K.S. Hegde, JJ.
1. This is a petition under Article 226 of the Indian Constitution. The petitioners who were the Shroffs in Davangere, assail the validity of the order of confiscation, under Section 167 (8) of the Sea Customs Act read with Section 23-A of the Foreign Exchange Regulation Act, 1947, made by the Collector of Central Excise, Bangalore, in his D B. Dis. No. VIII/10/4/59-Cus. O. R. No. 7/59, dated 25-12-1959. It was firstly contended that the order of the Collector is vitiated, because the Collector did not bear in mind the fact that the burden of establishing the case was on the Department. The second ground of attack was that the Collector contravened the principle of 'natural justice in making the impugned order. We shall presently consider these grounds in detail. But before doing so it is necessary to set out the material facts.
2. The 2nd petitioner is the son of the 1st petitioner; the petitioners are dealers in bullion at
Davangere; on 24-1-59, the Superintendent of Central Excise (Head Quarters Preventive) Bangalore, after obtaining a search warrant from the Special First Class Magistrate Davangere searched both the shop premises as well as the residence of the petitioners at the shop premises no incriminating article was found but when the house of the petitioners was searched eight pieces of gold weighing in all 186 Tolas were found concealed in a partly wet hand bag placed on a plank in the bath-room situated by the side of the kitchen of the house. Before conducting the search in question, the Superintendent Central Excise had questioned the petitioners as to whether they had any contraband gold they had informed him that they had no contraband gold with them. After seizing the gold in question the petitioners accounts were scrutinized in those accounts no mention of the 186 Tolas of gold above mentioned had been made in fact the accounts were silent about the gold in question. When the first petitioner who is the karta of the family was questioned about the same by the Superintendent of Central Excise, he had stated before him that he had purchased the gold in question from one Govind and another Ganapathy of Karwar. He had stated that he was not in a position to give either the names of the parents of those persons or any information as regards their residence; all that he knew according to him was that they belonged to Karwar he further stated before the Superintendent of Central Excise that he had not entered the transactions in question in his accounts as he had made those transactions from borrowed monies the account books were also silent about the alleged loans. The statement of the first petitioner was reduced into writing by the Superintendent of Central Excise and the same was made a part of the records.
3. On the receipt of the report of the Superintendent Central Excise the Collector called upon the first petitioner to submit his explanation. The petitioners gave a written explanation. Thereafter, the case was posted for hearing and the first petitioner was asked to appear before the Collector of Central Excise either in person or through a counsel. On the date of hearing, i.e., 27-4-1959, the second petitioner as well as his counsel Sri Ganji Veerappa appeared before the Collector, Central Excise. Sri Ganji Veerappa argued on behalf of the 1st petitioner. The contention taken on behalf of the first petitioner was that he was a bona fide purchaser from the aforementioned Govind and Ganapathy, and therefore he was not guilty of any offence. The explanation offered on behalf of the first petitioner was rejected and gold seized was ordered to be confiscated as mentioned above.
4. In making the impugned order the Collector of Central Excise was mainly influenced by the following circumstances:
1. Six out of the eight gold ingots seized bore foreign marks;
2. the transactions in question had not been entered in the account books of the petitioner;
3. the seized gold was kept hidden on a plank m the bath room of the house of the petitioners: and
4. the petitioners did not give correct information before the Superintendent of Central Excite.
The case was decided by the Collector of Central Excise against the first petitioner wholly on the basis of circumstantial evidence placed before him. He thought that the circumstances established the correctness of which were not in dispute, conclusively brought home the guilt to the first petitioner.
5. It may be remembered that the Collector of Central Excise is not in any sense a 'Court'. He is not bound by any procedure laid down by the Code of Criminal Procedure or by the Rules of evidence as found in the Evidence Act. But, in discharging his quasi judicial functions it is incumbent on him, not only to comply with the requirements of the relevant statutory provisions but also to apply the principles of 'natural justice'. If he had discharged his duties in the manner above set out then this Court cannot go into the correctness of his decision. Hence, we have to address ourselves to the question whether the enquiry in question is vitiated for any of the reasons mentioned above.
6. It was strenuously contended by Sri Ganji Veeiappa the learned Counsel for the petitioners, that though the proceedings before the Collector were not criminal proceedings as such, they without doubt are in the nature of Criminal Proceedings. Therefore considerations which are relevant in deciding criminal proceedings ought to have been borne in mind by the Collector while deciding the points in dispute. To be more specific his contention was that the burden of establishing that the gold seized was smuggled gold was heavily on the Department and that burden having not been discharged the Collector was not right in holding that the gold in question was imported gold. In this connection, it may be borne in mind- that the import of gold had been banned ever since 1939. The seizure in question as mentioned above took place on 24-1-59, i.e., about 20 years after the ban in question was imposed. In judging probabilities there is no point in imagining remote possibilities however interesting they may be as mental exercises. The Courts are concerned with realities of life. It is extremely unlikely that the gold ingots imported prior to 1939 would have been still preserved as ingots. Taking into consideration the probabilities, human course of affairs and other relevant circumstances, one could safely conclude that the gold seized must have been imported long after 1939. It is not easy to keep track of the smuggler. Ordinarily it is not possible to establish as to when the smuggling must have taken place. Evidently to get over this difficulty the Parliament had introduced in 1955. Section 178-A into the Sea Customs Act, which provision reads:
Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession the goods were seized.
