1962 (3) TMI 2 - SC - Customs

Supreme Court affirms gold confiscation under Sea Customs Act, dismissing challenge on constitutional validity.

The Supreme Court upheld the High Court's decision validating the confiscation of gold under Section 167(8) of the Sea Customs Act, rejecting the ... Confiscation of smuggled goods - presumption under Section 178A of the Sea Customs Act - burden of proof on person in possession to show goods not smuggled - reasonable belief for seizure - application of notification under the Foreign Exchange Regulation Act as deemed under the Sea Customs Act - confiscation independent of being a person concerned in importationConfiscation of smuggled goods - confiscation independent of being a person concerned in importation - Validity of the order of confiscation of gold under Section 167(8) notwithstanding the High Court's finding that the appellant was not shown to be concerned in the importation. - HELD THAT: - Section 167(8) renders goods imported in contravention of statutory prohibition or restriction liable to confiscation. The power to confiscate is not contingent on a finding that the person in whose possession the goods were found was concerned in their importation; once importation contrary to the notification (deemed by Section 23A to be under Section 19 of the Sea Customs Act) is established and the goods are shown to be smuggled, they are liable to confiscation. The High Court's separate conclusion that the appellant was not concerned in the importation does not prevent the confiscation under Section 167(8) where the statutory conditions for confiscation are otherwise satisfied. [Paras 4]The confiscation of the gold under Section 167(8) is valid despite the High Court's finding that the appellant was not concerned in the importation.Presumption under Section 178A of the Sea Customs Act - burden of proof on person in possession to show goods not smuggled - application of notification under the Foreign Exchange Regulation Act as deemed under the Sea Customs Act - Whether the statutory presumption in Section 178A applied and whether the appellant had rebutted the presumption that the goods were smuggled. - HELD THAT: - The notification of 1948 under the Foreign Exchange Regulation Act is to be treated as having effect under Section 19 of the Sea Customs Act by virtue of Section 23A, bringing the situation within the Sea Customs Act and attracting Section 178A. Once the goods were seized under the Act in the reasonable belief that they were smuggled, the onus lay on the appellant to prove they were not smuggled. The Collector found that the appellant had not discharged this onus; consequently the statutory presumption remained unrebutted and the goods had to be dealt with as smuggled goods, making them liable to confiscation under Section 167(8). [Paras 5, 6]Section 178A applied; the appellant failed to rebut the presumption and therefore the goods were rightly treated as smuggled and liable to confiscation.Natural justice in departmental enquiry - cross-examination of witnesses - Whether the enquiry was vitiated by denial of opportunity to cross-examine certain witnesses whose statements were recorded. - HELD THAT: - The challenge that certain witnesses (Anwar, Marotrao and Rambhau) were not produced for cross-examination is unfounded. It was accepted that Anwar was examined in the presence of the appellant's counsel who chose not to cross-examine. As to Marotrao and Rambhau, the appellant abandoned the earlier plea that required their evidence; their versions ceased to be inconsistent with the appellant's later case, making cross-examination unnecessary. On these bases the procedure adopted did not infringe natural justice or render the enquiry unfair. [Paras 7]No procedural unfairness is established; the enquiry was not vitiated by failure to permit cross-examination of those witnesses.Reasonable belief for seizure - Whether the seizure was effected on a reasonable belief that the goods were smuggled, as required by Section 178A. - HELD THAT: - The Court is concerned only with whether there were grounds prima facie justifying the officer's reasonable belief. Two features justified such a belief here: the large quantity of gold carried (five bars weighing 290.6 tolas) and the suspicious circumstances of the appellant's journey, including travelling without a railway ticket and an implausible explanation for the journey. The officer also had prior positive information regarding alleged smuggling by the appellant. These factors together furnished a reasonable basis for the belief that the gold was smuggled, bringing the seizure within Section 178A. [Paras 8]The seizure was effected on a reasonable belief that the goods were smuggled and therefore falls within Section 178A.Final Conclusion: The statutory presumption under Section 178A applied and was not rebutted; the confiscation of the gold under Section 167(8) is upheld, the challenges to the conduct of the enquiry and to the reasonableness of the seizure fail, and the appeal is dismissed with costs. Issues Involved:1. Constitutional validity of Section 178A of the Sea Customs Act.2. Justification of gold confiscation under Section 167(8) of the Sea Customs Act.3. Compliance with natural justice during the enquiry by the Collector of Central Excise.4. Reasonableness of the belief that the seized gold was smuggled.Detailed Analysis:1. Constitutional Validity of Section 178A of the Sea Customs Act:The appellant challenged the constitutional validity of Section 178A of the Sea Customs Act, claiming it infringed on his fundamental rights under Article 19(1)(f) and (g) of the Constitution. The High Court rejected this challenge. The Supreme Court noted that this issue had already been decided in the case of Collector of Customs v. N. Sampathu Chetty, where the Constitutional Bench upheld the validity of Section 178A. Therefore, this principal point was concluded against the appellant.2. Justification of Gold Confiscation under Section 167(8) of the Sea Customs Act:The appellant argued that the confiscation of gold was not justified under Section 167(8) because the High Court found that he was not concerned with the importation of the gold. The Supreme Court clarified that Section 167(8) provides for the confiscation of goods imported contrary to statutory prohibition or restriction, irrespective of whether the person in possession was concerned with the importation. Therefore, the confiscation of the gold was valid once it was established that the goods were imported contrary to the statutory provisions.3. Compliance with Natural Justice During the Enquiry by the Collector of Central Excise:The appellant contended that certain witnesses were not produced for cross-examination, which violated natural justice. The Supreme Court found no substance in this argument. It was established that one witness, Anwar, was examined in the presence of the appellant's counsel, who chose not to cross-examine him. As for the other two witnesses, Marotrao and Rambhau, their statements were rendered irrelevant by the appellant's change in his version of events. Therefore, the enquiry was conducted fairly and in compliance with the principles of natural justice.4. Reasonableness of the Belief that the Seized Gold was Smuggled:The appellant argued that there was no material on record to show that the seizure was based on a reasonable belief that the gold was smuggled. The Supreme Court disagreed, highlighting two key factors: the large quantity of gold (290.6 Tolas) valued at nearly Rs. 30,000, and the suspicious circumstances of the appellant's journey, including traveling without a railway ticket. These factors justified a reasonable belief in the mind of the officer that the gold was smuggled. The Court emphasized that its role was not to sit in appeal over the officer's decision but to determine if there was prima facie ground for the reasonable belief.Conclusion:The Supreme Court dismissed the appeal, upholding the High Court's decision to validate the confiscation of the gold and rejecting the appellant's arguments on all counts. The appeal was dismissed with costs.