Issardas Daulat Ram & Ors Vs. The
Union of India & Ors  INSC 318 (13 November 1961)
Smuggled Goods-Confiscation by Collector of
Customs-Evidence-If direct evidence essentialInterference of finding by
writ-Sea Customs Act, 1878 (8 of 1878), s. 167(8)-Constitution of India, Art.
On September 14, 1954, the appellant sent a quantity of gold to a refinery in Bombay for the purpose of melting it. On
receipt of information that the gold which was being melted was believed to be
smuggled, the customs authorities made some enquiries at the refinery and
seized the gold. The Collector of Customs found that the gold was of foreign
origin and had been imported into India in contravention of the Foreign
Exchange Regulations Act, 1947, and made an order confiscating it under s.
167(8) of the Sea Customs Act, 1878. The appellant filed a petition under Art.
226 of the Constitution of India before the Punjab High Court challenging the
legality of the order of confiscation on the ground that there was no evidence
before the Collector of Customs to show that the gold had been imported after
restrictions had been imposed in March 1947 by notification under the Foreign Exchange
Regulations Act, 1947, and consequently the finding that the gold had been
smuggled was unsustainable. In reaching the conclusion that the gold had been
smuggled the Collector of Customs considered the credibility of the story put
forward by the appellant about the purchase of the gold and the price at which
the gold was stated to have been purchased which was less than the market price
and also the conduct of the appellant in trying to get the gold melted at the
refinery with a small bit of silver added so as to reduce the fineness of the
gold and thus approximate the resultant product to licit gold found in the
^ Held, that though there was no direct
evidence to show that the gold had been imported in contravention of the
notification issued under the Foreign Exchange Regulations Act, 1947, the
evidence relied on by the Collector of Customs in coming to the conclusion that
the gold was smuggled could justify the finding and that the matter did not
call for interference under Art.
226 of the Constitution.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 591 of 1960.
Appeal by special leave from the judgment and
order dated November 6, 1958, of the Punjab High Court (Circuit Bench) at Delhi in Civil Writ No. 417-D of 1958.
A. V. Viswanatha Sastri, J. B. Dadachanji, O.
C. Mathur and Ravinder Narain, for the appellants.
P. K. Chatterjee and T. M. Sen, for the
1961. November 13. The Judgment of the Court
was delivered by AYYANGAR, J.-This appeal comes before us by virtue of leave
granted by this Court under Art.
136(1) of the constitution and is directed
against the judgment and order of the Punjab High Court by which a Writ
Petition filed before it by the appellants, under Art. 226 of the constitution
was summarily dismissed.
The point raised for our consideration
relates to the legality of an order of confiscation, by the Customs
Authorities, of certain gold belonging to the appellants on the ground of its
being smuggled. The appellants are the partners of a Joint Hindu Family firm
carrying on business in Bombay in inter alia gold and jewellery. On September 14, 1954, the appellantfirm had despatched to the Bombay Bullion Refinery for
the purpose of melting about 500 tolas of gold. Certain Customs Officers
received information that some quantity of gold which was believed to be
smuggled was being sent to the refinery for melting and in pursuance of this
information they went to the refinery and found the gold bullion which is the
subject of these proceedings placed in a crucible for the purpose of being
melted. These officers ascertained from the Manager of the refinery that this
gold belonged to the appellant-firm who were later contacted and 360 who
admitted their ownership of the gold. The gold was thereupon seized and
investigation started for ascertaining whether the gold was or was not smuggled
gold after which the Assistant Collector of Customs issued a notice to the
appellants on January 31, 1955, to show cause why the gold should not be
confiscated under s. 167 (8) of the Sea Customs Act. The appellants appeared in
response to this notice and were granted a personal hearing, their Counsel
being heard in support of their plea that the gold was not smuggled and so not
liable to be confiscated.
Their defence was however rejected and the
Collector of Customs who adjudicated in this matter under s. 182 of the Sea
Customs Act passed an order on August 25, 1955, directing the confiscation.
From this order appeals and revisions were preferred which were unsuccessful.
Thereafter the appellants filed a Writ
Petition before the High Court of Punjab with the result already stated.
It will be seen from the above narrative that
the case is not covered by s. 178 (A) of the Sea Customs Act which was enacted
by Central Act 21 of 1955 since the seizure and the proceedings in this case
were long anterior to the enactment of that section and cannot obviously be
governed by its provisions. For the reason that s. 178 (A) was in force at the
stage of the appeals from the order of the Collector of Customs to the Central
Board of Revenue and the Central Government and possibly under the impression
that their case had been decided by throwing on them the burden of proving that
the gold was not smuggled, the appellants raised in their Writ Petition to the
Punjab High Court points regarding the construction and constitutionality of s.
