Rajaram Bohra vs Union of India

The subject matter of challenge in the appeal is a judgment and order dated 13th April, 2009 [2009 (247) E.L.T. 478 (Tribunal)] passed by the Customs, Excise and Services Tax Appellate Tribunal dismissing an appeal preferred by the appellant. When the appeal was admitted, the following question of law was formulated ex parte:

"Whether the Tribunal below committed substantial error of law in holding that the appellant has not properly discharged the burden of proof when, admittedly, the seizure was initially made by Railway Protection Force and subsequently handed over to the Customs by not following the principle enunciated by the Supreme Court in the case reported in Gian Chand and Others Vs. The State Of Punjab, AIR 1962 SC 496 : (1983) 13 ELT 1365 : (1962) 1 SCR 364 Supp ."

On an earlier occasion when the appeal was taken up for hearing, Mr. Chakrabarti, learned advocate appearing for the appellant, submitted that an additional question of law should be formulated for ends of justice, which is as follows:

"Whether the order under challenge is bad because the order of confiscation was passed without considering the provisions of Section 125 of the Customs Act."

Considering that the additional question was raised by the learned advocate for the appellant and Mr. Saraf got enough opportunity to consider the same, we are inclined to add the aforesaid question.

Mr. Chakrabarti in support of the first question drew our attention to paragraphs 8 and 9 of the judgment in the case of Gian Chand and Others v. State of Punjab, reported in Gian Chand and Others Vs. The State Of Punjab, AIR 1962 SC 496 : (1983) 13 ELT 1365 : (1962) 1 SCR 364 Supp (S.C.) which read as follows:

"8. The question that now arises is whether the possession obtained by the Customs Department by goods being "conveyed to and deposited at the nearest Customs-house" within the last words of the second paragraph of Section 180 are goods which have been seized under the Act within the opening words to Section 178A. In the first place, it would be seen that these three sections which have to be read together, draw a distinction between seizure under the Act and a seizure under provisions of their laws. A seizure under the Act is one for which the authority to seize is conferred by the Act and in the context it could be referred to as a seizure under Section 178. The seizure from the owner of the property under Section 180 is not a seizure under the Act but by a police officer effecting the seizure under other provisions of the law, for instance the Criminal Procedure Code. And that is made clear by appropriate language in the first paragraph of Section 180. Learned Counsel for the respondent-State has urged that "the conveyance and deposit" in the office of the Customs authority under the second paragraph of Section 180 also involves a seizure under the Act and for this purpose relied on the meaning of the word ''seize'' given in Ballantyne''s Law Dictionary where it is equated to "taking a thing into possession". This, however, might be the meaning in particular contexts when used in the sense of the cognate Latin expression "seized" while in the context in which it is used in the Act in Section 178A it means ''take possession of contrary to the wishes of the owner of property''. No doubt, in cases where a delivery is effected by an owner of the goods in pursuance of a demand under legal right, whether oral or backed by a warrant, it would certainly be a case of seizure but the idea that it is the unilateral act of the person seizing is the very essence of the concept.

There is another matter to which reference should be made which, in our opinion, conclusively establishes that the delivery of goods to the Customs authorities under the latter part of Section 180 is not seizure under the Act within the meaning of Section 178A. The last part of sub-section (1) of Section 178A, lays the burden of proving that the goods are not smuggled on "the person from whose possession the goods are taken." Assuredly when the goods are delivered to the Customs authorities by the Magistrate they are not taken from the possession of the persons accused in criminal case so as to throw the burden of proof on them and it would lead to an absurdity to hold that the section contemplated "proof to the contrary" by the Magistrate under whose orders the delivery was effected. For the purpose of deciding the point arising in this case we do not think it necessary to enter into the philosophy of refinements of the law as to the nature of possession. When the goods were seized by the police they ceased to be in the possession of the accused and passed into the possession of the police and when they were with the Magistrate it is unnecessary to consider whether the Magistrate had possession or merely custody of the goods. The suggestion that the goods continued to be, at that stage, in the possession of the accused does not embody a correct appreciation of the law as regards possession. A ''seizure'' under the authority of law does involve a deprivation of possession and not merely of custody and so when the police officer seized the goods, the accused lost possession which vested in the police. When that possession is transferred, by virtue of the provisions contained in Section 180 to the Customs authorities, there is no fresh seizure under the Customs Act. It would, therefore, follow that, having regard to the circumstances in which the gold came into the possession of the Customs authorities, the terms of Section 178A which requires a seizure under the Act were not satisfied and consequently that provision cannot be availed of to throw the burden of proving that the gold was not smuggled, on the accused."

