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Judgment
S. Mohan, J.—Petition under Article 226 of the Constitution of India, praying that in the circumstances stated therein, and in the affidavit
filed therewith the High Court will be pleased to issue a writ of declaration, declaring Section 115(2) of the Customs Act read with the proviso
thereto, in so far as it relates to the adjudication order passed by the first respondent herein in his No. C. No. VIII/10/1/85 - O.R. No. 55/84-85
cus. Adj. dated 3-9-1985 in respect of the Ambassador car No. TMG 7137, owned by the first petitioner as ultra vires and as offending Articles
14, 19(1)(g) and 300A of the Constitution of India.
This Writ Petition coming on for orders as to admission on this day upon perusing the petition and the affidavit filed in support thereof and upon
hearing the argument of Mr. A. Devanathan, Advocate for the petitioner, the Court made the following order :-
On 13/14-10-1984 the police officers of Thiruvanmiyur and party proceeded to Injambakkam Kuppam at about 2.15 A.M. The policy party
found some parsons unloading some goods from an Ambassador car parked near the sea shore. On seeing the police officers, they all fled and
disappeared. On a search of the Ambassador car TMG 7137, the Officers found 1 bundle covered with gunny bag inside the car and another
inside the dicky and one more by the side of the car. They also found 14 bundles at a distance of about 50 yards off the sea shore. They opened
the packages in the presence of independent witness and found 2228 numbers of sarees and 40 bits of blouse pieces each measuring 9.50 mtrs.
The Officers also found the marks ""GRIMSLON"" Regd. trade mark of Phiraffabrics Regd. No. 358656-A 9273R Apsara Viscos 56%, Cotton
34%, 5 mts, processed for Amardeep Group ''printed'' on some of the clothes. As there were no claimants, the reasonable belief that these goods
were brought to the sea shore and attempted to be exported out of India illicitly, the above gooda and the Ambassador Car TMG 7137 were
seized by the Officers under a mahazar for further action under the Customs Act, 1962, hereinafter referred to as the Act.
Thereafter, all the goods were brought alongwith the car to the office of the Central Excise, Madras-34. The same was opened and examined in
the presence of independent witnesses and Mahazar was drawn which contained the details of the inventory. The details of the inventory are not
necessary for our purpose.
One Jayachandran Robin Mayne, residing at No. 77, East Anna Nagar, Madras appeared before the Superintendent of Central Excise,
Headquarters Preventive Unit, Madras on 13-12-1984. He stated that he was the owner of the car TMG 7137 which he purchased on 21-6-
1984 by paying Rs. 26,000/- as his share that he had a balance of Rs. 54,000/- with Durga Investments Ltd., Mount Road, Madras. He also
stated that M/s. Durga Investment were his financiers, that he owned another car also and that he had used the car TMG 7137 for tourism
purpose. He had maintained a tourist log book which was kept in the car itself. He used to see the book once in ten days or a week. He last saw
Maran on 6-10-1984. Maran was the driver of the said car. He did not know the address of his driver. He knew that he is (the driver) from Padi.
The driver left for Madurai on 8-10-1984 and returned on 18-10-1984. On his return he found that the car was missing. He came to know of the
seizure through some newspaper. He found the car TMG 7137 parked in the Excise Office on 18-10-1984. He did not have the log book of the
car TMG 7137. He did not know anything about the seized sarees and blouses. He had not seen his driver after 6-10-1984. He searched for him
but could not find him. He did not know whether his driver was licensed to drive or not. He also handed over the book and insurance papers
relating to the car.
A further statement was given on 31-12-1984 to the effect that he was still unable to find his driver Maran and that he did not have a copy of
the driving licence of Maran.
Yet another statement dated 19-3-1985 was given by him. He claimed ownership of the vehicle TMG 7137 and stated that he did not know the
address of his driver Maran and that he would bring him as soon as he could meet him. he added that he was also known as Robin Mayne, but he
was purchased the vehicle in the Jayachandran for account purposes.
A show cause notice dated 2-4-1985 was issued to the parties, namely (1) to Maran, the driver and (2) Robin Mayne Jayachandran, directing
to show cause as to why (i) the goods seized should not be confiscated u/s 111(d), Section 113(a) and Section 113(d) of the Customs Act, 1962,
read with Section 3(2) of the Import and Export Control Act, 1947;
(ii) a penalty should not be imposed on them u/s 114 of the Customs Act, 1962; and
(iii) the packing materials/packages used for the concealment of the goods seized should not be confiscated to the Govt. u/s 119 of the Customs
Act, 1962; and
(iv) the vehicle Ambassador car TMG 7137 used as a means of transport in the carriage of seized smuggled goods should not be confiscated to
the Govt. u/s 115(2) of the Customs Act.
A copy of the show cause notice was pasted on the notice board of the Collectorate on 6-4-1985 as required u/s 153(b) of the Customs Act,
1962.
Robin Mayne Jayachandran, acknowledged the receipt of the show cause notice on 12-4-1985, while the show cause notice sought to be
served on the driver was returned undelivered with an endorsement ''left''. However, action was taken u/s 153(b) of the Act by the Customs
Authorities. No reply was received from Robin Mayne Jayachandran and Maran till 1-9-1985. It was under those circumstances, adjudication
took place before the Collector of Central Excise, Madras-34.
