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Manicklal Sen and anr. Vs. Additional Collector of Customs and anr. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtKolkata High Court
Decided On
Case NumberMatter No. 270 of 1962
Judge
Reported inAIR1965Cal527,1965CriLJ487
ActsSea Customs Act, 1878 - Sections 167(8), 178A and 178A(2); ;Evidence Act, 1872 - Sections 101 to 104
AppellantManicklal Sen and anr.
RespondentAdditional Collector of Customs and anr.
DispositionPetition allowed
Cases ReferredBanerjee J. Mangala Prasad v. V. J. Manerikar
Excerpt:
- .....1 a copy whereof is annexure 'b' to the petition. it was stated in the show-cause notice that the goods seized were of 'foreign origin'. it was stated that the petitioner no. 1 could not produce any books of account to show proper entries relating to legal acquisition of the goods. the petitioner no. 1 being summoned under section 171a of the sea customs act to produce document if any, showing the legal importation of the goods, gave a statement on the 12th october, 1961. he stated that 28 pieces of transister radio sets and two pieces or transister phonographs did not belong to him but to the petitioner no. 2, who with a view to start a business in radio procured and/or purchased the said goods from diverse dealers for valuable consideration and had papers and documents relating.....
Judgment:

D.N. Sinha, J.

1. The petitioners in this case are (i) Sri Manick Lal Sen carrying on business under the name and style of 'Kedar Nath Dutt' at No. B-82, New Market, Calcutta and (2) Sri Abdul Hafiz. On or about 11th October, 1961 a search was conducted by the officers of the Customs at the place of business of the petitioner No. 1, on the strength of a search warrant issued by the Chief Presidency Magistrate Calcutta. As a result of the search the customs officers seized 28 pieces of Transister Radio Sets, 2 pieces Transister Phonographs, lip sticks, cigarette lighters, shaving razors, batteries for transister radio sets, electric shavers, fountain pens and other stationery goods as mentioned in a seizure list, a copy whereof is annexed to the petition and marked with the letter 'A'. On the 15th November, 1961 a show cause notice was served upon the petitioner No. 1 a copy whereof is annexure 'B' to the petition. It was stated in the show-cause notice that the goods seized were of 'foreign origin'. It was stated that the petitioner No. 1 could not produce any books of account to show proper entries relating to legal acquisition of the goods. The petitioner No. 1 being summoned under Section 171A of the Sea Customs Act to produce document if any, showing the legal importation of the goods, gave a statement on the 12th October, 1961. He stated that 28 pieces of transister radio sets and two pieces or transister phonographs did not belong to him but to the petitioner No. 2, who with a view to start a business in radio procured and/or purchased the said goods from diverse dealers for valuable consideration and had papers and documents relating thereto. It was further stated that the petitioner No. 1 being a friend of the petitioner No. 2 allowed him the. facilities of storing the said goods temporarily until the petitioner No. 2 could arrange for a suitable accommodation for storing the same. They were not displayed for sale. The other goods did belong to the petitioner No. 1. On the 13th October, 1961 the petitioner No. 2 made a statement claiming the ownership of the radio sets and phonographs. The petitioner No. 2 produced documents in respect of 18 transistor sets. It was stated in the show-cause notice that these documents, some of which were issued by the Customs did not show that there was anything to establish that the seized goods were the goods mentioned in the said documents. The petitioner No. 1 was asked to show cause why the goods should not be confiscated under Section 167(8) of the Sea Customs Act, read with Section 3(2) of the Imports and Exports (Control) Act, 1947 and penal action taken against them under Section 167(8) of the Sea Customs Act. In course of the explanation given, the petitioner No. 2 pointed out that excepting two the goods belonging to him were old and used for a long time and most of the pieces were broken and damaged. Even the remaining two would be between two to five years or age. Both the petitioners took the stand that the goods is were purchased by them for sale and were not smuggled goods. On the 25th April, 1962 the Assistant Collector of Customs and Superintendent Preventive Service, (the respondent No. 2 in this application) passed an order by which item Nos. 1 and 3 and electric shavers were released, but an order of confiscation was passed with regard to the remaining goods under Section 167 (8) of the Sea Customs Act read with Section 3(2) of the Imports and Exports (Control) Act, 1947. It is against this order that this application is directed.

2. The only point involved in this case is as to the onus of proof. The relevant provision is Section 178A of the Sea Customs Act and it runs as follows: '178A Burden of proof

(1) 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.

(2) This Section shall apply to gold, gold manufactures, diamonds and other precious stones, cigarettes and cosmetics and any other goods which the Central Government may, by notification in the Official Cazette, specify in this behalf.

(3) Every notification issued under Sub-section (2) shall be laid before both Houses of Parliament as soon as may be after it is issued.'

