1. The Revision Application filed before the Government of India against the Order No. 39/1976 dated 9th March 1976 passed by the Central Board of Excise & Customs statutorily stood transferred to the Tribunal for being heard as an appeal.
2. The brief facts necessary for the disposal of this appeal may be stated as under: On the night of 17/18th of Nov. '66 persuant to a secret information that silver ingots were secreted near Shop No. 5 at the junction of Bapty Road and Shanker Puppala Road, Kamathipura, Bombay, for being smuggled out of India, the Police officers and Prohibition Intelligence Bureau, Bombay, maintained a vigil at the suspected place with a view to intercept the persons coming to take away the concealed silver ingots which were hidden underneath the heap of iron scrap. Since no one came forward to claim the silver ingots, the police officers seized the silver ingots under the panchanama and subsequently made over the seized silver ingots to the Customs & Central Excise officers of the Marine and Preventive Division, Bombay on 19.11.1966 for taking action under the Customs law. After a month thereafter, the appellant Mulchand P. Jain by his letter dated 19.12.1966 claimed the ownership of the seized silver ingots and requested for release of the seized ingots. On a later date namely on 4.1.1967, he produced certain bills in support of his claim of ownership of 55 silver ingots out of 89 seized by the police. In his statement, among other things, he had stated that he brought 55 silver ingots in the ordinary course of business and had stored them in the godown of Shri Hasanalli Hasmulla Lokhandwalla.
However, he left Bombay on pilgrimage on 17.11.1966 and returned to Bombay only on 19.12.1966.
3. The Collector of Central Excise & Customs, Bombay who held the inquiry, on consideration of the material placed before him, he recorded a finding that Mulchand was not the owner of the silver ingots and he was made scapegoat by the real owner with the attempt to show that the transaction was genuine and goods were bonafidely stored in the god own. He also recorded a finding that all the 89 silver ingots in question were brought to Kamathipura which is near the sea coast of India and were attempted to be smuggled out of India in contravention of the provisions of Section 113(c) of the Customs Act. He therefore ordered confiscation of all the 89 silver ingots. Feeling aggrieved by the order of the Collector, Shri Mulchand preferred an appeal before the Central Board of Excise & Customs unsuccessfully. Thereafter, he carried the matter in revision to the Government of India. The Government of India also rejected the Revision Application.
4. Aggrieved by the order of the Government of India, the appellant herein filed a writ petition No. 1228/1978 before the High Court of Judicature at Bombay. During the pendency of the writ petition, a consent memo was filed. The writ petition was disposed of in terms of the consent memo. The terms of the consent memo are: 1. Order dated 7th June, 1978 (a copy whereof is Exhibit 'G' to the Petition) set aside. Revision Application of the Petitioner referred to in the said order remanded to Respondent No. 4 for fresh hearing and final disposal in accordance with law.
2. The Petitioner shall be at liberty to lead all such evidence, oral and documentary, as he deems necessary at the hearing of the said revision Application.
3. In case the Department desires to rely on any documentary evidence at the hearing of the said revision application, it may do so after furnishing copies thereof to the petitioner or his Advocate in advance.
4. In case the Petitioner desires to rely on any document in possession of the Department relevant to the enquiry and calls upon the concerned Respondents to produce the same at the hearing of the revision application, the concerned Respondents shall do so unless the Department claims any permissible privilege in respect thereof under the law.
5. Agreed and ordered that the said revision Application shall be heard by an Officer other than Respondent No. 3 so that the mind is applied afresh to the evidence and submissions at the hearing of said revision application.
6. In case the revision petition is decided against the Petitioner, the concerned Respondents shall not dispose of the silver ingots in question for a period of 3 months from the date of service of the order in revision application of the Petitioner.
5. After the disposal of the writ petition, the Revision Application which was required to be heard afresh remained pending with the Govt.
of India. After the constitution of the Tribunal and as provided by Section 131A of the Customs Act the proceedings were transferred to the Tribunal. The records were received in the office of the Tribunal on 21.6.1983. The appeal was listed for hearing on 30.11.1983. On that day, both sides requested time to file documents in terms of the consent memo filed before the High Court of Bombay. The hearing was therefore adjourned on 21.7.1984 and the parties were directed to file the documents by that date. Thereafter on the request of the parties, the hearing was adjourned from time to time When the matter came up for consideration on 24.8.1984, Shri Parikh, appellant's advocate, submitted that he requires the documents which he has indicated in the two letters addressed to the Secretary, Government of India and he also wants certain witness for cross-examination. Shri Parikh was directed to furnish the particulars of the documents and statements and also lists of witnesses by a separate application. Thereafter the matter came up for consideration on 28.11.1984 on which date Shri Krishna Kumar appearing for the Collector submitted that documents are all lying in Delhi and arrangements are being made to secure the documents.
