These writ petitions are dealt with together as the petitioner is the same in both and the writ petitions arise out of the same set of facts. In W.P.I 1408 of 1981, the petitioner has prayed for the issue of a writ of certiorified mandamus to quash the order No. 365/81 F.No. 373/1325/76 Cus. II, dated 4-3-1981 passed by the third respondent therein and for a direction to it to refund the amount of penalty and fine in a sum of Rs. 3, 000, while, in W.P. No. 11520 of 1981 the petitioner has prayed for the issue of a writ of declaration to the effect that the notification No, 101-Customs, dated 1-7-1964 and Notification G.S.R. 37 7/F.No. 2/5/78 Cus. VI dated 3-1-1969 are unconstitutional, null and void. The facts giving rise to the writ petitions are as follows :-


On 30-10-1974, the Customs Preventive Officers, Customs House, Madras, searched the Jain Temple at Pozhal near Red Hills, Madras and recovered 8 silver bars weighing 19.197 Kgs., valued at Rs. 19, 858.92 from a gunny covered tin kept in the locker of the temple. On the gunnuy cover, the name of Ukchand Ranka (the petitioner in these writ petitions) was found written. In the statement given by Shri Kesarimal, Manager of the Jain Temple, on the day of recovery, he stated that the devotees of the temple used to be allowed to keep their things in the lockers and that owning to pressure of work, he was unable to recollect who had left the recovered silver bars in the locker. Since the recovered silver was not covered by any transport voucher or other document, the preventive staff seized the silver bars under a mahazar. Thereafter, the case was transferred to the Superintendent, Gold Control Unit, Madras I Division for taking appropriate further action. By letter dated 2-12-1974, Shri Himmatmal Mardia, Advocate appearing for the petitioner, addressed the Customs House, Madras, claiming that the seized silver bars belonged to his client Sri Ukchand Ranka and required the Customs authorities to let him know the provision of law under which the seizure was effected. It was also claimed in that letter that Shri Ukchand Ranka was thebona fideowner of the silver and he had not committed any offence. Later, the counsel who had written the letter, dated 2-12-1974 on behalf of the petitioner sent a vakalat on his behalf on 25-1-1975, though the vakalat was executed on 21-1-1975. The Superintendent, Gold Control Unit, Madras, on 11-2-1975 wrote a letter to the counsel requesting the petitioner to appear before him in connection with the seizure of silver bars. In reply to this, on 15-2-1975, the counsel for the petitioner states that the petitioner had gone to his native place and requested the fixing of a date after eight weeks. This letter was received on 26-2-1975. Inasmuch as the petitioner was not produced and the address of the petitioner was also not furnished to facilitate further investigation, a notice was issued by the Collector of Central Excise, Madras-34, for the extension of time for a further period of six months under Section 110(2) of the Customs Act, 1962"The Government of India have carefully looked into the facts and records of the case in the light of the submission made in the revision application and at the personal hearing.


2. The Government observe that the order of the Collector is, correct in law. In any case, the contravention of Section 11K of the Customs Act, 1962 has also been admitted by the petitioner. However, having regard to all the facts of the case and considerations urged in the revision application and at the hearing the Government order that (i) the fine in lieu of confiscation be reduced to Rs. 2, 000/-(Rupees two thousand only), (ii) the penalty be reduced to Rs. 1, 000/-('Rupees one thousand only) and consequential refund granted. The order of the Collector is modified only to that extent and the revision application is rejected otherwise.'


It is the correctness of this order that is challenged by the petitioner in W.P. No. 11408 of 1981. Incidentally, the petitioner has questioned the validity of the exercise of powers of revision under Section 130 of the Customs Act, 1962 by the Collector of Central Excise, Madras-34 by impugning the validity of the notification 101-Customs, dated 1-7-1964 and the notification G.S.R. 37, dated 7.F.No. 2/5/68/Cus.VI, dated 3-1-1969 in W.P. No. 11520 of 1981.


