1975 (3) TMI 105 - HC - Customs

Court partially quashes penalties on firm, upholds penalties on partners. Order stayed for four weeks.

Tarak Nath Sen And Ors. Versus Union Of India

The court partially allowed the petition, quashing the penalties imposed on the firm while maintaining the penalties on the individual partners. The rest ... Confiscation of Gold Coins. Issues Involved:1. Legality of the combined show cause notice.2. Jurisdiction of the Additional Collector of Customs.3. Adherence to principles of natural justice in the adjudication process.4. Validity of penalties imposed on the firm and its partners.Issue-wise Detailed Analysis:1. Legality of the Combined Show Cause Notice:The petitioners argued that the combined show cause notice for alleged offences under the Customs Act, 1962, the Foreign Exchange Regulation Act, 1947, and the Defence of India Rules, 1962 was illegal. The court rejected this argument, stating that the show cause notice dated June 3, 1965, provided sufficient particulars of the charges. The notice detailed the seizure of 142 pieces of gold coins and Indian currency during a search at the petitioners' premises. The petitioners failed to produce documentation proving the gold was declared, making it liable for confiscation under Section 111(d) of the Customs Act, 1962, and Rule 126-H and Rule 126-I of the Defence of India Rules, 1962. The court found no illegality in the combined proceeding and noted that the petitioners did not initially object to the joinder of charges.2. Jurisdiction of the Additional Collector of Customs:The petitioners contended that the adjudication proceeding contravened Section 122 of the Customs Act, 1962, arguing that the Assistant Collector of Customs, who issued the show cause notice, lacked jurisdiction. The court clarified that under Section 2(8) of the Customs Act, the 'Collector of Customs' includes an Additional Collector of Customs. The Assistant Collector's role in issuing the show cause notice was ministerial, and the adjudication was conducted by the Additional Collector, who had jurisdiction. The court found the show cause notice and the adjudication proceeding lawful and valid.3. Adherence to Principles of Natural Justice in the Adjudication Process:The petitioners claimed that the ex parte adjudication violated natural justice principles. The court noted that the Additional Collector of Customs had initially stayed the adjudication pending the criminal case's outcome. After the criminal case concluded with the petitioners' conviction, the adjudication was resumed. The petitioners requested further adjournment, which was denied, and they were warned of an ex parte decision if they failed to appear. The court found that the Additional Collector acted within his discretion and provided sufficient opportunities for the petitioners to participate, thus adhering to natural justice principles.4. Validity of Penalties Imposed on the Firm and Its Partners:The court addressed the penalties imposed on the firm and its partners. It noted that under the Indian Partnership Act, a firm is not a separate legal entity but a collective name for its partners. The Additional Collector imposed penalties on both the firm and its partners, effectively punishing the same individuals twice. The court upheld the penalties on the individual partners but quashed the penalties imposed on the firm, Messrs. Shyamlal Sen & Company, under Section 112 of the Customs Act and Rule 126-L(16) of the Defence of India (Gold Control) Rules, 1962.Conclusion:The court partially allowed the petition, quashing the penalties imposed on the firm while maintaining the penalties on the individual partners. The rest of the petition was dismissed, and no order as to costs was made. The operation of the order was stayed for four weeks.