He requests two months time to file the documents. When the matter came up on 31.12.1984 Shri Parikh requested time to verify whether the department had furnishes copies of the documents which they had sought for and also to reconsider whether he would require all the witnesses for cross-examination. There fore the matter was adjourned to 2.1.1985.
On that day, the Bench passes an interim order No. 26/85. In this order the Bench considered the specific prayers contained in the application dated 5.9.1984 made on behalf of the appellant. The Bench noticed that the applicant had sought production o 8 documents. The Collector had raised objection regarding two of there which were investigating reports. The Bench pointed out to Shri Parikh the provisions of law under which he could request the Collector to furnish copies of those investigating reports. He however could not point out the provisions of law. Shri Parikh also did not press the matter further in regard to investigating reports. The Bench therefore directed that copies of those reports need not be furnished.
6. The Bench noticed that in Para 4(b) of the application dated 5.9.1984, there is a list of 9 persons whom they would like to cross-examine/examine and would like to lead oral evidence. In Para 4(c) of the same application, mention has been made of three other persons whom the applicant wishes to examine. The Bench explained the scope of the consent memo and observed that the department cannot object to the applicant examining any witness whose evidence the applicant considers necessary. It was however pointed out those would be the applicant's witnesses and the applicant cannot require the department to examine any persons as its witnesses. Shri Parikh submitted that he would like to examine as the applicant's witnesses 3, 4, 6, 7 & 8 in Para 4(b) of his application and also 3 persons mentioned in Para (c) ibid, Shri Krishna Kumar submitted that in adjudication and appeal proceedings under the Customs Act, where evidence of witness was taken, it was customary to file affidavits of the witnesses instead of subjecting them to examination. Thereafter they could be cross-examined and re-examined. He submitted that the same procedure should be followed. Shri Parikh agreed in principle, and said that if the applicant could find the respective witnesses and get them to sign affidavits he would file such affidavits; however, if the witnesses were not agreeable to sign affidavits, their evidence would necessarily have to be taken in court. The Bench also passed orders regarding the procedure for examination of witnesses. It was pointed out by the Bench that it would be convenient and expedient if the examination of witnesses could be done by a senior officer of the Customs department other than the Tribunal itself. Both sides accepted this suggestion.
7. On 1.3.1985, an application was made on behalf of the appellant requesting to issue summons to the witnesses as they were not prepared to sign any affidavits. This application came up for consideration on 17.4.1985. The Bench directed the Additional Collector of Customs, Marine & Preventive, to issue summons to the above mentioned witnesses and to record their evidence. Certain directions were also given to the Additional Collector in the matter of recording of evidence. The Additional Collector took considerable time to record the evidence of the witnesses. The Additional Collector forwarded the evidence recorded by him and it was received by the Tribunal on 3.4.1986. Copies of the evidence recorded by the Additional Collector was made available to both sides. Thereafter, the appeal was listed for hearing. At the request of both sides, the hearing was adjourned from time to time and finally arguments were heard on 15.7.1986.
8. Shri Parikh appearing for the appellant contended that 89 silver ingots were recovered from an open space in front of shop No. 5 situated in the junction of Bapty Road and Shankar Puppala Road (Kamathi-pura). In support of his contention, Shri Parikh relied on the panchnama prepared by the Police officers who effected the seizure.
Shri Parikh urged that the silver ingots were found in the open space outside the shop No. 5 was not correct and the document of seizure does not support the said stand of the department. Shri Parikh also submitted that actually the seizure of silver ingots was from inside the shop premises which is a godown and which belongs to Shri Hasanalli Hasmulla Lokhandwalla. Shri Parikh urged that if this silver was not found from inside shop No. 5, there was no need for the police to make any inquiries with the person found in the shop or to send word to the owner of the shop. The next contention of Shri Parikh was out of 89 silver ingots 55 belonged to the appellant. He had purchased them in the open market but immediately after the purchase he went on pilgrimage and returned to Bombay only on 19.12.66. On his return, he came to know about the seizure. He immediately wrote a letter dt.
19.12,1986 claiming the silver ingots and stating that he would produce bills subsequently. On 4.1.67 his statement was recorded under Section 108 of the Customs Act wherein he reiterated his prayer in respect of 55 silver ingots and also produced bills from Bombay Bullion Merchants Association for 51 silver ingots and gave particulars of the four other purchase bills. Shri Parikh further contended that the shop owner Shri Lokhandwalla corroborated the version of the appellant and has stated that 55 out of 89 silver ingots belonged to the appellant and were brought to his godown. The version of Shri Lokhandwalla finds corroboration from the statement of Mohamad who had also stated that he transported 55 silver ingots on 16.11.1966 to the godown of Lokhandwalla at the instance of the appellant.
