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PETITIONER: ISSARDAS DAULAT RAM AND OTHERS

       Vs.

RESPONDENT: THE UNION OF INDIA AND OTHERS

DATE OF JUDGMENT: 13/11/1961

BENCH:

ACT:      Smuggled Goods-Confiscation  by Collector  of Customs-Evidence-If  direct   evidence  essential- Interference of  finding by  writ-Sea Customs Act, 1878 (8 of 1878), s. 167(8)-Constitution of India, Art. 226.

HEADNOTE:      On September  14, 1954,  the appellant sent a quantity of  gold to  a refinery in Bombay for the purpose of  melting it.  On receipt of information that the  gold which was being melted was believed to be  smuggled, the customs authorities made some enquiries at the refinery and seized the gold. The Collector of  Customs found  that the  gold was of foreign origin and had been imported into India in contravention of  the Foreign Exchange Regulations Act, 1947, and made an order confiscating it under s. 167(8)  of  the  Sea  Customs  Act,  1878.  The appellant filed  a petition  under Art. 226 of the Constitution of India before the Punjab High Court challenging  the   legality  of   the   order   of confiscation on  the  ground  that  there  was  no evidence before  the Collector  of Customs to show that the gold had been imported after restrictions had been  imposed in  March 1947  by  notification under the  Foreign Exchange Regulations Act, 1947, and consequently  the finding  that the  gold  had been smuggled  was unsustainable.  In reaching the conclusion that  the gold  had been  smuggled  the Collector of Customs considered the credibility of the story  put forward  by the appellant about the purchase of  the gold  and the  price at which the gold was  stated to  have been purchased which was less than the market price and also the conduct of the appellant  in trying to get the gold melted at the refinery  with a  small bit of silver added so as to  reduce the  fineness of  the gold  and thus approximate the  resultant product  to licit  gold found in the market. ^      Held,  that   though  there   was  no  direct evidence to  show that  the gold had been imported in contravention  of the notification issued under the Foreign  Exchange Regulations  Act, 1947,  the evidence relied  on by the Collector of Customs in coming  to   the  conclusion  that  the  gold  was smuggled could  justify the  finding and  that the matter did  not call  for interference  under Art.

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226 of the Constitution. 359

JUDGMENT:      CIVIL APPELLATE  JURISDICTION :  Civil Appeal No. 591 of 1960.      Appeal by special leave from the judgment and order dated  November 6,  1958, of the Punjab High Court (Circuit  Bench) at  Delhi in Civil Writ No. 417-D of 1958.      A. V. Viswanatha Sastri, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants.      P. K.  Chatterjee and  T.  M.  Sen,  for  the respondents.      1961. November  13. The Judgment of the Court was delivered by      AYYANGAR, J.-This  appeal comes  before us by virtue of  leave granted  by this Court under Art. 136(1) of the constitution and is directed against the judgment and order of the Punjab High Court by which a  Writ Petition  filed  before  it  by  the appellants, under Art. 226 of the constitution was summarily dismissed.      The  point   raised  for   our  consideration relates  to   the  legality   of   an   order   of confiscation,  by   the  Customs  Authorities,  of certain gold  belonging to  the appellants  on the ground of  its being  smuggled. The appellants are the partners of a Joint Hindu Family firm carrying on business  in Bombay  in  inter  alia  gold  and jewellery. On  September 14,  1954, the appellant- firm had despatched to the Bombay Bullion Refinery for the  purpose of  melting about  500  tolas  of gold.   Certain    Customs    Officers    received information that  some quantity  of gold which was believed to  be smuggled  was being  sent  to  the refinery for  melting and  in  pursuance  of  this information they  went to  the refinery  and found the gold  bullion which  is the  subject of  these proceedings placed  in a  crucible for the purpose of being  melted. These  officers ascertained from the  Manager   of  the  refinery  that  this  gold belonged to  the  appellant-firm  who  were  later contacted and 360 who admitted their ownership of the gold. The gold was thereupon seized and investigation started for ascertaining whether  the  gold  was  or  was  not smuggled gold  after which the Assistant Collector of Customs  issued a  notice to  the appellants on January 31,  1955, to  show  cause  why  the  gold should not  be confiscated under s. 167 (8) of the Sea  Customs   Act.  The  appellants  appeared  in response  to   this  notice  and  were  granted  a personal hearing,  their Counsel  being  heard  in support of  their  plea  that  the  gold  was  not smuggled and  so not  liable  to  be  confiscated. Their  defence   was  however   rejected  and  the Collector  of  Customs  who  adjudicated  in  this matter under  s. 182 of the Sea Customs Act passed an  order   on  August  25,  1955,  directing  the confiscation.  From   this   order   appeals   and revisions were  preferred which were unsuccessful.

