V.V. Raghavan, J.
1. These three writ appeals arise out of three connected writ petitions viz., W.P. No. 2193 of 1967, W.P. No. 2194 of 1967 and W.P. No. 2195 of 1967. W.P. No. 2193 of 1967 is to quash the adjudication order of the Collector of Central Excise, Madras, dated 2nd September, 1964 confirmed by the appellate order of the Central Board of Excise and Customs, New Delhi, dated 18th August, 1966 and further confirmed in the revision petition by the Union of India by its order, dated 10th May, 1967 confiscating 2,657 diamond pieces weighing 228.51 carats seized from the appellant's premises on 23rd August, 1961 on the ground of illegal importation in contravention of Section 19 of the Sea Customs Act, 1878, read with Section 3 (2) of the Import and Export (Control) Act, 1947. W.P. No. 2194 of 1967 is filed to .quash the search warrant issued by the Chief Presidency Magistrate in his D.Dis. 5870/11 dated 23rd August, 1961 under Section 96 of the Code of Criminal Procedure, authorising the search of the appellant's premises 99/102, N.S.C. Bose Road, Madras-1, by the Officers of the Collector of Central Excise and W.P. No. 2195 of 1967 is for the issue of a writ of mandamus to direct the return of the said 2,657 diamond pieces seized from the appellant's premises forthwith to the petitioner.
2. The appellant is a native of Pallampur in Gujarat State settled down at Madras and carrying on business as a dealer in diamonds and other precious stones for the last 38 years. On 23rd August, 1961 an officer of the Customs (Preventive section) of the Collector of Central Excise along with certain other members of his-staff went to the premises of the petitioner with a search warrant from the Chief Presidency Magistrate, Madras, presumably issued on application filed on behalf of the Customs Collector stating that he believed that contraband watches were secreted in the petitioner's premises, under Section 172 of the Sea Customs Act, 1878. The search was commenced at 4 p.m.-on 28th August, 1961 and in spite of a complete search carried out by the authorities they were not able to secure any watches, for which they had obtained a search warrant. In the course of the search, the officers opened the iron safe and the steel almirah wherein certain leather pouches containing 39 paper packets containing in all 2,658 diamond pieces cut and polished weighing 226 carats and 51 cents were found.
3. The authorities having found no contraband watches in the premises started interrogating the petitioner regarding the same as also the sources from which such large quantity of diamonds were secreted in the premises.
4. The petitioner's case is that he was harassed till late in the night by interrogations and threat and they further made the petitioner sign a statement prepared by them stating that the petitioner did not have accounts showing the sources from which the diamond pieces were purchased,. that the Superintendent of Central Excise, who recorded the statement, required the inclusion in the statement, that it was made voluntarily and that the officers treated the petitioner courteously, that the signature of the petitioner in the statement was witnessed by (1) Mahendra M. Shah and (2) Babulal L. Mehta, but that the signatures of Sri K.S. Iyer would appear to have been taken later. The petitioner's further case is that after obtaining the said statement, they called upon the petitioner to sign a mahazar which the Deputy Superintendent of Customs Preventive (T.S. Jayaraman) prepared and obtained the signatures of three witnesses, viz., (1) Mahendra M. Shah, (2) Babulal L. Mehta and (3) Girish Kumar G. Mehta and that the officers left the premises at about 1 a.m. on 24th August, 1961 seizing the diamonds from the business premises, which is part of his residence, that the petitioner contacted next morning his Advocate, Mr. Rattan of M/s. Jacob and Rattan who was present on the previous evening for sometime and acquainted him with what all happened in the previous night, that his Advocate obtained statements from the petitioner and the witnesses to the Mahazar as to what all happened in the previous night and that his Counsel addressed a letter to the Collector stating the circumstances under which the petitioner's statement was extracted on the previous night and further calling upon him to furnish the grounds of seizure in accordance with Section 181 of the Sea Customs Act. The petitioner also addressed a similar letter to the Collector of Customs repudiating the correctness of the statements recorded on the night of 23rd August, 1971 offering to produce the accounts, receipts etc., and explain the possession of the diamond pieces seized if so required by the Collector and that there was no response either to the Advocate's letter or to the petitioner's letter. On 18th September, 1961 however, the petitioner received a show cause notice stating that the search was conducted on 23rd November, 1961 on suspicion that illicitly imported foreign goods were kept in the premises, that the importation contravened the provisions of the Sea Customs Act and the Import and Export (Control) Act, 1947 and that the search was conducted on the basis of the warrant issued by the Chief Presidency Magistrate, Madras and that the goods seized were liable for confiscation. A copy of the statement of the petitioner dated 23rd August, 1971 and that of the witnesses was also furnished. To