23 November 1964
Supreme Court


Case number: Appeal (civil) 777 of 1962






DATE OF JUDGMENT: 23/11/1964


CITATION:  1965 AIR 1072            1965 SCR  (1) 213  CITATOR INFO :  RF         1970 SC1310  (6)  RF         1972 SC 648  (8)  RF         1984 SC 667  (26)

ACT: Sea  Customs  Act, 1878 (Act 8 of  1878),  s.  167(8)-Person concerned in illegal importation of gold,--who is--Inference from  possession  of  gold  held  to  be  smuggled--Positive finding  as  to  being  concerned  in  illegal  importation, necessity for recording.

HEADNOTE: A  number  of gold bars held to be smuggled  were  recovered from the person of the appellant.  The Collector of  Central Excise and Land Customs ordered the confiscation of the gold and  imposed a penalty on the appellant under s.  167(8)  of the  Sea Customs Act (Act 8 of 1878).  The appellant’s  writ petition challenging the above order was allowed by a single Judge  of  the  Punjab High Court on  the  ground  that  the Collector had not recorded a finding that the appellant  was concerned in the act of smuggling gold into the country.  On Letters  Patent  Appeal the appellate Bench  set  aside  the order  of the single Judge and dismissed the writ  petition, whereupon the appellant came to the Supreme Court by special leave. It was contended on behalf of the appellant that the finding that the smuggled gold was recovered from the person of  the appellant  was  not  sufficient in  itself  to  justify  the conclusion  that the appellant was concerned  in  committing the offence of importing gold illegally.  It was also  urged that  Collector  had  not  recorded  any  finding  that  the appellate was concerned in    such importation. HELD:     (i)  The  person  who can be  penalised  under  s. 167(8) is one,who is in  any   way   ’concerned’   in    the commission  of the offence of bringing into India or  taking out  of  the  country goods with respect  to  which  certain prohibitions   or   restrictions  exist.    The   expression ’concerned  in any such offence’ in the penalty part  of  s. 167(8)  may  include  the  person  who  be  ’interested’  or ’involved’  or ’engaged’ or ’mixed up’ in the commission  of the  offence referred to in the first column of  s.  167(8).



[216 E; 217 A-B] (ii) Such  ’concern’ of the appellant in the  commission  of the  offence must be at a stage prior to the  completion  of the offence of illegal importation of gold into the country. The offence of importation is completed when the goods  have crossed the customs frontier as is clear from the provisions of  ss.  18  and 19.  Once the gold has  been  imported  any subsequent  interest etc. in the smuggled gold cannot  bring in the person showing such interest etc. within the  purview of  s. 167(8) for the purpose of imposition of the  penalty. [217 B-D] (iii)The  mere finding of fact recorded by the Collector  of Customs in this case about the smuggled gold being recovered from  the  person  of the appellant was  not  sufficient  to conclude  that the appellant was ’concerned’ in the  illegal importation  of  the  smuggled gold  into  the  country  and therefore  liable  for penalty under s. 167(8) of  the  Act. [217 D-E] Pukhraj  Jain v. D.  R. Kohli, I.L.R. 1959 Bom. 1771,  Gopal Mayaji  v.  T.  C.  Seth, A.I.R. 1960  Bom.  478  and  Addl. Collector  of  Customs v.  Sitaram, A.I.R.  1962  Cal.  242. approved. 214 (iv) A  finding of fact by the Collector of Customs  that  a person   is  in  possession  of  smuggled  goods  does   not necessarily  imply  that the Collector  had  considered  the question of the person’s being ’concerned’ in the commission of the offence of illegal impartation of goods.  It is  true that .an omission to record a formal finding to this  effect may  not  be  fatal  to the imposition  of  penalty  by  the Collector,  but the order must show that he  bad  considered this  aspect  of  the  matter.   The  order  should  clearly indicate what matter he had considered to have a bearing  on the  question  of the person’s being  concerned  in  illegal importation of the goods, and why he had concluded therefrom that the person was so concerned and therefore liable to pay the penalty under s. 167(8) of the Act. [219 C-D; 218 B-C] Balbir Singh v. Collector of Central Excise & Land  Customs, New Delhi, A.I.R. 1960 Punj. 488, referred to. Union of India, v. Jagdish Singh, I.L.R. 1962 (1) Punj. 369, disapproved.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 777 of 1962. Appeal  by special leave from the judgment and decree  dated March  6, 1962 of the Punjab High Court (Circuit  Bench)  at Delhi in L.P. Appeal No. 120-D of 1960. B.   D. Sharma, for the appellant. D.   R. Prem, V. D. Mahajan and R. N. Sachthey, for the res- pondents. The Judgment of the Court was delivered by Raghubar  Dayal,  J.  A  number of gold  bars,  held  to  be smuggled  gold,  were  recovered  from  the  person  of  the appellant  on  September 17, 1957, when he was  going  in  a truck from Jaisalmer to Pokaran.  The Superintendent of Land Customs  issued  a notice to the appellant  on  December  4, 1957,  to show cause why penal action be not  taken  against him and as to why the goods should not be confiscated  under s.  167(8)  of the Sea Customs Act, 1878 (Act  8  of  1878), hereinafter called the Act.  The appellant showed cause  and on March 21, 1959, the Collector of Central Excise and  Land Customs,  hereinafter shortly termed Collector, ordered  the