By order dated 3-9-1985, the Collector, after discussing the merits, passed the impugned order confiscating the goods, which are the subject
matter of the writ petition 1292 of 1986.
As regards the Vehicle TMG 7137, he came to the following view. So far as the Ambassador Car is concerned, the owner Jayachandran has not
been able to establish that either he or his agent namely his driver Maran had taken all necessary precautions against the car being used for carrying
the smuggled goods and the facts clearly established that the car has bee used for carrying the smuggled goods. However, being a tourist car, I
confiscate the car u/s 115(2) of the Customs Act, but give an option to the owner to redeem it on payment of a fine of Rs. 25,000/- (Rupees
twenty five thousand only) within one month from the date of receipt of this order or such extended time as the undersigned may allow an
application being made on this behalf.
It is under these circumstances W.P. No. 1291 of 1986 has been preferred for a declaration to declare Section 115(2) of the Customs Act read
with the proviso thereto is ultra vires.
It is the contention of Mr. A. Devanathan learned Counsel for the petitioner that this section is violative of Articles 14, 19(1)(g) and 300A of
the Constitution of India. According to him, the section imposes an unreasonable restriction on the petitioner and undue burden. The first petitioner
is carrying on business in Hire Purchase and lease transaction. The second petitioner is a shareholder of the first petitioner. In the course of his hire
purchases business, the first petitioner purchased the Ambassador car which is the subject matter of confiscation. The Invoice of M/s. Sancheti
Motors Private Limited, bearing No. 1845 dated 21-6-1984 was in the name of first petitioner. Subsequently the first petitioner let out the car on
Hire Purchase to C. Jayachandran, who had requested hire purchase financiers. He entered into hire purchase agreement with Dugar Investments
Limited on 21-6-1984. The total hire purchase was Rs. 89,200/-. The sum is payable in 36 monthly instalments. The first instalment commenced
on 14-7-1984. A total sum of Rs. 25,000/- has been received.
During the visit to various places by the first petitioner''s development Officer, it came to light that the vehicle had been sized by the Central
Excise Department and the hirer had filed the writ petition 1647/84 and obtained interim direction. Therefore it is clear that the first petitioner is the
absolute owner of the said vehicle having invested large funds and subsequently it let out on hire to several hirers. But as per the terms of he hire
purchase agreement, the first petitioner is yet to realise a sum of Rs. 51,700/- by way of instalments, not to speak of additional charges on over
due instalments. The High purchase agreement specifically prohibits from using the vehicle for carrying contraband goods in contravention of any of
the provisions of Central Excise and Customs Act. Yet the hire purchase vehicle had been subjected to transport contraband goods. It was so
done without the knowledge of the petitioners herein. Therefore to require the petitioners to prove that they had no knowledge would constitute
under hardship and burden.
I have given my careful consideration to the above arguments. I do not think that they are tenable at all. In order to appreciate the contentions
of the learned Counsel for the petitioner, it is necessary for me to refer to the preamble of the law relating to customs which provided the legal
background.
The Customs Act of 1962 is an act to consolidate and amend the law relating to customs. The object is to see the smuggling operations are put
an end to so that the Foreign Exchange reserves would be preserved. It is with this avowed purpose under Chapter XVI that confiscation of goods
and Conveyances and imposition of penalties are provided. Section 115 specifically deals with confiscation of conveyances. After setting out in
sub-section 1 of Section 115 as to what are the conveyances liable to confiscation, sub-section (2), along with the proviso and Explanation reads
as under :
115(2) Any conveyance or animal used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be
liable to confiscation, unless the owner of the conveyance or animal proves that it was so used without the knowledge or connivance of the owner
himself, his agent, if any, and the person in charge of the conveyance or animal and that each of them had taken all such precautions against such
use as are for the time being specified in the rules :
Provided that where any such conveyance is used for the carriage of goods of passengers for hire, the owner of any conveyance shall be given an
option to pay in lieu of the confiscation of the conveyance a fine not exceeding the market price of the goods are sough to be smuggled or the
smuggled goods, as the case may be.
Explanation - In this section ""market price"" means market price at the date when the goods are seized.
On an careful reading of this sub-section, it is very clear where the owner is in a position to prove that he had no knowledge or connivance,
certainly he will not be liable under this Act. Therefore it is a matter of proof. For my part I am unable to see how it is violative of Articles 14,
19(1)(g) and 300A of the Constitution of India.
The further argument of the petitioner is that the redemption fine that an owner is called upon to pay is relatable to the market price of the
goods. Supposing carries less valuable goods, the market price will be far less which will have no bearing as far as the price of the vehicle is
concerned. On the contrary, if he carries goods much more then the worth of the car, then the owner, for no fault of his, is called upon to pay a
huge sum by way of redemption fine.
This argument tends to overlook the fact that if the owner has knowledge or connivance, then undoubtedly he is to pay penalty. This liability is
a preventive measure. Therefore, a deterrent punishment is proposed by confiscation of the vehicle and a redemption fine as per the terms of the
proviso. Even here there is nothing unreasonable. As I stated above, it is entirely a matter for proof of knowledge or connivance of the owner.
Even then what is argued is that in spite of such proof, orders are not passed in favour of the owners. That will depend upon the nature of the
individual orders or the merits of the adjudication. That does not in any way impinge the validity of Section 115(2) of the Act. Therefore I dismiss
this writ petition.