Sarwan Singh vs The Collector, Customs and Central Excise, Central Excise Collectorate

Rajendera Nath Miital, J.—Briefly the case of the Petitioner is that he and some other persons were travelling in a ear(sic) on the Grand Trunk Road Ludhiana side to Goraya side. When they were between Phillaur and Goraya, the police conducted a raid on receipt of a secret information, checked the car and recovered currency notes worth Rs. 41800-/ 13 gold sovereigns and 32 bore pistol from it. The Petitioner made an application u/s 523 of the Code of Criminal Procedure (hereinafter referred to as the Cods) for delivery of Rs. 4,18,000/- to him. The Superintendent Customs, Amritsar, also made a similar application. The Magistrate 1st Class, Phitlaur vide order dated October 3, 1970 ordered that all the goods including the car except the revolver(sic) and the bullets be given to the Custom authorities for adjudication of the matter under the Customs Act, 1962 (hereinafter to as the Act). The Petitioner was, however, challaged regarding the pistol under the Indian Arms Act and the case is still pending He filed a revision petition against the order of the Magistrate to the Sessions Judge, Jullundur when the revision petition was pending, the Collector Customs and Central Excise, Chandigarh, served a notice dated December 16, 1972 (copy Annexure ''D'') on the Petitioner that he should appear before him on January 5, 1973 and produce all evidence in support of his defence regarding the seizure of Rs. 4,l3,000/-and 13 gold sovereigns and if he failed to appear, the case would be decided without any further reference to him The Petitioner filed a reply dated December 22. 1972 to the said notice inter olia stating that the matter was sub judica before the Additional Sessions Judge, and consequently the proceedings be stayed till the final decision of the case by him. On January 24, 1973, the Collector issued another communication to the Petitioner that his request had not been acceded to. Therefore, he asked him to appear before him on February 23, 1973.

On April 18, 1973, the Additional Sessions Judge accepted the revision petition and made a recommendation to the High Court u/s 438 of the Code for setting aside the order of the Magistrate. The case is now pending in this Court for decision. Thereafter the Petitioner received a communication from the Collector intimating him that the next date of hearing was April 30, 1973. The Petitioner appeared before him on the date of hearing and made an application to the effect that the matter was pending in the High Court and, therefore, It would be proper that the further proceedings in the case be stayed till the deeision of the High Court. In spite of the aforesaid application, it is alleged, the Collector recorded the evidence of the prosecution witnesses and rejected his prayer for stay The Petitioner has filed the writ petition for quashing the statement of Sant Lal, a prosecution witness (copy annexure ''J''). It is also prayed that the Collector be restrained from continuing the proceedings.

The writ petition has been contested by the Respondent who, inter alia pleaded that there is no legal bar on the Respondent to proceed with the enquiry pending before him under the Customs Act.

The first contention of the learned Counsel for the Petitioner is that the property was entrusted to the Respondent by the Magistrate and revision petition against that order has been accepted by the Additional Sessions Judge, who has recommended it to the High Court. The learned Counsel submits that the proceedings are still pending in the High Court and during the pendeney of the proceedings the Respondent has seized the property which he could not do. He made reference to the notice issued by the Respondent to the Petitioner wherein the property has been shown to have been seized. The learned Counsel for the Respondent was fair enough to admit that the property could no be seized by the Collector till the proceedings in the criminal Court were pending. He submits that the property has not been seized by the Respondent and the mention of the seizure in the notice is through oversight. In view of the aforesaid concession of the learned Counsel, the question is decided accordingly.

Mr. Sibal has then sought to argue that the question as to who is entitled to the possession of the property is still pending before this Court and the Respondent, who is a quasi judicial authority, has started proceedings u/s 124 of the Act for its confiscation, which he could not do. He submits that he can proceed against the property after the matter has been finally decided by this Court. In support of his contention he has made a reference to Gurcharan Das Chadha Vs. State of Rajasthan,

I have given due consideration to the argument of the learned Counsel. In order to determine the question it will be necessary to make a reference to the relevant provisions of the Code of Criminal Procedure 1898 and the Customs'' Act. Section j23 of the Code relates to the procedure by the police upon seizure of property taken u/s 81(sic), or suspected to have been stolen and Section 524 to the procedure where no claimant appears within six months. The said sections are as follows:

