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Motilal Lalchand Shah Vs. L.M. Kaul and anr. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Appln. No. 1559 of 1969
Judge
Reported in1984(17)ELT294(Guj)
ActsCustoms Act, 1962 - Sections 11, 112, 113, 114, 121, 124 and 131
AppellantMotilal Lalchand Shah
RespondentL.M. Kaul and anr.
Excerpt:
.....action under section 121 necessary for department to establish that amount in question represented sale proceeds of smuggled goods sold by person having knowledge or reason to believe that goods sold were smuggled goods - grounds of confiscation or imposing penalty notified to petitioner different from grounds ultimately found to be proved by collector - petitioner deprived of sufficient opportunity to defend himself - held, order of collector quashed and set aside. - - after making a panchnama, the said amount was seized and the statements of the driver of the car and two other persons as well as of the petitioner were recorded by the sub-inspector of customs mr. shelat the learned/assistant government pleader, urged that from the evidence, it has been clearly established (1) that..........to the assistant collector that the indian currency of rs. 51,000/- seized from the car was the sale proceeds of smuggled goods, and hence, was liable for confiscation under section 121 of the customs act of 1962, and whereas it further appeared to the assistant collector that the petitioner was a person dealing in the goods of foreign origin above said, knowing or having reason to believe that the said articles were liable to be confiscated under section 121 of the customs act, 1962, he should show cause why a penalty should not be imposed on him under section 112(b)(ii) of the said act and also to show cause why the indian currency should not be confiscated under section 121 of the customs act, 1962. the petitioner was also required to inform the authorities, whether he wanted a.....
Judgment:

B.K. Mehta, J.

1. This is a petition under Articles 226 and 227 of the Constitution of India challenging the order of the Collector of Customs and Central Excise at Baroda, dated nil October, 1969 confiscating the Indian currency to the tune of Rs. 51,000/- under Section 121 of the Customs Act, 1962. The said order came to be passed in the following circumstances :-

The petitioner is a businessman dealing in silver and gold articles at Bombay. He had gone to Daman on August 22, 1968 and carried with him a sum of Rs. 51,000/- and odd in cash. It is said that he had gone to Daman for purposes of finding out a suitable premises and for purchasing certain utility articles said to be available in Daman against the bills. But as he could not find any suitable property, nor he could purchase any utility articles against the bill, he was returning from Daman on August 24, 1968 at about 10-30 P.M. in an hired private car bearing No. BMZ-4935 belonging to one Bhaskerrao Manchharam. There were two other persons travelling in the said car from Daman to Vapi. As the car approached Kunta cross-road, a Customs raiding party stopped the car as the riding party found the movements of the car to be suspicious and on the search of the car, a sum of Rupees 51,000/- was found from under the driver's seat. After making a panchnama, the said amount was seized and the statements of the driver of the car and two other persons as well as of the petitioner were recorded by the Sub-Inspector of Customs Mr. Samuel. The statement of the petitioner was recorded in English and the statements of three other persons were recorded in Gujarati. On February 17, 1969, a show cause notice bearing No. VIII 10, 1355. 58-6884 dated February 14, 1969, issued by the Assistant Collector of Customs, Surat, was served on the petitioner. The petitioner was called upon by the said notice that as it appeared to the Assistant Collector that the Indian currency of Rs. 51,000/- seized from the car was the sale proceeds of smuggled goods, and hence, was liable for confiscation under Section 121 of the Customs Act of 1962, and whereas it further appeared to the Assistant Collector that the petitioner was a person dealing in the goods of foreign origin above said, knowing or having reason to believe that the said articles were liable to be confiscated under Section 121 of the Customs Act, 1962, he should show cause why a penalty should not be imposed on him under Section 112(b)(ii) of the said Act and also to show cause why the Indian currency should not be confiscated under Section 121 of the Customs Act, 1962. The petitioner was also required to inform the authorities, whether he wanted a personal hearing in the matter. The documents listed in the Annexure 'A' to the said notice were said to have been supplied to the petitioner. On the receipt of the show cause notice, the petitioner filed his written explanation by his statement of March 18, 1969, contending, inter alia, that the notice issued by the Assistant Collector was without jurisdiction and without application of mind to the facts of the case and denying that the amount seized from the car on August 24, 1968, represented the sale proceeds of smuggled goods at all as alleged. It was further denied by the petitioner that he was the person dealing with the goods of foreign origin as alleged in the notice. The petitioner made a specific grievance that no statements as shown in the Annexure to the said notice were supplied to him. It was further pointed out in the explanation in terms that the petitioner did not know English and the contents of the statement recorded by the Superintendent Mr. Samuel in English were not explained to him and he, therefore, denied that he had stated in the statement that he threw away the cash under the driver's seat of the car on the car being stopped by the raiding party. His explanation of the possession of such a considerable amount was that he had taken the money from Bombay to Daman and was bringing the same back when the same was seized from him. A personal hearing was given to the petitioner on May 9, 1969, when the petitioner appeared before the Collector of Customs at Baroda, along with his advocate. At the time of hearing when it was contended by the advocate of the petitioner that the statement and documents furnished to the petitioner did not disclose anything showing that the petitioner had dealt with any goods of foreign origin and that the Indian currency notes under the seizure were of the sale proceeds thereof, it was pointed out by the Collector hearing the matter, that the case of Department was not that the currency in question were the sale proceeds of the smuggled goods of the foreign origin, but the currency in question were obtained by the petitioner in disposal of 'silver' which the petitioner had brought from Bombay to Daman for purposes of it being exported from a place other than the land Customs Station or a Customs Port appointed for the loading of silver and the silver being prohibited goods, the petitioner has committed a Customs offence under Section 113 which made him liable under Section 121 of the Customs Act. The Advocate for the petitioner made a grievance that the notice as required under the Customs Act did not disclose the case as disclosed at the time of hearing, but however, as the Collector desired him to make his submission on the case of the department as clarified by him, the Advocate of the petitioner made further submissions and contended that the statements of the witnesses supplied to the petitioner did not suggest that the petitioner actually exported the silver or had taken any silver to Daman for purposes of export and that there was no restriction on sale of silver at Daman at the material time, though the petitioner had in fact sold the silver at Bombay. The Collector however relied on the Panchanama and the statement of one Babu Savlekar and found that (1) the Indian currency seized from the driver's seat in the car was thrown by the petitioner or seeing the Customs Officer; (2) the Indian currency seized was the sale proceeds of silver disposed of at Daman for an unauthorised export by the petitioner and, (3) that the petitioner was a person dealing with the unauthorised export of silver out of India. On these findings, the Collector of Customs passed an order under Section 121 of the Customs Act, 1962 directing that the Indian currency of Rs. 51,000/- be confiscated and further imposed a penalty of of Rupees 5,000/- on the petitioner under Section 114 of the said Act.

