13 G.L.R. 117, is of no consequence. The Court in that case held that the whole object of giving notice as laid down in Section 110(2) of the Customs Act and Section 79 of the Gold Control Act is to inform the person concerned of the grounds on which it is proposed to confiscate the goods or to impose a penalty and to give an opportunity to make a representation in writing within such reasonable time as may be specified in the notice and he must be given reasonable opportunity of being heard in the matter. The Court further observed that the said notice must reach the person concerned before the expiry of six months. As stated above, as the notice was given on 24th April, 1956 by the concerned authority, it can be said that this judgment would have no bearing in the present case.
17. Learned Counsel has also relied upon the decision of the Supreme Court in the case of State of Gujarat v. P. Raghav A.I.R. 1969 Supreme Court 1297. In that case the Supreme Court considered Section 211 of the Land Revenue Code alongwith Section 65 and arrived at the conclusion that the revisional authority should exercise its jurisdiction within a reasonable time after grant of permission for building purpose because after the grant of permission the occupant is likely to spend money on starting building operations at least within a few months from the date of the permission. The Court took into consideration the fact that within 3 months of the date of the application the Collector was required to decide whether permission to construct as applied for by the person should be granted or not and that if the Collector has not decided the said application within 3 months, then permission shall be deemed to have been granted as per the provisions of Section 65 of the Bombay Land Revenue Code. In the context of that section the Court interpreted that even though no period of limitation is prescribed under Section 211 of the Bombay Land Revenue Code, the said power must be exercised in a reasonable time and the length of reasonable time must be determined by the facts of the case and the nature of the order which is being revised. In our view, the aforesaid decision has no bearing to the present case because in this case as stated above, the show-cause notice was already issued on 24th April, 1956; the confiscation order was passed in September 1956; that order was set aside by the Civil Court by the judgment and decree passed in 1963 which was in terms set aside by this Court in First Appeal which was decided in November 1971. Therefore, it cannot be said that the competent authority has initiated the proceedings after a lapse of reasonable time. As such proceedings were pending before the competent authority. Once the proceedings are pending before the competent authority, then it cannot be said that as it is not decided within a particular time, it abates. As there is no such law otherwise the result would be disastrous in present day situation. This would be clear from the fact that we are deciding the Special Civil Application which is filed on 23rd July, 1981 on 31st July, 1991. If this contention is accepted, then the petition filed by him would become infructuous or would abate. Further, if this plea is accepted, number of matters pending in various Courts or before the quasi judicial authorities would abate without there being any decision or adjudication.
18. Apart from the aforesaid aspect, in the present case the petitioner filed Miscellaneous Civil Application No. 119 of 1980 before this Court for punishing the respondents for contempt of Court by alleging that respondents have committed breach of undertaking and assurance given before this Court and yet the authorities have not passed any order in adjudication proceedings. It was also prayed that the respondents be directed to purge themselves of the contempt committed by them by returning 30 gold bars or to give the present market value thereof to the petitioner. That application was rejected by this Court on the statement of the learned Standing Counsel for the respondents that adjudication will be completed within four months from the date of the order. i.e., from 1st May, 1980 after giving a reasonable opportunity to the petitioner of leading evidence in adjudication proceedings. At that stage the petitioner had not contended that the respondents should not be permitted to finalise the adjudication proceedings or in any set of circumstances the petitioner's prayer for return of the gold bars or their value was not accepted by this Court. In pursuance of the statement made before this Court the adjudication proceedings were completed by the respondents within four months by passing an order dated 30th September, 1980. Hence in our view, there is no substance in the contention that because of delay the impugned order passed by the Collector of Customs & Central Excise should be set aside.
19. In the result, there is no substance in the petition and it is rejected. Rule discharged with no order as to costs.