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Ram Kishan Agarwala Vs. Collector of Central Excise and Customs and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise;Customs
CourtOrissa High Court
Decided On
Case NumberO.J.C. No. 745 of 1978
Judge
Reported in1981(8)ELT217(Ori)
ActsCustoms Act, 1962 - Sections 2(34), 11K, 14, 106A, 110, 113, 113(1), 114, 115(2), 123 and 125; Income Tax Act; Gold Control Act - Sections 63; Specified Goods (Prevention of Illegal Export) Rules, 1969 - Rule 3(1); Constitution of India - Article 226
AppellantRam Kishan Agarwala
RespondentCollector of Central Excise and Customs and ors.
Appellant AdvocateR. Mohanty, ;K. Patnaik and ;B.K. Mohanty, Advs.
Respondent AdvocateStanding Counsel (Central), ;S.C. Mohapatra, ;S.R. Das, ;K.K. Rath, ;Arjun Agarwal and ;P.K. Ray, Advs.
DispositionPetition allowed
Cases ReferredMalkiat Singh and Anr. v. The Slate of Punjab
Excerpt:
.....breach of the statutory provision leads to serious consequences, including forfeiture and prosecution, the provision has to be strictly construed and it was not open to the department to assume that if petitioner's stand that the goods was intended to be taken to a particular person at calcutta failed, there would be an assumption that the goods was intended to move westwards into bombay area......an ambassador car bearing registration no. orr 1763 and authorising redemption thereof by one bipin prasad agarwala on payment of a fine of rs. 25,000 and also directing confiscation of 370.850 kilogrammes of silver and authorising redemption of the same by the said sri bipin prasad agarwala on payment of a fine of rs. 2 lakhs.2. petitioner alleges that he carries on money-lending business in his individual capacity from june, 1974 and he also started dealing in silver from september, 1976. he is an assessee under the income-tax act in respect of his business. in regard to his silver business, petitioner used to make local purchases of silver as also of old ornaments from the tarava market within bolangir district. petitioner's natural father bipin prasad agarwala is a partner of a.....
Judgment:

R.N. Misra J.

1. Challenge in this application under Article 226 of the Constitution is to the order dated 6-4-1971 (Annexuie-12) passed by the Collector of Customs and Central Excise (opposite party No. 1) in purported exercise of powers vested under Section 125 of the Customs Act, 1962 (hereafter referred to as the 'Act'), confiscating an ambassador car bearing registration No. ORR 1763 and authorising redemption thereof by one Bipin Prasad Agarwala on payment of a fine of Rs. 25,000 and also directing confiscation of 370.850 Kilogrammes of silver and authorising redemption of the same by the said Sri Bipin Prasad Agarwala on payment of a fine of Rs. 2 lakhs.