3. Tin's provision was inserted by the Sea Customs (Amendment) Act, 1955 which came into operation on the 7th May, 1955.

4. It is not disputed that the goods which were seized and ultimately confiscated in this case did not come within the scope of Sub-section (2) mentioned above. Therefore, the question is as to upon whom the onus lies and whether that onus has been discharged. In my opinion, the point is covered by two decisions of the Supreme Court. The first is Amba Lal v. Union of India AIR 1961 SC 264. The facts in that case were as follows: The appellant, at the relevant time was residing at Barmer in the State of Rajasthan. But before 1947, he was living at a place which is now in Pakistan. On 22nd June. 1951 the Deputy-Superintendent, Land Customs, conducted a search in the appellant's house and recovered therefrom silver and gold bullion, silver coins, gold bars and several miscellaneous items. A notice was given to the appellant to show cause why the goods seized should not be confiscated under Section 167(8) of the Sea Customs Act read with Section 7 of the Lund Customs Act. With regard to some of the goods, the appellant contended that he had brought them from Pakistan after the partition in 1947, and rest of the items were purchased by him bona fide, although they may have been originally smuggled goods from Pakistan. The Collector of Central Excise held that the appellant failed to establish that the items 1 to 5 in the seizure list had been brought by him to India in the year 1947 and also did not accept the plea of the appellant in regard to items 6 to 10 thereof, that he was a bona fide purchaser of them. In the result he held that all the goods were imported to India in contravention of (i) Section 3 of the Imports and Exports (Control) Act read with sections 19 and 167 (8) of the Sea Customs Act and (ii) sections 4 and 5 of the Land Customs Act read with Section 7 thereof. He made an order of confiscation under Section 167(8) of the Sea Customs Act read with Section 7 of the Land Customs Act, giving option to the appellant to redeem the confiscated goods within four months of the date of the order on payment of the sum of Rs. 25,000/-. In addition, he imposed a personal penalty of Rs. 1000/- and directed the payment of import duty leviable on all the items together with other charges before the goods could be taken out of the customs control. The appellant being aggrieved by the said order, preferred an appeal to the Central Board of Revenue which upheld the order of the Collector, holding that the onus of proving the import of the goods was on the appellant. The appellant thereafter made a revision petition before the Central Government which was dismissed. Thereupon, he made an application under Art. 226 of the Constitution in the High Court of the Punjab. This application was dismissed by the Division Bench. The appellant thereafter appealed to the Supreme Court. Subba Rao J. dealt with the question in two parts, one in regard to items 1 to 5 and the other in regard to items 6 to 10. With regard to items 1 to 5 the learned Judge said as follows:--

'The decision in regard to items 1 to 5 turns purely on the question of onus. The Collector of Central Excise as well as the Central Board of Revenue held that the onus of proving the import of the goods lay on the appellant. There is no evidence adduced by the customs authorities to establish the offence of the appellant, namely, that the goods were smuggled into India after the raising of the customs barrier against Pakistan in March 1948. So too, on the part of the appellant, except his statement made at the time of seizure of the goods and also at the time of the inquiry that he brought them with him into India in 1947, no other acceptable evidence has been adduced. In the circumstances, the question of onus of proof becomes very important and the decision turns upon the question on whom the burden of proof lies.

This Court has held that a customs officer is not a judicial tribunal and that a proceeding before him is not a prosecution. But it cannot be denied that the relevant provisions of the Sea Customs Act and the Land Customs Act are penal in character. The appropriate customs authority is empowered to make an inquiry in respect of an offence alleged to have been committed by a person under the said Acts, summon and examine witnesses, decide whether an offence is committed, make au order of confiscation of the goods in respect of which the offence is committed and impose penalty on the person concerned, see Sections 168 and 171A of the Sea Customs Act and Sections 5 and 7 of the Land Customs Act. To such a situation, though the provisions of the Code of Criminal Procedure or the Evidence Act may not apply except in so far as they are statutorily made applicable, the fundamental principles of criminal jurisprudence and of natural justice must necessarily apply. If so, the burden of proof is on the customs authorities and they have to bring home the guilt to the person alleged to have committed a particular offence under the said Acts by adducing satisfactory evidence. In the present case, no such evidence is forthcoming indeed there is no tittle of evidence to prove the case of the customs authorities.'

5. The order of the customs authority with regard to these items was set aside. With regard to items 6 to 10 it was held that the appellant had admitted that they were smuggled goods and consequently the order of confiscation was upheld, as also the order of penalty because it was found that the appellant had purchased them knowing that they were smuggled goods.

