The petitioner is aggrieved by the order of the first respondent dated 28th October 1981 in and by which he has confirmed an order of confiscation of cloves valued at Rs. 47, 000 for violation of Section 111(d) of the Customs Act, 1962 (hereinafter called the 'Act'), and also levy of personal penalty of Rs. 2500 under Section 112 of the Act.


2.Brief facts relating to this writ petition may now be noted. On 7th May 1973, the officers of the Central Excise department raided the premises bearing Nos. 104 and 126 South street, Madras 23, and seized 245 kgs. and 249 kgs. of cloves belonging to the petitioner on entertaining a reasonable belief that the said cloves have been illegally imported into India. For the show cause notice dated 7th August 1973 issued to the petitioner, a reply was sent on 18th October 1973, stating that the cloves were purchased from one Kusal Ray who in turn purchased the same in the auction held by the Central Excise department at Nagapattinam under Customs Receipt No. 90, dated 20th July 1964. In the same reply, it was further stated that the statement already given by the petitioner at the time of inspection should not be relied upon as it was taken under threat and coercion and, therefore, not voluntary. The petitioner, in the reply notice took a stand that the department has to discharge the burden by adducing evidence by discovering the origin of the cloves, time, mode and manner of smuggling. The petitioner further denied certain factual aspects such as the cloves seized in bags contained moisture and sea-sand particles sticking on them. The petitioner was given a personal hearing through counsel. The Deputy Collector of Central Excise, was not prepared to accept the contentions raised on behalf of the petitioner in the reply to the show cause notice as well as the arguments raised at the time of personal hearing. Consequently, by order dated 23rd December 1974, the Deputy Collector of Central Excise ordered confiscation of 474 kgs. of cloves and imposed a personal penalty of Rs. 5, 000/-. Aggrieved by the order of the Deputy Collector, an appeal was preferred to the Appellate Collector of Customs who by order dated 3rd April 1980, confirmed the order of confiscation and reduced the personal penalty to Rs. 2, 500/-and in other respects rejected the appeal. A further revision to the first respondent also was not successful. Hence the present writ petition.


3.Mr. Madanchand Chopda, learned counsel for the petitioner, placing reliance on a judgment of Nainar Sundaram J. reported inAbunackerv. Secretary, Government of India, 1981-2-MLJ 405 submitted that the impugned order cannot be sustained in law. According to the learned counsel, in addition to the confiscation and levy of personal penalty, the department prosecuted the petitioner in criminal court and the petitioner was acquitted on merits by the Criminal Court. The order of acquittal was further confirmed on appeal by the Department by this Court in Cr. Ap 860 of 1978. The learned counsel relied on the finding given by this Court in the said criminal appeal to the effect that 'There isprima facieevidence that the cloves were purchased from the auction purchaser in an open auction. In the light of the acquittal on the same facts, the order of confiscation and levy of personal penalty cannot be sustained as held by this Court in the judgment reported in 1981-2-MLJ 405 (cited supra), is the contention of the learned counsel for the petitioner. He also contended that the petitioner was not given a fair and full opportunity to defend the case. In any event, according to the learned counsel for the petitioner, the option to pay fine in lieu of confiscation which is available under Section 125 of the Act was not offered to the petitioner and, therefore, the order is vitiated on that ground.


4.Mr. T. Somasundaram, learned counsel appearing for the respondents, fairly submitted that it is true that the judgment of Nainar Sundaram J. clearly supports the case of the petitioner. However, he submitted that an appeal is pending on the file of this Court against the judgment of Nainar Sundaram J. He further submitted that the view taken by Nainar Sundaram J. in the decision cited supra is not only contrary to the view taken earlier by Suryamurthy J. in Cr. M.P. 2761 of 1977 but also contrary to a judgment of a Division Bench of this Court in W. A. No. 106 of 1977 decited on 30th June 1977. Therefore, he contends that the Division Bench judgment and the judgment of Suryamurthy J. in Cr.M.P. 2761 of 1977 are binding on me against the judgment of Nainar Sundaram J. relied on by the learned counsel for the petitioner. The learned counsel further submitted that the petitioner was given full and adequate opportunity to defend the case, and that the contention to the contrary is not correct. Regarding the option under Section 125 of the Act, learned counsel submitted that the petitioner was not factually given the option as contemplated under Section 125 of the Act.