confiscation,  of  the gold seized from the  person  of  the appellant  and imposition of a penalty of Rs. 15,000 on  him under  S. 167(8) of the Act.  The appellant  presented  writ application  under art 226 of the Constitution to  the  High Court  of  Punjab  praying  for  the  issue  of  a  writ  of certiorari  quashing the order of the Collector dated  March 21,  1959 and for the issue of a writ of mandamus  directing the  respondents not to take any steps against him  for  the realisation of the amount of penalty.                             215 The writ petition was allowed by the learned Single Judge on the  ground  that the Collector had not recorded  a  finding that  the  appellant was concerned in the act  of  smuggling gold  into  the  country, in view of  the  decision  of  the Division  Bench of the Punjab High Court in Balbir Singh  v. Collector  of Central Excise & Land Customs,  New  Delhi(1). On  letters patent appeal the appellate Bench set aside  the order  of  the learned Single Judge and dismissed  the  writ petition.   The  appellate Bench relied on  the  Full  Bench decision  of  the  Punjab High Court in Union  of  India  v. Jagdish Singh (2).  It was held in that case that it was not necessary  for the Collector of Customs to record  a  formal finding to the effect that the person proceeded against  was concerned  in  the  importing of  the  smuggled  gold.   The appellant  then  preferred  this  appeal,  after   obtaining special leave from this Court. Mr. Sharma, for the appellant, does not question the finding that the gold was recovered from the person of the appellant as  alleged or that the gold recovered was a smuggled  gold. His contention is that these findings, by themselves, do not justify the conclusion to the effect that the appellant  was concerned  in  committing  the  offence  of  importing  gold illegally.  His further contention is that the Collector did not record any finding to the effect that the appellant  was concerned in such importation of the gold.  It is  therefore urged  that  the Collector was not competent to  impose  the penalty on the appellant. Mr. Prem, for the respondent, has urged that on these  facts the  appellant  must  be  held  to  be  ’interested  in  the importation’  of  the  smuggled  gold  and  that  the   word ’concerned’  in  s. 167(8) of the Act be  construed  in  the light  of  the  policy of the Act and  the  difficulties  in establishing  the  fact of a person found in  possession  of smuggled  gold being actually concerned in the importing  of it illegally. The relevant portion of s. 167(8) reads "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      (Column 1)     (Column 3)      offences  Penalties      (1)  (2)      8.  If  any goods, the importation  or      Such  goods shall be liable to confiscation-      exportation of which is for the time    tion, and      being prohibited or restricted by or      under  Ch.  IV  of this Act,  be  imported  any  person concerned in any such (1)  A.I.R. 1960 Pun. 488. (2)  A.I.R. 1962 Punj. 484. 216 (1) into or exported from India contrary to such prohibition  or restriction, of