the Advocate's letter dated 30th September, 1961 the first respondent replied that the warrant was shown to the petitioner and that a copy of the same could be obtained from the Chief Presidency Magistrate, Madras, that the search was not for watches alone, that the reasons for the seizure were already stated in the mahazar and the show cause notice and that there is no need to furnish the grounds again. The petitioner's Advocate immediately wrote back stating that the warrant was not shown to the petitioner and prayed for the reasons for the seizure under Section 181 of the Act. After prolonged correspondence a copy of the statement dated 23rd August, 1961 was furnished to the petitioner. The petitioner sent a reply to the show-cause notice stating that his statement dated 24th August, 1961 which was extracted from him under compulsion could not be acted upon and he further added an explanatory note as to the persons from whom he acquired the said diamonds and that he would produce all the persons mentioned in the statement for examination. Meanwhile the Collector of Central Excise would appear to have obtained sworn statements from the various persons from whom he obtained the diamonds and also a sworn statement from one K.S. Iyer, a witness to the statement dated 23rd August, 1971. On 14th March, 1963 the petitioner was given a personal hearing by the first respondent. In response to the directions of the first respondent, the petitioner produced his accounts on 10th May, 1963. The first respondent passed on order dated 2nd September, 1964 holding that the diamonds were seized in the reasonable belief that they were smuggled, that the burden of proof shifted to the petitioner from whose premises the goods were seized, that the officer seizing the goods validly obtained the warrant as he had reasonable belief that smuggled goods had been secreted in the premises in question and that the goods were illegally imported into India without an Import Trade Control Licence in contravention of Section 19 of the Sea Customs Act read with Section 3 (2) of the Import and Export Control Act, 1947 and that they are liable to be confiscated under Section 167 (8) of the Sea Customs Act read with Section 3 (3) of the Import and Export (Control) Act, 1947. The Collector, however, held that he did not impose any penalty on the petitioner with reference to Section 167 (3) and Section 167(8) of the Act as there was no conclusive evidence that the petitioner was the person concerned in the offence.
5. The petitioner filed an appeal against the order of the first respondent to the Central Board of Excise and Customs, pointing out the several irregularities in the order. The second respondent gave a hearing to the petitioner but the appeal was dismissed.
6. The petitioner filed a revision petition to the Ministry of Finance, Government of India, New Delhi, on 19th December, 1966 and requested for a personal hearing and the Government refused to give a personal hearing by its order dated 10th May, 1967 and dismissed the revision petition summarily. The petitioner has filed the above writ petitions on the following main grounds.
(1) The entire proceedings of the first respondent from the stage of obtaining the warrant from the Magistrate, the conduct of the search and the seizure of the diamonds are illegal and that there was lack of good faith on the part of the officers concerned and that the proceedings violated the principles of natural justice.
(2) The warrant of the Chief Presidency Magistrate merely mentioned that the authorities had suspicion that the petitioner had secreted contraband watches in his premises and the search was grounded only on suspicion.
(3) The warrant obtained from the Chief Presidency Magistrate is not in accordance with Section 172 of the Sea Customs Act, as it was applied for by the first respondent merely on suspicion that the petitioner had secreted in his premises illicit goods of foreign origin and that there was no belief in the mind of the applicant for the issue of a warrant that dutiable or prohibited goods were secreted by the petitioner in the premises and that the search warrant was obtained not on any reasonable or bona fide belief but on mere suspicion.
(4) The Officers cannot seize first and then assert that they believed that the goods are smuggled goods and the seizure of the diamonds being illegal and without jurisdiction, the burden of proof provided under Section 178-A is not attracted.
7. In the counter-affidavit filed on behalf of the respondents the contentions that the entire proceedings from the stage of obtaining a warrant from the Magistrate till the passing of the final order of confiscation are illegal and violative of the principles of natural justice and not done in good faith were denied. The further contentions that the warrant of the Chief Presidency Magistrate was not made available for inspection or that the authorities harassed the petitioner taking undue advantage of the mental condition of the petitioner and his wife when the search was conducted, were also denied. It was pointed out in the counter-affidavit that the writ petitioner took nearly 76 days to file a list of persons from whom diamonds seized were alleged to have been purchased by him seeking to wriggle out of the situation. The respondents pointed out that the impugned orders were validly passed and no rules of natural justice were violated.
