Vimalchand K. JaIn Vs. Cc (Prev) - Court Judgment

Excerpt:
1. the officers of the enforcement directorate searched the appellant's shop and seized on 9.6.1997 20 gold biscuits bearing foreign markings.on the same day this gold was in turn seized by the officers of the customs department. notice was issued proposing confiscation of the gold and imposition of penalty on the appellant. the notice cited the provisions of section 123 of the act. in the order impugned in the appeal, collector has ordered confiscation of the gold and imposed a penalty of rs. 2.00 lacs on the appellant.2. the appeal does not question the liability to confiscation of the gold. it reiterates the stand earlier taken by the appellant that the gold did not belong to him and it was given to him by some other person. it is limited to the imposition of penalty.3. the contention of the advocate for the appellant is that since the gold was seized by the officers of the custom and by the enforcement directorate official not from the appellant, the burden cast by section 123 of the act proving that it was not smuggled does not fall upon him.4. in his order, the commissioner has taken an ingenious stand that the gold was seized from the appellant's premises not by the officers of the enforcement directorate, but by the customs officers, who were assisted in that seizure by the officers of the enforcement directorate. he has held that the judgement of the supreme court in gian chand v. state of punjab is no longer good law after the introduction of the customs act, 1962. he refers to section 151 of the customs act, 1962, for which there is no provision corresponding to which sea customs act 1878. he says that the enforcement directorate officials had no authority in law to seize the gold, and therefore they only assisted the customs officers, who made actual seizure. hence the provisions of section 123 are available and rightly invoked.5. the first panchnama was made between 2.45 pm and 4.45 pm on 9.6.1997 which refers to the presence of the enforcement directorate and narrates the event takes place in the premises of s. kapoorchand jewellers at chira bazar. it says that the gold in question was recovered and seized by the officers from the premises. the second panchnama is made at the same place and says that the panch witnesses were called at 1715 hours i.e. 5.15 pm, the witnesses state that they were told that earlier in the day enforcement directorate officials had recovered and seized 20 pieces of yellow metal, presumably gold from the premises; that these gold pieces were and taken over by the customs staff in the presence of the owner from the officials of the enforcement directorate under the reasonable belief that they are smuggled. these facts amply demonstrate that there were two acts of seizure, one from the shop by the enforcement directorate, and second from the enforcement directorate by the customs officials. whether the fact of seizure by the enforcement directorate officials was under authority of law is not relevant point. if it was not, they may perhaps liable for the civil consequences of such act. but that does not disturb the fact that they took into the physical custody the gold in question, and that the customs officers in turn took into their physical custody.6. section 151 of the customs act empowers and authorises, inter alia, officers of the enforcement directorate to assist customs officers in the performance of their functions. the fact of this provision apparently in the customs act, 1962 not having a parallel provision in the sea customs act, 1878 while that act replaced does not have the effect of nullifying the supreme court judgement in gian chand v. state of punjab. the supreme court noted that the seizure made by the police officials in jullundur was not a seizure made under the sea customs act, 1878. it noted that when the gold was seized by the police, the accused lost possession of it and therefore held that the provisions of section 178 of the sea customs act, 1878 which correspond to section 123 in the later act would not apply. that position continue undisturbed and had been made applicable to seizures under the customs act, 1962 by a number of decisions of this tribunal (see r. ramesh, madras v. cc, madrasranjit ram, faridkot v. cc, chandigarh 1983 elt 2086 : 1984 ecr 428 (t)). we are not able to accept the departmental representative's contention that penalty can be sustained even without relying upon the provisions of section 123. the entire order of the commissioner relies only on section 123, and it does not cite any material in support of the confiscation. the notice to show cause does not cite any such material either. the fact that the appellant said that the gold might have been smuggled does not show that it was smuggled. the import policy, in fact, at the relevant time, permitted import of gold subject to fulfilment of certain conditions.it has not been demonstrated by the department, as it is required to, that it was not imported under the conditions and that if it was the condition under which import was permitted have not been complied with.penalty was therefore not sustainable.

Judgment:
1. The officers of the Enforcement Directorate searched the appellant's shop and seized on 9.6.1997 20 gold biscuits bearing foreign markings.

