Ishwarlal Narbheram Soni vs Commissioner of Customs (Preventive)

Sonia Gokani, J.—The Appellant herein, by way of the present appeal u/s 130 of the Customs Act, (hereinafter referred to as the Customs

Act) has challenged the order of Commissioner of Customs (Preventive) dated 4.12.2007 directing the confiscation of gold bars weighing

2254.750 grams valued at Rs. 7,18,857/- under the provision of Section 111 read with Section 120 of the Customs Act and also imposing penalty

u/s 112(B) of the Act.

The brief facts would be necessary to understand the issues that have been raised in the present appeal.

2.1 The Police Sub-Inspector of Jamnagar seized five boxes containing 2514.75 grams of smuggled gold valued at Rs. 7,97,731/- from goldsmiths

of Jamnagar and Bhuj exercising his powers u/s 102 of the Code of Criminal Procedure. The said action was taken pursuant to the information

received by D.S.P, Jamnagar that two persons, namely, Shri Abbas Jaku Bhaya and Shri Talab Siddik Sanghar had smuggled gold ornaments

from Dubai (Malgoi) and brought to Salaya in a vessel in the month of December, 1993.

This was handed over to Customs Department on 11.4.1994 for initiating the actions under the provisions of the Customs Act.

As the said bars were detained from the persons not having import documents, a reasonable belief was formed that the same were smuggled

gold ornaments liable for confiscation and accordingly the same were seized under the provisions of the Customs Act. The statements of suspects

Shri Talab Siddik Sanghar and Abbas Jaku Bhaya had been recorded on 12.4.1994 u/s 108 of the Customs Act before the Superintendence of

Customs (PI), Jamnagar, where it had been stated that they had stolen the gold ornaments and smuggled the same into India. The statements of

following persons were recorded u/s 108 of the Act in connection with these gold ornaments:

Shri Ashwin Mohanlal Soni

Shri Chandrakant Harilal Varia

Shri Hasmukhlal Hansraj Gusani

Smt. Karimaben Suleman Sanghar

Shri Mukundlal Harilal Patadia

Shri Ishwarlal Narbheram Soni

The present Appellant Shri Ishwarlal Narbheram Soni whose statement had been recorded on 3.5.1994, wherein he stated that the said gold

ornaments had been purchased by him weighing 1254.450 grams from one Wagher having boyish look for an amount of Rs. 4,84,500/- and he

converted the same into gold bar weighing 1254.450 grams which was seized by the police on 5.4.1994. As the challenge to the act of the

Customs Officer in connection with the confiscation and the penalty, is made by the present Appellant, elaboration of the statements made by

others is not done at this stage. What further emerges from the record is that after the issuance of the show cause notice and completion of the

adjudication, the Commissioner vide its order dated 4.12.2007 confiscated the goods and imposed penalty.

Being aggrieved by the same, the appeal was preferred before the Tribunal, which had remanded back the matter to the Commissioner with

certain observations where once again all the contending parties were heard and the Commissioner confiscated five gold bars and also imposed

penalties on all the four of them. This was then further challenged before the Tribunal. The Tribunal vide its order dated 23.11.2009 had confirmed

the order of confiscation passed by the Commissioner by holding that the five gold bars were smuggled goods, which were smuggled into India in

contravention of the provisions of the Customs Act and accordingly were liable for confiscation u/s 111(d), 111(e) and 111(i) read with Section

120(1) of the Customs Act. As the entire gold was absolutely confiscated, the Tribunal had reduced the penalty. However, holding categorically

that all the persons including present Appellant had intention to make some profit out of the said deal, therefore, even with the complete knowledge

of the same being smuggled goods, they had purchased the same. Penalty imposed u/s 112 of the Act on the present Appellant is to the tune of Rs.

2,00,000/-.