9. Shri Parikh then submitted that two show cause notices were issued.
One was issued to the owner of the remaining 34 silver ingots and another was issued to the appellant. In the show cause notice issued to the appellant it was alleged that 55 silver ingots were attempted to be exported out of India in contravention of Import and Export Act and the Order and that said silver ingots were brought near the coast of India for the purpose of being exported from a place other than the Customs port. The appellant was called upon to show cause as to why the 55 silver ingots should not be confiscated under Section 113(c) of the Customs Act. Shri Parikh also drew our attention to the annexure to the show cause notice wherein it was stated that silver ingots have been secreted near shop No. 5. It clearly belies that the silver ingots were recovered from the road. Shri Parikh submitted that the appellant did not send any reply expecting that silver ingots which he had claimed would be delivered to him. Shri Parikh further urged that no inquiry was made as to the owner. It was also contended by Shri Parikh that at the relevant time the silver could not have been confiscated because the provisions of Chapter IV B was brought into force some time in January 1969. The goods were found near Kamathipura which is a central commercial place and cannot be considered a coast or land frontier or a place near the coast and therefore the seized silver cannot be ordered to be confiscated. Shri Parikh then referred to the Order-in-Original.
He urged that the observation in the Collector's order that Kamathipura is not a place where dealings in silver ingots take place in large scale but on the contrary, it is a notorious place where dealings in smuggled goods and dealings of illegal nature take place was irrelevant. Shri Parikh urged that the Collector committed an error in not accepting the appellant's claim particularly when it was established by documentary evidence namely purchase bills and also supported by the evidence of Mohamad. Shri Parikh submitted that if the appellant wanted to make a false claim, he would have made a claim for all the 89 ingots and would not have restricted to 55 ingots only. Shri Parikh submitted that the seizure of the ingots was illegal. The appellant was not supplied with the copy of the information stated to have been received by the police. The extract of police chart was also not furnished to the appellant and therefore the information and police diary could not have been relied upon.
10. Shri Parikh then referred to the order passed by the Central Board of Excise & Customs. Shri Parikh urged that the Board has not properly appreciated the statement of Shri Lokhandwalla. The Board according to Shri Parikh was not correct in commenting that Lokhandwalla ought to have informed the Police authorities or the Central Excise Department that 55 silver ingots out of 89 belonged to Shri Mulchand. He urged that there was no such obligation on Lokhandwalla. His conduct in going to the residence of the appellant, on coming to know of the seizure is natural and expected of a prudent person. No adverse inference can be drawn for not informing the police authorities or the Central Excise officers regarding the ownership of 55 silver ingots. But Lokhandwalla did not find the appellant in his house.
11. Shri Parikh vehemently urged excepting the appellant, none others laid claim for the 55 ingots. The appellant was the sole claimant.
There was no dispute regarding the ownership. When the silver ingots did not offend any provisions of the Customs Act, the same cannot be ordered to be confiscated. In the absence of rival claims, the authorities ought to have returned 55 silver ingots to the sole claimant namely the present appellant particularly when he had produced bills which covered 51 ingots and gave particulars of weight and other particulars in respect of remaining. The department had verified the genuineness of the bills and were satisfied that the bills produced by the appellant did relate to 51 ingots out of 55 claimed by him. Shri Parikh thereafter referred to the income tax settlement proceedings.
The Income Tax had accepted his statement that he purchased 55 ingots for Rs. 6,34,000/-. He was assessed to income tax and wealth tax and thus there was tax liability of nearly Rs. 3 lakhs. Shri Parikh urged that no sound and prudent person would accept tax liability of Rs. 3 lakhs if the silver ingots did not really belong to him.
12. Shri Parikh then referred to the order dated 7.6.1978 passed by the Government of India. He urged that the Government of India relied on documents the copies of which were not supplied to the appellants. It also relied upon the panchnama but then the panchnama drawn up at the time of seizure does not indicate that any photograph was taken.
13. Shri Parikh submitted that the bills stood in the name of brokers but then the purchases were all for and on behalf of the appellant and the consideration for the purchase flowed from the appellant. The appellant did not make direct purchase in order to avoid income tax and wealth tax. It was also contended by Shri Parikh that Shri Lokhandwalla had a godown and he had employed 8 persons and there used to be day and night watch and therefore the appellant found the said place safe and secure for keeping his silver ingots. The inferences drawn by Collector and the Government of India did not flow from the established facts.
14. Shri Parikh vehemently contended that the silver ingots were found not in the coast or near the coast but in the heart of Bombay city.
There was no scope for ordering confiscation under Section 113(a) or (c). The coast according to Shri Parikh is a land adjoining sea waters or land next to the sea shore. To substantiate his contention that Kamathipura is situated in the middle of Bombay city and not near the coast Shri Parikh produced a map of the city of Bombay. Finally, Shri Parikh referred to Mukherjee's Custom Law 2nd edition page 279. Shri Parikh prayed that the order of confiscation of 55 silver ingots may be set aside and they may be ordered to be returned to the appellant.