2. The petitioner being aggrieved with the said order has come to this Court under Articles 226 and 227 of the Constitution of India for appropriate writs, orders, directions to quash and set aside the said order of the Collector and to direct the Collector to return Rs. 51,000/- seized from the petitioner without any authority of law.

3. At the time of hearing of this petition, Mr. Ramchandani the learned advocate, appearing for the petitioner has urged that the Collector of Customs has passed the order and adjudicated the matter ultimately ordering the confiscation of Indian currency of Rupees 51,000/- on the basis which was not disclosed to the petitioner in the show cause notice served on him. According to Mr. Ramchandani the notice which was served on the petitioner asked him to show cause why the Indian currency seized from the petitioner shoule not be confiscated under Section 121 of the Customs Act, 1962 as it represented the sale proceeds of smuggled goods of foreign origin, but as the statements of the witnesses supplied to the petitioner did not disclose that the currency notes seized were the sale proceeds of the smuggled goods of foreign origin, the Collector thought fit to proceed on a basis which was not the basis of the charge. The clarification given by the Collector, according to Mr. Ramchandani, as to the case of the Department, was altogether a new case which was not disclosed under the show cause notice served on the petitioner. At the time of hearing the basis for the proposed action as clarified by the Collector was that the amount in question represented the sale proceeds of the silver which was a prohibited article and which had been brought from Bombay to Daman for purposes of it being exported from a place other than the land Customs Station or Customs Port appointed for the loading of silver. In submission of Mr. Ramchandani, this was not the basis for the proposed action in the notice. It has been further contended by Mr. Ramchandani that even on the basis as further elucidated by the Collector at the time of hearing, the evidence did not establish that the silver was brought to Daman and that it was meant for purposes of export. In submission of Mr. Ramchandani at the relevant time there was no restriction on carrying of articles of silver inside the territory of India from one place to another.