2.It will be convenient to deal with W.P. No. 11520 of 1981 first. In the affidavit filed in support of the challenge to the notifications referred to earlier, it is stated that the vesting of powers of revision in the Collector of Central Excise is absolute and excessive without any safeguard against misuse. The notification No. 101-Customs dated, 1-7-196't was also challenged on the ground that unbridled suo motu powers of revision had been conferred. In paragraph 12 of the common counter affidavit filed by the respondents, it was stated that the power of revision was exercised by virtue of express provision in Section 130 of the Customs Act, 1962 and that was also subject to checks and therefore, the review power cannot be characterised to be arbitrary or unbridled power. It was also further pointed out that consequent upon the creation of an Appellate Tribunal for Customs, Central Excise and Gold Control, Section 130 of the Customs Act had undergone an amendment and the impugned notification had also become redundant and had been rescinded as well and therefore, there is no need to strike down a notification not in force.


3.There is no dispute that under Section 152 of in the Customs Act, 1962


4.The learned counsel for the petitioner, however, challenged the notification No. 7, Customs, dated 3-1-1969 on the ground that it imposes unreasonable restrictions and also affects right to property. On the other hand, the learned Additional Central Government Standing Counsel submitted that the restrictions imposed under Section 11-J, K and L of the Act are reasonable restrictions imposed in public interest and that there is no total ban on either owning, possessing or transporting silver bullion and coins, but that it had to be done after complying with certain statutory requirements and formalities. The learned counsel therefore maintained that the Notification No. 7, Customs, dated 3-1-1969 did not suffer from any infirmity.


5.It has to be mentioned that the power of the Central Government under Section 11-I of the Act to specify the goods was not disputed by the learned counsel for the petitioner. Therefore, the only question that arises is whether there is any justification for the complaint of the petitioner that the restrictions are unreasonable and affect rights to own and possess property or there is no reasonable nexus between the imposition of restrictions and the avowed object viz., illegal export of silver bullion and coins. The impugned notification indicates the circumstances under which the notification came to be issued. The magnitude of illegal export of silver bullion and coins is stated to be the reason for taking special measures to check such illegal export and to facilitate detection of such goods likely to be illegally exported. Avowedly, the object of the notification is to prevent illegal export. The restrictions imposed under Section 11-J, K, L and M of the Act relating to place of storage, transport of goods, . maintenance of accounts and the steps to be taken by persons selling or transferring specified goods are conceived only with a view to keep places of storage, transport of goods, maintenance of accounts as well as sale under check and control. If there is no such control whatever over places of storage of silver, transport of silver, acquisition or parting with silver being reflected by the accounts and the sale or transfer of silver, then, it follows that there cannot be any kind of check over acquisition, storage, transport and sale of silver bullion and coins with the result that the magnitude of illegal export cannot be checked at all, but would have been, perhaps, encouraged. Precisely, with a view to check illegal export of silver bullion and coins, these restrictions in Section 11-J to M had been thought of and imposed on silver bullion and coins by declaring them to be specified goods under Section 11-1 of the Act. A consideration of the restrictions, imposed under Section 11-J to M also clearly establishes that they cannot be stated to be unreasonable restrictions or totally unrelated to the object viz., prevention of illegal export of silver bullion 'and coins. Even under the restrictions, which are undoubtedly reasonable restrictions having regard to the object sought to be achieved viz. prevention of illegal export of silver bullion and coins, any citizen can still hold and. dispose of silver bullion and coins in accordance with the requirements under Section 11-J to M of the Act. It is thus seen that the restrictions imposed are with a view to prevent injury to the economy of the country by the illegal export of silver and is therefore in public interest and consequently, cannot be challenged either as being unreasonable or having no reasonable nexus between the imposition of restrictions and the avowed object. Under those circumstances, the validity of the Notification No. 7, Customs, dated 3-1-1969 including the silver bullion and coins as "specified goods" in the schedule has to be upheld.


6.The learned counsel for the petitioner in W.P. No. 11408 of 1981 first contended that the seized silver was purchased by the petitioner on 8-1-1971 for Rs. 11, 112.36 as shown by the production of bill for the purchase and therefore, the petitioner cannot be held to have contravened Sections 11-J, K and L of the Act. On the other hand, the learned Additional Central Government Standing counsel submitted that the seizure of the silver was effected on 30-10-1974 and it was then valued at Rs. 19, 948.82 and there being no other material placed by the petitioner to show the value of the silver seized on 30-10-1974, the petitioner is not entitled to claim that even in 1974, its value should be taken as on 8-1-1971.


