ORDER
Mrs. Archana Wadhwa
1. Briefly stated the facts of the case are as under:-
1.1 On 4.11.1950, the C.I.D. Branch of Bombay Police instituted a case against Late Shri Santo Kumar Mitra for defalcation of Government money and amongst others, seized foreign-marked gold bars from the residential premises at Bombay. It was the case of the Police that out of the defalcated money, Late Shri Mitra acquired movable and immovable properties. It appears from the count proceedings that Late Shri Mitra acquired the properties between 1941 till September, 1949. He was tried under Sections 409, 420, 467 and under Section 120B read with Sections 409, 420 & 467/471 of the Indian Penal Code.
1.2 The case was finally decided and settled in 1993. Gold bars of foreign origin formed part of the attachment proceedings in the defalcation Case No.M.J.C.No.31/49 before the Judicial Commissioner culminated in the Order passed on 5.1.93 & revised on 7.1.93. Shri Mitra died in 1976. Hence his widow, Smt. Nirmala Mitra was to inherit the properties including the foreign gold bars.
1.3.. Before the case was finally decided by the Judicial Commissioner, the Assistant Commissioner of Customs & Central Excise filed a Writ Petition (Cr.W.J.C. No.69 of 1990 (R) before the Patna High Court (Ranchi Branch) for possession of the foreign gold bars and the primary gold to proceed under the Customs Act, 1962 and the Gold Control Act, 1968. The Hon’ble Judicial Commissioner gave the liberty to the Central Excise & Customs Authority to initiate action under the Customs Act, 1962 in respect of the foreign gold bars.
1.4 As per Orders of the Hon’ble Judicial Commissioner, the appellant had to file an affidavit that she would not take the gold, but would keep the gold in the State Bank of India for initiating action by the Customs Authority. On 18.1.93 at the time of delivery of the gold, gold ornaments, jewelleries etc. the representatives of the Police and the Assistant Commissioner of Customs & Central Excise were present. The inventory of the foreign gold bars was prepared by the Customs Official and the same was signed by the Assistant Commissioner of Customs & Central Excise, Ranchi. In her letter dated 18.1.93 to the Manager, State Bank of India, the appellant intimated, inter alia, that the inventory of the articles had been prepared and signed by her and the Customs & Central Excise Authority and the said inventory had been kept in the sealed box in presence of the parties. The said letter dated 18.1.93 was signed by the Inspector of Customs & Central Excise on behalf of the Superintendent of Customs & Central Excise. By his letter dated 21.1.93 the Assistant Commissioner of Customs & Central Excise, Ranchi informed the appellant that on 18.1.93, as per the Order of the Hon’ble Judicial Commissioner, Ranchi dated 7.1.93, the gold of foreign origin was examined for actin under the Customs Act, 1962. It has been found that the gold of foreign origin was possessed by her in contravention of the various provisions of the Customs Act, 1962. The gold of foreign origin was liable for confiscation under Section 111 of the Customs Act, 1962,.A formal detention order was also sent along with the said letter. Formal seizure of the gold of foreign origin was made by the Customs Officials on 4.3.93.
1.5. Show cause notice was issued on 2.4.1993 wherein the facts stated above were admitted. By the said show cause notice gold of foreign origin had been sought to be confiscated and penalty imposed. The said show cause notice culminated into the impugned Order passed by the Commissioner of Customs, Patna vide which he has ordered absolute confiscation of the foreign-marked gold under the provisions of Section 111(d) of Customs Act 1962 and also imposed a personal penalty on the appellant herein, Shrimati Nirmala Mitra under Section 112(b) of the Customs Act, 1962. The said Order is impugned before us.