8. Before Kailasam, J., two contentions were put forward viz., (1) The warrant issued by the Chief Presidency Magistrate under Section 172 of the Sea Customs Act, 1878, is not in accordance with law and that the seizure of the goods was without a reasonable belief and consequently the burden of proving that the goods were not smuggled goods had not shifted to the petitioner and (2) The diamonds seized belonged to the petitioner and they were purchased by him in the open market and this plea of the petitioner vouched by accounts and receipts should have been accepted.
9. The learned Judge rejected the plea of the petitioner that the diamonds seized were purchased by him from private part-ties, that the said purchases were not supported by account books, vouchers, receipts etc., and that they were smuggled ones on the admission contained in the petitioner's voluntary statement.
10. The learned Judge further found that the Magistrate in issuing the warrant was satisfied on the basis of information that dutiable goods were secreted in the premises of the petitioner and that the burden, shifted on to the petitioner, to establish that the goods seized were not smuggled diamonds and that the petitioner failed to discharge the burden. In the result, the learned Judge dismissed the writ petitions. The petitioner has filed the above writ appeals to this Court.
11. Sri V.K. Thiruvenkatachari, the learned Counsel for the appellant contends:
(1) that the warrant issued by the Chief Presidency Magistrate, Madras, was based on suspicion that illicitly imported foreign goods have been secreted in the petitioner's premises and that the warrant did not disclose that it was issued on information furnished by the officer who had reasonable belief that they are smuggled goods and that the petitioner was not informed on what information the warrant was obtained and consequently the burden of proof under Section 178-A of the Act was wrongly thrown on the petitioner; and (2) The statement dated 23rd August, 1961 deposed to by the petitioner before the Deputy Superintendent of Central Excise, Customs Preventive, Madras, and the mahazar prepared on the same night cannot be relied upon as they were prepared by the Deputy Superintendent of Central Excise, Customs Preventive (Sri T.S. Jayaraman), though signed by the petitioner and that in the circumstances it could not have been the statement of the petitioner.
12. In dealing with the first contention, we may refer to the judgment of the Supreme Court in the Collector of Customs, Madras v. Nathella Sampathu Chetty and Anr. : 1983ECR2198D(SC) , where Rajagopala Ayyangar, J. in reversing the judgment of this Court reported in Nathella Sampathu Chatty v. Collector of Customs : AIR1959Mad142 , observed at pages 336 and 337 as follows:
The other ground upon which the learned Judges upheld the respondent's contention that the rule as to the burden of proof enunciated in Section 178-A was not attracted to the present case was based on the finding that the Customs Officer who effected the seizure did not, at the moment of seizure, entertain a reasonable belief that the goods seized were smuggled. The learned Solicitor-General who contested the correctness of this finding-did not urge that the words in Section 178-A 'In the reasonable belief that they are smuggled goods' did not prescribe a condition precedent to the applicability of that provision which had to be satisfied before the provisions could be invoked against the affected party. As we have already pointed out, his further submission was that such a reasonable belief must not only be entertained by the seizing officer and besides that the question whether the officer had done so or not, was a matter which could objectively be determined by the adjudicating authority acting under Section 182. And these submissions he made, as aids to his main contention that the burden of proof imposed was reasonable. We are pointing this out since before the learned Judges of the High Court the argument apparently advanced was that the test was the subjective belief of the seizing officer which could only be disproved by the establishment of circumstances in which no such belief could ever honestly or reasonably be entertained based on the reference to 'the subjectivity of the officer' in the judgment of this Court in Babulal Amirthlal Mehta v. Collector of Customs : 1983ECR1657D(SC) . It was by approaching the problem even from this very narrow standpoint that the learned Judges reached a conclusion on this part of the case favourable to the respondent.
