1964 (1) TMI 69 - HC - Indian Laws

Customs failed to prove illicit importation; goods to be returned. Burden of proof emphasized.

Mangala Prosad Versus V.J. Manerikar and Ors.

The court held that the Customs authorities failed to prove the illicit importation of seized goods, setting aside the order of confiscation. The ... - Issues Involved:1. Legality of seizure and confiscation of goods.2. Applicability of Section 178A of the Sea Customs Act.3. Burden of proof regarding illicit importation.4. Validity of the Customs authorities' actions and orders.5. Rights of an innocent purchaser.Issue-Wise Detailed Analysis:1. Legality of Seizure and Confiscation of Goods:The petitioner's business premises were searched, and goods were seized by the police, not by the Customs authorities. The Customs Department later took possession of the goods through a court order. The petitioner argued that since the initial seizure was by the police, the Sea Customs Act's provisions, specifically Section 178A, did not apply. The court agreed, stating, 'Section 178A of the Sea Customs Act would not apply and that the burden of proving that the goods were smuggled goods was on the Customs authorities.'2. Applicability of Section 178A of the Sea Customs Act:The petitioner contended that Section 178A, which shifts the burden of proof to the person from whom goods are seized, did not apply since the goods were initially seized by the police. The court upheld this view, referencing the Supreme Court's decision in Gian Chand v. State of Punjab, which clarified that the burden of proof under Section 178A does not apply when goods are delivered to Customs by a Magistrate's order.3. Burden of Proof Regarding Illicit Importation:The court emphasized that the burden of proving illicit importation lies with the Customs authorities. The court stated, 'The burden of proof is on the Customs Authorities and they have to bring home the guilt of the person alleged to have committed a particular offence under the said Act by adducing satisfactory evidence.' The Customs authorities failed to provide such proof, and the court noted that the petitioner produced certain bills and documents to support his claim of bona fide purchase, although these were not admitted in the affidavit-in-opposition.4. Validity of the Customs Authorities' Actions and Orders:The Customs authorities argued that the seized goods were of foreign manufacture and their importation was restricted by law, thus shifting the burden of proof to the petitioner. The court rejected this argument, stating that the Customs authorities must first establish that the goods were unlawfully imported. The court cited the Supreme Court's decision in Ambalal v. Union of India, which held that the Customs authorities must prove the illicit importation of goods.5. Rights of an Innocent Purchaser:The court highlighted the rights of an innocent purchaser, stating that an innocent buyer should not be penalized unless the Customs authorities prove that the goods were smuggled and that the buyer had guilty knowledge of their illicit importation. The court stated, 'A buyer, who with the knowledge that the goods have been smuggled in this country, keeps or buys the goods may be liable to penalty. But not an innocent buyer, unless the Customs Authorities prove by affirmative evidence that the goods seized formed part of smuggled goods.'Conclusion:The court concluded that the Customs authorities failed to prove the illicit importation of the seized goods and set aside the order of confiscation. The petitioner was entitled to recover the seized goods and was awarded costs. The court stated, 'We, therefore, make this Rule absolute and set aside the order of confiscation.'Separate Judgment by BASU, J.:Basu, J. agreed with the judgment and added that the burden of proving unlawful importation lies with the Customs authorities. He emphasized that the principle of burden of proof applies unless reversed by specific legislation, such as Section 178A, which was not applicable in this case. He concluded that the Customs authorities must establish the offence before confiscating goods, and the petitioner's fundamental rights under Articles 19(1)(f) and 31(1) of the Constitution were violated by the confiscation without proper proof.