1961 (4) TMI 137 - HC - Central Excise

Court overturns confiscation order and penalty, citing lack of natural justice in customs case

Nagar Mohan Rao And Anr. Versus The Collector Of Central Excise

The court set aside the order of the Collector of Central Excise confiscating a Vauxhai car under the Sea Customs Act and Foreign Exchange Regulation Act, ... - Issues Involved:1. Confiscation of Vauxhai car under Section 168 of the Sea Customs Act and Section 23-A of the Foreign Exchange Regulation Act.2. Imposition of a penalty of Rs. 1000 on each petitioner under Section 167(8) of the Sea Customs Act.3. Alleged violation of the principles of natural justice during the enquiry conducted by the Collector of Central Excise.Issue-wise Detailed Analysis:1. Confiscation of Vauxhai Car:The petitioners challenged the order of the Collector of Central Excise, Bangalore, dated 12-2-1960, which confiscated their Vauxhai car under Section 168 of the Sea Customs Act, read with Section 23-A of the Foreign Exchange Regulation Act. The confiscation was based on allegations that the car was used for the removal of illegally imported gold.2. Imposition of Penalty:A penalty of Rs. 1000 was imposed on each petitioner under Section 167(8) of the Sea Customs Act. This penalty was in connection with the alleged illegal importation of gold into India.3. Violation of Principles of Natural Justice:The primary contention was that the enquiry conducted by the Collector of Central Excise violated the principles of natural justice. Specifically, the petitioners argued that:- The statements of all witnesses were recorded behind their backs.- None of the witnesses were produced for cross-examination despite a specific request.- The evidence of the opponent was not taken in the presence of the petitioners, and they were not given an opportunity to cross-examine the witnesses.The petitioners relied on several Supreme Court decisions, including State of U.P. v. Mohammad Nooh (AIR 1958 SC 86) and Union of India v. T.R. Vaima, which held that rules of natural justice require that a party should have the opportunity to adduce all relevant evidence, that the evidence of the opponent should be taken in their presence, and that they should be given an opportunity to cross-examine the witnesses.The court noted that the principles of natural justice, as laid down by the Supreme Court, have been violated in this case. The evidence of the witnesses was taken behind the petitioners' backs, and they were not given an opportunity to cross-examine the witnesses. Therefore, the enquiry was conducted in a manner violative of all principles of natural justice.The Advocate-General attempted to distinguish the Supreme Court decisions by arguing that they related only to cases under Article 311 of the Constitution and not to cases under the Sea Customs Act. However, the court rejected this argument, stating that the principles of natural justice are applicable to all cases of investigation by a judicial or quasi-judicial tribunal, not just those under Article 311.The court also referred to a decision of the Bombay High Court in Ganesh Mahadev v. Secy, of State (ILR 43 Bom. 221; AIR 1919 Bom 30), which held that if the evidence of the other party is taken in the absence of the accused and the accused has no opportunity to cross-examine the witnesses, there has not been a fair hearing of both sides. Applying this principle, the court concluded that there had not been any adjudication within the meaning of Section 182 of the Sea Customs Act.Conclusion:The court held that the manner in which the enquiry was conducted violated the principles of natural justice. Consequently, the order of the Collector of Central Excise, Bangalore, dated 12-2-1960, was set aside. The petition was allowed, and the impugned order was quashed. There was no order as to the costs of the petition.