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Manilal Bhanabhai Patel Vs. Kaul and ors. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Appln. No. 166 of 1970
Judge
Reported inAIR1976Guj134
ActsCustoms Act, 1962 - Sections 110, 122 and 124
AppellantManilal Bhanabhai Patel
RespondentKaul and ors.
Appellant Advocate I.M. Nanavati, Adv.
Respondent Advocate G.N. Desai, Govt. Pleader
Excerpt:
customs - interpretation - sections 110, 122 and 124 of customs act, 1962 - service of notice and adjudication proceedings - goods of petitioner seized - notice regarding confiscation served by authorities different from adjudicating authority - held, issuance of notice and conducting adjudication proceedings are different things - power can be exercised by different authorities. - - 5. the petitioner further claims that on 26th august, 1968 he purchased the silver, which is seized by the customs department, from bombay, and as he was transporting that silver from bombay to navsari, for the purpose of getting it cut into different small pieces, the truck in which the said silver was loaded failed near village tukwada. village tukwada where the truck is said to have failed is situated..........the officers of the customs. this chapter consists of sections 3 to 6. section 3 classifies the customs officers into different classifications. section 4 speaks about the appointment of the officers of customs, section 5 speaks about the powers of these officers of customs while section 6 speaks about the entrustment of the functions of the board and customs officers on certain other officers. he pointed out that all these sections go to show that the duties of different classes of customs officers have been specified in the act and, therefore, an officer of a lower grade cannot perform the duty which is expected to be performed by the officers of higher grade. he therefore urged this court to hold that if adjudication proceedings under section 122 could be conducted by collector of.....
Judgment:

Mehta, J.

1. The simple question which is involved in this petition is whether the authority issuing show cause notice contemplated by Section 124 of the Customs Act, 11)(3:2 (which is hereinafter referred to as 'the Act') should be the same which can conduct ad indication proceedings counterpleaded by Section 122 of the said Act. Such a show cause notice under Section 124 of the Act 1has been issued in this case by Assistant Collector of Customs, Central Excise, Surat on 31st January, 1969 requiring the petitioner and hers to show cause why the silver weighing 2770 Kgs. valued at Rs. 16,07,127.00 seized on 27-8-1968 from the premises of one Shri Manila] Jagariji Desai of village Tukwada, slimild not be confiscated under Section 113(c) of the Act and why penalty should not be imposed tinder Section 114 of the Act. The petitioner has approached this court by this petition making a grievance against this show cause notice principally on the ground that looking to the value of the silver which is seized it is only the Collector of Customs or a Deputy Collector of Customs who is authorised tinder Section 122(a) of the Act to conduct the proceedings regarding confiscation and penalty and, therefore, the show cause notice, which is contemplated by Section 124 of the Act, ought to have been issued only by the Collector of Customs or the Deputy Collector of Customs authorised to bold the adjudication proceedings, and not by the Assistant Collector of Customs. The petitioner in his petition has raised various other points but none of these points are pressed for the Purpose of this petition with the result that the only point which is indicated above remains to be considered in this petition.

2-3. Short facts leading to this petition are that the petitioner is an agriculturist but claims to be dealing in silver. He is a resident of village Dabhel and claims to have entered into partnership with one Kadirbhai Ismailbhai of village Chikhali for carrying on the business of silver and silver bullion. According to him, document of partnership between the two was executed on 7-6-68 and it was decided to carry on the business of silver bullion, silver ornaments and silver articles in the name of M, s. Mauibhai Kadirbhai and Co. at village Vapi. The petitioner further claims that this partnership was registered with Registrar of firms on 28th July, 1968. He has further averred that this firm is now dissolved and the assets and the liabilities thereof have been taken over by him.

4. It is further contended by the petitioner that usually silver bullion is purchased in big humps and thereafter cut into small pieces at refineries situated at Navsari. According to the petitioner he had made some arrangements with one Gulabbhai Dajibhai Patel of Navsari to act as his commission agent for selling the silver after getting it cut into small. pieces at the refineries at Navsari.