2. Petitioner alleges that he carries on money-lending business in his individual capacity from June, 1974 and he also started dealing in silver from September, 1976. He is an assessee under the Income-tax Act in respect of his business. In regard to his silver business, petitioner used to make local purchases of silver as also of old ornaments from the Tarava Market within Bolangir district. Petitioner's natural father Bipin Prasad Agarwala is a partner of a firm running under the name and style of Messrs Nagarmal Chhotelal (opposite party No. 4). The said firm also deals in silver. Petitioner maintains that in September, 1976, he sent 17 small silver bars, 98 silver coins, 4 silver sticks, 2 silver plates, 9 silver ingots weighing in all 370.850 Kilogrammes in an Ambassador Car driven by one Gobardhan Meher with a view to melting the same at Bargarh. Petitioner wanted the melted silver to be sent to Messrs Jalan & Company at Calcutta who are Commission Agents in Silver. On the basis of secret intelligence claimed to be available with the Preventive Officers of the Central Excise Department, the vehicle was intercepted on the way at about 5 a.m. and the silver was seized. A written statement was taken from Sarbeswar Dwari, the person accompanying the driver. Dwari happened to be an employee of Messrs Nagarmal Chhotelal (opposite party no. 4). A seizure list (Annexure-1) was drawn up. The Preventive Officers came to Tarava, raided the residential hcuse of Bipin Prasad Agarwala (opposite party no. 5) and recovered and seized silver ingots weighing about 123 Kilogrammes. By noon time that day, the Assistant Collector of Central Excise together with Preventive Officers interrogated the petitioner and recorded his statement where petitioner claimed that the silver seized from the car belonged to him. In the afternoon that day. samples were drawn from the seized silver for assaying. A statement was taken from the driver of the vehicle. Further statements were also taken from Dwari, but all these statements had been collected behind the back of the petitioner. On 18-10-1976, petitioner applied for return of the seized silver and made a second petition to the same effect on 13-12-1976. On 7th of March, 1977, the Assistant Collector recorded a further statement of Bipin Prasad Agarwala behind the back of the petitioner and on the same day samples were drawn for the purpose of assaying from the seized silver from the residence of Bipin Prasad Agarwala. On 2-8-1977, the Collector of Central Excise issued show-cause notices to opposite parties 3 to 8 and the petitioner. In the notice petitioner was described as the son of Bipin Prasad Agarwala and it was stated therein that the specified goods were being transported in a suspicious manner to Bombay without cover of appropriate transport voucher and thus provisions of Section 11K of the Customs Act read with Rule 3(1) of Specified Goods (Prevention of Illegal Export) Rules 1969, had been violated. The noticees were, therefore, called upon to show ca.use why the goods should not be confiscated under Section 113(b) of the Act and the car being the means of transport of the specified goods should not be con-ficated under Section 115(2) of the Act. They were also called upon to show cause why they may not be penalised under Section 114(i) of the Act. Petitioner claimed that the seized silver belonged to him. The other noticees took the same stand. Affidavits were filled in support of the claim. Summons had been issued to the petitioner under Section 63 of the Gold Control Act and Section 108 of the Customs Act describing the petitioner as owner of the seized silver. Petitioner alleges that there was no material to support the stand of the Department that Messrs Nagarmal Chhotelal or its partner Bipin Prasad Agarwala (opposite parties 4 and 5 respectively) were owners of the seized silver. Petitioner submitted that Section 11-K of the Act had no application inasmuch as the place of seizure did not justify a conclusion that the silver was intended to be sent to Bombay within the specified area. According to the petitioner there is no prohibition on transport of silver bullion outside the specified area and no transport voucher is necessary to authorise such transport. Without consideration of these aspects and without furnishing adequate opportunity to the petitioner to substantiate his stand and notwithstanding abundant material on the record supporting the stand of the petitioner, the Collector by the impugned order came to hold that the stock did not belong to the petitioner and directed confiscation of the stock of silver as also the ambassador car. That order of confiscation is assailed on the following grounds :-

(i) There is no material on record to come to the conclusion that three was violation of Section 11K of the Act or the Specified Goods (Prevention of Illegal Export) Rules, 1969 ;

(ii) The entire proceeding is vitiated for gross violation of principles of natural justice ;

(iii) The seizure is vitiated, inasmuch as Sri A.K. Patnaik, the seizing . officer, was not empowered and authorised under Section 106-A read with Section 2(34) and Section 110 of the Act to effect the seizure, nor was there any material to entertain a reasonable belief that the goods were liable to confiscation ; and

(iv) Section 114 of the Act had no application, inasmuch as, Section 113(1) with reference to which Section 14 is attracted was brought into the statute book with effect from 1-3-1969.

3. The-Assistant Collector of Central Excise (opposite party no. 2) has filed a counter affidavit on behalf of opposite parties 1 to 3 and has supported the impugned order as a valid one. Opposite party no. 5 has filed an affidavit to the effect that he was not the owner of the silver in question and it belonged to the petitioner.

Petitioner has filed a rejoinder disputing the stand taken in the counter affidavit. Along with the rejoinder, petitioner has produced a notification dated 24-1-1978 which has delegated the powers under Section 106A of the Act to an officer above the rank of Inspector and this is sought to be utilised in support of the petitioner's contention that the seizure had been effected by an unauthorised officer.