5.Let me consider the merits and demerits of the rival contentions. Nainar Sundaram J. in the decision cited above namely, 1981-2-MLJ 405 (cited supra) has held under similar circumstances as follows :-


"Ananthanarayanan Offg. Chief Justice, inShaikh Kasimv. Superintendent of Post Offices, following the judgment of the Bench of this Court inD'Silvav. Regional Transport Authorityheld that where the acquittal is substantially on merits, on identical facts and charges, it will not be proper for disciplinary Tribunal to record a finding of guilt, and to punish thereon and this court in exercise of the jurisdiction under Article 226 of the Constitution would be justified in striking down the action based on such findings as not in consonance with principles of natural justice.


I find that before the proceedings of the departmental authorities got terminated finally the Criminal Court judgment has been rendered by the Sessions Judge, Madras Division, and the said court has acquitted the petitioner not on any technical ground, but, on the merits of the case. Such being the position, the dictum laid down in the above two decisions will squarely apply to the facts of the present case. In this view, I am obliged to interfere in the writ petition and accordingly the writ petition is allowed. There will be no order as to costs." *


6.As pointed out by the learned counsel for the petitioner, this judgment directly supports the case. However, the learned counsel for the Revenue has brought to my notice the judgment of the Division Bench and also the decision of another learned single Judge wherein they have taken the view that proceedings under Section 112 of the Act are different from proceedings under Section 135 of the Act. The Division Bench in W.A. 106 of 1977, KanniahlalJethaji v.Central Board of Excise and Customs, judgment dated 30-6-1977 has expressed the view in the following words :

"The appellant has raised a point which has emphasised the incongruity that would result if the confiscation of goods and imposition of penalty under Section 112(b) of the Customs Act is permitted to stand when for the same act a prosecution under Section 135(b) has resulted in an acquittal by virtue of the judgment of this Court in CA-389 of 1973. Counsel emphasised that the working of Section 112(b) and 135(b) are identical and that, therefore, the ingredients of the offence, if the misconduct or the act of the appellant can be termed as such, are the same and if it is not established for one purpose, namely, under Section 135(b), it cannot be said to be established for the other purpose under Section 112(b). The argument is certainly interesting and somewhat attractive. But we have to bear in mind that the Act contemplates two separate proceedings for the same act or omission and it is not contended that these two cannot be taken simultaneously, and there is no question of double jeopardy involved. The degree of proof in the case of imposition of punishment by way of imprisonment apparently had been taken to be that required for the establishment of a criminal offence under the criminal law. That we think is the basis of the judgment of acquittal in C.A. 389 of 1973. The same view we need not necessarily take in regard to a matter falling under Section 112(b). The Board apparently relied on the statement given by the appellant in the first instance and there can be little doubt, if the appellant is bound by the statement, he has confessed to the guilt. The fact that he has retracted from the confession will weigh with a criminal court but will not deter the authorities under the statute from imposing penalties under Section 112(b)." *


Suryamurthy J. in Cr. M.P. 2761 of 1977 (Elatheefv. Asstt. Collector of Central Excise) has also taken a similar view by observing as follows :-

"..... The proceedings before the Central Board of Excise and Customs have no hearing on the case to be tried by the learned Magistrate. They are parallel proceedings operating in different areas which do not meet each other at any point." *


In the light of the Division Bench judgment, which is binding on me, I am unable to agree with the learned counsel for the petitioner that on the basis of the acquittal, confirmed by this court, the order of confiscation and the personal penalty imposed have to be set aside.


7.The argument developed, based on the contention that the petitioner was not given reasonable and full opportunity is not acceptable as it is seen from the orders of the first Authority and the Appellate Authority that ample and adequate opportunities were given to the petitioner through his counsel to put forward the defence.


8.On the other point, namely, that the Authority has failed to give the option as contemplated under Section 125 of the Customs Act, I find force in the argument of the learned counsel for the petitioner. Section 125 of the Act reads as follows :-


"125(1). Whenever confiscation of any goods is authorised by this Act, the officer adjuding 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 compensation 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 s

uch 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." * It is not in dispute that cloves are not prohibited items and, therefore, the second limb of Section 125(1) will apply to the facts of this case. If so, the first Authority ought to have given the option to the petitioner before ordering confiscation of the goods. On that ground, the impugned order is liable to be set aside. Accordingly, the orders of confiscation passed by the Deputy Collector of Customs, confirmed by the Appellate Authority and the Revisional Authority are set aside, and the matter is remanded to the Deputy Collector of Customs, to enable him to invoke Section 125 of the Act as it stood at the time of the seizure, and afford an opportunity to the petitioner to exercise the option in accordance with law. 9.In the circumstances, the writ petition is allowed for a limited purpose of consideration of the matter in the light of Section 125 of the Act as it stood at the time of seizure, but without costs. The Deputy Collector will pass orders on remand within two months from the date of receipt of copy of this Order.