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HIGH COURT OF CALCUTTA
Bose
SHEW PUJAN RAI INDRASAN RAI LTD. - Appellant
Versus
COLLECTOR OF CUSTOMS - Respondent
Civil Matter 84 Of 1952
Decided On : AUGUST 5, 1952
SEA CUSTOMS ACT, 1878 - Section 167(8) - Smuggling - Confiscation of goods - Jurisdiction of Collector of Customs - Procedure under Section 182 - Applicability - Foreign Exchange Regulation Act, 1947 - Section 23 - Contravention of provisions - Procedure - Principles of natural justice - Violation - Conditions for release of confiscated goods - Validity.
Fact of the Case:
The petitioner, a private limited company carrying on business as bullion merchants, purchased gold in the usual course of business and deposited it with respondent banks as security for loans. The gold was seized by the Customs authorities on the ground that it was smuggled gold. The Collector of Customs, after a hearing, ordered confiscation of the gold under Section 167(8) of the Sea Customs Act, 1878, giving the petitioner an option to pay a fine of Rs. 10,00,000 in lieu of confiscation. The petitioner challenged the order on various grounds, including lack of jurisdiction of the Collector, violation of principles of natural justice, and invalidity of the conditions imposed for release of the confiscated gold.
Finding of the Court:
1. The Collector of Customs has jurisdiction to order confiscation of goods under Section 167(8) of the Sea Customs Act, 1878, even if the person responsible for smuggling cannot be traced and the offence is not established against him. 2. The procedure under Section 182 of the Sea Customs Act, 1878, cannot be adopted when the charge is contravention of Section 19 of the Sea Customs Act read with Section 8 of the Foreign Exchange Regulation Act, 1947, as such contravention is punishable only in the manner prescribed by Section 23 of the Foreign Exchange Regulation Act, 1947. 3. The Collector of Customs, when exercising powers under Section 182 of the Sea Customs Act, 1878, does not function as a Court of Justice and is not bound to follow strict rules of judicial procedure or the Indian Evidence Act. 4. Adjudication of confiscation under the Sea Customs Act, 1878, extinguishes the interest of the pledgees in the goods and vests the goods in the Government. 5. The conditions imposed by the Collector for release of the confiscated gold, including payment of unascertained customs duty and unspecified charges, and production of a permit from the Reserve Bank, are not warranted by the Statute and are invalid.
Issues: 1. Whether the Collector of Customs has jurisdiction to order confiscation of goods under Section 167(8) of the Sea Customs Act, 1878, even if the person responsible for smuggling cannot be traced and the offence is not established against him? 2. Whether the procedure under Section 182 of the Sea Customs Act, 1878, can be adopted when the charge is contravention of Section 19 of the Sea Customs Act read with Section 8 of the Foreign Exchange Regulation Act, 1947? 3. Whether the Collector of Customs, when exercising powers under Section 182 of the Sea Customs Act, 1878, functions as a Court of Justice and is bound to follow strict rules of judicial procedure or the Indian Evidence Act? 4. Whether adjudication of confiscation under the Sea Customs Act, 1878, extinguishes the interest of the pledgees in the goods and vests the goods in the Government? 5. Whether the conditions imposed by the Collector for release of the confiscated gold, including payment of unascertained customs duty and unspecified charges, and production of a permit from the Reserve Bank, are warranted by the Statute?
Ratio Decidendi: 1. Section 167(8) of the Sea Customs Act, 1878, makes the goods which are imported or exported contrary to prohibition or restriction liable to confiscation, irrespective of whether the person responsible for importation or smuggling can be found out, tried, and convicted. 2. Section 23 of the Foreign Exchange Regulation Act, 1947, provides a specific procedure for punishment of contravention of the provisions of the Act, and this procedure must be followed when a person is charged with such contravention. Adoption of the procedure under Section 182 of the Sea Customs Act, 1878, in such cases prejudices the provisions of Section 23 of the Foreign Exchange Regulation Act, 1947. 3. The Collector of Customs, when exercising powers under Section 182 of the Sea Customs Act, 1878, acts in an administrative capacity and is not bound by strict rules of judicial procedure or the Indian Evidence Act. 4. Adjudication of confiscation under the Sea Customs Act, 1878, extinguishes the interest of the pledgees in the goods and vests the goods in the Government, as the Act does not recognize any interest other than the interest of the owner in the goods. 5. The conditions imposed by the Collector for release of the confiscated gold, including payment of unascertained customs duty and unspecified charges, and production of a permit from the Reserve Bank, are not warranted by the Statute and are invalid.