2. Shri B.N. Chattopadhyay, learnd Consultant appearing for the appellant made the following submissions:- 2.1. The main submission of the appellant is that the gold of foreign origin had been seized by the Customs Authority from the Police Custody and hence the onus is on the Department to prove that the gold had been smuggled into the country. From the facts narrated here-in-before such as filing of Writ Petition for possession of gold by the Assistant Commissioner, Customs , Ranchi; Court’s Order rendering the liberty to the Customs Authority to initiate actin under the Customs Act 1962, the segregation of the foreign gold bars vis-a-vis making of inventory and signature of the inventory of the foreign gold bars on 18.1.93 by the Assistant Commissioner of Customs, subsequent upon detention and seizure of the same will prove conclusively that the gold had ben seized by the Customs Authority from the Police Authority.
2.2. “Seizure” under the authority of law does involve a deprivation of “possession” and not merely of custody and so when the Police Officer seized the gold, the accused lost possession which vested in he Police. When that possession is transferred to the Customs, there is no fresh seizure under the Customs Act. Since no seizure is involved under the Customs Act, the provisions of Section 178A of the Sea Customs Act, 1978 (now Section 123 of the customs Act, 1962 cannot be availed of to throw the burden of proving that the gold had not been smuggled, on the accused (Gian Chand & Others reported in 1983: ELT:1365(SC)]. In the case of Collector of Customs & Central Excise , W.B. & Others vs. Hindustan Motors & Others & Anr. reported in 1979: ELT:J:313 it has been held by the Hon’ble Calcutta High Court that an overt act of sealing of the drums by the Assistant Collector of Customs amounts to exercise of dominion over the goods. In other words, it is an act of seizure of the goods within the meaning of Section 110(1) of the customs Act, 1962. It was fan prohibitory order under the proviso to Section 110(1). In the case of Commissioner of Income Tax & Others vs. Tarsem Kumar & Others (1986 (26)ELT-10(SC) the word, “Seizure” has been implied to mean forcibly taking from the owner or who has the possession and who was unwilling to part with the possession. In the case of Assistant Collector vs. Daljit Singh & Others [1992(58 ELT (P & H)] the Hon’ble Court relying on the 1979:Cr. L.J.:1173 interpreted Section 178A of the Sea Customs Act then prevailing as-
“The goods were seized from the Petitioner by the Police. The accused and the goods seized were taken to the Police Station and a Panchnama was prepared. Thereafter, the goods were handed over by the Police to the Customs Authority. It is evident that the seizure of the goods was not made by the Customs Authority. The expression, “seize” was defined by the Supreme Court in Gian Chand & State of Punjab, in the context in which it is used in the Act. That word was stated to mean the taking of possession, contrary to the wishes of the owner of the Property. It cannot be denied that in the insant case, as far as the Police was concerned, there was a seizure of the goods from the accused/respondent, but a far as the Customs Authorities were concerned, the goods were received and not seized by the, because they were willingly parted with the Police, who by that time had the custody of the goods, to the Customs Authorities. There was therefore no seizure of goods within the meaning of Section 123 in the instant case. Besides, the seizure must be with the reasonable belief that they are smuggled goods. There is nothing on record to show that the goods were seized by the Police in the reasonable belief that they were smuggled goods. For all we know the Police might have seized the goods were under the bonafide belief that goods were smuggled goods. For these two reasons it is not possible to apply the provisions of Section 123(1) of the Act to the present case and shift the burden of proof to the respondent to prove his innocence.”
2.3 It is respectfully submitted that it is a settled law that when the goods are seized from the Police, the provisions of Section 178A of the Sea Customs Act, 1978 or Section 123 of the Customs Act, 1962 is not applicable and the burden t o prove is on the Customs Authority that the goods are smuggled into India. Following decisions are cited:-
(i) 1983:ELT: 1365 (SC)
Gian Chand & Others vs. State of Punjab;
(ii) 1992 (58) ELT:54(P & H)
Asstt. Collector vs. Daljit Sing & Others;
(iii) 1987 (11) ECR-333(CEGAT)
Shri K.Beeman vs. Collector of Customs, Madras;
(iv) 1987 (10) ECR-614 (CEGAT)
Shri R.Ramesh, Madras vs. Collector of Customs, Madras;
(v) 1986 (26) ELT-10(SC)
Commissioner of Income Tax & Other vs.