15. Shri Pattekar who represented the Collector referred to the letter written by the applicant on 19.12.1966. He urged that in this letter, the claim was not restricted to 55 ingots but the claim was made in respect of the entire seizure. Shri Pattekar further submitted that in this letter, the appellant did not mention the dates of purchases or produced the bills. It was further contended by Shri Pattekar that the bills produced by the appellant did not stand in his name. The so called brokers were not produced by the appellant. They were either non-existing or fictitious persons. Shri Pattekar further contended that no ordinary prudent man would keep silver worth more than 10 lakhs underneath the iron scrap. It was also contended by Shri Pattekar that Mulchand is a partnership firm. Besides the appellant, there was another partner. If as stated by Shri Lokhandwala that the appellant was not available, he could have informed the other partner Kapur-chand and in that event Kapurchand would have made the claim but then Lokhandwalla did not inform Kapurchand and no reason is also given for not informing Shri Kapurchand. Therefore his version that he had gone to inform Mulchand and Mulchand was not available cannot be believed.
Shri Pattekar commented on the evidence of handcart puller. He submitted an illiterate could even remember the date which clearly shows that he was tutored. Shri Pattekar then referred to the issuing of the show cause notice and the same being not claimed by the appellant. Shri Pattekar also commented on the conduct of the appellant in not sending reply to the show cause notice. Shri Pattekar further submitted that if really the silver ingots were kept in the shop of Lokhandwalla he would have informed the police authorities immediately after coming to know of the seizure. Shri Pattekar submitted that when the appellant had failed to establish that he was the owner of the seized goods he has no locus standi to question the legality of the order of confiscation. The circumstantial evidence according to Shri Pattekar clearly established the attempted export of silver. He urged the silver business is normally carried out in Jhaveri Bazar. Silver bars and ingots are kept in safes. In the instant case silver ingots of the value of more than Rs. 12 lakhs were kept hidden underneath the scrap apparently with a view to export them. Kamathipura was found to be a safer place for moving silver for export. In all other respects, Shri Pattekar relied on the orders passed by the Collector, the Board and the Government of India. Shri Pattekar finally submitted that the question of ownership cannot be established in an adjudication proceedings and the proper forum is the Civil Court and in this connection Shri Pattekar relied upon the decision of this Bench in Appeal No. CD (T)(BOM) A 413/1980 Kishin J Hifanandani v. Collector of Collector (Sic) Bombay decided on 18.3.1986.
16. In reply, Shri Parikh contended that the silver ingots did not belong to the appellant's partnership firm and therefore no entry of purchase was made in the account books. Shri Lokhandwalla knew that the silver ingots belonged to the appellant personally and therefore he did not inform the partner.
17. Shri Parikh further submitted that the information that the appellant got on his return from pilgrimage was that his silver was seized and therefore he made a claim without mentioning the number of ingots. Shri Parikh also urged that the decision relied on by Shri Pattekar is not applicable because the goods which is the subject matter of the decision were liable to confiscation but the goods which is the subject matter of the present appeal are not liable to confiscation since they did not offend any of the provisions of the Customs Act. He also urged that when the goods are not liable to confiscation, the ownership question does not assume much importance.
18. As has been stated earlier, as per the consent order passed in Misc. Petition 1228/78 it was agreed that the order dt. 7th June, 1978 passed by the Government of India should be set aside. It was further agreed that the Revision Application of the appellant herein was to be remanded to the Government of India for final disposal in accordance with law. After the remission by the High Court, the revision application was not disposed of by the Government of India and it stood transferred statutorily to the Tribunal.
19. We have carefully considered the submissions made on both the sides. The two questions that arise for our consideration are (1) whether the Collector and the Board were unjustified in holding that 55 silver ingots out of 89 silver ingots seized did not belong to the appellant and (2) whether the Collector and the Board were not justified in holding that the seized silver ingots were liable to confiscation.
20. Before we proceed to answer the questions set out above, we will briefly refer to the findings of the Collector as well the Board. The Collector after referring to the statement of the appellant observed "In this statement, he further narrates that he had been keeping such goods since a period of about 15 years but adds that he was not knowing the full name or the address of Shri Lokhandwalla where he is staying.
