1. That on 15-4-1980, the officers of the Directorate of Revenue Intelligence, New Delhi searched the premises of the applicant situated at 48, Tagore Park, Model Town, Delhi and took into possession some articles and documents.
2. The applicant was interrogated by the officers of the Directorate of Revenue Intelligence on 15-4-1990 itself. The applicant was mainly questioned about his visits to Hongkong. The applicant admitted that he had gone to Hongkong a number of times in connection with his business of export of garments and that his last visit was when he left India on 16-1-1980 by Pan Am Flight No. PA-002. The applicant was asked as to whether he had taken with him any foreign exchange without making declaration to the Officers of Customs. The applicant admitted that he had taken with him Hongkong dollars 200 and U.S. dollars 200 without making declaration thereof to the Customs Officers. When questioned as to whether the applicant had declared any silver before Hongkong Customs, the applicant denied that he had not done so and he had not carried any silver while going to Hongkong on 6-1-1980.
3. The Officers of the Directorate of Revenue Intelligence also similarly interrogated one Shri Inder Malhotra who had accompanied the applicant to Hongkong. He also denied having with him any silver from India on 6-1-1980.
4. The Officers of Directorate of Revenue Intelligence had come to know from Hongkong Customs that one Shri Kanwal Kishore Malhotra, having Indian Passport No. K-979525 had arrived at Hongkong Airport on 6-1-1980 and declared 50 pieces of silver valued at Hongkong Dollars one lakh to Hongkong Customs. On the basis of this information, enquiries were made from the applicant, Shri Inder Malhotra and Airline authorities in India. A show cause notice was issued to the applicant and Shri Inder Malhotra calling upon them to explain as to why a penalty under Section 114 of the Customs Act be not imposed on them for illegally exporting 50 pieces of silver valued at Rs. 1,67,000/- and Hongkong dollars 200 and U.S. dollars 200.
5. In reply to the show cause notice, the applicant denied having exported 50 pieces of silver as alleged in the show cause notice and contended that there was no legal evidence to support this allegation.
The applicant also submitted that the extract of Hongkong Customs letter dated 14-5-1980 supplied in support of the allegations in the show cause notice did not show that the applicant had declared 50 pieces of silver at Hongkong Airport on 6-1-1980. The applicant, however, did not contest the other allegation of illegal export of 200 Hongkong dollars and 200 U.S. dollars. The applicant prayed that the persons whose statements are relied upon, may be summoned and made available for cross-examination at the time of personal hearing.
6. During the adjudication proceedings, the applicant pointed out to the adjudicating authority that the extract of the Hongkong Customs' letter supplied to him did not support the allegations made in the show cause notice. Upon this, the adjudicating authority supplied an extract of another letter dated 14-5-1980 from the Trade, Industry and Customs Department, Customs and Central Excise Headquarters, Hongkong. This extract also did not show as to who had made an enquiry from the Commissioner of Customs and Excise and as to whom this reply was sent.
Regarding the request of the applicant to summon the persons on whose statements reliance was sought to be placed, the learned Collector observed that it could not be possible for the department to produce the persons who had sent the letter dated 14-5-1980 on behalf of the Customs and Central Excise, Hongkong for the reason that apart from the expenses involved, it might have other repercussions. The advocate for the applicant then argued that the letter of Hongkong Customs dated 14-5-1980 was not a statement before the Gazetted Officer and was, therefore, not admissible under Section 138B; that the said letter was not tendered by the prosecution in evidence in the Court of law and the same was, therefore, not admissible for the purposes of Section 139 of the Customs Act, 1962 also. The advocate for the applicant also contended that the said letter only indicated that one Kanwal Krishna Malhotra had declared on his landing at Hongkong certain amount of silver and at its best it could constitute only one piece of circumstantial evidence which would not be conclusive to prove the guilt of the applicant to the hilt, because the said letter indicated that the flight had come to Hongkong from Bangkok. Even if assuming, though not admitting, the quantity of silver was declared by the applicant, it could not be taken to imply that the same had been illegally exported from India by the applicant. The advocate of the applicant further submitted that the Airlines, in their letter, have clearly stated that the applicant had not paid any freight charges.
The learned Collector, the adjudicating authority, imposed a penalty of Rs. 5,000/- on the applicant under Section 114 of the Customs Act, 1962 in respect of the illegal export of foreign exchange. The learned Collector however exonerated the applicant from the other charge i.e.
illicit export of silver.
7. The Collector of Customs, under the direction of the Central Board of Excise and Customs filed an appeal against the said order in which two points were sought to be determined by the Tribunal. First, as to whether simply on the basis of non-pay-ment of extra freight by the applicant it could be concluded that he had not smuggled out 50 pieces of silver valued at one lakh Hongkong dollars, from India. Second, as to whether letter dated 14-5-1980 received from Hongkong Customs was not sufficient to hold that the applicant had carried 50 pieces of silver with him from India.
8. The appeal was argued before this Tribunal and it was inter alia contended that the rate of silver at the material time in India was about Rs. 3,350/- per kg., and that the value of silver alleged to have been exported would in view of the aforesaid rate, account for 50 kgs.
of silver. It was contended that this weight of silver could not have been carried by the applicant by air without paying excess freight.
During the arguments, the applicant was directed to produce extracts of letters which were supplied to him from time to time with regard to export of 50 pieces of silver. The applicant complied with the directions vide application dated 25th February, 1988.
9. This Tribunal vide its order No. A-278/88-NRB dated 16-9-1988 accepted the appeal and held the applicant liable to a penalty of Rs. 2 lacs on the ground that it was established that the applicant had illicitly exported 50 pieces of silver from India to Hongkong on 6-1-1980. The Tribunal inter alia held that the contention of the applicant that the letter dated 14th May 1980 from the Commissioner of Customs and Excise is not relevant and cannot be tendered in evidence in view of Section 138B of the Customs Act, 1962 cannot be accepted and that it was probable that the applicant could have carried the said 50 pieces of silver without paying the freight thereon to the airlines.
Aggrieved by the said order, the applicant filed an application praying for making reference for the determination of various points of law by the Hon'ble High Court of Delhi. The Bench comprised of two Members, both differed in their opinion as to the legality and propriety of reference on two issues. While the Judicial Member held that no question of law arises, the Technical Member held that the following points of law are referable to the High Court for determination:- "1. Can in the facts and circumstances of the case, letter dated 14-5-1980 from Shri K.L. Mak of Hong Kong Customs authorities, addressed to the Counsellor, Commissioner of India, Hong Kong be read in evidence against the appellant? 2. (a) Can in the facts and circumstances of the instant case the question No. X proposed by the applicant arise out of the order passed by the Tribunal when it was never urged by the applicant at the time of hearing of the appeal on merits, nor it was considered by the Tribunal? (b) If so, can the Tribunal in exercise of powers under Section 129-D(4) of the Customs Act impose penalty in the first instance or it is competent only to determine the points referred to it in the Order passed by the Board under Sub-section (1) of Section 129D?" The third Member of the Tribunal, on the difference of opinion being referred to him, concurred with the opinion of the Technical Member; the Tribunal has, therefore, accepted the reference application on the two questions mentioned above.
It is prayed that the Hon'ble High Court may take into consideration the material on record and determine the issues as required under Section 130D of the Customs Act, 1962.
A list of documents required for the decision of the reference alongwith copies of the said documents in three sets are enclosed.