Tarsem Kumar & Another.
2.4. In the preset case, the Assistant Collector of Customs filed Writ Petition to the Hon’ble Court and as per the Orders of the Judicial Commissioner, Ranchi liberty was given to the Customs Authorities to initiate actin on the said gold. By the said Order of the Hon’ble Court, the gold was virtually transferred to the Customs from the Police custody. After that order the appellant has no possession of the gold. That order o the Hon’ble Judicial Commissioner led to de privation of the possession of the gold against the will of the appellant. Gold was transferred to the Customs from the possession/custody of the Police by that order(Orders dated 5.1.93 & 7.1.93).
2.5. Further, on 18.1.93 at the time of release and before the gold was formally received by the appellant, the gold was inventorised by the Customs and the inventory was signed by the Assistant Commissioner Customs. That was practically “seizure” before the gold was formally released to the appellant. In the show cause notice it has been mentioned that in obedience to the Court’s order, the foreign-marked g old was segregated from the primary gold and gold ornaments by the joint supervision of the State Authorities (Police), Mrs. Nirmala Mitra & Customs & Central Excise Officers of Ranchi Division on 18.1.93. The deposit letter to the Manager, S.B.I. was also signed by the Customs Officials. All these will lead to the inescapable conclusion that the gold had been taken over from the Police and subsequent ‘detention’ and seizure’ were mere formality which are always done in case of taking over of goods from Police by the Customs authority. The order of the Judicial Commissioner was transfer of the gold to the Customs Authority which by subsequent actin of the Customs would prove that the gold was transferred to the Customs and the same were not seized from the possession of the appellant. Hence the provisions of Section 123 are not applicable in the present case. The onus is non the Department to prove that the gold had been smuggled ones. There having no ta spec of evidence in the show cause notice, the gold is not liable to confiscation.
2.6. Although all these points were specifically mentioned in the reply to the show cause notice as well as in the Written Arguments, the Commissioner has not dealt with them. He simply stated that seizure was effected on 4.3.93 and hence the provisions of Section 123 are applicable in he present case. The Order of the Commissioner is not also a speaking order. For that , the Commissioner failed to appreciate that seizure is depravation of possession against the will of the person and the Police had seized the goods long time back. i.e. on 4.11.50. There was no seizure by the Customs Officials. The goods were merely transferred from the Police to the Customs Authorities as per the Orders placed.
2.7. From the extracts of the verdict given by the Judicial Commissioner, Ranchi, it appears that Late Shri Santo Kumar Mitra acquired the gold by the defalcated money during the period from 1941 to 1949. It further appears that as per the statement of Late Shri Mitra the gold had been acquired from the Reserve Bank of India through brokers. Further, certain cash memos of the gold were also found. These are all exhibits in the case of defalcation.
2.8 It is also respectfully submitted that when the gold had been seized by the Police in 1950 the provisions of Section 178a was not in existence. The provision of Section 178A were incorporated in Sea Customs Act, 1978 in 1955. In the case of Ambalal vs. Union of India & Others reported in 1983: ELT:13(21) (SC) it has been held by the Honourable Apex Court that since the Section 178 of sea Customs Act was not invoked and was inserted in that Act by Act No.21 of 1955 and whereas the order of confiscation of the goods in question was made in January, 1952, the Section was not applicable at that point of time. The Section was prospective in operation and could not govern the said order.
2.9. The Police in this case seized the gold for proceedings under the various provisions of the I.P.C. They had got no reasonable belief at the time of seizure of the gold in 1950. The said seizure continued and hence in this seizure case, there was no reasonable belief on the part of the Police to seize the gold in 1950. The Customs Officers cannot have the reasonable belief that the goods were smuggled inasmuch as the gold had been seized in 1950. The gold with foreign marking seized by the Police in 1950 and transferred to the Customs by the Order of the Hon’ble Court may kindly be ordered to be released to the octogenarian widow who is counting her last days and practically living at the mercy of her daughter and son-in-law.
