Udai Lal Doshi vs Collector Of Customs And Central … on 17 February, 1992

0
73
Customs, Excise and Gold Tribunal – Delhi
Udai Lal Doshi vs Collector Of Customs And Central … on 17 February, 1992
Equivalent citations: 1992 (60) ELT 288 Tri Del


ORDER

S.L. Peeran, Member (J)

1. Both the appeals are against the impugned order passed by the Collector of Customs and Central Excise, Jaipur on 31-3-1987.

2. The learned Collector lias under Section 111 of the Customs Act, 1962, ordered for the confiscation of seized 10 pieces of gold weighing 10 tolas each (total 1166.400 gms) in the form of gold biscuits having foreign markings and has also imposed a penalty of Rs. 5.000/- under Section 112 of the Customs Act, 1962.

3. The Asstt. Collector of Central Excise & Customs Division, Udaipur issued a show cause notice dated 30-10-1986 to the appellants making out the following charges on the basis of the facts stated therein.

(i) It was alleged that on 11th and 12th of April, 1984, the residential premises of the appellants was searched by the Income tax authorities under the Income-tax Act which resulted among other things, 10 pieces of gold weighing 10 tolas each (total 1166.400 gms). These 10 pieces of gold so recovered were said to be gold biscuits having foreign markings and were taken into possession by the Income-tax authorities for taking action under the Income-tax law. Since the gold having foreign markings attracted the provisions of the Customs Act, 1962, the appellants were summoned by the Asstt. Collector/Superintendent (Preventive) Central Excise, Udaipur for investigation. The statement of the appellant was also recorded on 12-12-1985 under Section 108 of the Customs Act, 1962. The appellant admitted the fact of the search of the business and residential premises by the IT authorities on 11th and 12th April, 1984 and also admitted the fact of recovery of 10 gold pieces (gold biscuits) weighing 1166.400 gms of 22 carat purity from his residential premises. On inquiry, the appellants stated that the gold in question was kept in a box which was given to his married son namely Sh. Narinder Doshi for safe custody by his mother who is deceased. He further stated that the gold in question was to be divided among five brothers but due to family disputes, it could not be done.

(ii) The Supdt. summoned the son of the appellant namely Sh. Narinder Doshi on 31-3-1986 and his statement was obtained. In the statement tendered under Section 108 of the Customs Act, 1962, he admitted that the 10 gold biscuits were recovered from the box which was lying in the common store room of their residence and that their family was a joint family and they were all residing together.

(iii) After the completion of the action initiated by the authorities under the Income-tax Act, the Income-tax Department handed over the 10 gold biscuits in question having foreign markings to the Central Excise officers, Udaipur on 30th July, 1986 in the presence of two independent witnesses under a proper panchnama dated 30-7-1986. Since the appellant nor his authorised representative tendered any statutory account for legal import/acquisition/possession of the aforesaid 10 gold pieces, the same were formally seized on 30-7-1986 by the Central Excise officers of Udaipur Division under Section 110 of the Customs Act, 1962 under a proper panchnama dated 30th July, 1986 on a reasonable belief that the same had been illegally imported into India through a route not prescribed under Section 7(c) of the Customs Act, 1962 read with Section 3(1) of Imports and Exports (Control) Act, 1947 and Section 13 of the FERA, 1973 rendered the seized gold biscuits for confiscation under Section 111 of the Customs Act, 1962.

