Customs confiscation and severability of invalid release conditions upheld, while unauthorised reserve bank permission terms were struck down.

Customs confiscation of smuggled gold was treated as an action in rem under the Sea Customs Act, so section 23 of the Foreign Exchange Regulation Act did not bar the proceedings where the notice and adjudication were directed at confiscation of the goods, not punishment of the offender. The additional release conditions requiring Reserve Bank permission and payment of duty and charges were beyond statutory power and therefore invalid. However, those unauthorised conditions were severable from the lawful confiscation order and the option to redeem the gold on payment of fine, which remained operative.

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Issues: (i) Whether the customs authorities could proceed under the Sea Customs Act, 1878, for confiscation of smuggled gold notwithstanding section 8(3) and section 23 of the Foreign Exchange Regulation Act, 1947. (ii) Whether the Collector of Customs had jurisdiction to impose, in addition to confiscation and option to pay fine in lieu thereof, the further conditions requiring production of a Reserve Bank permit and payment of customs duty and other charges, and whether those invalid conditions were severable from the rest of the order.

Issue (i): Whether the customs authorities could proceed under the Sea Customs Act, 1878, for confiscation of smuggled gold notwithstanding section 8(3) and section 23 of the Foreign Exchange Regulation Act, 1947.

Analysis: Section 8(3) of the Foreign Exchange Regulation Act, 1947, deemed the import restriction to be imposed under section 19 of the Sea Customs Act, 1878, without prejudice to section 23 of the Foreign Exchange Regulation Act, 1947. Section 23 was treated as a proceeding against the offender, while confiscation under section 167(8) of the Sea Customs Act, 1878, operated on the goods themselves. On the facts, the notice and the adjudication related to confiscation of the gold and did not establish a proceeding against the appellant as the offender under section 23. The confiscation therefore proceeded as an action in rem and did not prejudice section 23.

Conclusion: The customs authorities were competent to proceed under the Sea Customs Act, 1878, and the confiscation was not without jurisdiction on this ground.

Issue (ii): Whether the Collector of Customs had jurisdiction to impose, in addition to confiscation and option to pay fine in lieu thereof, the further conditions requiring production of a Reserve Bank permit and payment of customs duty and other charges, and whether those invalid conditions were severable from the rest of the order.

Analysis: Section 183 of the Sea Customs Act, 1878, required an option to pay a fine in lieu of confiscation where confiscation was authorised, but the Act did not authorise the additional conditions imposed. The conditions requiring retrospective Reserve Bank permission and payment of duty and charges were outside jurisdiction. Applying the principle of severability, those conditions were distinct from the valid order of confiscation and fine in lieu thereof and could be struck down without disturbing the lawful part of the order.

Conclusion: The additional conditions were without jurisdiction, but they were severable from the valid confiscation order and option of fine.

Final Conclusion: The confiscation of the gold and the option to redeem it by payment of fine were upheld, while the two extra release conditions were set aside as unauthorised; the writ succeeded only to that limited extent.

Ratio Decidendi: Where a customs restriction is deemed under the Sea Customs Act and the proceedings culminate only in confiscation of the goods, section 23 of the Foreign Exchange Regulation Act, 1947, is not attracted; however, conditions imposed beyond the statutory power are invalid but may be severed from a lawful confiscation order.

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