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Thereafter the  appellants filed  a Writ  Petition before the  High Court  of Punjab  with the result already stated.      It will be seen from the above narrative that the case  is not  covered by s. 178 (A) of the Sea Customs Act which was enacted by Central Act 21 of 1955 since the seizure and the proceedings in this case were  long anterior  to the enactment of that section and  cannot obviously  be governed  by its provisions. For  the reason that s. 178 (A) was in force at  the stage  of the appeals from the order of the  Collector of  Customs to the Central Board of Revenue and the Central Government and possibly under the  impression that  their  case  had  been decided by  throwing on them the burden of proving that the  gold was  not smuggled,  the  appellants raised in  their Writ  Petition to the Punjab High Court  points   regarding  the   construction  and constitutionality  of   s.  178  (A).  When  their Petition as  summarily dismissed these points were repeated in  the petition  for  special  leave  to appeal filed  in this  Court,  and  special  leave appears to have been granted mainly for the reason that 361 the   appeal   invoved   the   question   of   the constitutionality of s. 178 (A) of the Sea Customs Act. The  appeal has  for that  reason been posted for hearing  after the  decision of  this Court in Collector of  Customs, Madras v. Nathella Sampathu Chettey, in  which the  validity  of  section  was considered and upheld.      Section 178  (A) being  put aside,  it may be added, the  only question now arising for decision is whether  the order  of the Collector of Customs holding the appellants gold seized at the refinery to  be  smuggled  gold  so  as  to  be  liable  to confiscation under  s. 167  (8) of the Sea Customs Act is  vitiated by  any error such as to call for interference under  Art. 226  of the Constitution. Section. 167 (8) runs in these terms.      "167. The  offences mentioned  in  the  first column  of   the  following   schedule  shall   be punishable to  the extent  mentioned in  the third column of the same with reference to such offences respectively:-      Offences       Section of this Penalties                      Act to which                       offence has                        reference. (8) If any goods         18 & 19              such goods shall the importation  or                             be liable to con exportation                                     of fiscation; & any which is for the                            person concern- time being prohi-                            ed in any such bited or restric-                          offence shall be ted by  or under                         liable to a penalty

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Chapter IV  of                                 not exceeding this Act,  be im-                            three times the ported           into            or            ex- value of the ported                 from                  India goods, or not contrary                  to                  such exceeding one prohibition or res-                       thousand rupees." triction; 362 The  finding  of  the  Collector  is  recorded  in paragraph 6 of his order in these terms:           "Taking all  the available evidence into      consideration, I  am satisfied  that the gold      bullion in  question is of foreign origin and      had been imported into India in contravention      of  Foreign  Exchange  Regulations  Act,  and      Section 19  of the  Sea Customs  Act  thereby      establishing  an   offence   attracting   the      provisions  of  Section  167(8)  of  the  Sea      Customs Act. It was  not disputed that if there was material to support this  decision the  appeal must  fail. The conclusion of  the Collector  involves findings on two distinct  matters: (1) that the gold which was the subject of adjudication was of foreign origin, and  (2)   that  gold   had   been   imported   in contravention of  the Foreign Exchange Regulations Act. Mr. Viswanatha Sastri-learned Counsel for the appellant submitted  that though the several facts mentioned by  the Collector  in paragraph 5 of his order which form the basis of the finding recorded in paragraph  6 might  show that  the gold  was of foreign origin,  there was  no evidence before the Collector that this foreign gold had been imported after restrictions  had been imposed in March 1947 by  notification   under  the   Foreign   Exchange Regulations Act,  a fact  the onus  to prove which was also  on  the  department,  and  that  in  the absence of any material supporting that conclusion the  finding   that  the  gold  was  smuggled  was unsustainable and  that  the  confiscation  should therefore be set aside.      We  find   ourselves  unable  to  accept  the submission of  learned Counsel.  Though, no doubt, there was no direct evidence that the gold which 363 was the  subject of adjudication had come into the country after  March  25,  1947,  when  the  first notification   under    the    Foreign    Exchange Regulations Act  placing a  ban on the importation of gold was issued, it is not as if this could not be deduced  or inferred  otherwise. There has been little or  no importation of gold from outside the country since  1947. If  the gold  now in question had been  imported earlier  it would  be extremely improbable that  the gold would remain in the same shape of  bars and  with the same fineness as when imported after the passage of this length of time. It was precisely for this reason that at the stage of the  enquiry before the Collector the principal

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point which  was urged on behalf of the appellants was to  deny that  the seized  gold was of foreign origin and  it is  the nature  of the defence that accounts for  the order  of the  Collector dealing almost  wholly  with  the  consideration  of  that question. In  order to reach his finding about the gold being smuggled; the Collector has referred to the conduct  of the  appellants in connection with (a)  the   credibility  of  the  story  about  the purchase of  this gold from three parties, (b) the price at  which the  gold was  stated to have been purchased which  was less  than the  market price, and (c)  the hurry  exhibited in trying to get the gold melted  at the  refinery with  a small bit of silver added  so as  to reduce the fineness of the gold and thus approximate the resultant product to licit  gold   found  in  the  market.  These  were undoubtedly relevant pieces of evidence which bore on the  question regarding  the character  of  the gold, whether  it was  licit or  illicit.  Learned Counsel is, therefore, not right in his submission regarding  the  absence  of  material  before  the Collector  to  justify  the  finding  recorded  in paragraph 6  we have  set out  earlier.  The  Writ Petition was  therefore properly  dismissed by the learned Judges of the High Court.      The appeal is dismissed with costs.                                  Appeal dismissed. 364