4. On behalf of the Union of India, Mr. S. N. Shelat the learned/assistant Government Pleader, urged that from the evidence, it has been clearly established (1) that the petitioner took the silver from Bombay to Daman, (2) that he sold silver at Daman; (3) that the amount of Rs. 51,000/- was the sale proceeds of silver at Daman; (4) that on search being made by the raiding party of the Customs Department the currency notes were thrown under the seat of driver of the car; and (5) the false explanation by the petitioner that he sold the silver at Bombay. It was, therefore, urged that the only irresistible inference is that the amount in question represented the sale proceeds of the smuggled goods which were disposed of and sold at Daman and, therefore, liable to confiscation under Section 121 of the Customs Act, 1962. In submission of Mr. Shelat the Collector was justified in relying on these five important circumstances from which the inference which has been drawn by the Collector was completely justified and, therefore, the order was perfectly a valid and a legal order. As regards the basis of the proposed action as disclosed in the show cause notice, it was submitted by Mr. Shelat that the petitioner has taken part in the proceedings after the case of the Department was further elucidated and clarified by the Collector and having once taken part in the proceedings after the case was clarified, it is not open for the petitioner now to contend that the order is bad on the principles of natural justice.

5. In our opinion, the contentions of Mr. Ramchandani the learned advocate for the petitioner must prevail. In order to take an action under Section 121 of the Customs Act it is necessary for the Department to establish that the amount in question represented the sale proceeds of the smuggled goods sold by a person having knowledge or reason to believe that the goods were smuggled goods. It should be noted that the show cause notice issued to the petitioner proceeded on the footing that the petitioner was a person dealing in the goods of foreign origin and that the amount of Rs. 51,000/- and odd seized from the car represented the sale proceeds of the smuggled goods of foreign origin. It, therefore, implies that the basis in the show cause notice was that the petitioner was a person dealing in goods of foreign origin and the amount in question represented the sale proceeds of such smuggled goods. But in appears that at the time of hearing, the Collector in order to clarify the case of the Department pointed out to the Advocate of the petitioner that it was not the case that the amount in question represented the sale proceeds of the goods of foreign origin but on the contrary the case of the Department as pointed out by the Collector was that the amount in question represented the sale proceeds of prohibited articles, namely silver, which the petitioner took near the port of Daman for purposes of export. Now it does not require much imagination to show that the basis as disclosed in the show cause notice was quite contrary to the case which was found by the Collector on certain statements recorded by the authority of the Department. The case which has been found proved against the petitioner by the Collector was that the amount in question represented sale proceeds of the prohibited article, namely, silver sold at Daman for purposes of export. Therefore, it was on this diametrically opposite case, namely, the case of export as contrary to the case of import in the show cause notice served on the petitioner, that the petitioner has been found guilty of the offence under Section 131 of the Customs Act read with Section 121 of the said Act. In our opinion, therefore, that would invariably cause great prejudice to the petitioner in defending himself against the new case of the Department. Therefore, the petitioner was justified in urging before the Collector that unless a fresh notice is served on the petitioner stating out in terms clearly and precisely the case of the Department as pointed out by the Collector, he cannot be tried for this new offence as the basis of a show cause notice was given a go bye at the time of hearing by the Collector. Apart from this initial hurdle in the way of the respondents, as the essential element in order to bring home the offence alleged against the petitioner, the Department ought to have established that the prohibited goods, namely, in the instant case, silver were taken from Bombay near the coast of India i.e. Daman for purposes of export outside India. It is of course an admitted position that at the relevant time there was an order issued by the Chief Controller of Imports and Exports under Clause (3) of Imports and Exports (Control) Act, 1947 (18 of 1947) prohibiting the export of silver bullion and silver sheets and plates which have not undergone any process of manufacture subsequent to rolling. The said order has been placed on record by Mr. Shelat the learned Assistant Government Pleader. It is an order dated 7th October, 1966 issued in exercise of the powers conferred by Section 3 of the Imports and Exports (Control) Act, 1947, whereby the Central Government amended the Exports (Control) Order, 1962 by inserting after Item 26 in Part A of the Schedule I to the said order the items of silver bullion and silver sheets and plates and silver coins. The effect of such an amending order is that it will be deemed to be an order under Section 11 of the Customs Act, 1962. It should be noted that admittedly there were no restrictions, at the relevant time, on carrying of silver from one place to another in India. In our opinion there was no evidence worth its name to establish that the petitioner carried the silver from Bombay to Daman and had, in fact, sold at Daman, except the improved statement recorded by the department of Mr. Savlekar, who has not stated anything as to establish the above fact in his first statement recorded just after the incident. In the circumstances, therefore, there is no evidence from