Final Decision: The petition was allowed, the order of the Collector of Customs confiscating the gold was quashed, and the respondents were directed to forbear from giving effect to the said order. The petitioner was awarded costs of the proceedings from respondents 1 to 3.
( 1 ) THIS is an application under Article 226 of the Constitution for an appropriate writ for quashing of an order of confiscation of the petitioner's gold of the value of about Rs. 10,00,000 passed by the Collector of Customs under the provisions of the Sea Customs Act, 1878, and for direction upon the respondents 1 to 3 to return the said gold to the petitioner.
( 2 ) THE petitioner is a private limited company and carries on business as bullion merchants. The case of the petitioner is that prior to its incorporation this business was being carried on by a firm of the same name on a very large scale for about the last twenty years. The petitioner purchases gold at Calcutta or Bombay and does not import any gold from any foreign country. Between 14th November 1950 and 20th November 1950 the petitioner in the usual course of business purchased gold in the market and in respect of such purchases borrowed moneys from its bankers Messrs. National Hendels Bank N. V. and Messrs. Bharat Bank Ltd. who are respondents 4 and 5 in this application. The gold so purchased was deposited with the respondent banks as security for the said loans. It is alleged that between the said two dates the petitioner deposited 7041 tolas of gold with respondent 4 and 2437 tolas of gold -with respondent 5. After the purchase of the said gold the petitioner with the knowledge and consent of the respondents 4 and 5 entered into Forward Control (Contract ?) for the sale of the same at Bombay. 'the said respondents 4 and S at the request of the petitioner sent the said gold on petitioner's account to the Calcutta Mint for the purpose of assaying. On 20th November 1950 the Collector of Customs asked the Mint authorities not to part with the petitioner's gold and on 21st November 1950 the said gold was seized in the presence of the petitioner's representative at the Mint premises pursuant to a search warrant issued by the Chief Presidency Magistrate, Calcutta, at the instance of the Customs Authorities. On the same day the petitioner's Books of Account were also seized from its place of business at No. 69 Monohar Das Street. It is alleged that before the seizure was effected no notice was given to the petitioner nor was the petitioner allowed any opportunity of making any representation against the said seizure. On 19th December 1950 the petitioner made an application under Article 226 of the Constitution for appropriate writ directing the Collector of Customs not to give effect to the order of seizure or detention of, the gold and books of account and to release the same. On 23rd April 1951 this Court held that the seizure of the books of account was illegal and accordingly directed the return of the said books to the petitioner. But no relief was given in that application in respect of the order of seizure or detention of the petitioner's gold.
( 3 ) BY a notice dated l0/20th June 1951 the Superintendent, Correspondence Department of the Customs Collectorate, called upon the petitioner to show cause before the Collector of Customs as to why penal action should not be taken against the petitioner and in respect of the said gold under the provisions of the Sea Customs Act. The relevant portion of such notice is set out hereunder :"you are requested to show cause in writing within 14 days from date hereof why penal action should not be taken against you and the 9478'19 tolas of gold in question under the provisions of Sections 167 (8) and 168, Sea Customs Act 1878, for alleged violation of Section 19 of the same Act read with Section 8, Foreign Exchange Regulation Act 1947. "the Notice further directed the petitioner to send copies of all documentary evidence along with the explanation and further gave intimation to the petitioner that a date and time will be fixed for hearing at which the petitioner would be required to produce all oral evidence in support of the explanation and to make its submissions.
( 4 ) ON 3rd July 1951 the petitioner submi
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