2.10. It has also been strongly contended by the learned Consultant that the gold being seized by the Police in 1950 when the provisions of Section 178A of the Sea Customs Act, 1878 (Section 123 of the Customs Act, 1962) was not in operation. When the Sea Customs Act was no covered under Section 178A, the Department was to prove as a matter of positive fact that the gold in question was imported into India in contravention of the relevant provisions. Hence, the onus in this case is on the Department and no evidence has been produced by the Department to substantiate their claim that the gold had been illegally imported in to India.
(i) 1983:ELT:1321 (SC)
(II) 2000(125) ELT:425 (Bombay)
2.10. In the present case, there was no reasonable belief on the part of the Customs Officials when seizing the gold. In the seizure list dated 4.3.93 there is no mention that which Section of the Customs Act the gold had been seized by the Customs Official. There is no mention that gold had been seized on the reasonable belief as required under the provisions of Section 100(1) of the Customs Act, 1962.
2.11. In the Panchnama, the violation of Section 11 of the Customs Act, 1962 read with Section 19 of the Sea Customs Act, 1878 and Section 3(1) of the Import and Export Control Act, 1947 has been shown. This indicates that the Offices were aware that the gold had been seized by the Police in 1950 when the provisions of Section 19 of the Sea Customs Act, 1878 was involved. Hence, the onus is on the Department to prove that the gold had been illegally imported into the country.
2.12. In the Adjudication Order it has been mentioned by the Commissioner that 19831.805 gms. of foreign-marked gold were seized by the Officer s under a reasonable belief that the same were smuggled into India contrary to the provisions of Section 3 o f Imports & Exports (Control ) Act, 1947 read with Section 19 of the Sea Customs Act, 1878 which a was subsequently reenacted as Section 11 of the Customs Act, 1962. the Commissioner observed that Smt. Nirmala Mitra has not been in a position to discharge the burden of proof cast on her regarding lawful import of the impugned gold into India. Smt.Nirmala Mitra is bound to discharge this burden as she is claiming the ownership of the impugned gold. T he Commissioner mentioned that he had no option except to conclude t hat the foreign-marked gold weighing 19831.805 gms. seized in this case have been smuggled into India during the year, 1950 as the appellant could not produce document of licit importation of the gold. He want on saying that this is the year in which the same were initially seized by the Police fr contravention of the provision of Section 3 of the Import & Export Control Act, 1947 read with Section 19 of the Sea Customs Act, 1878 and further red with Section 11 of the customs Act, 1962. When the Commissioner has of relied on the provisions of Sea Customs Act, 1978 it was incumbent on his part to hold that the provisions of Section 178A of the Sea Customs Act, 1878 was notion operation at that point of tie. The Section 178A of the Sea Customs Act, 1878 was introduced in 1955. Hence, the onus to prove was definitely on the Department and not on the poor widow. Although in the reply to the show cause notice and at the time of personal hearing this point was specifically mentioned, the Commissioner has not discussed the point at in his Order.
2.13. Alternatively, Shri Chattopadhyay, learned Consultant for the appellant argued that even if it is held that the seized gold is liable to confiscation, the same may kindly be released on payment of redemption fine in view of the liberal policy of the Government taken in the matter of importation of gold, which a has led the different Benches of the Tribunal to release the gold even when the gold has been held to have not been importable legally into the country on payment of redemption fine. In support, he relies upon the following decisions:-
(i) 2000(118) ELT-233(T) in the case of Gordhanbhai N. Patel vs. C.C.Ex., Ahmedabad;
(ii) 1994 (73) ELT-425(T) in the case of V.P. Hameed Collector of Customs, Bombay;
(iii) 1999 (83) ECR-302(T) in the case of Monica Overseas & Others vs. C.C., New Delhi;
3. Similarly, a prayer has been made to set aside the personal penalty imposed upon Shrimati Nirmala Mitra on the ground that the provisions of Section 112 of the Customs Act, 1962, are not applicable inasmuch as the appellant was in no way concerned in possessing of gold by virtue of a personal capacity except for the fact that she has claimed gold as a legal heir to her husband, Shri Santo Kumar Mitra.
