Padigala Sriramulu Vs. Collector of Customs and C. E. - Court Judgment

Excerpt:
1. this appeal is directed against the order of the collector of customs, hyderabad, dated 28-7-1992.2. shri satish sunder, the learned counsel for the appellant at the outset submitted that the appellant is not claiming the indian currency of rs. 30,700 and 15 tolas of gold bars under absolute confiscation under the impugned order but is contesting the impugned order only with reference to the sustainability of penalty levied on the appellant. the learned counsel submitted that the appellant has disputed the very seizure of indian currency and gold bars from the appellant's possession. the police who claimed to have effected seizure on 3-12-1987 did not even register fir for a period of 23 days and therefore the alleged seizure of currency and gold bars from the possession of the appellant is suspected. the learned counsel further submitted that section 123 of the customs act, 1962 does not apply in the present case since admittedly seizure was effected by police officers. the learned counsel in this context placed reliance on the ruling of the supreme court in the case of gian chand and ors. v. state of punjab, reported in air 1962 sc 496, division bench ruling of the madras high court in the case of nathella sampath chetty and anr. v.collector of customs, reported in air 1959 madras 142 and the division bench ruling of the gujarat high court in the case of assistant collector of customs v. mukhjusair, reported in 1970 cri l.j. 1306 (vol. 76 om 340). the learned counsel further urged that the appellant wanted to cross-examine the mahazar witnesses to probablise the plea that no gold bars or currency was ever in the possession of the appellant much less seized from the appellant and the learned collector has not dealt with this issue at all in the impugned order.4. i have gone through the records and considered the submissions made before me. it is not disputed that seizure of gold and currency was allegedly made by the police and not the customs department. in such a situation, section 123 of the customs act, 1962, does not apply. i may usefully refer to the ruling of the supreme court cited supra the relevant portion of which (para 9) reads as under : * * * * * * * * * * * * * 5. division bench of the madras high court in the case cited supra has taken a similar view. para 30 of their judgment is reproduced below : * * * * * * * * * * * * * 6. the division bench of the gujarat high court in the case cited supra referring to the ruling of the various high courts and the supreme court has held against the applicability of presumption of section 123 of the customs act, 1962 in respect of seizure by the police officers and the relevant portion of the ruling of the high court is reproduced below : "...this decision furnishes a complete answer to the present question that in order to attract the presumption under section 123, the goods must be shown to have been seized under the act from the possession of the accused by the customs authorities. if the goods were allegedly seized by the police authorities from the possession of the accused, the accused lost the possession by seizure under the provisions of the criminal procedure code and, therefore, the possession vested in the police authorities. if thereafter the customs authorities got the custody of the goods, they could not be said to have seized under the act so as to throw the burden on the accused to prove that the gold in question was not smuggled gold....therefore, the learned sessions judge was right in holding that in this case the presumption under section 123(1) could not help the prosecution and the prosecution must prove the essential ingredient of the offence by proving that the gold in question was smuggled gold".7. when section 123 is not applicable, it is for the department to prove that the goods are of foreign origin and were smuggled by the appellant. in the present case when the appellant has disputed the very seizure of the goods from his possession and wanted to cross-examine the mahazar witnesses which plea he has taken even in reply to the show cause notice, the learned adjudicating authority should have afforded an opportunity to the appellant to cross-examine them unless otherwise the appellant had waived the right of cross-examination of the mahazar witnesses. the appellant in reply to the show cause notice dated 9-10-1991 in para 7, wanted to cross-examine the punchanama witnesses and the appellant's plea in this regard has not been considered by the adjudicating authority. therefore, in the peculiar circumstances of the case where the question of seizure from appellant's possession is vitally important i am inclined to think that the plea of the appellant seeking cross-examination of the mahazar witnesses should be acceded to. in this view of the matter, without expressing any opinion on the merits of the issue, the impugned order is set aside and the matter remanded to the original authority for reconsideration of the issue in accordance with law after affording the appellant a reasonable opportunity to cross-examine the mahazar witnesses. ordered accordingly.

Judgment:
1. This appeal is directed against the order of the Collector of Customs, Hyderabad, dated 28-7-1992.