178 (A). When their Petition as summarily dismissed these points were repeated
in the petition for special leave to appeal filed in this Court, and special
leave appears to have been granted mainly for the reason that 361 the appeal
invoved the question of the constitutionality of s. 178 (A) of the Sea Customs Act.
The appeal has for that reason been posted for hearing after the decision of
this Court in Collector of Customs, Madras v. Nathella Sampathu Chettey, in
which the validity of section was considered and upheld.
Section 178 (A) being put aside, it may be
added, the only question now arising for decision is whether the order of the
Collector of Customs holding the appellants gold seized at the refinery to be
smuggled gold so as to be liable to confiscation under s. 167 (8) of the Sea
Customs Act is vitiated by any error such as to call for interference under Art.
226 of the Constitution.
Section. 167 (8) runs in these terms.
"167. The offences mentioned in the
first column of the following schedule shall be punishable to the extent
mentioned in the third column of the same with reference to such offences respectively:Offences
Section of this Penalties Act to which offence has reference.
(8) If any goods 18 & 19 such goods shall
the importation or be liable to con exportation of fiscation; & any which
is for the person concerntime being prohied in any such bited or restriction
offence shall be ted by or under liable to a penalty Chapter IV of not
exceeding this Act, be three times the ported into or exvalue of the ported
from India goods, or not contrary to such exceeding one prohibition or res thousand
362 The finding of the Collector is recorded
in paragraph 6 of his order in these terms:
"Taking all the available evidence into
consideration, I am satisfied that the gold bullion in question is of foreign
origin and had been imported into India in contravention of Foreign Exchange
Regulations Act, and Section 19 of the Sea Customs Act thereby establishing an
offence attracting the provisions of Section 167(8) of the Sea Customs Act.
It was not disputed that if there was
material to support this decision the appeal must fail. The conclusion of the
Collector involves findings on two distinct matters: (1) that the gold which
was the subject of adjudication was of foreign origin, and (2) that gold had
been imported in contravention of the Foreign Exchange Regulations Act. Mr. Viswanatha
Sastri-learned Counsel for the appellant submitted that though the several
facts mentioned by the Collector in paragraph 5 of his order which form the
basis of the finding recorded in paragraph 6 might show that the gold was of
foreign origin, there was no evidence before the Collector that this foreign
gold had been imported after restrictions had been imposed in March 1947 by
notification under the Foreign Exchange Regulations Act, a fact the onus to
prove which was also on the department, and that in the absence of any material
supporting that conclusion the finding that the gold was smuggled was
unsustainable and that the confiscation should therefore be set aside.
We find ourselves unable to accept the
submission of learned Counsel. Though, no doubt, there was no direct evidence
that the gold which 363 was the subject of adjudication had come into the
country after March 25, 1947, when the first notification under the Foreign
Exchange Regulations Act placing a ban on the importation of gold was issued,
it is not as if this could not be deduced or inferred otherwise. There has been
little or no importation of gold from outside the country since 1947. If the
gold now in question had been imported earlier it would be extremely improbable
that the gold would remain in the same shape of bars and with the same fineness
as when imported after the passage of this length of time.
It was precisely for this reason that at the
stage of the enquiry before the Collector the principal point which was urged
on behalf of the appellants was to deny that the seized gold was of foreign
origin and it is the nature of the defence that accounts for the order of the
Collector dealing almost wholly with the consideration of that question. In
order to reach his finding about the gold being smuggled; the Collector has
referred to the conduct of the appellants in connection with (a) the
credibility of the story about the purchase of this gold from three parties,
(b) the price at which the gold was stated to have been purchased which was
less than the market price, and (c) the hurry exhibited in trying to get the
gold melted at the refinery with a small bit of silver added so as to reduce
the fineness of the gold and thus approximate the resultant product to licit
gold found in the market. These were undoubtedly relevant pieces of evidence
which bore on the question regarding the character of the gold, whether it was
licit or illicit. Learned Counsel is, therefore, not right in his submission
regarding the absence of material before the Collector to justify the finding
recorded in paragraph 6 we have set out earlier. The Writ Petition was
therefore properly dismissed by the learned Judges of the High Court.
The appeal is dismissed with costs.