4. Shri V.K. Chaturvedi, learned S.D.R. for the Revenue has reiterated the Department’s stand as reflected in the impugned Orders.
5. We have given our careful consideration to the matter before us. Two major issues have been raised by the appellants. Fist that the gold in question having been seized by the police, and subsequently transferred to the customs cannot be held to be a seizure under the Customs Act so as to invoke the provisions of section 178A of Sea Customs Act, 1878 or the provision of section 123 of the Customs Act 1962 and secondly that even if the seizure is held to by the customs authorities, the provisions of the said two sections will not apply inasmuch as they were not in existence at the time of original seizure by the police.
6. As regards the first question, it is admitted that the gold was seized by the police in the year 1950 from Late Shri Santor Kr.Mitra on the ground of defalcation of Govt.money. It was subsequently on finalisation of the prosecution proceedings in the said case of defalcation of Govt.money that the gold in question was ordered to be handed over to the customs authorities and to be deposited in the back and permission was granted to the customs authorities to proceed under the provisions of Customs Act, 1962. The gold in question has been confiscated by the adjudicating authority on the ground that the same was smuggled gold. The question which a rises is as to whether the onus to prove that the gold was acquired legally rests on the appellant or the department is required to produce positive evidence as regards the smuggled nature of the same. The appellants have strongly contended that the possession obtained by the customs department was as a result of the order of the magistrate , whether it can be held to be a seizure’ from the possession of the appellant.
We find that the Hon’ble Supreme Court in the case of Gian Chand & ors. v. State of Punjab-1983 ELT 1365 (SC) has observed that ‘seizure’ mens to take possession of contrary to wishers of the owner of the goods in pursuance of a demand under legal right. Seizure involves a deprivation of assassin and not merely of custody of goods. the Hon’ble Supreme Court further observed that if the goods are seized by the police and delivered to the customs authorities under section 180 of the Sea Customs Act, 1878, it is to seizure by the customs within the meaning of section 178A of the Sea Customs Act, 1878. This is because when the police officer seized the goods under some other law, such as, code of criminal procedure, the accused lost possession of the goods which then vested in the police and when that possession was transferred to customs authorities under section 180 ibid there was no fresh seizure under the Sea Customs Act, 1978. In this connection, we would like to reproduce para 9 of the said order.
9. There is another matter to which reference should be made which, in our opinion, conclusively establishes that the delivery of the goods to the Customs authorities under the latter part of S.180 is to siezure under the Act within the meaning of S.178A. The last par to sub-sec. (1) of S.178A, lays the burden of proving that the goods are not smuggled on “the goods are taken”. Assuredly when the goods are delivered to the Customs authorities by the magistrate they are not taken from the possession of the persons accused in criminal case so as to throw the burden of proof on them and it would lead to an absurdity to hold that the section contemplated “proof to the contrary ‘ by the magistrate under whose orders the delivery was effected. For the purpose of deciding the point arising in this case we do not think it necessary to enter into the philosophy or refinements of the law as to the nature of possession. When the goods were seized by the police they caused to be in the possession of the accused and passed into the possession of the police and when they were with the magistrate it is unnecessary to consider whether the Magistrate had possession or merely custody of the goods The suggestion that the gods continued tobe, at that stage, in the possession of the accused does not embody a correct appreciation of the law as regards possession. A ‘seizure’ under the authority of law does involve a depravation of possession and not merely of custody and so when the police officer seized the goods, the accused lost possession which vested in the police. When that possession is transferred, by virtue of the provisions contained in S.180 to the customs authorities, there is no fresh seizure under the Customs Act. It would, therefore follow that, having regard to the circumstances in which the gold came into the possession of the Customs authorities, the terms of S.178A which requires a seizure under the Act were not satisfied and consequently that provision cannot be availed of to throw the burden of proving that the gold was not smuggled, on the accused.