5. The petitioner further claims that on 26th August, 1968 he purchased the silver, which is seized by the customs department, from Bombay, and as he was transporting that silver from Bombay to Navsari, for the purpose of getting it cut into different small pieces, the truck in which the said silver was loaded failed near village Tukwada. According to the petitioner he was travelling along with this silver bullion by the same truck. Village Tukwada where the truck is said to have failed is situated at a distance of about 3 miles north of Vapi. He, therefore, sought the aid of one Bhagwanji Gulabbhai, who was his friend. It is contended by the petitioner that since it was now possible to get the truck repaired immediately, through the help of his friend Bhagwaiji Gulabbbai, he unloaded the silver from the said truck into the house of one Manilal Jaganji Desai situated at a distance of one or two furlongs from the highway. The case of the petitioner is that he intended to take this silver to Navsari on the next day. However, during the night intervening between 27th and 28th August, 1968, officers of the customs department at Vapi raided the house of Manilal Jaganji Desai at Tukwada, where the silver bullion, was stored for the night. As a result of this become the whole quantity of silver was seized under Section 110 of the Act under a panchnama which is dated 27th August, 1968.

6. The record of the case reveals that this silver was seized as it was liable to be confiscated under Clause (c) of Section 113 of the Act, which says that any dutiable or prohibited goods brought near the land frontier or the coast of India or near any bay, gulf, creek or tidal river for the purpose of being exported from a place other than a land-customs station or a customs port appointed for the loading of such goods, shall be liable to confiscation. It is not in dispute that the silver which is seized was, at the relevant time, a prohibited goods which could not be exported.

7. After the above referred silver was seized on 27th August, 1968, the Assistant Collector of Customs at Surat, issued the above referred show cause notice on 31st January, 1969 under Section 124 of the Act. In response to this show cause notice the petitioner claimed that the seized articles belonged to him and that they were riot liable to confiscation. Before the adjudication proceedings contemplated by Section 122 of the Act could be undertaken, the petitioner has approached this court and has challenged the adjudication proceedings on the ground that show cause notice under Section 124 of the Act has not been issued 'o him by the proper authority.

8. As against this, the respondents do Dot admit that the petitioner is a bona fide merchant dealing in silver or silver bullion. Briefly stated, the case of the respondents is that the customs department received reliable information that good deal of quantity of silver which was meant for illegal export, was secreted at the house of Manilal Jaganji Desai at Tukwada and on that information, the house of said Manilal Jaganji Desai was rak'ed under a search warrant issued by the Superintendent of Customs, Vapi. On search, the seized quantity of silver was found from that house. During the course of the inquiry which was made at that time, Manilal Jaganbhai Desai, from whose house this silver was seized, was not found in possession of any documents such as purchase bill or any other papers explaining his possession of the seized silver. It is contended by the respondents that at the time of the seizure and even subsequent to that, the petitioner was not found present. According to the respondents, the silver was liable to be confiscated under Seetion 113(c) of the Act, because, it was meant for illegal export through the tidal river Kolak which is about two furlongs from the place of detection. On further search it is said to have been revealed that one Sukkar Naran of Daman had engaged some laborers with instructions that their services would be required to lift the seized silver during the night between 27th and 28th August, 1968. It is said that it was on these facts that the silver was seized under a reasonable belief that it was able to be confiscated.

9. As already noted above, the only question of law which arises to be determined in this petition is whether the show cause notice contemplated by Section 124 of the Act could be issued by an authority which is not entitled to conduct the adjudication proceedings contemplated by Section 122 of the Act for the purpose of confiscation and penalties. In order to understand this contention of the petitioner, it would be necessary to make a reference to sections 122 and 124 of the Act. Both these sections are placed in Chapter XJV of the Act which deals with confiscation of goods and conveyances and imposition of penalties. Section III which is the first section of this Chapter speaks about the confiscation of improperly imported goods. We are not concerned in this case with this section because here the proposed confiscation is under Clause (c) of Section 113 which contemplates confiscation of the goods meant for export. We have already made a reference to the provisions of, Clause (c) of Section 113. The next relevant section of this Chapter is Section 122 which is in the following terms:

