ISSARDAS DAULAT RAM AND OTHERS versus THE UNION OF INDIA AND OTHERS

AYYANGAR, J.-This appeal comes before us by virtue of leave granted by this Court uuder 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.

p. 359

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 pa1tners ofa Joint Hindu Family firm carrying on business in Bombay in inter alia gold and jewellery. On September 14, 1954, the appellant-firm had despatched to the Bombay Bullion Refinery for the purpo8'3 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 JJ!aced in a crucible for the pui·pose of being melted. These officers ascertained from the Mana.ger of the refinery that this gold belongecl to the appellant-firm who were later contacted and who addmittcd 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 ABBistant 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 res· ponse 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 Colletor 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.

pp. 359–360

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 C'.-entral 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 foroe 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 was 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 the appeal invoved the question of the constitu· tionality of s. 178 (A) cf the Sea Customs Act. The appeal has for that reason been posted for hearing after tho decision of this Court in Collector of Gus· toms, .JJfadras v. Nathella Smnpathu Chettey (1), in which the validity of section was considered and upheld.

pp. 360–361

Section 178 (A) being put aside, it mll.y be added, the only question now arising for decision is whether the order of the Collector of Customs holding the appellant's 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.

p. 361

"167. The offences mentioned in the first eolumn of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences res· pectively :- Offences . Section of this Penalties Act to which offence has

p. 361

reference. (8) lf any goods 18 & 19 such goods shall the importation or be liable to conexportation of fiscation; & any which is for the perl!on concern· time being prohi· ed in any such bited or restric- offence sh>tll be ted by or under liable to a penalty Chapter IV of not exceeding this Act, be im- three times the ported into or ex- value of the ported from India goods, or not contrary to such exceeding one prohibition or res· thousand rupees." triction; .................. . . . . . . . . . . . . . . . .

p. 361

.. The finding of the Collector is recorded in para. graph 6 of his order in these wrms :

pp. 361–362

"Taking all the available evidence into consideration, I am satisfi<'d that the gold bullion in question is of foreign origin and h1>d boon imporU>d into India in contraven· tion of Foreign Exchange Hegulations Act, and Section 19 of the Sea Customs Act there by establishing an offence attracting the provisions of Section 167(8) of the Sea Customs

p. 362

Act." It ~as not disputed that if there was material to support this decision the appeal must fail. The conclusion of the Collector involves findings on two di8tinct matters : (I) that the gold which was the subject of adjudir.atlon was of foreign origin, and (2) that that gold had been imported in contravention of the Foreign Exchange Regulations Act. Mr. Viswanatha Sastri-learnL'<i Counsel for the appellant submitted that though the several facta 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 Collt"ctor that this foreign gold had been imported nftcr restrictions had been imposed in March 1947 by notification under the Foreign Exchange Regula· tionB Act, a fa.ct the onus to prove which was also on the department, am] 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.

p. 362

'We find our8elves 1m1ble to accept the submiSBion of learned Counsel. Though, no doubt, there was no direct evidence that the gold which was the subject of adjudication had eome 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 wns 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 bas 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 ail ver 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 CQllector to justify the finding recorded in paragra.hp 6 we have set out earlier. The Writ Petition was therefore properly dismissed by the learned Judges of the High Court.

pp. 362–363

The appeal is dismissed with costs.

p. 363

Appeal diBmisaed.

p. 363