4. There is no dispute that silver is a specified goods under the provisions of the Act. Petitioner has, however, from the very commencement of the proceeding taken the stand that there was no material to support the assumption that the specified goods was being taken from or into a specified area and, therefore, there was no necessity for a transport voucher. There is no dispute that the place from where the seizure was made is not a specified area while Bombay is. Mr. Mohanty for the petitioner relies upon the finding of the Collector in the impugned order where it has been stated :-

'Coming to the merits of the case under the Customs Act, it has already Deen admitted that the place between Tarava and Bolangir and also the entire State of Orissa is not included in the areas specified by the Government of India in notifications issued under Chapter IV-B of the Customs Act. Movement of silver in such area does not therefore require any transport voucher or document. To this extent the arguments submitted by the parties in their reply to show cause notice as well as in the course of personal hearing, are accepted. The fact that Ram Kishan Agarwala's explanation that the seized silver in this case was sent for melting and casting into ingots for onward despatch to M/s. Jalan and Co., Calcutta, is an absolute lie. As already indicated above, inquiries made in Calcutta reveal that there is no firm by the name M/s. Jalan and Co. at 57 Manohardas Street. Calcutta-7. - However, it is found that there is a firm by the name M/s. Jalan Company who are mainly engaged in silver bullion business. But from the statement of the Accountant of the firm M/s. Jalan Company, it is clear that this Jalan Company never |had and dealings with either Ram Kishan Agarwala or Bipin Prasad Agarwala of Tarava or M/s. Nagannal Chhotelal of Tarava in the matter of sale and purchase of silver and silver bullions....'

The statement obtained from the Accountant of Jalan Company was behind the back of the petitioner, as alleged by him, and that position has not been controverted. Given an opportunity to cross-examine the Accountant, petitioner may have been able to establish that the specified goods was intended to be transported into a specified area. Since; breach of the statutory provision leads to serious consequences, including forfeiture and prosecution, the provision has to be strictly construed and it was not open to the Department to assume that if petitioner's stand that the goods was intended to be taken to a particular person at Calcutta failed, there would be an assumption that the goods was intended to move westwards into Bombay area. There is force in Mr. Mohanty's contention that Section 123 of the Act does not apply in respect of silver and, therefore, there was no statutory burden on the petitioner to prove the primary facts relevant to the question in issue. The onus that lay on the Department does not appear to have been discharged. At any rate, the Collector while dealing with the matter has not taken this aspect into consideration. The ratio of the decision in the case of Malkiat Singh and Anr. v. The Slate of Punjab, A.LR. 1970 Supreme Court, 713, is applicable.

5. Before the Collector petitioner had applied for examining the Assistant Collector of Sambalpur, the Inspector of Central Excise who effected the seizure and some other persons including Dwari. Petitioner also prayed for an opportunity to cross-examine the driver and the Accountant of Jalan Company. Such opportunity was denied to the petitioner and in the counter affidavit, it has been stated that the adjudicating officer did not (hink it necessary to afford such opportunity. It is not disputed before us by learned Standing Counsel that petitioner was entitled to an adequate opportunity of substantiating his stand and we are not prepared to accept the position maintained in the counter affidavit that the opinion of the adjudicating officer was final on the question as to what would be relevant for the defence of the petitioner. The. matter should have been left to the petitioner and the adjudicating authority should not have taken that burden on him. We are inclined to agree with Mr. Mohanty that principles of natural justice have been violated and petition-ner has been denied a reasonable opportunity to substantiate his stand. If he was the real owner of the silver as also of the motor car, he was entitled to establish that fact and for establishing his stand he was also entitled in law to an opportunity of substantiating his stand. On this score also, the proceeding is vitiated.

6. The other contentions are that the seizing Inspector had no authority under Section 106A of the Act, he having not been so authorised ; Section 114 of the Act was not applicable to the case in issue and the maximum penalty leviable was Rs. 1,000. Bipin Prasad Agarwala had preferred an appeal against the impugned order which was still pending before the competent authority. The appeal has now been disposed of against him and the Collector's action has been affirmed. The other two questions which we have taken note of above need not be disposed of finally by us as we propose to quash the order of the Collector and remit the matter to him for a fresh disposal. The Collector shall pointedly examine whether Section 11K of the Act has been violated after giving rersonable opportunity to the petitioner to substantiate his case. He should proceed on the footing that the burden is on the Department to establish that there is violation of the statutory provision in Section 11K of the Act. The other questions would also be examined by the Collector in case they are canvassed before him.

7. The writ application is allowed and the impugned order is quashed. The Collector is directed to re-dispose of the matter within two months from the date of service of the writ on him after complying with the directions indicated above. Petitioner shall be entitled to costs of this proceeding. Hearing fee is assessed at rupees two hundred and fifty to be collected from the Collector alone.


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