Impugned order of confiscation as well as that of penalty is under challenge before this Court where learned advocate Mr. D.D. Vyas appearing

for the Appellant has emphatically and vehemently made his submissions in this regard. It is argued, at the outset, by learned advocate for the

Appellant that initially there was a seizure by the Respondent authorities u/s 102 of the Code of Criminal Procedure and subsequently the gold had

been handed over by the Police Inspector to the Customs Department on 11.4.1994 for initiating actions under the Customs Act. He, therefore,

had contended that this was not a seizure u/s 110 of the Customs Act as u/s 110, proper officer has to have "" reason to believe"" if any goods are

liable to confiscation under the Act, which according to him is absent here. It is further argued that only in the event of seizure u/s 110 that the

provision of Section 123 would be attracted where the onus of burden shifts on the person from whom the seizure is made to establish that the

goods seized are not smuggled goods otherwise, burden continues on prosecuting agency.

He relied heavily upon the judgment of the Apex Court in the case of Gian Chand and Others Vs. The State Of Punjab, where the Apex Court has

discussed at length the provision of Customs Act and particularly Section 178(A) by holding that the expression "" seized"" in the context of Section

178 would mean taking possession, contrary to the wishes of the owner of the property. It has also held that where a delivery is effected by an

owner in pursuance of the demand under the legal right whether oral or by a warrant, it will be a seizure of the Court. Accordingly, the learned

advocate has drawn a distinction between the seizure under the Sea Customs Act and the seizure under the provision of other laws. He

emphasized further that in the event of a seizure under the Customs Act only, the onus will be shifted, in respect of proof of a particular commodity

seized, on a person from whose possession the same was taken and not otherwise.

Learned advocate also sought to place reliance on the judgment in the case of Union Bank of India v. Adulkadar Abdulgani Hasmani and Ors.

reported in 1986 G.L.H. 371. Following the decision of the Apex Court given in the case of Gian Chand and Ors. v. State of Punjab (supra), the

Gujarat High Court has held in Union Bank of India v. Adulkadar Abdulgani Hasmani and others(supra) that before a presumption can be raised

that the goods in question were foreign goods, the seizure must be under the Customs Act by properly authorized Customs Officer. Further

reliance is also placed by the learned advocate on the decision of the Apex Court in the case of Noor Aga v. State of Punjab and Anr. reported in

AIR 2009 SC Sup 852. It was held herein that exclusive reliance on the statement recorded u/s 108 of the Customs Act was a fundamental error

in a prosecution under the NDPS Act.

It was argued further on the facts that the present Appellant had filed three affidavits of his family members and that of his own to state that the gold

belonged to his wife and two daughter-in-laws. He also presented three bills to the Commissioner before retracting his earlier statement given to

the officer. Learned advocate also urged to this Court that the statement recorded under duress, once retracted, no reliance can be placed thereon

and any adjudication based on such a statement would amount to committing a fundamental error.

On duly considering the submissions of the learned advocate and on closely scrutinizing the facts along with the judgments of both the

Commissioner and that of the Tribunal, for the reasons to be followed hereinafter, the appeal deserves dismissal.

7.1 What culls out from the record is that on the basis of the information received by the D.S.P,Jamnagar the action was initiated u/s 102 of the

Code of Criminal Procedure by the Inspector of Police confiscating five boxes containing 2514.750 grams of 16 to 18 carats pure gold valued at

Rs. 7,97,731/-.

7.2 As two persons Shri Abbas Jaku Bhaya and Shri Talab Siddik Sanghar were said to be the persons behind these smuggled goods and they

were also found to have disposed of the same to different persons, they were handed over to the Customs Department. The goods were also

handed over to the Customs Department by the Police Inspector on 11.4.1994 for taking action under the provision of Customs Act. On

considering merit in the documents, the proper officer had confirmed a reasonable belief of the gold bars being the smuggled gold ornaments and,

therefore, they were seized under the Customs Act. What is further emerging from the record is that the statements of both the aforementioned

persons (smugglers) were recorded u/s 108 and on the basis of the details provided by them, show cause notices were also issued to others. The

persons, who have been named hereinbefore, also include present Appellant giving statement u/s 108 and on oath he accepted that he purchased

the seized gold bars knowing the fact that the same were the smuggled gold and later on, he retracted the same stating that he has converted the

ornaments after getting the ornaments of his wife and daughter-in-law who also gave their ornaments to uphold prestige of the family.