if  any  attempt  be made so to import or  export  any  such goods, or if  any such goods be found in any package produced  to  any officer of Customs as containing no such goods or (2) offence  shall  be liable to a penalty not  exceeding  three times the value of the goods, or not exceeding one  thousand rupees. The  question is, who can be said to be ’concerned’  in  any such offence for the purposes of the expression used in  the third column relating to penalties.  Such a person would  be one  who is concerned in the importation or  exportation  of such goods whose importation into or exportation from  India is  contrary to the prohibition or restriction placed  under Chapter IV of the Act.  The offences described in the  first column have reference to ss. 18 and 19 of the Act.   Section 18  prohibits  the bringing into India, whether by  land  or sea, of the goods mentioned in its several clauses.  Section 19  empowers the Central Government to prohibit or  restrict by  notification  in the Official Gazette, the  bringing  or taking  by  sea or land goods of any  specified  description into  or  out  of India across  any  customs  frontier.   It follows therefore that the person who can be penalised under s.  167(8)  is  one  who is in any  way  ’concerned  in  the commission  of the offence of bringing into India or  taking out  of  the  country goods with respect  to  which  certain prohibitions or restrictions exist.  It is not disputed that gold  cannot  be brought into the country  without  a  valid permit from the authority empowered to issue it.  It is  not disputed also that the gold recovered from the appellant was imported  into  the country illegally.   The  appellant  can therefore  be said to be concerned in the commission of  the offence  of illegally bringing into the country gold, if  he had been in some way responsible for such ’bringing into the country.   He  cannot  be said to be  so  concerned  in  the commission of this offence if he is not responsible in  this manner  and  if he got possession of the gold after  it  had been  brought into the country.  His being in possession  of such   gold,  when  arrested,  can  in  no  way  raise   the presumption  that  he actually brought such  gold  into  the country  from outside the border or that he was  responsible for its being brought into the country by taking such action which led to the importing of the smuggled gold prior to its import.  There is no evidence about any action taken by  the appellant in connection with the import of the gold found in his possession.  It is immaterial what meaning be attributed to the 217 word  ’concerned’  It can have the meaning  ’interested’  as urged  for  the  respondent.   It  may  have  the   meanings ’involved’ or ’engaged’ or ’mixed up’.  The requirements  of the  expression  ’concerned  in any  such  offence’  in  the penalty  part  of  s.  167(8) are  that  the  person  to  be penalised must be interested or involved or engaged or mixed up in the commission of the offence referred to in the first column  of s. 167 (8).  The interest or the  involvement  or the  engagement  or the mixing up of the  appellant  in  the commission  of the offence must be at a stage prior  to  the completion  of  the offence of illegal importation  of  gold into  the  country.  Once the gold has  been  imported,  any subsequent interest etc., in the smuggled gold cannot  bring in the person showing such interest etc., within the purview of  s.  167(8)  for the purposes of the  imposition  of  the penalty.  The offence of importation of goods is complete when  the goods have crossed the customs frontier.  This  is



clear from the provisions of s. 19 and also from those of s. 18  which,  however,  does not  use  the  actual  expression ’across the customs frontier’. We  are therefore of opinion that the mere finding  of  fact recorded by the Collector of Customs in this case about  the smuggled  gold  being recovered from the possession  of  the appellant  is not sufficient to conclude, as urged  for  the respondent,  that  the  appellant  was  ’concerned’  in  the illegal  importation of the smuggled gold into  the  country and  therefore liable for the penalty under s. 1 67  (8)  of the Act. The  view  we have expressed has been taken by  the  Bombay, Calcutta  and  Madras High Courts in Pukhraj fain v.  D.  R. Kohli(1); Gopal Mayaji v. T. C. Seth(2); Addl.  Collector of Customs  v.  Sitarmn(3); Devi Chand J. & Co.  v.  Collector, Central Excise("). The Punjab High Court has taken a different view and we  may now consider its reasons for the contrary view. In  Balbir  Singh’s Case (5) there was no dispute  that  the Collector  had  not recorded a finding that  the  petitioner before  the  High  Court was concerned  in  the  offence  of importation or exportation of goods which were for the  time being prohibited or restricted.  It was therefore held  that the  order  imposing a penalty on the person  could  not  be sustained.   It  was this case which was relied  on  by  the learned  Single  Judge in the present case  as  the  finding recorded by the Collector was as follows (1) I.L.R. 1959 Bom. 1771.                   (2) A.I.R. 1960 Bom. 478. (3)  A.I.R. 1962 Cal. 242.  (5) A.I.R. 1960 Punj.  488.  (4) A.I.R. 1960 Mad. 281. 218               "In view of all this evidence on record I hold               that the gold in question is smuggled one  and               was recovered from Shri Radha Kishan while  he               was  taking the same to Pokaran in  truck  No.               RJM 40.               I  therefore order confiscation of the  seized               gold  under Section 7(i) of the  Land  Customs               Act ... I also impose upon Shri Radha Kishan a               personal penalty of Rs. 15,000 (Rupees Fifteen               thousand only) under Section 167(8) of the Sea               Customs Act, 1878." The  Division  Bench, on Letters Patent  Appeal,  relied  on Jagdish Singh’s Case(1) and held that the finding that Radha Kishan was concerned in the importation of gold was implicit in  the manner in which the Collector dealt with  the  case. It observed :               "It  cannot be gainsaid that here, apart  from               the  fact  that the smuggled gold in  a  large               quantity was found concealed on the person  of               Radha  Kishan, the plea taken by Radha  Kishan               that  it  was not taken from  his  person  was               found to be false and this circumstance  taken               together  with  the recovery of  the  smuggled               gold would be sufficient for the Collector               to   be  satisfied  that  Radha   Kishan   was               concerned  in the importation of the  smuggled               gold." The  circumstances  referred  to by the  Punjab  High  Court appellate  Bench  may  be sufficient for  holding  that  the appellant knew’, that he was carrying smuggled gold and that he  was thereby committing some offence.  But we are  unable to  say how these circumstances lead to the conclusion  that he must be ’concerned’ in the importation of that gold.   It