(iv) The appellant was summoned by the Asstt. Collector, Udaipur on 4-9-1986 to appear before him on 5-9-1986 for interrogation. The appellant’s statement was again recorded on 5-9-1986 under Section 108 of the Customs Act, 1962. The appellant admitted about the proceedings of handing over gold biscuits by the Income-tax authorities to the Customs authorities under the panchnama dated 30-7-1986. He reiterated the same facts as he had rendered in the earlier statement before the Superintendent on 12-12-1985. He and his son admitted full knowledge about the custody of contravened gold biscuits in his residential premises. Therefore, it was alleged in the show cause notice that they had contravened the provisions of Section 11 of the Customs Act, 1962 read with Section 3(1) of the Imports & Exports (Control) Act, 1947 and Section 13 of the Foreign Exchange Regulation Act, 1973. Therefore, they were called upon to show cause as to why the seized gold weighing 1166.400 gms valued at Rs. 2,26,000 should not be confiscated under Section 111 of the Customs Act, 1962 and why penalty should not be imposed under Section 112 of the Act for contravention of various provi- sions of law. It was also stated in the show cause notice that the burden of proof that the seized gold was not smuggled one, was on the appellant and that he was required to discharge this burden under Section 123 of the Customs Act.

4. The show cause notice was also issued to the appellant Sh. Udailal Joshi. The appellant filed his reply to the show cause notice dated 28-1-1985. In their reply, they contended that the panchnama dated 30-7-1986 merely stated taking over of the said 10 gold biscuits by CE officers and formally seizing them. Therefore, the appellants contended that 30-7-1986 cannot be treated as the date of seizure. It was contended that the date of seizure must be treated as 11/12-4-1984 when the said 10 gold biscuits had been recovered by the Income-tax officers. It is contended that the customs authorities had given direction to IT authorities immediately after the recovery of the said gold biscuits by the income-tax authorities on 11/12-4-1984, not to release the goods to appellants as the goods were liable for confiscation under the Customs Act. Therefore, it was contended that the date of seizure has to be taken from this date and hence the show cause notice issued after the six months from this date would be barred by time and terms of Sub-section (2) of Section 110 of the Customs Act.

5. It was contended by the appellants that he hails from a very rich family of Udaipur and his father Sh. Ambalal Doshi was a engineer in the erstwhile State Mewas, whereafter he joined PWD in the Govt. of Rajasthan. He had contended that his ancestors Bikhuji Doshi had been awarded jagir at Rajamand which had come to be known as ‘Doshi ji ki Bari’. He contended that he was living with his other 4 brothers and that his father lived with them till his death in 1985. After his father’s death, he had separated from his brothers and he and his mother Smt. Sunderbai were living together. He had contended that his father had purchased the said gold bars much earlier than the partition of the country in 1947, when the gold price was only Rs. 18 to Rs. 20 per tola.

6. He has contended that Us father had not disclosed about his gold assets to his sons and had kept the said gold with his mother Smt. Sunderbai. His mother had chosen to stay with him and she had kept the valuables in a box which she had kept always with her under her own lock and key till her death in 1974. He has contended that his mother had not disclosed about the contents of the valuables kept in her box to any member of her family as is customary with the old ladies. He contended that there was no restriction of export/possession of the gold prior to the partition of the country and therefore, his father had not made aware to his mother about taking precautions in keeping the gold in her possession. He had contended that his mother is an illiterate lady and that she did not know about the provisions of law prevailing then nor did she note that possession of foreign marked gold was an offence under any law. The appellant has stated that the above narrated facts are true but unfortunately, he did not have any documentary evidence to prove the said facts because the gold bars were purchased years before partition of the country and were meant for personal use of his mother and not for a commercial consideration and therefore, no vouchers or bills of purchase, had been obtained.

7. He had stated that he was a partner in the firm M/s. London Stores, Udaipur alongwith his two sons as partner. He stated that his firm deals with sale of Indian made foreign liquor and the same was started in the year 1944. He has stated that he had categorically denied before the officers who had recorded his statement on 12-12-1985 about dealing in sale/purchase of gold at any time. He has stated that he had admitted before the Income-tax officers about the recovery of silver ornaments as well. He has stated that he had told the officers that he had no knowledge of the said gold bars having been placed by her mother in his box.