'122. In every case under this Chapter in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged:

(a) without limit, by a Collector of Customs or a Deputy Collector of Customs;

(b) where the value of the goods liable to confiscation does not exceed ten thousand rupees and where the penalty proposed to be imposed does not exceed two thousand rupees, by an Assistant Collector of Customs;

(c) where the value of the goods liable to confiscation does not exceed one thousand rupees and where the penalty proposed to be imposed does not exceed two hundred rupees, by a gazetted officer of customs lower in rank than an Assistant Collector of Customs. 'It is evident from a bare perusal of the provisions contained in this section that adjudication proceedings for confiscation and in position of penalty can be undertaken only by the officers specified in cls. (a), (b) and (c) of the section and that too if the value of the goods which are liable to confiscation and the proposed amount of penalty do not exceed the limits specified in these clauses. The point to be noted is that Assistant Collector of Customs can hold adjudication proceedings only if the value of the goods liable to confiscation does not exceed Rs. 1,000/-. It is an admitted position in this case that the value of the goods proposed to be confiscated, does exceed Rs.

1,000 ' /- and, therefore the adjudication proceedings which are proposed to be conductor in this case, would fall under clause (a) and would be required to be conducted only by the Collector or the Deputy Collector of Customs which can undertake the proceedings of adjudication under Section 122. Elaborating this argument Shri Nanavati Pointed out that since Clause (a) of Section 122 refers to a 'proposal' to confiscate the goods as well as the proposal to impose a particular penalty, such a proposal necessarily involves a judicial determination of that authority which can undertake adjudication proceedings contemplated by Section 122. According to him, therefore, if it is found that the adjudication proceedings in this case could be conducted only by a Collector of Customs or a Deputy Collector of Customs, an officer subordinate to these two officers is not competent to issue any show cause notice under Section 124. In this connection he also drew our attention to Chapter 11 of the Act which speaks about the officers of the Customs. This Chapter consists of Sections 3 to 6. Section 3 classifies the customs officers into different classifications. Section 4 speaks about the appointment of the officers of customs, Section 5 speaks about the powers of these officers of customs while Section 6 speaks about the entrustment of the functions of the board and customs officers on certain other officers. He pointed out that all these sections go to show that the duties of different classes of customs officers have been specified in the Act and, therefore, an officer of a lower grade cannot perform the duty which is expected to be performed by the officers of higher grade. He therefore urged this court to hold that if adjudication proceedings under Section 122 could be conducted by Collector of customs or Deputy Collector of customs, the issuance of show cause notice under Section 124 cannot be made by any officer subordinate either to the Collector or to the Deputy Collector of customs. whose pecuniary jurisdiction to-conduct such proceedings is without any limit.

10. Section 123 which follows Section 122 provides for a rule of evidence inasmuch as it casts the burden of proving that the seized goods are not smuggled goods on the person from whose possession the goods are seized. For the purpose of this petition, we are not concerned with this section., Then follows Section 124 which is in the following terms:

'124. No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person-

(a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;

(b) is given an opportunity of making a representation in writing within such reason-

able time as may be specified in the notice against the grounds of confiscation or imposition 4 penalty mentioned therein; and (c) is given a reasonable opportunity of being heard in the matter;

Provided that the notice referred to in el. (a) and the representation referred to in el. (b) may, at the request of the person concerned be oral.'

Reference to this section shows that it incorporates therein the rules of natural justice inasmuch as it provides not only for a show cause notice but also for an opportunity of making a representation as well as of being heard in the matter. It should be noticed at this stage that this S. 1.24 does not specifically provide as to which authority should issue a show cause notice contemplated by it.