is not invariably the case that smuggled things are  carried by  the smuggler himself or by someone who had  taken  steps for  the smuggling of those goods.  They can be  carried  by persons who had nothing to do with the smuggling or  illegal importation  of the goods into the country and had  come  to possess them subsequently even with the knowledge that  they were smuggled goods. The facts of Jagdish Singh’s Case() were somewhat different. The  conclusion,  whose  correctness is not  before  us  for decision,  about  Jagdish  Singh’s being  concerned  in  the illegal  importation  of the foreign watches was  based  not only  on  his  being in possession of  those  watches  after taking  delivery of the parcel from the post office but  was based on several other circumstances.  We are how- (1)  A.I.R. 1962 Punj. 484.                             219 ever concerned with the other aspect of the decision in this case  and  that relates to the findings  which  a  Collector should  arrive at before he imposes a penalty on the  person proceeded  against,  under  s.  167 (8)  of  the  Act.   The Collector had not recorded any express finding that  Jagdish Singh  had been concerned in the illegal importation of  the watches.  The High Court held that law does not require  any formal finding to that effect.  It is true that an  omission to  record a formal finding to this effect may not be  fatal to  the imposition of the penalty by the Collector, but  the order of the Collector must show that he had considered this aspect  of  the matter.  The order should  clearly  indicate what  matters  he had considered to have a  bearing  on  the question   of  the  person’s  being  concerned  in   illegal importation of the goods and why he had concluded  therefrom that  that person was so concerned and therefore  liable  to pay  the  penalty  under  s. 1 67 ( 8 )  of  the  Act.   The decision  of the High Court in Jagdish Singh’s Case(1)  does not appear to hold to the contrary.  It is said at p. 486               "What  has  to be ascertained is  whether  the               Tribunal’s  mind  was directed  to  a  certain               matter and whether the Tribunal did, in  fact,               arrive  at  a particular conclusion.   In  the               present  case,  I  have  no  doubt  that   the               Collector did conclude that Shri Jagdish Singh               was responsible for the illegal importation of               the watches in question and ’could not absolve               himself  from  the infringement of  the  regu-               lations’." The  judgment  in question mentions that  the  Collector  of Customs,  after  recording  the order  of  confiscating  the watches  held  to  be of foreign origin  and  to  have  been imported  through  unlawful means, went on to  consider  the question of Jagdish Singh’s personal liability and held that he  could  not  be  absolved  of  the  liability  of  having infringed  the  Import Trade Control  Regulations.   If  the Collector  had  actually done so, his omission to  record  a formal  order about Jagdish Singh’s being concerned  in  the illegal  importation of the watches would not have made  the order bad in law.  The further extract from the order of the Collector does not, in our opinion, support this view of the High  Court as it indicates that the Collector  formed  this opinion  on the basis of his finding that Jagdish Singh  was in  possession  of  the  smuggled  watches.   The  way   the Collector  recorded his finding indicates that he  concluded about  Jagdish  Singh’s  being  concerned  in  the   illegal importation of the watches merely on the basis of his  being in  possession  of those watches.  This he  could  not  have justifiably done in view



(1)  A.I.R. 1962 Punj. 484. 220 of   what  we  have  said  above.   The  extract  from   the Collector’s order in this connection is :               "Shri  Jagdish  Singh cannot  absolve  himself               from  the infringement of  I.T.C.  Regulations               inasmuch  as he  was  in possession  of  the               offending  watches.  1, therefore,  impose  on               Shri  Jagdish Singh a personal penalty of  Rs.               7,000.  " We do not agree with the High Court that it was implicit  in this order that the Collector was fully satisfied that  Shri Jagdish  Singh was concerned in the offence described in  S. 167(8) of the Act. We therefore hold that a mere finding of fact that a  person is  in possession of smuggled goods does neither imply  that the Collector of Customs had considered the question of  the person’s  being concerned in the, commission of the  offence of illegal importation of the goods nor in any way justifies the conclusion that the person must have been so  concerned. Other  circumstances  indicating that the  person  had  some connection with the importation of the goods prior to  their actual  import have to be established.  In the present  case no such circumstances have been alleged which would  connect the appellant with the actual importing of the smuggled gold recovered from his person.  There is no mention of any  such circumstances  in the order of the Collector or even in  the reply  affidavit  filed in the High Court by  the  Assistant Collector  of  Central Excise and Land Customs,  New  Delhi, though  the appellant had said in ground no.  C of the  writ petition  that  there  was  absolutely  no  material  before respondent  no. 3 on which he could have come to  a  finding that the petitioner had imported the said gold. We  may also mention here that there is no  allegation  that the  appellant  himself smuggled the gold from  outside  the country. In  the result, we allow the appeal with  costs  throughout, set aside the order of the appellate Bench of the High Court and restore that of the Single Judge. Appeal allowed. 221