7. By applying the ratio of the above decision of the Hon’ble Supreme Court which is more or less akin to the facts and circumstances of the present case we hold that there was no seizure by the customs authorities under the Customs Act so as to invoke the provisions of section 178A of the Sea Customs Act, 1878 or section 123 of the Customs Act, 1962 against the appellants of or placing the onus open them as regards the non-smuggled nature of the gold in question. We also draw Support from the decision of the Tribunal in the case of Shri K. Deman v. CC, Madras 1987(11)ECR )CEGAT-SRB) and in the case of Shri R. Ramesh v. cc. Madras-1987(10)ECR 614 (CEGAT-SRB).
8. The appellant also succeed on the second ground. Admittedly the gold in question was seized by the police in the year 1950, when the provision of section 178a of the Sea Customs Act, 1878 or the provisions of section 123 of the Customs Act 1962 were not in operation. T he question arises s to whether the said provisions can be made retrospective in operation and burden to prove can still be placed upon the accused. We find that the Hon’ble Supreme Court in the case of Ambala V. UOI & Ors.- 1983 ELT 1321 (SC) has held that the said provisions of the Sea Customs Act or the Customs Act, 1962 were prospective in operation and will not apply in respect of the seizures made prior to that. Admittedly the gold in question was in India in the year 1950 where section 178a of the Sea Customs Act was inserted in 1955 without retrospective operation. We also find that in the case of Jal Hormusji Khajotia v. TC Set 2000(125) ELT 425 (Bom), the provisions of section 178 of Sea Customs Act, 1878 were not made applicable to the seizure made before the date of insertion of the said section. As such by following the earlier decision we hold that the section 178 of Sea Customs Act, 1978 or section 123 of Customs Act, 1962 were no applicable to the facts and circumstances of the case.
9. After holding that the onus to prove non-smuggled nature of the gold was to on the appellant, we proceed to examine the evidence on record produced by the Revenue for the purpose of discharging the onus placed upon them as regards the smuggled nature of the gold in question. It may be incidentally mentioned here that the Hon’ble Supreme Court in the case of Gian Chand, relied up by us, has observed that the prosecution can produce positive evidence in Support of there case that the goods in question were smuggled. We find from the impugned order in the present case that he commissioner has not referred to any positive evidence on record to show that the gold found from the possession of Shri Santo Kr. Mitra was illegally smuggled into country. He has merely observed that as the appellant could not produce any evidence as regards the legal character of the gold in question, the same has to be presumed tobe smuggled one. Having already held that the onus was not up the appellant the same is required to be discharged by the REvenue by production of positive and tangible evidence, which they have failed to discharge. It is also on record that Shri Santo Kr.Mitra in this statements recorded at the time of seizure by the police and during investigations thereafter has deposed that the gold in question was purchased by him from the From the Reserve Bank of India through brokers. Certain cash memos of the gold were also found, as is evident fro the exhibits in the case of defalcation Even the prosecutions case before the judicial magistrate was that the gold was acquired by Shri Mitra by defalcation money during the period form 1941 t 1949. As against the above evidences there is no evidence produced by the Revenue to show that the gold was smuggled and acquired illegally in the year 1950 by Shri Santo Kr.Mitra, Inasmuch as the Revenue has failed to produce any evidence as regards the smuggled nature of the gold, we hold that there was no justifiable ground for confiscation ofthe same and the same is directed to be released to the appellant Smt. Nirmala Mitra, legal heirof Late Shri Kr.Mitra. The is also set aside. In a nutshell, the appeal is allowed with consequential relief to the appellants.
(Pronounced)