Ambiguity in the application of clauses (a) and (b) of Section 112 of the Customs Act, 1962, vitiates the orders passed.

The proceedings impugned in the present writ petition are those under S. 112 of the Customs Act 52 of 1962, hereinafter referred to as the Act. The facts leading to the action against the petitioner are as follows :

1. On 20th October, 1973, the Central Excise Officers, Coimbatore, intercepted one Chand Mohamed after he got out of Madras Cochin Kerala Express and on search of his person and his baggage, found 235 wrist watches of foreign origin concealed and they also found a slip of paper on which the address and telephone number of the petitioner were written. The said Chand Mohamed gave a statement that the watches recovered from him were intended for delivery to the petitioner and that he had brought them from Bombay where he had received them from a person known as Radhakrishnan. The officers went to the premises of the petitioner on the same day and found him with another person by name Verghese. The said Verghese was subjected to search and seven wrist watches of foreign origin were recovered from him. The said Verghese gave a statement that the watches recovered from him were purchased from the petitioner. Two rose coloured hoses were recovered from the premises of the petitioner and were found to be similar to hoses found on the person of Chand Mohamed and in which some of the wrist watches of foreign origin were concealed. On the basis of the statement of these persons and the recovery of the wrist watches and the rose coloured hoses, proceedings were initiated by the Collector of Central Excise, Madras, against the petitioner and as well as the other two persons under the Act. Ultimately, the Collector of Central Excise passed orders on 9th September, 1974, confiscating the 235 wrist watches as well as the seven wrist watches of foreign origin under S. 111(d) of the Act. The Collector of Central of Excise also ordered confiscation of the articles used for concealing the wrist watches under S. 119 of the Act. He also imposed a penalty of Rs. 10, 000, on the petitioner quoting S. 112 of the Act. There were imposition of penalties on the other two persons about which we are not concerned. The petitioner appealed to the Central Board of Excise and Customs and it did not prove fruitful and the appeal was dismissed by an order dated 17th September, 1975. The petitioner preferred a revision to the respondent and that revision was also dismissed on 19th October, 1977. The petitioner challenges the order passed by the respondent in the present writ petition.

2.Mr. K.C. Rajappa, learned counsel for the petitioner made an attempt to canvass the merits of the case; but ultimately and rightly was content to make a legal submission in that there is no indication in the proceedings initiated and the orders ultimately passed by the authorities under the Act as to whether the penalty is being imposed either under clause (a) or (b) of S. 112 of the Act and this would vitiate the orders passed. On an appraisal of the submission made by the learned counsel along with the provisions of the Act and the relevant judicial pronouncements I am inclined to sustain the plea put forth on behalf of the petitioner. Clauses (a) and (b) of S. 112 of the Act read as follows :-

"112.Penalty for improper importation of goods etc.- Any person (a) who, in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation under S. 111, or abets the doing or omission of such an act, or

(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under S. 111;......'

Clauses (i) to (v) which then follow deal with the classes of penalties, depending on the categories of goods. A plain reading of the above clauses makes it clear that they are distinct and separate. There is a possibility that the act co