(I) The seizure by any police-officer of property taken u/s 51, or alleged or suspected to have been stolen, or found under circumstances which create suspicion of (he commission of any offence, shall be forthwith reported to a Magistrate, who shall make such order as he thinks fit respecting the disposal of such property or the delivery of such property to the person entitled to the possession therrof, or, if such prrson cannot br ascertained, respecting toe custody and production of such property

(2) If the person so entitled is known, the Magistrate may order the property to be delivered to him on such conditions (if any) as the Magistrate thinks fit. If such person is unknown. The Magistrate may detain it and shall, in such care, issue a proclamation specifying the articles of which such proparty consists, and requiring any person who may have a claim thereto to appear before him and establish his claim within six months from the date of such proclamation.

(I) f no person within such period estalbishes his claim to such property, and if the person in whose possession such property was found, is unable to show that it was legally acquired by him such property shall be at the disposal of the State Government and may be sold under the orders of the Presidency Magistrate, District Magistrate or Sub-divisional Magistrate or of an Executive Magistrate of the first class em-powered by the State Government in this behalf.

(3) In the case of every order passed under this section, an appeal shall lie to the Sessions Judge." From a reading of Section 523, it is clear that after the seizure of the property by the Police u/s 51, the Magistrate is entitled to make an order for delivery of the property to the person entitled to its possession. Section 524 provides that if a person from whose possession the property has been found is unable to establish that he acquired it legally or if no person is able to establish his claim to the property, it will be at the disposal of the State Government. It is thus evident that the criminal Court is to bold under the said section as to who is entitled to take the property from the custody of the Magistrate. Unless that is done, the authorities under the Act have no right to seize the property.

Section 110 of the Customs Act relates to seizure of goods, documents and things. Section 122 to adjudication on confiscation and penalties, Section 124 to issue of show-cause notice before confiscation of goods etc. and Section 126 to vesting of goods in the Central Government after their confiscation. Sections l10, 124 and 126 are as follows:

Seizure of goods, documents and things -

(1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods;

Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of che goods an order that he shall not remove, part with or otherwise deal with the goods except with the previous permission of such officer.

(2) Where any goods are seized under Sub-section (1) and no notice in respect thereof is given under Clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized:

Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Collector of Customs for a period not exceeding six months.

(3) * * * * *

(4) * * * * *

Issue of show cause notice before confiscation of goods, etc, No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods of such person-

(a) Is given a notice in writing informing him of the grounds on which it Is proposed to confiscate the goods or to impose a penalty;

(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and

(c) is given a reasonable opportunity of being heard in the matter:

Provided that the notice referred to in Clause (a) and the representation referred to in Clause (b) may, at the request of the person concerned, be oral.

On confiscation property to vest in Central Government: (1) When any goods are confiscated under this Act, such goods shall thereupon vest in the Central Government

(2) The Officer adjuging confiscation shall take and hold possession of the confiscated goods.

Section 123 inter alia provides that where any goods are seized under the Act under 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 are seized and in any other case on the person who claims to be the owner of the goods so seized. A controversy arose whether a show-cause notice could be issued u/s 124 with regard to the seized goods only or it could also be issued with respect to goods returned under Sub-section (2) of Section 110 and the goods not seized by the department but a notice regarding which was issued to the owner under proviso to Sub-section (1) of Section 110. The matter came up before a learned Single Judge of this Court in Muni Lal Vs. The Collector of Central Excise, Chandigarh, , wherein it was held that there appears to be no bar for giving the show-cause notice as contemplated by Clause (a) of Section 124 even after the return of the seized goods, because of failure to issue such notice within 6 months or the extended period thereafter as prescribed in Sub-section (2) and proviso thereto, of Section 110 It was further observed that when the provisions contained in the proviso to Sub-section (I) of Section 110, Clause (a) of Section 124, and Sub-section (2) of Section 126 of the Act are looked at, it cannot be gainsaid that adjudication of confiscation of goods can be recorded even without seizure of the goods. The judgment of the learned Single Judge was affirmed in Letters Patent Appeal No 508 of 1974 (Muni Lal v. Collector, Central Excise Chandigarh) decided on September 27, 1976. The learned Bench while affirming the view observed as foliows:

We have very carefully gone through the provisions of Sections 110 and 124 of the Act We find that the proceedings u/s 124 of the Act are in no way dependent upon the proceedings to be taken u/s 110 of the Act, In a given case, even if the proceedings of seizure u/s 110 of the Act have not been initiated, still the proceedings u/s 124 of the Act for conffiscation of the goods which are liable to be confiscated under the provisions of Section 111 of the Act can be initiated at any time whereas limitation of six months qua the seizure of goods u/s 110 of the Act has been provided... Section 124 provides that no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty. The section does not lay down any period within which the notice required by it has to be given. The period laid flown in Section 110(2) affects only the seizure of the goods and not the validity of the notice.

Similar view was taken in Civil Writ Petition No. 4206 of 1973 (Harbans Lal v. The Collector Central Excise and Customs, ChandigarhC. W. p. No. 4206 of 1973) decided on August 7, 1979.

From a plain reading of the aforesaid judgments it is clear that proceedings of confiscation of case u/s 124 can be taken inspite of the fact that the goods have not been seized by the authorities under the Act Gwrcharan Dass Chadha''s case (supra) on which reliance has been placed by Mr Sibal is distinguishable and, therefore, he cannot derive any benefit from it. It further appears from a reading of Section 123 that in case the goods are seized the burden of proving that they are not smuggled goods is on the person who is owner thereof or from whose possession these have been seized. In case a show cause notice is issued without seizing the goods, the burden of proof is on the department to show that the goods are smuggled ones. The matter as to who her the goods are smuggled or not is to be decided by the author ties under the Act. The authorities are also enitled to confiscate the goods and on confiscation, the confiscated goods vest in the Central Government u/s 126.

The question that now arises for determination is at to whether In the present case, the authorities can adjudicate finally regarding the currency notes till the matter is finally decided by the criminal Court. As already observed above, the matter in the first instance is to be decided by the criminal Court as to whether the Petitioner or some other person is entitled to the currency notes. It is possible that the criminal Court may come to the conclusion that the Petitioner is not entitled to the currency notes.

If the authorities under the Act give a decision u/s after serving notice on the Petitioner that the goods are smuggled goods and are liable to confiscation and later it is held by the criminal Court that the goods do not belong to the Petitioner but to some other person, great complications will arise in the matter. Therefore, in order to avoid such a conflict it will be proper that the authorities may continue with the proceedings but may not pass a final order till the decision of the criminal revision by this Court

Mr. Sibal then argues that the Indian currency notes are not smuggled goods and, therefore, the authorities under the Act have no jurisdiction to confiscate them, unless they have evidence that these are sale proceeds of smuggled goods. To fortify his arguments he made a reference to a Division Bench judgment of Delhi High Court in Civil Writ Petition No 802 of 1968 (Anand Kumar v. The Collector Customs) C. W. P. No. 802 of 1968 decided on December 20, 1968. The point hhs not been taken specifically in the writ petition. The Respondent produced a statement of the Petitioner recorded by the Custom authorities wherein he admitted that Ram Labhaya of Amritsar met him at Bhatinda 4 days earlier and gave him 200 biscuits of gold for disposal on commission basis He disposed of the same on February 11, 1979 and February 1 , 1970 to one Sant Lal son of Ganpat Rai Saraf of Sirsa and he paid to him Rs. 4,20,00)/- in three instalments, on February 11, 1970, February 12, 1970 and February 13, 1970. He further stated tost he came to know that Sant Lal sold the gold to Bishambar Dayal Saraf, Anaz Mandi Mansa, subsequently. He also stated that after deducting his commission at the rate Rs. 1/- per tola, the balance of Rs. 4,18,000/-was handed over to Ram Labhaya at Ludhiana. After referring to the statement, Mr. Kuldip Singh, has argued that the abovesaid statement clearly goes to show that the currency notes are the proceeds of the sales of smuggled goods and consequently liable to confiscation. In the aforesaid circumstances, it will not be proper to adjudicate upon this matter in these proceedings.

For the reasons recorded above, I partly accept the writ petition as indicated above with no order as to costs. The parties are directed to appear before the Collector, Central Excise, Chandigarh, on October 26, 1979.