6. The next case to be considered is also a decision of the Supreme Court, Gian Chand v. State of Punjab : 1983(13)ELT1365(SC) . That case related to the conviction of the appellants under Section 167(81) of the Sea Customs Act. It appears that Sub-Inspector of Police, Jullundhar, received an information that some smugglers were on the point of transporting certain goods from Amritsar to Jullundhar and that some of them had actually come and were present in the house of Gian Chand, the first appellant. A raid party was organised and the house was raided. In course of search, certain bars of gold were found together with a large amount of cash. The Customs Authorities applied under Section 180 of the Sea Customs Act and took custody of the gold bars. A notice was issued to the appellants to show cause why the same should not be confiscated under Section 167(8) of the Sea Customs Act. During the proceedings for confiscation, sanction was accorded to prosecute the appellants for an offence under Section 167(81). They were found guilty and were convicted of having committed the said offence. Section 167(81) inter alia provides that if any person knowingly, and with intent to defraud the Government of any duty payable thereon acquires possession of any goods or is in any way concerned in carrying, removing, depositing, harbouring, keeping or concealing any such goods, then upon conviction before a Magistrate, he is liable to imprisonment for a term not exceeding two years or to fine or to both. In respect of this provision of law Ayyanger J. said as follows:

'It will be seen from the terms of Section 167(81) that there are two distinct matters which have to be established before a person could be held guilty of the offences there set out: (1) that the goods (in this case gold) were smuggled, i.e., imported into the country either without payment of duty or in contravention of any restriction or prohibition imposed as regards the entry of those goods, and (2) that the accused knowing that the goods were of that character did me acts specified in the latter part of the provision. It is clear that in the absence of any valid statutory provision in that behalf the onus of establishing the two ingredients necessary to bring home the offence to an accused is on the prosecution.'

7. This case, although not strictly relevant, has an important bearing on the question of onus. The position seems to be as follows: The Sea Customs Act deals with offences which carry punishment of confiscation or fine. The offences and the adjudication thereof, including conviction and punishment, are all of a penal nature. Such proceedings are therefore, in the nature criminal proceedings. The general rule relating to all criminal proceedings is that a criminal charge has to be established by the prosecution to the him and the burden of proof is never on the accused. This fundamental principle of the burden of proof in criminal proceedings can only be varied by a statutory enactment. Under the Sea Customs Act, it has now been varied by the introduction of Section 178A, which has been quoted above. In this case, however, it is admitted that Section 178A is not applicable. I do not think that it is necessary to multiply legal authorities. The decisions of the Supreme Court cited above are sufficient to dispose of the issue raised. I would, however, like to cite a Madras case as the facts are very similar to the present case. In Public Prosecutor, Madras v. M. L. Modi : AIR1961Mad368 , what happened was as follows: The petitioner H. L. Modi disembarked at Meenambakkam Aerodrome from an aeroplane which flew from Bombay' to Madras. He was interrogated by Customs Officials and his trunk was searched; with the result that underneath certain articles of clothing a tin box was found containing 247 wrist watches of 'Record' Manufacture, most of them being new. He was charge-sheeted under Section 167(8) of the Sea Customs A6t and was convicted. It was stated on behalf of the Customs Authorities that the petitioner had made a statement admitting the broad facts, which was Ex. P2 in that case. There was a revision to the Madras High Court which was allowed. Anantanarayanan J. said as follows:

'It is claimed by the learned Public Prosecutor that in his statement, Ex. P. 2, the revision petitioner admitted that he was aware that there were watches upon which duty had not been paid. First of all, I am not at all certain how far Ex, P. 2 could be safely accepted and acted upon. Secondly, even it it is to be acted upon, such an admission clearly cannot form the basis for any conviction of the revision petitioner. The prosecution must prove, by some other dependable evidence, that these watches had been imported into India without duty, and were, in fact, smuggled goods. Actually, the Legislature has been very well aware of the difficulty of proving this, and has enacted S. 178-A(1) of the Act .................. ..... ....... ....... Under Section 178-A(1) and (2) there is a presumption that certain categories of goods are smuggled goods, when they are seized under the Act in the reasonable belief that they were of that character. Section 178-A(2) refers to these categories, and also refers to a notification which the Central Government may make. Neither under the Sub-section, nor under any such notification, are wrist watches goods of that description. This matter is not in dispute. Hence, there was no presumption that, even when the revision petitioner was in possession of so large a quantity of wrist watches as 247 they were smuggled goods or goods imported into India from abroad without due payment of duty.

Since the purchase of these goods was not prohibited, even on a large scale, and duty was payable in respect of such goods only on the occasion of import into the country, the revision petitioner could obviously have acquired these goods quite legitimately at Bombay or elsewhere. The fact that bills were not produced or that he failed to satisfactorily account for the acquisition, will not raise any presumption against him, unless the goods fall within the scope of Section 178-A of the Act.'