If the transaction was genuine and if Shri Mulchand Phulchand Jain was the owner of the silver ingots, Shri Hasanalli Hasmulla Lokhandwalla would have definitely come forward to make a statement that the silver ingots in question were belonging to Shri Mulchand Phulchand Jain and he was merely a custodian. Neither Shri Lokhandwalla nor his servants who were alleged to be on guard duty, disclosed either at the time of seizure or subsequent to it, that the silver ingots were belonging to Shri Mulchand Phulchand Jain. Shri Mulchand Jain, though he had stated that he had left Bombay on pilgrimage on 17.11.1966, no evidence either documentary or otherwise, has been adduced by him to substantiate his contention. The value of the silver ingots is about 12 lakhs and it is absurd to believe that a prudent man would leave Bombay on pilgrimage without disposing of such high valued goods and that too, at a place which had no such security. The silver ingots were found concealed in the heaps of iron scrap and it can hardly be believed that any prudent man would keep such high valued goods in this manner and leave abruptly on pilgrimage. Moreover, the investigations made into the case have revealed that the persons through whom Shri Mulchand Phulchand Jain is alleged to have purchased the silver ingots, were not traceable nor Shri Mulchand Phulchand Jain could produce them. He has also not cared to furnish his reply to the show cause notice although he received it on 12.6.1967. All these factors when taken into consideration lead me to believe that Shri Mulchand Phulchand Jain is not the owner of the silver ingots but he was made a scape goat by the real owner with an attempt to show that the transaction was genuine one and goods were bonafidely stored in the godown. These factors also lead me to believe that the real owner tried to obtain bogus documents to cover all the 89 silver ingots in question but when he failed in this respect, he came forward to claim only 55 silver ingots in respect of which he could manage the documents.
21. The Board considered the evidence on record. It recorded a finding that the conduct of Shri Hasanalli Lokhandwalla does not inspire any confidence and that he was only trying to assist the appellant in the claim of 55 silver ingots out of the 89 seized. As regards the contention of the appellant that the Central Excise authorities are not competent to decide issues involved in the ownership of property, the Board observed: That the Collector of Central Excise did not in fact adjudicate the case with a view to determine the ownership of the silver ingots.
Since the appellant claimed himself to be the owner of the 55 ingots it was for him to establish his claim and the Collector had the jurisdiction to decide whether the claim of ownership advanced by the appellant was sustainable or not.
The Board did not accept the evidence of Hasanalli Lokhandwalla. The Board also did not accept the explanation offered in respect of the bills by observing: The explanation offered by the advocate during the personal hearing before the Board that the bills were issued in the names of the brokers through whom the appellant purchased the goods is contrary to normal business practice. Bills for purchases are normally issued in the names of persons who buy the goods and not in the names of the brokers. In the light of the fact that when this case was detected there was no restriction on the trading in silver bullion as introduced subsequently under the provisions of Chapter IV(B) of the Customs Act, 1962, the fact that the bills were not issued in the name of the appellant but in the names of other persons who could neither be traced by the Department nor were produced by the appellant himself is an indication that these bills were substantially procured for staking a claim to the goods which did not belong to the appellant.
From the letter of the Income-tax Department the Board observes that the Income-tax liability of the appellant was decided by settlement with the appellant. It is also observed by the Board that this settlement was made upon the basis of the letter dated 7.10.1971 from the appellant himself to the Commissioner of Income-Tax, Bombay City-IV, Bombay. In this letter the appellant has stated "That in November 1966 there was an ACB raid in a godown belonging to Shri Hasanalli Lokhandwalla and from where 89 ingots of silver were found by them and handed over to the Central Excise Department. Out of these 89 ingots of silver 55 ingots belonged to some business friends of mine who had purchased these silver through me from several traders in Bombay and who had stored the same in the godown on my introducing them to Hasanalli. Subsequently, I claimed these 55 ingots of silver from the Central Excise Department as an owner as the people to whom it belonged did not turn up to help me even though the silver was purchased through me. Even the Central Excise Department officials were satisfied as to the source from where the silver ingots were purchased.
It is evident from the cited extracts from the appellant's letter dated 7.10.1971 addressed to the Commissioner of Income-Tax Bombay City-IV, Bombay that he was not the real owner of the 55 ingots of silver but was forced to claim ownership of the same because of certain circumstances. It is also evident that the appellant did not declare these 55 ingots of silver for income-tax or wealth-tax purposes until 1971 and until the income-tax authorities decided to reopen his assessment for the year 1967-68. Had the appellant been the owner of the goods even in 1966 he would normally have declared this to the income-tax authorities without waiting for the income-tax authorities to reopen the assessment on the basis of information obtained by them. All these circumstances go to show that the claim of ownership of the 55 ingots of silver advanced by the appellant was not only not established by him but was also contrary to his own statement made to the income-tax authorities.
As regards the liability of the silver ingots to confiscation, the Board did observe that Bombay is near the coast of India and further observed: That a particular article would become liable to confiscation under Section 113(c) or not is whether the article was found near the coast for the purpose of being exported from a place other than a land customs station or a customs port appointed for the loading of such goods. After taking into consideration, the various circumstances, the Board recorded a finding that the silver was in all probability kept concealed in Kamathipura under iron scrap for the purpose of illegal export out of India. Finally, the Board held that the present appellants Shri Mulchand Phulchand Jain cannot be treated as an aggrieved person for the purpose of Section 128(1) of the Customs Act, 1962. The Board also upheld the confiscation of the silver and ultimately rejected the appeal filed by the present appellant.
