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1974 Supreme(Mad) 168
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. Krishnaswamy Reddy, J.
Misrimal Hansraj .. .....Appellant(s)
Versus
Union of India, represented by the Assistant Collector of Customs, Madras .. .....Respondent(s)
Crl. Appeal No. 454 of 1973.
Decided On : 11 April 1974
M/s. Aiyar and Dolia, S. Sunder, for Appellant.
G. Ramaswami, Central Government Pleader and K. M. Srirangan, for State.
R. Nagaratnam, amicus curiae.
Headnote:
CUSTOMS ACT - Smuggling - Burden of proof - Section 123 - Scope and extent - Jurisdiction of Magistrate - Disposal of property - Section 517, Criminal Procedure Code - Confiscation by Customs Department - Effect.
Fact of the Case:
The appellant was convicted under section 135(b)(ii) of the Customs Act for possession of smuggled watches. The appellant challenged the conviction and argued that the prosecution failed to prove that the watches were smuggled and that he had knowledge or reason to believe that they were smuggled. The appellant also contended that the Magistrate lacked jurisdiction to dispose of the watches since they had already been confiscated by the Customs Department.
Finding of the Court:
The Court held that the prosecution failed to establish that the watches were smuggled and that the appellant had knowledge or reason to believe that they were smuggled. The Court further held that the Magistrate had jurisdiction to dispose of the watches under section 517 of the Criminal Procedure Code, despite the confiscation by the Customs Department.
Issues: 1. Whether the prosecution proved that the watches were smuggled and that the appellant had knowledge or reason to believe that they were smuggled? 2. Whether the Magistrate had jurisdiction to dispose of the watches under section 517 of the Criminal Procedure Code, despite the confiscation by the Customs Department?
Ratio Decidendi: 1. The burden of proof lies on the prosecution to prove that the goods seized under the Customs Act were smuggled goods. Mere seizure of goods by the Customs Authorities does not make such goods "smuggled", but the Officer while making such seizure must have materials for him to entertain a reasonable belief that the goods to be seized are smuggled goods. 2. The Magistrate has jurisdiction to dispose of the property under section 517 of the Criminal Procedure Code, independent and irrespective of the order of confiscation made by the Department.
Final Decision: The appeal was allowed, the conviction was set aside, and the watches were ordered to be returned to the appellant.
2. In respect of the disposal of the alleged smuggled watches (M.O. 1 series), no separate order was passed as, in the opinion of the learned Chief Presidency Magistrate, they have been already confiscated to the State by the Customs Authorities.
3. The appellant is running a business in watches and other fancy goods in the premises at No. 97, Narayana Mudali Lane, George Town, Madras, under the name and style of Messrs. Sha Manmal Misrimal, a partnership firm consisting of the appellant and his two brothers.
4. On 19th December, 968, P.W.1 J. Rama Rao,Preventive Officer, attached to the Customs House, Madras, searched the shop of the appellant in pursuance of a search warrant issued by the Assistant Collector of Customs and recovered from the shop, 221 wrist watches, 27 fountain pens and 8 ball point pens. All of them were brand new and were of foreign origin. Of 221 wrist watches, 18 watches were kept in a paper packet under a chest of drawers attached to the showcase. Another tin containing 23 watches was found underneath a steel almirah in an adjoining room. All other watches were in the show-cases in the shop. The appellant did not produce the documents to prove that he acquired the watches lawfully. But, however, it is the case of the appellant that he told the Customs authorities that he would produce the vouchers, but they asked him to produce them later at the Customs Office. P.W.1 seized all those articles in the reasonable belief that they were smuggled ones. The details of the seized items were incorporated in the Annexture to Exhibit P-2, the mahazar for seizure, and the copy of Exhibit P-2 was served on the appellant. The appellant does not dispute the seizure of the watches and other articles detailed in Exhibit P-2.
5. After the search of the premises at Narayana Mudali Lane, the house of the appellant at No. 51, Strotten Muthiah Mudali Street, Madras, was also searched. Leather and metal watch straps were seized during that search and they were subsequently released to the appellant as they were not, in the opinion of the Customs Officers, goods liable for confiscation.
6. P.W.1 recorded a statement (Exhibit P-3) from the appellant. In Exhibit P-3, the appellant admitted about the seizure of the watches and other articles and stated that he was not able to produce any documents readily for the watches, fountain pens and ball point pens seized by the Customs authorities. In respect of the recovery of one brown paper packet containing watches and one tin containing watches, kept underneath a cup-board in the back-room of the shop, the appellant stated that he did not know as to how the watches came to be there and further stated therein that he was new to the business, that his elder brother Manmal used to look after the business completely and that after his death, his other brother Chunilal was looking after the shop.
7. The appellant stated that Exhibit P-3 was obtained under duress.
8. A show cause notice (Exhibit P-4) was issued to the appellant stating that the appellant was not in a position to correlate the seized watches with the relevant documents and asking him to show cause as to why 221 numbers wrist watches, 27 numbers fountain pens, 8 numbers ball point pens, 27 numbers Seiko leather watch straps and 170 numbers metal lady’s watch straps, all valued at Rs. 15,796 should not be confiscated to Government under section III (d) of the Act and why penalty should not be imposed on them under section 112 of the Act.
9. The appellant questioned the method of scrutiny and correlation by the Customs authorities by his letter ( Exhibit P-5), dated 24th January, 1971 in which he had given details as to how the various items of watches were acquired from the various firms at Bombay. The appellant produced