On the same day this gold was in turn seized by the officers of the Customs department. Notice was issued proposing confiscation of the gold and imposition of penalty on the appellant. The notice cited the provisions of Section 123 of the Act. In the order impugned in the appeal, Collector has ordered confiscation of the gold and imposed a penalty of Rs. 2.00 lacs on the appellant.

2. The appeal does not question the liability to confiscation of the gold. It reiterates the stand earlier taken by the appellant that the gold did not belong to him and it was given to him by some other person. It is limited to the imposition of penalty.

3. The contention of the advocate for the appellant is that since the gold was seized by the officers of the Custom and by the Enforcement Directorate official not from the appellant, the burden cast by Section 123 of the Act proving that it was not smuggled does not fall upon him.

4. In his order, the Commissioner has taken an ingenious stand that the gold was seized from the appellant's premises not by the officers of the Enforcement Directorate, but by the Customs officers, who were assisted in that seizure by the officers of the Enforcement Directorate. He has held that the judgement of the Supreme Court in Gian Chand v. State of Punjab is no longer good law after the introduction of the Customs Act, 1962. He refers to Section 151 of the Customs Act, 1962, for which there is no provision corresponding to which Sea Customs Act 1878. He says that the Enforcement Directorate officials had no authority in law to seize the gold, and therefore they only assisted the Customs officers, who made actual seizure. Hence the provisions of Section 123 are available and rightly invoked.

5. The first panchnama was made between 2.45 pm and 4.45 pm on 9.6.1997 which refers to the presence of the Enforcement Directorate and narrates the event takes place in the premises of S. Kapoorchand Jewellers at Chira Bazar. It says that the gold in question was recovered and seized by the officers from the premises. The second panchnama is made at the same place and says that the panch witnesses were called at 1715 hours i.e. 5.15 pm, the witnesses state that they were told that earlier in the day Enforcement Directorate officials had recovered and seized 20 pieces of yellow metal, presumably gold from the premises; that these gold pieces were and taken over by the Customs staff in the presence of the owner from the officials of the Enforcement Directorate under the reasonable belief that they are smuggled. These facts amply demonstrate that there were two acts of seizure, one from the shop by the Enforcement Directorate, and second from the Enforcement Directorate by the Customs officials. Whether the fact of seizure by the Enforcement Directorate officials was under authority of law is not relevant point. If it was not, they may perhaps liable for the civil consequences of such act. But that does not disturb the fact that they took into the physical custody the gold in question, and that the Customs officers in turn took into their physical custody.

6. Section 151 of the Customs Act empowers and authorises, inter alia, officers of the Enforcement Directorate to assist Customs officers in the performance of their functions. The fact of this provision apparently in the Customs Act, 1962 not having a parallel provision in the Sea Customs Act, 1878 while that Act replaced does not have the effect of nullifying the Supreme Court judgement in Gian Chand v. State of Punjab. The Supreme Court noted that the seizure made by the police officials in Jullundur was not a seizure made under the Sea Customs Act, 1878. It noted that when the gold was seized by the police, the accused lost possession of it and therefore held that the provisions of Section 178 of the Sea Customs Act, 1878 which correspond to Section 123 in the later Act would not apply. That position continue undisturbed and had been made applicable to seizures under the Customs Act, 1962 by a number of decisions of this Tribunal (see R. Ramesh, Madras v. CC, MadrasRanjit Ram, Faridkot v. CC, Chandigarh 1983 ELT 2086 : 1984 ECR 428 (T)). We are not able to accept the departmental representative's contention that penalty can be sustained even without relying upon the provisions of Section 123. The entire order of the Commissioner relies only on Section 123, and it does not cite any material in support of the confiscation. The notice to show cause does not cite any such material either. The fact that the appellant said that the gold might have been smuggled does not show that it was smuggled. The Import Policy, in fact, at the relevant time, permitted import of gold subject to fulfilment of certain conditions.

It has not been demonstrated by the department, as it is required to, that it was not imported under the conditions and that if it was the condition under which import was permitted have not been complied with.

Penalty was therefore not sustainable.