11. Now the contention of Shri Nanavati, who appeared on behalf of the petitioner was that show cause notice which is contemplated by Section 124(a) refers to a proposal to confiscate the goods as well as to impose a penalty and since the adjudication as regards the said confiscation and imposition of penalty can be made only by the specified authority as mentioned in Section 122 of the Act, issuance of show cause notice is an integral part of the adjudication proceedings contemplated by S. 122, and therefore, the authority which issues show cause notice under Section 124 cannot be different from the authority which can undertake the proceedings for adjudication under Section 122, According to Shri Nanavati therefore, though Section 124 does not specifically state which authority should issue the show cause notice contemplated by it, it necessarily follows by reference to the provisions contained in Section 122 that show cause notice can be issued by the same authority

12. On perusal of the scheme as regards seizure and adjudication when read together with the provisions contained in Section 124 of the Act, we do not find any substance in any of the arguments advanced by Shri Nanavati on behalf of the petitioner. As already noted by us above, the goods in question have been seized on the night of 27th August, 1968 under Section 110 of the Act, which speaks about the seizure of goods, documents and things. So far as the facts of this case are concerned, sub-sections (1) and (2) of Section 110 are relevant. They are in the following terms:

'(1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods;

Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or other-wise deal with the goods except with the previous permission of such officer.

(2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause

(a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Collector of Customs for a period not exceeding six months.'

This section speaks of 'proper officer' which term is defined in Clause (34) of Section 2 of the Act as under:

' 'Proper officer' in relation to any functions to be performed under this Act. means the officer of customs

In this case it is not in dispute that the seizure of the disputed quantity of silver is made by a 'proper officer'. Now if we make a reference to the above quoted provisions of Section 110, it becomes evident that seizure under this section can be made by a 'proper officer' only if he has a reason to believe that the goods are 'liable to confiscation' under the Act. in other words, before proceeding to seize a particular article, the officer concerned must entertain a belief that the said article was liable to confiscation. The belief as regards the liability to confiscation should, therefore, precede the act of seizure. It follows. therefore that the officer who seizes an article under Section 110 of the Act is the first officer who can know and disclose the grounds on which the said article has become liable to confiscation. It need not be said that the officer acting under Section 110 may not be the same officer who is authorised to hold adjudication proceedings under Section 122 and when this is so, it is the seizing officer and not the adjudicating officer who possesses the first hand knowledge regarding the circumstances under which he believed that the seized article was liable to be confiscated. It should further be noted that the show cause notice contemplated by Section 124 follows the act of seizure under Section 110. This is evident from subsection (2) of Section 110 which provides that if within 6 months of the seizure of the goods no show cause notice contemplated by clause (a) of Section 124 is given, the seized goods should be returned to the person from whose possession they were seized. Thus, it is apparent that Section 124 has direct relation with Section 110. This aspect of the matter provides a complete answer to Shri Nanavati's contention that it is only the officer competent to hold inquiry under Section 122 who can know the grounds on which confiscation should be made. Fact of the matter is that in cases where seizure under Section 110 is made, the intimate knowledge about the grounds of confiscation would be more with the seizing officer rather than with the officer empowered to adjudicate under Section 122, for the simple reason that the seizing office- could have seized only after entertaining a belief that the article concerned was 'liable to be confiscated'.