8. Finally I have to mention a judgment of the Division Bench of this Court presided over by Banerjee J. Mangala Prasad v. V. J. Manerikar : AIR1965Cal507 . The facts in that case were as follows: The petitioner carried on business under the trade name of Hard Sales Agency in Calcutta. On August 3, 1962 the office and godown of the petitioner were searched by the police and certain tins of dyes, all manufactured in foreign countries together with other articles were seized. The Customs Authority applied under S. 180 of the Sea Customs Act and Kept custody of the seized goods. On 17th November, 1962 a notice was issued to the petitioner stating that the goods were imported without a valid licence and to show cause why the goods should not be confiscated or penalty not imposed upon the petitioner. The petitioner showed cause denying the allegations and stating that he was a bona fide purchaser of the seized goods except one item of which he denied ownership. The Assistant Collector of Customs gave him a hearing and made an order directing the confiscation of the goods under Section 167(8) of the Sea Customs Act read with Section 19. Thereupon an application was made under Artcle 226 or the Constitution. What was argued before the Court was that once the customs authority proved that the importation of the goods was restricted, the burden shifted on the petitioner. This contention was repelled. It was held that the burden of proof to show that the goods were smuggled or unlawfully imported or that a person was in possession of such goods with knowledge thereof, is on the prosecution, namely, the customs authority. Once it is proved that the goods have been unlawfully imported or have been smuggled into the country, the right of confiscation arises in respect of the goods wherever they may be found. But the initial onus of proving the same is on the customs authority. As regards penalty, a buyer who with the knowledge that the goods have been smuggled into this country purchases or buys the goods, may be liable to penalty, but not an innocent buyer. These being the tests to be applied, let us come now to the facts of the present case. In this case, the charge was that the petitioner No. 1 was in possession of various goods of foreign origin, but he could not produce satisfactory evidence of legal importation and/or possession of the same. The burden of proof that these goods were smuggled into India or imported without a valid permit or that the petitioner No. 1 was in possession thereof with the knowledge that they were so smuggled or imported, was on the customs authority. Nevertheless, they proceeded as if the burden was on the petitioner No. 1. This is perfectly clear from the show cause notice itself. The statement there is to the effect that

'the party could not produce on the spot any documentary evidence to prove legal importation and/or possession of goods. The party could not also produce any books of accounts to show proper entries relating to legal acquisition of the goods.'

Actually, both the petitioners were asked to prove that these goods were legally imported and statements were taken from them. In the impugned order, the Assistant Collector discussed the evidence that was produced and the statements that were made. According to him the documents produced did not prove to the satisfaction of the authorities that they related to the goods in question. Actually, certain documents issued by the customs authority themselves were produced. It was, however, stated that they did not show that the documents related to these particular goods. If the customs authorities make a habit of issuing documents, presumably in connection with auction sales of seized goods, in this form they have to thank themselves. Such documents are open invitations for illicit smuggling. However, the point is that throughout the order the Assistant Collector assumed that the burden of proof was on the petitioner No. 1 to prove that the goods in his possession were not smuggled into India or not imported illegally. According to him, the petitioner No. 1 was unable to prove that the goods that were seized were not smuggled goods and had not been illegally imported. In my opinion, the entire approach is contrary to law and the order cannot be supported. The burden of proof in this case did not lie on the petitioner No. 1 or either of the petitioners, but the burden of proof was on the customs authority to prove beyond reasonable doubt that the goods had been illegally imported andwere smuggled goods. The mere fact that the goods were of foreign make was not sufficient to discharge this onus or shift the same upon the petitioner. If the respondents had discharged the initial onus of showing that the goods had been illegally imported, then they could confiscate the same. For purposes of penalty they would have to go further and show that the petitioner No. 1 had been in possession of the said goods with the knowledge that they were smuggled. That, of course, has never been proved, because the initial onus had not been discharged by the respondents. Materials on record show that the goods were principally old and damaged goods. As the goods are of foreign origin they must have been imported into India at some date or other. But there is no evidence to show as to when they were imported and who imported them or that they were imported in violation of the law and under what circumstances. Not only is there no evidence to show the same but the respondents did not make the slightest attempt to adduce any evidence, but proceeded on the mistaken assumption that the burden of proof lay on the petitioners or at least on the petitioner No. 1.

9. The result is that for the reasons above mentioned this rule must be made absolute and there will be a writ in the nature of certiorari quashing the order of the respondent No. 2 dated 25th April, 1962 and there will be a writ in the nature of mandamus directing the respondents not to give effect to the same. The seized goods must be returned to the petitioners. There will be no order as to costs.


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