22. Since the order dated 7.6.1978 passed by the Government of India had been set aside by the High Court of Bombay as per the consent memo, it is not necessary for us to refer to the findings of the Government of India. With this, we will now proceed to consider the points that we had formulated ealier.
Point No. 1 :-At the outset, it is necessary to make it clear that the adjudication proceedings is a summary proceedings. Strictly speaking, the adjudicating authority has no jurisdiction to determine the title to the goods. The finding of the adjudicating authority as to the title or the ownership of the goods would not be conclusive or binding on the real owner. The proper authority to determine the title to the property is the Civil court. But then, if any person lays claim to the seized goods, the adjudicating authority gets jurisdiction to decide whether the claim is real or fanciful. This is because in the event of the adjudicating authority holding that the goods seized are not liable to confiscation, the same shall have to be returned to its real owner or to the person from whom it was seized. The position, however, gets altered if the finding of the adjudicating authority is against the claimant. Such a claimant cannot question the legality of the order of confiscation of goods unless and until he establishes his right to the seized goods.
23. An appeal against the order of Adjudicating authority is maintainable at the instance of a person aggrieved. A person becomes aggrieved in case his rights are affected by the order of the adjudicating authority. The appellant before us claims ownership of the 55 ingots out of 89 ingots seized in the case. As has been seen earlier, the adjudicating authority as well as the Board rejected the appellant's contention that he was the owner or had any title to 55 ingots out of 89 ingots of silver. We have already referred to the various contentions urged on either side. The limited question for our consideration is whether the finding recorded by the adjudicating authority and confirmed by the Board regarding appellant's claim is erroneous or not justified in the facts and circumstances of the case.
24. Undisputedly, the 89 silver ingots were seized by the officers of Anti-Corruption and Prohibition Intelligence Bureau in the early hours of 18.11.1966 hidden underneath the iron scrap from an open space in front of shop No. 5, at the junction of Bapty road and Shankar Puppala Road, Kamathipura. The appellant laid claim for 55 ingots our of 89 ingots. This claim was made one month after the seizure. The claim was made by a letter dated 19.12.1966 addressed to the Assistant Collector Central Excise, Marine & Preventive Division, Central Excise Bldg., Churchgate, Bombay. This is a very short letter and it reads: I, Mulchand Jain of Molana Azad, Bombay-4 have to inform you that the patlas of silver belonging to me have been seized by your officers on the 18th November, 1966 and are at present in your custody.
The silver belongs to me and I have purchased the same from the open market for resale for profits. When called upon to do so I will produce all the Bills before you or your officers at any place and at any time.
I say that I am an honest businessman and had purchased this silver in the ordinary course of business. I submit that the silver has not contravened any of the provisions of the Customs Law and as such it may kindly be returned to me.
I am at all times ready to produce my books of account and the purchase bills before you at any time desired by you.
I again request you to kindly check my account and release the silver to me.
The statement of the appellant was recorded on 4.1.1967. Among other things, the appellant stated that Shri Mulchand and himself were the partners of the firm since about 16 years. He has been conducting business in Bombay. He had business in gold but he closed that business after Gold (Control) Order came into force. At the time of recording his statement, he was conducting business in silver ready as well as speculation. Stock exchange speculation in Cotton, cotton seeds etc.
and purchasing and selling non-ferrous metals. They have also paid about Rs. 1000/- every year as income tax. It was also stated by him that he has been doing business in silver since very long time, more than 50 years. He makes his deals in silver with other parties. He takes delivery of the silver ingots and either sells them in Bombay or out of Bombay. He had purchased 55 ingots of silver in the month of November, 1966 from the regular market and had taken the delivery of the same. He gave the details of the purchases. He then stated that they have facility to store these goods purchased by them i.e. silver, tin, zinc, copper, brass etc. at the godown of the junction of Bapty road and Shankar Puppala Road. This storage place was in the name of Hasanalli Lokhand walla. It was also stated by him that they were so storing since past 15 years or so. It was further stated "In this particular case I had besides my other goods stored the above mentioned 55 silver ingots at the place of Shri Hasanalli on 16.11.1966 soon after delivery." Thereafter, he stated that on 24.10.1966 his wife and children had gone on pilgrimage. They were to reach Calcutta on 18.11.1966. Therefore, he left Bombay on 17.11.1966 and went to Calcutta by plane and joined them at Calcutta. He returned to Bombay with his family on 19.12.1966. On the same day, he learnt about the seizure of the ingots and he wrote a letter to the Central Excise authorities claiming the silver.