The object of citing the aforesaid judgment is to demonstrate that the burden of proof that the goods were not smuggled goods was not on the appellant. He submitted that Section 178A of the Sea Customs Act, 1878 corresponds to Section 123 of the Customs Act, 1962 as has been indicated in the aforesaid judgment itself. Section 123 of the Customs Act provides as follows:

"123. Burden of proof in certain cases. - [(1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be -

(a) in a case where such seizure is made from the possession of any person, -

(i) on the person from whose possession the goods were seized;

and

(ii) if any person, other than the person from whose possession the goods were seized; claims to be the owner thereof, also on such other person;

(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.]

(2) This section shall apply to gold (and manufactures thereof), watches, and any other class of goods which the Central Government may by notification in the Official Gazette, specify."

Section 178A of the Sea Customs Act, 1878 provided as follows:

"178A. (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession the goods were seized."

Mr. Chakrabarti contended that the goods were not seized under Section 123 of the Customs Act. On the contrary the goods were seized by the railway police. This submission of Mr. Chakrabarti has seriously been disputed by Mr. Saraf, learned advocate appearing for the respondent. His first submission is that the appeal itself is incompetent because the appellant succeeded to have the appeal admitted on a wrong premise of fact by untruly suggesting in the question formulated at the time of admission that "admittedly, the seizure was initially made by Railway Protection Force and subsequently handed over to the customs". Mr. Saraf added that the appellant suppressed the fact that a Seizure List under Section 110 of the Customs Act was prepared by the Inspector, Kaliachak, Customs, Preventive Unit in the presence of witnesses at the time of seizure of the goods. The appellant has also signed the seizure list. Mr. Chakrabarti submitted that the seizure list also contains the signatures of Sri Dilip Kumar Hazra, Officer-in-Charge, Farakka Police Station, Sri Hiren Kumar Sarkar, Officer-in-Charge, Farakka GPRF and the place of seizure is Farakka Police Station as would appear from the seizure list itself.

The question for consideration is whether the goods, gold in this case was, were seized from the appellant by the customs officer or by the police. The fact that the goods were seized by the customs officer from the appellant finds corroboration from the statements made by the appellant soon after the seizure on 10th September, 1994 and the subsequent statement made by him on 22nd September, 1994 pursuant to leave granted by the Chief Judicial Magistrate, Malda. The interrogation was made by the Inspector of Kaliachak Customs, Preventive Unit. Based on the evidence, the Commissioner of Customs (Appeals) was of the opinion that the goods were seized by the customs department from the custody of the appellant and not from the custody of the police. The aforesaid finding has been upheld by the learned Tribunal indirectly by observing that the judgment in the case of Gian Chand (supra) does not apply to the facts and circumstances of this case. The judgment in the case of Gian Chand can help the appellant provided the goods were seized from the appellant by the police and not by the customs officers. The fact that the goods were seized by the customs officers from the appellant has concurrently been found both by the Commissioner of Customs (Appeals) and the learned Tribunal.

The case of the appellant that he purchased the goods from a merchant of Ahmedabad, namely M/s. Lalji Bhai Kanji Bhai, is inconsistent with the statements made by the appellant on 10th September, 1994 and 22nd September, 1994. We do not dilate on the issue considering that the prosecution launched against the appellant is still pending.

The correctness of the concurrent finding as regards the goods having been seized by the customs officer is not in challenge in the appeal. Mr. Saraf is correct in his submission that the appellant resorted to suggestio falsi and suppressio veri in formulating the question on the wrong basis that it was an admitted position that the goods were seized by the police and not by the customs official. Since the goods were seized by the customs official, it goes without saying that the burden of proof that the goods were not smuggled goods is squarely on the appellant, which he failed to discharge. Therefore, the finding arrived at by the learned Tribunal that the judgment in the case of Gian Chand did not apply is just and correct.