13. Shri Nanavati's contention that the requirement of issuing a show cause notice contemplated by Section 124 of the Act is a part and parcel of the proceedings of adjudication contemplated by Section 122, is also not acceptable. The provision as regards show cause notice which is incorporated in Section 124(a) is, as already stated above, in compliance with the rules of natural justice. These rules of natural justice require that the person against whom the proceedings of confiscation and imposition of penalty are proposed to be undertaker. should know the exact grounds on which these proceedings are contemplated to be undertaken. These grounds would be best known to the officer who conducts the proceedings of seizure under Section 110 as it is that officer who proposes to confiscate the goods and who, therefore, ultimately seizes the goods under Section 110. Therefore, that officer would be in a better position to know the grounds on which the goods are seized on the footing that they are liable to confiscation. Under the circumstances, it would not be correct to state that proposal to confiscate the goods and to impose penalty should come only from an officer who is authorised to conduct the adjudication proceedings under Section 122 of the Act. Issuance of a show cause notice is a distinct step which is preliminary to the adjudication proceedings which are to follow. The adjudication proceedings are dependant upon the grounds mentioned in the show cau3e notice, but not vice versa. It is therefore not correct to say that the proceedings for a show cause notice form part and parcel of adjudication proceedings. The scheme of the Act as revealed from Sees. 110, 124 and 122 is that after a 'proper officer' forms a reasonable belief that certain goods are liable to be confiscated, he would seize these goods under Section 110. within six months from this seizure a notice contemplated by Section 124(a) should be given to the person from whose pos session these goods are seized, calling upon him to show cause why the goods should no be confiscated. Such a notice under Section 124(a) can be given by any officer who I competent to act. Ordinarily, the officer who has seized the goods after forming a belief that they are liable to be confiscated would be best fitted to issue the required show cause notice and to give information as regards the grounds on which the confiscation is proposed to be made, but there is nothing in Section 124 to prevent any other competent officer from issuing such a notice after studying the facts of the case. It is significant to note that the legislature has advisedly refrained from providing in Section 124 as to who is competent to issue show cause notices under clause (a). The purpose of not making any specific provision on this point is that the issuance of a show cause notice being a formality which is quite distinct and separate from the actual adjudication proceedings under Section 122, such a formality can be undertaken by any officer who is conversant with the facts of the case, and also has authority to take steps under the provisions of the Act. Thus the show cause notice stating grounds of confiscation amounts practically to a large-sheet submitted by the police relating to an accused who is sought to be tried before a Court of law. Adjudication proceedings which follow pursuant to the show cause notice under Section 124(a) furnish the last step which may result in actual confiscation and penalty, From this analysis of the scheme there emerges nothing to show that the issuance of a show cause notice under Section 124(a) is part and parcel of adjudication proceedings held under Section 122.

14. What Section 122 of the Act does is merely to make a suitable distribution of pecuniary jurisdiction to adjudicate as amongst different ranks of custom officers. Different officers authorised to act under this section may or may not be having first hand knowledge about the circumstances under which goods are seized under S. 110. They can therefore supply the grounds for confiscation in a show cause notice under S. 124(a) only after studying materials placed before them. It would there fore be a mistake to bold that they are the only authorities who can issue show cause notices under Section 124(a) .

15. Shri Nanavati contended that if this view is taken then much confusion would follow because if the officer who is entitled to hold the adjudication proceedings under Section 122 of the Act is of the opinion that the goods in question should be confiscated on some other grounds, be would be bound by the grounds given by the officer who may be subordinate to him. We are not impressed. In the least by this contention of Shri Nanavati because though it is only the grounds which are conveyed to the person proceeded against, there is nothing in the Act to prohibit the officer conducting the adjudication proceedings to supply fresh grounds to the person proceeded against and to give him an opportunity to show cause against those grounds. As already noted above, Section 124 does not restrict the power to issue a show cause notice to only a particular officer.

16. Before parting with this point it is necessary to note that clauses (b) and (c) of Section 124 contain other facets of the rules of natural justice. Clause (b) contemplates an opportunity of making a representation against the grounds of confiscation and Clause (c) contemplates a reasonable opportunity of being heard. Obviously, both these opportunities are expected to be availed of from the authority which is competent to hold adjudication proceedings under Section 122. It, therefore, follows that if a show cause notice under Clause (a) of Section 124 is issued by an officer who is not authorised to hold the adjudication proceedings, under Section 122, the said show cause notice should indicate before which authority the representation against the grounds of confiscation should be filed and the opportunity of being heard should be availed of. if such an indication is not available from the notice issued by an authority not competent to adjudicate under Section 122, the notice would be defective. But so far as the impugned notice in this case is concerned, it does not suffer from any such defect as it clearly directs the petitioner to appear before the Collector.

17. Under these circumstances, we are of the opinion that it is not necessary under Section 124 of the Act that the authority giving show cause notice under Clause (a) of this Section should be the same which can undertake adjudication proceedings under Section 122. The function of issuing a show cause notice and the function of conducting adjudication proceedings under Section 122, are quite different and if Section 124 is intimately connected with any other section of the Act, it is Section 110 under which the goods are seized.

18. Since this is the only point which is pressed and argued in this petition and since rest of the points are not pressed at this stage, we are of the opinion that this petition should fail. The same is dismissed and rule is discharged with costs.

19. Petition dismissed.


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