25. According to the statement made by the appellant, the partners of the firm were carrying on business in silver as well as speculation and in other goods. His categorical statement was that it was he who had purchased the 55 ingots from other parties. He had also stated that his firm had been storing their goods for over 15 years in the godown of Hasanalli. In his letter dated 19.12.1966, the appellant did not state that the silver belonged to this firm but he maintained that he had purchased the same. Though this letter was written a month after the date of seizure, the appellant did not produce any bills. He claimed that he was an honest businessman and purchased the silver in the ordinary course of business. He is prepared to produce the books of account. But then the bills produced by him were not in his name. In his statement recorded on 4.1.1967, he did not contend that he was purchasing through a middleman. Later on, the appellant contended that the purchases were not made through brokers but then the Central Excise authorities were not able to trace the brokers nor the appellant himself could produce any one of the brokers. The categorical statement made by the appellant in his letter dated 19.12.1966 was that he was an honest businessman and he was prepared to produce the books of account and the Central Excise authorities could even check his account but did not choose to produce the books of accounts. On the other hand, Shri Parikh appearing for the appellant contended that the business of purchase of silver is not the partnership business. It is appellant's personal venture. He further urged to avoid payment of income tax and wealth tax purchases were made through the brokers and no record is kept and no entries were made in the books of accounts. In view of the categorical statement made by the appellant the contentions urged by the learned advocate that the silver was purchased through brokers with a view to avoid income tax cannot be accepted. The seizure in this case is in the month of November, 1966. There was no restriction placed on the dealers regarding purchase or transport or place of storage or maintenance of accounts. The Chapter IV B came to be incorporated in the Customs Act with effect from 3rd Jan. 69. The restrictions regarding intimation of place of storage, transport of silver, maintenance of accounts required to be taken by persons selling or transferring silver became enforceable with effect from 3rd January, 1969 and not earlier to that date. In the circumstances, there was no need for the appellant to purchase silver through brokers. As matter of fact, the appellant himself did not state 'either in his application dated 19.12.1966 or in his statement recorded on 4.12,1967 that the purchases were made through brokers. The belated explanation was put forward to explain the bills which stood in the names of others. If really, the purchases were made through brokers, they would have been known to the appellant and the appellant when required by the Central Excise officers would have produced them.
26. The total quantity of the silver seized was 2832.781 kgs. and its value at that time was about Rs. 12 lakhs. According to the bills produced by the appellant, out of 55 ingots, 51 were purchased on 16.11.1966 and 4 ingots were purchased on 15 11.1966, The purchases were cash purchases. It is not the case of the appellant that he had the cash in his house and it is very unlikely that such huge cash could have been kept in the house. The appellant had not produced any documentary evidence to show withdrawal of this cash from the bank. The appellant also did not contend that he had borrowed any amount from anybody for the purchase of silver. Though in his statement recorded on 4.1.1967, the appellants stated that he had gone on pilgrimage and returned on 19.12.1966, in his letter dated 19.12.1966, he did not state that he had gone on pilgrimage. Significantly, when he staked his claim by letter dated 19.12.1966, he did not even choose to produce the purchase bills or the copies thereof. After the completion of the investigation, a show cause notice was issued to the appellant. It came back with an endorsement "unclaimed returned to sender." Thereafter, a show cause notice was served by hand to the appellant. He did not choose to send any reply to the said show cause notice. In the show cause notice issued to the appellant, it was specifically stated that the bills are not genuine and the appellant was not the real owner of the goods. Inspite of this specific allegation, the appellant did not choose to send a reply. This could not be the conduct of a real owner of silver worth Rs. 10 lakhs.
27. According to the appellant, the silver ingots purchased by him were sent to the godown of Hasanalli Lokhandwalla for storage. He had stated that for the past 15 years, that was the practice followed by his firm.
In his statement Lokhandwalla stated inter alia that he had taken the godown on hire. It is shop No. 5 and its dimension is about 22 ft. in width and 40 ft. depth. He stores his own goods as well as goods of others such as metal sheets, scrap, bars. In his statement, Shri Lokhandwalla did not state that 55 bars of silver which were brought to his godown were stored underneath iron scraps. But then the police officers found 89 ingots hidden underneath the iron scrap in an open space in front of shop No. 5. Now if the silver bars were sent by the appellant for storage in the godown of Lokhandwalla, there was no need for Lokhandwalla to keep them underneath the iron scrap and that too in an open space. The other goods which he stores are metal sheets, scraps and bars. According to his statement, the dimension of his godown is 22 ft. x 40 ft. Therefore, any prudent man would have kept the silver if it was received by him in the godown and not kept them hidden underneath the scraps. The story of the appellant that he had sent 55 bars of ingots of silver to the godown of Lokhandwalla and the version of Lokhandwalla that he had received 55 bars of silver from the appellant in the circumstances of the case cannot be believed. Shri Lokhandwalla had come to know of the seizure and according to him he went to inform the appellant but the appellant could not be found. It is not known why Shri Lokhandwalla did not inform the other partner of the appellant namely Kapurchand. According to the statement of the appellant, Kapurchand and himself were partners and the business is carried on by them. It was also in the statement of the appellant that they were storing their goods for over 15 years in the godown of Lokhandwalla. Therefore Lokhandwalla would have known that goods belonged to the firm. In that case, one would have expected him to inform the other partner. This conduct of Shri Lokhandwalla makes us disbelieve his version as well as the version of the appellant.