8. The statement of Narinder Doshi was recorded on 31-3-1986. Sh. Narinder has confirmed the facts stated by his father in recovery of 10 gold biscuits. He has stated that his grand-mother had given the box to be delivered to Tej Singh, his father’s younger brother. He has stated that he has come to know the contents of the box only when the Income-tax officers searched the premises and opened the box. He has also contended that he had not acquired the seized gold nor he was in possession of the same and therefore, the penal provisions for improper importation of goods etc., as contained in Section 112 of the Customs Act, cannot be alleged and penalty cannot be imposed.

9. The learned Collector has granted the personal hearing and also recorded the submissions made by the parties before him. After a careful consideration, he has passed the following findings in para 14 to 16 as follows –

“I have carefully gone through the records of the case. The fact of recovery of the gold in question was admitted by the parties. There plea was that they were not aware of the presence of the gold in the locked box which was in the possession of their late mother who died in the year 1974.

15. I have carefully considered this plea. Sh. Udailal Doshi and his son Narinder Doshi contended that the property of the mother could not be distributed amongst the five brothers all these time and therefore, the box remained locked till Income-tax authority searched the premises. One thing is contained that the late mother had in possession the gold in contravention of Customs Act, 1962 vide Section 11 read with Section 123 and therefore, the seized gold is liable to confiscation.

16. The contention of Sh. Udailal Doshi is difficult to believe as his mother died in 1974 and he did not verify the content of the box for long ten years. In view of the discussions above I pass the order as follows –

I order confiscation of the seized gold under Section 111 of the Customs Act, 1962. I also impose a penalty of Rs. 5,000/- on Sh. Udailal Doshi under Section 112 of the Customs Act, 1962 which is reasonable under the circumstances. No separate penalty is imposed on Sh. Narinder Doshi”.

10. I have heard Miss Savita Sharma learned advocate for the appellants and Sh. Ashok Mehta, DR for the Revenue. Miss Savita advocate submitted that the appellant was not in a conscious possession and had also not acquired the seized gold biscuits before the charge of importation and possession of foreign gold biscuits is not sustainable in law. She contended that the seized gold had been in the possession of the appellant’s mother for several decades and even prior to the coming into force of the Customs Act and therefore, the charge of illegal importation of foreign branded gold biscuits is not sustainable in law. She has submitted that property which has been inherited cannot be brought within the ambit of acquisition and possession as contemplated under the proviso to section under which the appellants have been charged. In this context, she has relied on the ruling of Abaji Nana Patil v. Gold Control Administrator 1985 (21) E.L.T. 483. She also contended that the Income-tax authorities had been made known about the recovery of the gold pieces on the very day of the raid and the Customs authorities had also taken the statement on 12-12-1985 and therefore, this should be the date to be considered for seizure of the gold biscuits and that the show cause notice having been issued on 30-10-1986, is time-barred under Section 110(2) read with Section 124 of the Customs Act. In this context, she has relied on the ruling in the case of I.J. Rao, Asstt. Collector v. Bibhuti Bhushan Bagh 1989 (42) E.L.T. 338.

11. Sh. Mehta, learned DR submitted that the date of seizure in this case is only from the date on which the Mahazar were drawn by the Customs authorities and that the date on which the gold was handed over by the Income-tax authorities to the Customs authorities and the date of seizure is the date of panchnama dated 30-7-1986. Therefore, the show cause notice has been issued within 6 months and therefore, there is no illegality in the proceedings pertaining to Section 110(2) and Section 112 of the Customs Act. He contended that the appellants themselves had clearly admitted about the recovery of the gold biscuits from his store room and that the other statement about his not being in conscious possession is a flimsy definition and is not sustainable. He contended that the appellants themselves had admitted about the gold to be partitioned among his brothers and also about the family being a joint family and therefore, the liability of the seizure cannot be passed on the appellants. He also submitted that the appellants had clearly admitted that he had no evidence in support of his contention that the gold biscuits had been purchased by his father and that he had given to his mother. He submitted that his father had passed away in 1956 and that the appellants mother had died in 1974 well after the Customs Act had been promulgated. Therefore, he contended that the appellants had not discharged the burden as contemplated under Section 123 of the Customs Act. He contended that the appellants had not disputed about the foreign markings of the gold biscuits and therefore, the charge brought out now of non-denial and non-discharge of the burden by the appellants, is proof beyond any shadow of doubt. He also submitted that the question of conscious and non-conscious possession of gold biscuits with foreign markings does not arise in the present case when the gold biscuits had been seized from the premises of the appellants and moreover, the appellant’s son was also a partner in the business of the appellants. He submitted that the ruling relied upon by the learned advocate is clearly distinguishable. He has relied on the ruling in the case of Phanindra Bikash Roy Chowdhury v. Union of India (AIR 1978 Calcutta 544).