Even taking the record of the detention in the mahazar prepared at the Central Station as ' the seizure ' we do not agree with the learned Judges of the High Court that the seizing-officer could not entertain a reasonble belief that the gold seized was smuggled. The reasonableness of the belief has to be judged by all the circumstances appearing at that moment. In the present case, the quantity of gold in the possession of Nandagopal of the value of over one laksh of rupees was certainly a very relevant factor to be taken into account and which could be considered in judging the matter. No doubt, such a quantity could be the subject of bona fide purchase in the course of normal trade, particularly when the person in possession was the representative of a well-known firm of bullion-dealers. But one would also normally expect that the representative would have secured a bill or voucher to evidence the purchase. In other words : (i) it was not a case of a few trinkets of gold or small quantity purchased for domestic or personal use but a considerable amount for purposes of business; (2) the undelivered letter addressed to Messrs. Mathuradas Gopalakrishnayya and Company which admittedly had a bearing upon the purchase of gold in the possession of Nandgopal necessarily drew an amount of suspicion on the theory of a bona fide purchase. These circumstances, in our opinion, which were admittedly present at the moment when the gold was taken by the Customs Officer at the Central Station did tend to raise a reasonable suspicion that the gold seized had been obtained illicitly and this was sufficient to constitute, in the words of the statute, 'a reasonable belief that the goods (gold) were smuggled'.
In the same volume we may refer to another decision Pukhraj v. D.R. Kohli, Collector of Central Excise, Madhya Pradesh and Vidarbha and Anr. : 1983(13)ELT1360(SC) , where Gajendragadkar, J., as he then was, observed as follows:
Now Section 178-A places the burden of proving that the goods are not smuggled goods on the person from whose possession the said goods are seized, where it appears that the said goods are seized under the provisions of the Sea Customs Act in the reasonable belief that they are smuggled goods. Once it is shown that the goods were seized in the manner contemplated by the first part of Section 178-A, it would be for the appellant to prove that the goods were not smuggled goods and since it has been held by the Collector of Central Excise that the-appellant had not discharged the onus imposed on him by Section 178-A, the statutory presumption remained unrebutted and so, the goods must be dealt with on the basis that they are smuggled goods. As soon as we reach this conclusion, it follows that under Section 167 (8) of the Sea Customs Act, the said goods are liable to confiscation. That is the view taken by the High Court when it rejected the appellant's prayer for a writ quashing the order of confiscation passed by the Collector of Central Excise in respect of the gold in question, and we see no reason to interfere with it.
The learned Judge further observed later as follows:
The argument is that the question as to whether there was a reasonable belief or not is justiciable and since there is no material on the record to show that the belief could have been reasonable the statutory presumption cannot be raised. In our opinion, this argument is not well-founded. There are two broad features of the seizure which cannot be ignored. The first feature on which the officer relied is supplied by the quantity of gold in question. It was found that the appellant was carrying on his person five pieces of gold bullion weighing as much as 290.6 tolas. This large quantity of gold valued at nearly Rs. 30,000 itself justified a reasonable belief in the mind of the officer that the gold may be smuggled.
In the present case the adjudicating officer had the entire material before him and he is entitled to come to a conclusion that the seizing officer had reasonable belief that the goods are smuggled goods. In coming to the factual conclusion the officer has taken into account two circumstances viz., : (1) seizure was of 2,657 diamond pieces weighing 228 carats and 51 cents;(2) the petitioner's admission that he had no accounts, bills or vouchers for the purchase of the diamonds at Zaveri Bazaar, Bombay and locally at Madras and that he was unable to account for the diamonds seized. Taking into account the large quantity of diamonds seized and his failure to explain the source from which he obtained the same, his admission that he does not keep accounts or vouchers showing from whom the purchases had been made, we are of opinion that the order of the adjudicating officer is correct. The case falls squarely within the decision in Nathella's case : 1983ECR2198D(SC) , and Pukkraj case (1964) M.L.J. (Crl.) 161 : (1964) S.C.J. 281 A.I.R. 1962 S.C. 1599, referred to above. We are further of opinion that the order rejecting the account books produced before the authorities long after the seizure is justified.
13. It is no doubt true that the Magistrate issuing a warrant should have reasonable belief that the goods seized are smuggled goods. The authorities need not disclose to the petitioner the source of information on which a warrant is sought for, but they must have information on the basis of which the warrant for seizure is obtained. We are of opinion that in the instant case the warrant was issued by the Chief Presidency Magistrate on the basis of the information which the concerned officer had. Further the adjudicating officer rightly relied upon the large quantity of diamonds seized viz., 2,657 diamond pieces weighing 228.51 carats, which was not accounted for. We are of opinion that on the facts and circumstances of the case the view of Kailasam, J., is correct.
14. In the result, the writ appeals fail and are dismissed with costs. Counsel's fee one set which we fix at Rs. 250.