2. Shri Satish Sunder, the learned Counsel for the appellant at the outset submitted that the appellant is not claiming the Indian currency of Rs. 30,700 and 15 Tolas of gold bars under absolute confiscation under the impugned order but is contesting the impugned order only with reference to the sustainability of penalty levied on the appellant. The learned Counsel submitted that the appellant has disputed the very seizure of Indian currency and gold bars from the appellant's possession. The Police who claimed to have effected seizure on 3-12-1987 did not even register FIR for a period of 23 days and therefore the alleged seizure of currency and gold bars from the possession of the appellant is suspected. The learned Counsel further submitted that Section 123 of the Customs Act, 1962 does not apply in the present case since admittedly seizure was effected by Police Officers. The learned Counsel in this context placed reliance on the ruling of the Supreme Court in the case of Gian Chand and Ors. v. State of Punjab, reported in AIR 1962 SC 496, Division Bench ruling of the Madras High Court in the case of Nathella Sampath Chetty and Anr. v.Collector of Customs, reported in AIR 1959 Madras 142 and the Division Bench ruling of the Gujarat High Court in the case of Assistant Collector of Customs v. Mukhjusair, reported in 1970 Cri L.J. 1306 (Vol. 76 OM 340). The learned Counsel further urged that the appellant wanted to cross-examine the mahazar witnesses to probablise the plea that no gold bars or currency was ever in the possession of the appellant much less seized from the appellant and the learned Collector has not dealt with this issue at all in the impugned order.

4. I have gone through the records and considered the submissions made before me. It is not disputed that seizure of gold and currency was allegedly made by the Police and not the Customs Department. In such a situation, Section 123 of the Customs Act, 1962, does not apply. I may usefully refer to the ruling of the Supreme Court cited supra the relevant portion of which (para 9) reads as under : * * * * * * * * * * * * * 5. Division Bench of the Madras High Court in the case cited supra has taken a similar view. Para 30 of their judgment is reproduced below : * * * * * * * * * * * * * 6. The Division Bench of the Gujarat High Court in the case cited supra referring to the ruling of the various High Courts and the Supreme Court has held against the applicability of presumption of Section 123 of the Customs Act, 1962 in respect of seizure by the Police Officers and the relevant portion of the ruling of the High Court is reproduced below : "...This decision furnishes a complete answer to the present question that in order to attract the presumption under Section 123, the goods must be shown to have been seized under the Act from the possession of the accused by the Customs authorities. If the goods were allegedly seized by the Police authorities from the possession of the accused, the accused lost the possession by seizure under the provisions of the Criminal Procedure Code and, therefore, the possession vested in the Police authorities. If thereafter the Customs authorities got the custody of the goods, they could not be said to have seized under the Act so as to throw the burden on the accused to prove that the gold in question was not smuggled gold....Therefore, the learned Sessions Judge was right in holding that in this case the presumption under Section 123(1) could not help the prosecution and the prosecution must prove the essential ingredient of the offence by proving that the gold in question was smuggled gold".

7. When Section 123 is not applicable, it is for the Department to prove that the goods are of foreign origin and were smuggled by the appellant. In the present case when the appellant has disputed the very seizure of the goods from his possession and wanted to cross-examine the mahazar witnesses which plea he has taken even in reply to the show cause notice, the learned adjudicating authority should have afforded an opportunity to the appellant to cross-examine them unless otherwise the appellant had waived the right of cross-examination of the mahazar witnesses. The appellant in reply to the show cause notice dated 9-10-1991 in para 7, wanted to cross-examine the punchanama witnesses and the appellant's plea in this regard has not been considered by the adjudicating authority. Therefore, in the peculiar circumstances of the case where the question of seizure from appellant's possession is vitally important I am inclined to think that the plea of the appellant seeking cross-examination of the mahazar witnesses should be acceded to. In this view of the matter, without expressing any opinion on the merits of the issue, the impugned order is set aside and the matter remanded to the original authority for reconsideration of the issue in accordance with law after affording the appellant a reasonable opportunity to cross-examine the mahazar witnesses. Ordered accordingly.