7.There is no dispute that the value of the silver seized was arrived at Rs. 19, 948.82 on the basis of the value prevalent on the date of the seizure. Indeed, it is seen from the files that the seizure report mentions this value. If, according to the petitioner, the value of the seized silver was something different from that given by the Customs Department, then, it is for the petitioner to have placed adequate materials in support thereof. Admittedly, between the date when the silver was purchased by the petitioner on 8-1-1971 and the date of seizure viz., 30-10-1974, more than three years had elapsed. It is common knowledge that gold and silver have a fluctuating market and the value may change even during the course of the day. Under those circumstances, the petitioner cannot, by merely relying upon a purchase bill three years prior to the date. of the seizure, contend that the value of the silver seized was less than Rs. 15, 000/- and therefore, the provisions under Section 11-J, K and L of the Act cannot be applied to him. There is therefore no substance in this contention of the learned counsel for the petitioner.7A. The learned counsel for the petitioner next submitted that the Customs Preventive Officer is not a proper officer for the purpose of conducting a search and seizure and therefore the seizure and the proceedings arising out of the seizure, are not valid. On the other hand, the learned Additional Central Government Standing Counsel invited attention to Section 2(34) and Section 110 of the Act and the Entry against Serial No. 78 with reference to Section 110 in the Madras Supplement to the Customs Manual, First Edition, Page 54, and contended that the officers of the Preventive Department would also be proper officers for the purpose of effecting seizure of goods under Section 110 of the Act.


8.Section 110 of the Act empowers a proper officer to seize goods, if he has reason to believe that the goods are liable to confiscation under the Act. "Proper officer" is defined under Section 2(34) of the Act in relation to any functions to be performed under this Act as the Officer of Customs who is assigned those functions by the Board or the Collector of Customs. It is seen from page 54 of the Madras supplement to the Customs Manual, First Edition, that by standing order 79/70, dated 29-6-1970, the Collector of Customs has designated all officers, except clerks of the Preventive Department all principal appraisers, appraisers, examiners, as proper officers in the exercise of powers under Section 2(34) of the Act. This is with reference to the exercise of powers under Section 110 of the Act. Serial No. 78 in the Madras Supplement to the Customs Manual clearly bears this out. Since the officers of the Preventive Department have been assigned the performance of the functions under Section 110 of the Act by the Collector of Customs, there is no substance in the objection raised by the learned counsel for the petitioner that the proceedings relating to the search and seizure as well as subsequent proceedings are invalid and fundamentally bad.


9.The learned counsel for the petitioner next contended that the Preventive Officers could not have entertained a reasonable belief that the silver was liable to confiscation at the time of seizure and therefore, the seizure was vitiated. Reliance in this connection was placed by the learned counsel for the petitioner upon certain decisions as well. On the other hand, the learned Additional Central Government Standing Counsel pointed out that the place of storage had not been notified and there was no material to establish any permitted transport and no documents were also available to support the ownership of the silver bars at the time of search and that therefore, the officersbona fideentertained a reasonable belief that the goods were liable to be confiscated - Reliance was also placed by the learned counsel upon the statement of Shri Kesari mull to the effect that though the name of Ukchand Ranka was written, there was nobody in the temple of that name and that there were no documents to support the ownership of the silver or possession of the same.


10.The question whether the Preventive Officers entertained a reasonable belief that the goods were liable to confiscation has to be decided in the context of the circumstances which led to the search. Apparently, on information, the Preventive Officers had searched the temple and during the course of such search, they had recovered the silver bars. At the time of the recovery, there was absolutely nothing to indicate that the temple was the owner of the recovered silver, for, Shri Kesarimull disclaimed interest in the silver recovered. There was no other material to show that the recovered silver belonged to the person whose name was found written on the gunny bag. There was no bill or transport voucher to show either the purchase or transport of the silver. The storage of silver in the temple had also not been notified. A cumulative consideration of the aforesaid circumstances coupled with the disclaimer of interest in the recovered silver by the temple clearly showed that the silver recovered was of unknown origin. There is, therefore, nothing improbable under those circumstances in the Preventive Officers havingbona fideand honestly entertained a reasonable belief that the silver was liable to be confiscated. The reasonable belief has to be found on the subjective satisfaction of the officers concerned and if, on a consideration of the circumstances and other materials available, the Preventive Officers had honestly entertained an opinion that the goods were liable to be confiscated, then, it cannot be stated that they could not have entertained such a reasonable belief. On the materials available in this case, it is clearly made out that the Preventive Officers had reason to believe that the silver was liable to be confiscated. In any event, the authorities below have found that the petitioner had violated Section 11-J, K and L of the Act occurring in Chapter IV-B of the Act and that would render the goods liable to be confiscated under Section 113(1) of the Act. There is, therefore, no substance in the contention of the learned counsel for the petitioner.