Therefore, the first question is accordingly answered in favour of the respondent/Revenue.

The second question, indicated above, depends upon construction of Section 125 of the Customs Act, 1962 which provides as follows:

"125. Option to pay fine in lieu of confiscation. - (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods (or, where such owner is not known, the person from whose possession or custody such goods have been seized,) an option to pay in lieu of confiscation such fine as the said officer thinks fit:

Provided that, without prejudice to the provisions of the proviso to Sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.

[(2) Where any fine in lieu of confiscation of goods is imposed under Sub-section (1) the owner of such goods or the person referred to in sub-section (1) shall, in addition, be liable to any duty and charges payable in respect of such goods.]"

Mr. Saraf, learned advocate appearing for the respondent, submitted that this question was neither raised before the Commissioner nor before the learned Tribunal. He added that ''gold'' at the relevant point of time was within the list of prohibited/restricted goods. Therefore, the authorities were not obliged to give an option to the appellant to pay redemption fine in lieu of confiscation. Mr. Chakrabarti, learned advocate, however, disputed this submission. He submitted that ''gold'' at the relevant point of time was not in the list of prohibited items. Therefore, it was the bounden duty, according to him, of the officers to give option to the appellant to pay redemption fine in lieu of confiscation.

We have considered the submissions. The object of the legislature appears to be that option shall be given under Section 125 in all those cases where the goods are not within the prohibited list.

With respect to the prohibited goods, the officer has a discretion. It is well settled that discretion has to be exercised according to rules of reason and justice. The Apex Court in the case of U.P. State Road Transport Corporation and another Vs. Mohd. Ismail and others, AIR 1991 SC 1099 : (1991) 2 CompLJ 170 : (1991) 62 FLR 841 : (1991) 2 JT 292 : (1991) 2 LLJ 332 : (1991) 1 SCALE 734 : (1991) 3 SCC 239 : (1991) 2 SCR 274 : (1991) 2 UJ 61 , opined in this regard as follows:

"The discretion allowed by the statute to the holder of an office, as Lord Halsbury observed in Sharp v. Wakefielf, (1891) AC 173 at 179 is intended to be exercised "according to the rules of reason and justice, not according to private opinion; according to law and not humor. It is to be, not arbitrary, vague and fanciful but legal and regular. And it must be exercised within the limits to which an honest man competent to the discharge of his office ought to confine himself." Every discretion conferred by statute on a holder of public office must be exercised in furtherance of accomplishment of purpose of the power. The purpose of discretionary decision making under Regulation 17(3) was intended to rehabilitate the disabled drivers to the extent possible and within the above said constraints. The Corporation therefore, cannot act mechanically. The discretion should not be exercised according to whim, caprice or ritual. The discretion should be exercised reasonably and rationally. It should be exercised faithfully and impartially. There should be proper value judgment with fairness and equity. Those drivers would have served the Corporation till their superannuation but for their unfortunate medical unfitness to carry on the driver''s job. Therefore, it would not be improper if the discretion is exercised with greater concern for and sympathetic outlook to the disabled drivers subject of course to the paramount consideration of good and efficient administration."

We are unable to accept the submission of Mr. Saraf that the point was not raised by the appellant. The point of substance is other way round. Was the adjudicating authority alive of its obligation that the law had vested the discretion in him to be exercised judiciously and honestly? From the judgments they appear to have been oblivious. Therefore, the order of confiscation is wrong. Whenever, discretion has been vested the administrative authority shall do well to at least briefly record the reasons why they chose to exercise the discretion in one way or the other.

The matter shall now go back to the Joint Commissioner of Customs, Siliguri. He shall consider the question under Section 125 in accordance with law after giving an opportunity of hearing to the appellant. The Question No. 2 is answered in the affirmative and against the Revenue. Since the matter is pretty old, the Joint Commissioner is directed to use some expedition in the matter.