Further, neither the appellant nor Lokhandwalla produced a scrap of paper to evidence the storage of 55 ingots of silver. Shri Lokhandwalla according to his statement had taken the godown on hire. Therefore, he would have charged something to the appellant for the storage of silver. Further, the storage would have been evidenced by some documents. Looking to the quantity and value, no prudent man would store the silver without taking some receipt or acknowledgement but then as stated earlier, not even a scrap of paper is produced to evidence this storage.
28. Shri Parikh had vehemently contended that no sane person would have accepted the tax liability of Rs. 3 lakhs if he was not the real owner.
In that connection, Shri Parikh had drawn our attention to the order of settlement. The settlement was at the instance of the appellant. The appellant was not the loser in claiming the ownership of silver ingots because the value was Rs, 10 lakhs. In the settlement order, it is stated inter alia, "Moreover, you have already proved and admitted before the Income Tax Department that you purchased silver upto 51 ingots during the financial year 66-67 and 4 ingots were in stock. The total amount for which you have purchased silver is Rs. 6 lakhs 34 thousand.
So, before the Income tax authorities, the admission of the appellant was that he purchased 51 ingots and out of which 4 were in stock. The purchase price has been mentioned as Rs. 6 lakhs 34 thousand. But the bills produced by the appellant before the Central Excise officer were for a higher amount and the number of ingots claimed was also higher namely 55. That apart, in the order of the Board, the Board had called out the letter written by the appellant to the Income tax authorities, wherein he had stated that out of the 89 ingots of silver, 55 belonged to some business friend of his who had purchased this silver through him from several traders in Bombay and who had stored the same in the godown on his introducing them to Hasanalli. He claimed 55 ingots from the Central Excise deptt. as an owner because the owners to whom it belonged did not turn up to help him even though the silver was purchased through him. During the hearing of this appeal it was not contended that no such letter was written to the Income-tax authorities or that the contents of the letter are incorrect. The appellant has categorically stated that 55 ingots belonged to some business friend of his and since they did not come forward he claimed the ownership.
29. The only other evidence relied on by the appellant was that of the statement of handcart puller Mohamad Munir. He had stated that on the 16.11.1966 in the evening, his handcart was hired by Mulchand. On that day he transported 55 silver bars to Hassanali at the junction of Bapty Road and Shankar Pupaia Road at Bharat Lokhand Bazar. As has been rightly urged by Shri N.K. Pattekar, this witness was even able to state the exact date on which he transported the silver. Shri Munir did not refer to any diary maintained by him nor did he give any reason as to how he remembered the exact date, It looks to us that his evidence was secured for the purpose of this case. It is too much to expect a handcart puller to remember the time and date.
30. On consideration of all the evidence and the circumstances of the lease, we do not see any reason to hold that the rejection of the appellant's claim by the Collector and the Board was either wrong or unjustified. We, therefore, see no reason to interfere with that part of the orders.
31. Having regard to our finding on Point No. 1, it would not be necessary for us to go into the question as to the validity of the order of [confiscation of the silver ingots. The legality of the order of confiscation can be gone into only at the instance of a person who had substantiated his claim to the seized goods. Since the appellant had not substantiated his claim it would not be necessary for us to consider the validity or otherwise of the order of confiscation passed by the Collector and confirmed by the Board. The Collector and the Board, particularly the Board, after taking into consideration the various aspects have come to the conclusion that there was an attempt to export silver. It was no doubt that the silver was seized at Kamathipura. The chain of circumstances established in this case clearly establishes that if there had been no intervention by the police officers, the silver would have been exported out of India. May be as a first step, the silver was kept hidden at Kamathipura. This act would fall under (Clause (a) of Section 113-if not, under Clause (C) and therefore, we see no reason to interfere with that part of the order also. It is true that in the show cause notice it was not alleged that there was violation of Clause (a) of Section 113 but then the legality of the show cause notice or the denial of the principles of natural justice also cannot be gone into at the instance of a person who has no claim or whose claim is unfounded to the seized goods.
32. Before we part with this case, we would like to observe that the learned advocate who appeared for the appellant and the learned deptt.
representative did not refer to the evidence of the witnesses recorded by the Addl. Collector after the remand.
33. In the result for the reasons stated in the preceding paragraphs, this appeal fails and the same is rejected.