12. Miss Savita countering the arguments, relied on the ruling in the case of Ambalal v. Union of India AIR 1961 SC 264.

13. I have carefully considered the submissions made by both the sides and have also perused the records and the findings rendered by the learned Collector. The question that arises for my consideration is as to whether the appellant have contravened the provisions of Section 11 of the Customs Act, 1962 read with Section 3(1) of Imports & Exports (Control) Act, 1947 and Section 13 of the Foreign Exchange Regulation Act, 1973.

14. The admitted facts in this case are that the seized gold biscuits were bearing foreign markings and that they were recovered from the premises of the appellants. It is also admitted that the appellants family is a Hindu Joint family and the assets of the family had not been partitioned and there was a dispute pertaining to the division of the assets. It is also admitted that the appellants and his two sons were carrying on business in Indian foreign liquor on partnership basis. It is also admitted that the appellants does not have any documentary evidence in proof of acquisition of the seized gold biscuits having foreign markings by his father. It is also admitted that his mother had not informed the authorities about the possession of the foreign marked gold biscuits and no declaration had been filed regarding its possession under the Income-tax Act. The appellants have also admitted that there is no voucher, bills for acquisition and purchase of the gold biscuits. However, he was contended that the gold seized with foreign markings is a inherited property and the same had been purchased by his father prior to partition of the country when there was no legislation barring the purchase of the said gold with foreign markings. He has taken the defence that as he was not in conscious possession of the seized gold biscuits, the provisions of the Customs Act does not apply in his case. This defence has to be rejected out-right as without any merit and any substance. The burden of discharging the proof that the seized goods were not of smuggled nature, clearly is on the appellants as can be noted from Section 123 of the Act which is reproduced below –

“Burden of proof in certain cases. – (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be –

(a) in a case where such seizure is made from the possession of any person,-

(i) on the person from whose possession the goods were seized; and

(ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person;

(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.

(2) This section shall apply to gold, diamonds, manufacturers of gold or diamonds, watches and any other class of goods which the Central Govt. may by notification in the official Gazette, specify.”

There is no ambiguity made in the charge made in the show cause notice. The appellants have been clearly charged for having in possession of foreign marked smuggled gold biscuits and therefore, the appellants having admitted the possession of the same was required to have discharged the burden by a cogent plea and reliable facts. In this case, admittedly not an iota of evidence or a scrap of paper is produced in proof of several contentions raised by the appellants either orally or by documentary evidence. The appellants have not chosen to produce the evidence of his brother also. Therefore, this plea of property having been inherited and not having been in conscious possession, cannot be believed.

15. The appellants have taken the contention that the show cause notice has not been issued within 6 months as contemplated under Section 110(2) read with Section 124 of the Customs Act. Therefore, their contention is that the Customs have recorded the statement on 12-12-1984 and that the show cause notice having been issued on 30-12-1986, is clearly barred by time. As has been rightly contended by the learned DR, the time for issue of show cause notice commences from the date of seizure of the goods. In this case, the department has seized the goods from the Customs authorities by panchnama dated 30-7-1986 and therefore, the recording of statement on 12-12-1985, cannot be considered the date of seizure for the gold biscuits. Thus, the contention of the appellants that the proceedings are bad as the show cause notice having been issued after 6 months from 12-12-1984, is not sustainable.