7.3 The issue of course has been raised by the learned advocate making a distinction between the seizure u/s 110 of the Customs Act and the

seizure under other laws. With regard to seizure under the laws other than the Sea Customs Act, onus would be on the department to establish

connection with the seized goods. However, in the event of seizure u/s 110 of the Customs Act, the onus of proof will be shifted on the person

from whose possession the particular commodity is seized. In other words, if the provisions of Section 110 are satisfied where the proper officer

would have a reason to believe that goods are liable to confiscation and is satisfied that the goods seized can be presumed to be smuggled goods

and he seizes the goods, then the burden of proving otherwise would be on the person from whom the same were seized.

This view is also followed with a further emphasis in the decision of the Gujarat High Court in the case of Union Bank of India v. Adulkadar

Abdulgani Hasmani (supra).

Although this is an interesting question of law that has been raised, it would be pertinent to mention at this stage that the order under challenge is

not concerning prosecution of the Appellant nor is the question concluded solely on the basis of statements recorded u/s 108 of the Customs Act.

Again, reference also needs to be made of the fact that once the police officer handed over the seized goods to the Customs Department, it was

deciding the aspect of confiscation of the smuggled goods brought in the country in contravention of provisions of the Customs Act and, therefore,

in the present proceedings issue raised need not be decided by this Court. Statements u/s 108 of the Customs Act have been recorded of both the

persons namely, Shri Abbas Jaku Bhaya and Shri Talab Siddik Sanghar, who were proved to have been smuggled the gold into India and also

statements of all those persons, who had purchased the said commodity. And, these statements were recorded u/s 108 soon after the gold bars

had been handed over to the Customs department for taking actions. What clearly and unequivocally gets established from the record is that there

is an overwhelming evidence before the adjudicating authorities to establish that the commodities seized were smuggled and the said gold had been

sold to different persons, who had purchased them with full knowledge and not these statements alone.

Before the Customs authorities, the question was not that of prosecution, it was to decide the aspect of confiscation. Again, exclusive reliance

was placed on the statement of the accused in the case of Noor Aga(supra), which is of no help to the Appellant for there being no exclusive or

excessive reliance on the statements recorded u/s 108 of the Customs Act for determining the question of confiscation. In the very same judgment,

the mention is also made of the use of retracted confessional statement of the person recorded u/s 108 of the Act provided the same is made

voluntarily and the burden of proof with regard to such confession being voluntary would be, of course, on the prosecution. The Court has also

noted from its earlier decision of Gian Chand and Ors. v. State of Punjab (supra) saying that by no stretch of imagination a Customs Officer is a

police officer and he does not become one merely because his powers are similar to that of police officer. This Court is also not required to further

delve into that aspect, at this stage, as the statements recorded of the present Appellant and those of others even when retracted later on by filing

the affidavit, would not take away the very edifice of the case of the department as discussed elaborately and extensively in the orders of the

Commissioner and the Tribunal where facts get established on the basis of the documentary evidence made available to the adjudicating authorities.

Thus, both the authorities below have based their opinions and findings on all these facts cumulatively to arrive at a conclusion that the gold seized

was the smuggled goods liable to be confiscated for having been smuggled in contravention of the provisions of the Customs Act and those who

purchased the gold, including the present Appellant, did so with an intention to make profit knowing fully well that the same were smuggled.

Difference in the purity of gold, anomaly found in the bills produced by all those persons at the time of retracting the statements made in their

affidavits and positive evidence presented before the department in the form of total matching quality of the goods seized, cumulatively led these

authorities and particularly the Tribunal to arrive at such a conclusion. This Court sees no reason to interfere with the said order which is well

reasoned and appeases the logic.

It is also needed to be mentioned that the amount of penalty in the instant case is very less and the additional reason why this calls for no

interference is also a meager amount of penalty and the same would not require any interference in the wake of the seizure of the gold bars.

In this premise, the appeal of the present Appellant having no merits deserves dismissal. Accordingly, Appeal is dismissed.

In view of the order passed in Appeal, no orders in Civil Application. Accordingly, Civil Application stands disposed of.