which even an inference can be drawn as to the amount which the petitioner was carrying with him at the time of raid was the sale proceeds of the alleged sale of silver at Daman. Mr. Shelat, the learned Assistant Government Pleader even fairly conceded that the Department has got to establish that the petitioner brought the prohibited goods near the port of India for purposes of export outside India. In submission of Mr. Shelat this fact can be found from the statement of one of the witnesses Mr. B. P. Savlekar who was one of the persons travelling in the car with the petitioner at the time when the search was made at the Customs Checking Post. Now, it should be noted that the Department has recorded two statements of Savlekar, one on the day when the first statement was recorded i.e. on 25th of August, 1968 the day next to the day on which the seizure was made, and the second statement was recorded on 10th of February, 1969 only four days before the issuance of the show cause notice. In the first statement the said witness Savlekar did not tell anything about the throwing away of currency notes under the seat of the driver of the car or about the admission by the petitioner to him that the amount in question represented the sale proceeds of silver brought from Bombay and sold at Daman. These two allegations were sought to be established from the second statement of Shri Savlekar which was recorded by the Department only four days before the issuance of the show cause notice. Mr. Ramchandani was, therefore, right that this was a case of 'no evidence' at all and the second statement which has been recorded was apparently an improvement on the first statement which was made immediately after the incident. The objection of Mr. Shelat was that this is a case of the appreciation of some evidence by the Collector and, therefore, this Court could not in exercise of its jurisdiction under Articles 226 and 227 of the Constitution of India, interfere with the findings made on the basis of that evidence. But we are unable to accede to this contention of Mr. Shelat the learned Assistant Government Pleader that if the evidence which has been sought to be relied upon is an evidence which has been clearly improved upon it can be said to be a legal and cogent evidence on which a finding can be made. But apart from that fact also the so called admission of the petitioner to Mr. Savlekar did not establish that the silver was taken from Bombay to Daman for purposes of export. An inference would have been possible if the Department had established either that the silver was being used for purposes of making payments to the persons bringing in the smuggled goods or that on the parity of prices prevailing in the International Market, at the relevant time, there was an inducement to the persons like the petitioner to export outside India. In our opinion, therefore, the Collector had no evidence before him to infer that the petitioner took the prohibited articles, namely, silver from Bombay to Daman for purposes of exporting and, therefore, it was the prohibited act which made the goods liable to be confiscated under Section 113 of the Customs Act and, therefore, invited that consequences of the sale proceeds of sale of such articles liable to be confiscated under Section 121 of the Customs Act. In our opinion the petitioner had not sufficient opportunity to meet with the case which was ultimately found to be proved by the Collector of Customs, as the basis of the show cause notice issued to the petitioner was that the amount in question represented the sale proceeds of the goods of foreign origin. No doubt the Advocate of the petitioner made his submission after this case was clarified by the Collector. But that would not absolve that Department from the obligation under Section 124 of issuing a show cause notice before passing an order confiscating any goods or imposing any penalty on any person under Chapter 14 of the Customs Act. Mr. Shelat the learned Assistant Government Pleader was right that it was pointed out by the Collector at the time of hearing what was exactly the nature of the case of the Department. But that case, as we have stated earlier, is quite contrary to the basis of the proposed action as disclosed in the show cause notice. The obligation of issuing notice under Section 124 is (sic) a notice which must be in writing informing the person sought to be held liable as to the grounds on which it is proposed to confiscate the goods or the imposing of penalty. The grounds must, in our opinion, state precisely and clearly the facts which constitute the customs offence. Even at the cost of repetition we must say that the grounds stated in the show cause notice were, that the petitioner was a person dealing in the goods of foreign origin and the amount in question represented sale proceeds of such goods. The case found after the hearing was, that the petitioner was a person dealing in smuggled goods, inasmuch as he took the prohibited articles for purposes of export from a place which is not a recognised port or a place for purposes of export under the Customs Act. Therefore, the grounds which were notified to the petitioner and the grounds which were ultimately found to be proved by the Collector are quite contrary. We have no hesitation is saying that this would clearly cause prejudice to the petitioner who was deprived of sufficient opportunity to defend himself. On that ground also, therefore, the order of the Collector required to be quashed and set aside.

6. The result is that this petition should be allowed and the order of the Collector of Customs at Baroda dated nil of October, 1969 which is Annexure 'E' to the petition is quashed and set aside. We, therefore, issue a writ accordingly and direct further that the amount of Rs. 51,000/- seized from the petitioner, should be returned to him. The Rule is made absolute. The respondents will pay the costs to the petitioner.

7. Petition allowed.


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