16. The learned advocate has relied on the ruling rendered in the case of Abaji Nana Patil (supra). In this case, the Income-tax authorities had searched the premises. On search, 96 gold coins were found concealed in a wall inside the Ganesha Cup board and 6 gold chips were found-in the cup board itself. The appellants in that case had denied knowledge about the existence of the gold coins recovered from the walls and had contended that the same could have been secreted by father, when he was only 15 years old. He had also pleaded that he and his brothers were agriculturists and the business of money lending had been stopped with the demise of their father. It was noticed by the Bench from the order of the Income-tax officer under Section 132(5) of the Income-tax Act that they had possessed about 270 acres of land. Therefore, on the basis of these facts, the bench had come to the conclusion that the appellants family seems to be old fashioned, agricultured family dabbling in money lending business during the life time of the father of the appellants. Therefore, the Bench held on considering the facts as a whole, that the appellants were not in conscious possession of gold and gold coins and the same had been established by the appellants and that they are not actionable under Section 8(1) and/or Section 16 of the Gold Control Act.

17. In the present case, the facts are totally different and the appellant was aware of the box and the same being in his possession, cannot be said to be unaware of the contents of the box. Moreover, as the partition in the family could not be effected as his mother expired, gold was to be shared among his younger brothers. There is clear contradiction in the statement of the appellant that he was not aware and therefore, his contention is not proper and liable to be rejected. The appellant is a businessman dealing in Indian made foreign liquor. Therefore, the appellant having not discharged the burden under Section 123 of the Customs Act, the charges made in the show cause notice are sustainable and the foreign marked gold biscuits are liable for confiscation.

18. The learned DR had relied on two rulings rendered in the case of Phanindra Bikash Roy Chowdhury v. Union of India. In this case, the High Court had held in Para (3)’
“It was contended on behalf of the petitioner that the petitioner was entitled to hold primary gold if the petitioner was holding the same from 1939. It was urged that the Gold (Control) Act, 1968 had come into effect in 1968 and the provisions of the said Act were prospective in nature. It was therefore, urged that the petitioner was not required to file or submit any declaration in respect of the primary gold which the petitioner had held since 1939 under Section 16 of the Act and therefore, the possession of the said gold by the petitioner in the circumstances was not illegal under Section 8 of the Act and therefore, the petitioner could not be said to have contravened the provisions of the Gold (Control) Act, 1968. It was further urged that there was no positive finding controverting the assertions of the petitioner that the item in question had been held by the petitioner since 1939. It appears that the said contentions of the petitioner are based on misapprehension of the provisions of the Act. Under Section 8 of the Act, as I see it, possession of primary gold after the Act coming into operation, would be contrary to law unless the same is held in the manner as provided by the Act. Section 16, Sub-section (1) and Sub-section (2) and Section 5 deal with declaration in connection with articles and ornaments. In view of the definition provided under the Act, primary gold is neither article nor ornament. Therefore, in case primary gold is held, the question whether beyond certain quantity, an individual or a family is required to declare such a primary gold, has nothing to do with the requirement of Section 16 as such and in that view of the matter, the decision of this court in the case of Jay Krishna Saha v. D.M.Lai (1981 Cal WN 539) (AIR 1977 Cal 468) and the decision of the Division Bench of this court in the case of Collector of Customs v. Jaykrishna Saha 1977 (81) Cal WN 908 on which reliance was placed have no relevance to the controversy before me.”

This ruling can also be applied to the present case. The learned advocate has relied on the ruling of Ambalal’s case (supra). This case is rendered under Sea Customs Act, 1878. The appellant in that case had taken a plea that the goods had been brought by him from Pakistan before the Customs Act was established. Therefore, the Supreme Court had held in para 5 of the report that where the accused contends that the goods were imported from Pakistan before the Customs barrier was established, the onus is on the customs authorities to prove that they were imported after the barrier was put up. The Supreme Court has further held in para 11 of the judgement that where a person with the knowledge that the goods have been smuggled into India keeps the goods, than he is liable for penalty. Therefore, the Supreme Court held that the appellant was liable to penalty and has upheld the imposition of the penalty by lower authorities. Therefore, in the peculiar facts and circumstances of the case, the Supreme Court while upholding the imposition of penalty, had granted redemption of the confiscated goods on payment of a lesser amount. In the present case, the facts are totally different and the ruling rendered by the Supreme Court in the case of Ambalal case is clearly distinguishable and not applicable.