The validity of this provision is no more open to dispute in view of the decision of the Supreme Court in Civil Appeals Nos. 408 to 410 of 1960, reported in : 1983ECR2198D(SC) , Collector of Customs, Madras v. Sampathu Chetty. The presumption provided in Section 178-A is not a conclusive presumption. But it shifts the burden of establishing that the goods seized are not smuggled goods on to the (person from whom the goods in question were I seized. But before the Department could take advantage of that presumption it is necessary for the Department to establish that the officer who seized the articles in question had reasonable belief that the seized roods were smuggled goods. It is complained on behalf of the petitioners that that fact has not been established. Is this contention correct? Before searching the residence of the petitioners the Superintendent of Central Excise had obtained a search warrant from the Special First Class Magistrate at Devangere. under Section 172 of the Sea Customs Act any Magistrate may on application by Customs-Collector stating his belief that dutiable or prohibited goods (or any documents relating to such goods) are secreted in any place within the local limits of the jurisdiction of such Magistrate issue a warrant to search for goods (or documents). Unless there was a representation that the Officer concerned had reasonable belief that prohibited goods were secreted in the house of the petitioners the Magistrate would not have issued the search warrant. There is a presumption that things were done according to law.
The result of the search shows that Officer must have had information about the activities of the petitioners. He was evidently after them. At no stage during the enquiry before the Collector the validity of the search was questioned. The petitioners did not express any desire to cross-examine the Superintendent of Central Excise. The goods seized have tell-tale foreign marks on them. On seeing them even a layman is likely to suspect that they are smuggled gold. Whether the Superintendent of Central Excise could have had reasonable belief that the gold seized is smuggled gold, is essentially a matter of inference. The facts established in this case leaves us in no doubt in that regard.
7. The next and the more important contention taken by Sri Ganji Veerappa is that the proceedings before Collector are vitiated as he failed to observe the principles of 'natural justice'. It was strenuously contended that the Collector did not question the appraiser of the Canara Industrial and Banking Syndicate, Ltd., Davangere, who appraised the gold seized and the Superintendent of Central Excise (who conducted the search in this case) in the presence of the petitioners. For that matter the Collector does not appear to have questioned them at all. He proceeded on the basis of admitted facts. The appraiser of the Canara Industrial and Banking Syndicate, Ltd. Davangere was questioned by the Superintendent of Central Excise to find out whether the gold seized was pure gold. -The first petitioner had admitted before the Superintendent of Central Excise as well as before the Collector that the seized ingots were gold ingots. Therefore the question as to the nature of the goods seized was never in issue. Hence there is no point in complaining that the appraiser was not examined before the petitioners.
8. Now, coming to the non-examination of the Superintendent of Central Excise here again, there is no substance in the grievance. As noticed earlier the decision of the Collector was founded on admitted circumstances. They are: (1) secreting of imported gold on a plank in a bath-room, (2) the transactions in respect of that gold not entered in the accounts of the petitioners, (3) false information given by the petitioners to the effect that they had no imported gold with them and (4) the identity of the seller was not clearly disclosed.
9. No explanation is forthcoming as to why the gold in question was kept hidden in the bath-room plank or as to why they did not give the true information to the Superintendent of Central Excise. The petitioners claim that they have paid over Rs. 18,000/- for the gold seized. Therefore the fact that the transactions relating to them have not been entered in the account books of the petitioners is a highly incriminating circumstance. In their statement before the Superintendent of Central Excise they had stated that they had to borrow hand loans to purchase the gold in question. Their creditors are kept anonymous. The loans in question were not entered in the account books. These circumstances can by no means be said to be innocent in character. They are highly militating against the petitioners. If from those circumstances the Collector drew the inference that the gold seized is smuggled gold the same is not open to any valid objection. The circumstances in question are admitted circumstances and therefore there was no need to examine any one to prove the same.
10. Sri Ganji Veerappa contended that his clients had mentioned the names of the persons from whom they had purchased the gold in question and it was up to the officers of the Department to trace them; if they had been either indifferent or negligent in tracing those persons, his clients cannot be held responsible for the same. This contention is a very feeble one. If the bona fides of a receiver of smuggled goods are held to be established merely because he gives some names, real or imaginary as those who had sold the goods in question to him then law can be made a mockery.
11. In support of his contention that principles of natural justice had been violated in this case Sri Ganji Veerappa tried to seek support from the decision of this Court in Nagar Mohan Rao v. Collector of Central Excise Bangalore Writ Petition No. 164 of 1960: (AIR 1961 Mys 203) and from the decision of the Bombay High Court in Ganesh Mahadev v. Secy. of State, reported in ILR 43 Bom 221: (AIR 1919 Bom 30). In our opinion the above decisions are of no assistance to the petitioners. In those cases, the authorities concerned relied on the) evidence of persons examined behind the back of the persons proceeded against even without giving them any opportunity to cross-examine those witnesses. The ratio of those decisions has no bearing on the facts of the present case.
12. The only other contention of Sri Ganji Veerappa which remains to be examined is that out of the eight ingots of gold seized, only six of them bear foreign marks and therefore the Collector was not right in confiscating the remaining two gold ingots. On proved facts, and circumstances established, taken along with the presumption arising under Section 178-A, the only reasonable conclusion is that those ingots were also smuggled.
13. For the reasons mentioned above, this petition fails and the same is dismissed with costs. Advocate's fee Rs. 100/-.