11.The learned counsel for the petitioner next contended that the order of the first respondent was void, without jurisdiction and based on conjectures and surmises. I am unable to accept this argument, for, a reading of the order of the first respondent clearly establishes that with reference to the conclusions arrived at, there has been a reference to the available materials and the order cannot, therefore, be characterised as one not based on materials. Equally, I do not see how the first respondent's order can be said to be one without jurisdiction. There is nothing to indicate that the order passed by the first respondent is without jurisdiction or is otherwise unsupportable. This contention of the learned counsel for the petitioner is therefore rejected.


12.The learned counsel for the petitioner next contended that the levy of penalty under Section 114 of the Act is not sustainable as an overt act is contemplated and the petitioner has not been found to have committed any such act. On the other hand, the learned Additional Central Government Standing Counsel pointed out that even according to the petitioner, there has been a violation of Section 11-K and L of the Act with reference to specified goods under Chapter IV-B of the Act and therefore, the goods were liable to be confiscated under Section 113(1) of the Act and the omission on the part of the petitioner to obtain a transfer voucher under Section 11-K and maintain an account under Section 11-L would suffice to attract levy of penalty. Earlier, it has been pointed out that the value of the seized silver was in excess of Rs. 15, 000/-. Silver bullion and coins had been notified under Section 11-I of the Act as specified goods. Under Section 11-K, transport of specified goods, can be done within any specified area or in any conveyance only if it is accompanied by a transport voucher. Similarly, Section 11-L obliges a person owning, possessing within a specified area any specified goods of a market value exceeding Rs. 15, 000/- to maintain a true and complete account of the goods and this would take in even application of those goods for the manufacture of other goods. In the instant case, even according to the letter, dated 27-10-1975 (page 77 of the file) sent by the counsel for the petitioner, the quantum of silver purchased by the petitioner was 19.612 Kgs., and it had been kept at No. 19, Chandi Road, Pozhal, where the petitioner was residing till October 1974. The latter further states that in April or May 1974, the petitioner thought of disposing of the silver and the silver was melted and it weighed 19.197 Kgs. It is also further stated that the petitioner vacated the house on 31-10-1974 and at that time, he kept the silver bill as in the locker in the temple. It is thus seen from the letter that the petitioner had not intimated the storage of the specified goods in excess of the market value of Rs. 15, 000/- to the authorities. Even if it be that the petitioner became the owner of the silver subsequent to 3-1-1969, the specified date under Section 11-J (2) of the Act, he was obliged to deliver intimation at least in October 1974, where such goods were proposed to be kept or stored. This omission would plainly be a case of violation of Section 11-J (2), if not Section 11-J (1) of the Act. Similarly, under Section 11-K of the Act, the transport of specified goods has to be accompanied by a voucher. Admittedly, in this case, at the time of the transport of the silver from door No. 19, Gandhi Road, Pozhal, to the temple it was not covered by any transport voucher. The transport voucher is dispensed only where the transport is within the village, town or city and of specified goods, the market price of which on the date of transport does not exceed Rs. 1, 000/-. Even according to the petitioner, what had been purchased was 19.6 Kgs., and what was found in the shape of bill as was 19.197 Kgs. Admittedly, no accounts had been maintained by the petitioner with reference to the silver owned or possessed after 3-1-1969. There has therefore been a violation of Section 11-J (2) and Section 11-K and L of the Act. Such violation would attract Section 113(1) of the Act rendering the person who had omitted to do the things enjoined upon him under Section 11-J to L liable to the levy of penalty under Section 114 of the Act. It is therefore, not necessary that there should be any overt act attributable to the petitioner before penalty can be levied. It is, therefore, not possible to accept this contention of the learned counsel for the petitioner.

Please Login To View The Full Judgment!