19. In this case, the ruling rendered by the Hon’ble Supreme Court – Collector of Customs, Madras and Ors. v. D. Bhoormull 1983 (13) E.L.T. 1546 (SC), is applicable. The Hon’ble Supreme Court while discussing the burden of proof which has to be discharged by the noticee, has this to say, as appearing in para 30 to 35 as under –

“It cannot be disputed that in proceedings for imposing penalties under clause (8) of Section 167, to which Section 178A does not apply, the burden of proving that the goods are smuggled goods, is on the department. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the onus cast by it, we must pay due regard to the other kindred principles, no less fundamental, of universal application. One of them is that the prosecution or the department is not required to prove its case with mathematical precision to a demonstrable degree for in all human affairs absolute certainty is a myth, and as Prof. Brett felicitously puts it “all exactness is a fake”. El Dorado of absolute proof being unattainable the law accepts for it, probability as a working substitute in this work a day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent man’s estimate as to the probabilities of the case.

31. The other cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered to use the words of Lord Mansfield in Blatch v. Archar (1774) 1 Cowp 63 at p 65 “According to the Proof which it was in the power of one side to prove and in the power of the other to have contradicted.” Since it is exceedingly difficult, if not absolutely impossible for the prosecution to prove facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden.

32. Smuggling is clandestine conveying of goods to avoid legal duties, secrecy and stealth being its covering guards. It is impossible for the Preventive department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the department would rebut the initial presumption of innocence in favour of that person and in the result prove, him guilty. As pointed out by Best in Law of Evidence (12th Edn Article 320 p 291) the presumption of innocence is no doubt, presumptio juris; but every day’s practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property”, though the latter is only a presumption of fact. Thus the burden on the prosecution or the department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very light evidence may suffice.

33. Another point to be noted is that the incidence, extent and nature of the burden of proof for proceedings for confiscation under the first part of the entry in the third column of clause (8) of Section 167 may not be the same as in proceedings when the imposition of the other kind of penalty under the second part of the entry is contemplated. We have already alluded to this aspect of the matter. It will be sufficient to reiterate that the penalty of confiscation is a penalty in rem which is enforced against the goods and the second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In the case of the former, therefore, it is not necessary for the customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough if the department furnishes prima facie proof of the goods being smuggled stocks. In the case of the latter penalty, the department has to prove further that the person proceeded against was concerned in the smuggling.

34. The propriety and legality of the Collector’s impugned order had to be judged in the light of the above principles.

35. It is not correct to say that this is a case of no evidence. While it is true that no direct evidence of the illicit importation of the goods was adduced by the department, it had made available to the Collector several circumstances of a determinative character which coupled with the inference arising from the dubious conduct of Baboothmull and Bhoormull, could reasonably lead to conclusion drawn by the Collector that they were smuggled goods. These circumstances have been set out by us earlier in this judgment. We may recapitulate only the most salient among them.

20. The learned Collector has imposed a penalty of Rs. 5,000/-. The value of the gold seized is Rs. 2,26,000/-. Therefore, the penalty imposed is not on the higher side. I do not see any reason to interfere with the order. There is no merit in the appeal and the same is rejected.

21. The appellants have filed G-38/87 under Gold (Control) Act. The appellants have not been charged under any provisions of the Gold (Control) Act nor there is any order under the Gold (Control) Act. Therefore, this appeal is infructuous and it is rejected.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

* Copy This Password *

* Type Or Paste Password Here *