Satwant Singh and Mohd. Islam Vs. Collector of Customs - Court Judgment

Excerpt:
1. these appeals are directed against the order in original no.: 1-collar/cus./90, dated 1-3-1990 of collector (customs), kanpur, and were heard together.2. the facts in brief are that police officers of thana chakeri, kanpur, intercepted one truck carrying goods of foreign origin concealed under sugarcane. the driver of the truck, sh. nanhey, managed to escape from the spot and the other two passengers, namely, s/shri mohd. zamal and mohd. islam, were arrested by the police. truck was found to carry goods of foreign origin like cloves, cameras and crockery, etc., totally valued at rs. 6,52,000/-. pursuant to show cause notice issued to the owner of the truck sh. satwant singh and the two passengers found travelling in the truck, the proceedings culminated in confiscation of truck and imposition of penalty of rs. 25,000/- on the appellant, sh. satwant singh, the owner of the truck, and penalty of rs. 5,000/-among others on mohd. islam, the second appellant. the truck was allowed to be redeemed on payment of redemption fine of rs. 1,00,000/- 3. arguing for the appellants, the ld. advocate submitted that there was no evidence at all indicating knowledge or connivance of the owner.the owner, shri satwant singh, in his statement had stated that he had remained out of kanpur from 22-3-1988 to 29-3-1988 on another truck. it was only on 29-3-1988 that he learnt from his father that the appellant's truck has been intercepted by police/customs for carriage of third country goods. he submitted that the panchnama made does not bear signature of the driver, sh. nanhey, nor of the two passengers, sh. zamal and islam. customs did not make any enquiry from the police with regard to the alleged escape of shri nanhey. the appellant had no knowledge either about the nature of the goods nor that the truck was being used for transporting these goods. he presented copy of unreported order a 904-905 cal/84, dated 13-9-1984 of tribunal east regional bench in case of sh. ramesh kumar ghai and satnam dass ghai v.collector of customs, patna, in support of his contention that no penalty should be imposed.4. in case of the second appellant, sh. mohd. islam, he submitted that the mere discrepancy, which is very minor, in the statement taken in the jail has been taken as evidence against the appellant. he was merely travelling as a passenger in the truck and is a hawker and had consistently maintained that he had nothing to do with the goods.5. ld. d.r. submitted that from the records it is clear that the address of the driver was fictitious. the owner was expected to have made necessary enquiries in regard to driver before entrusting his truck to him. the very fact that the driver who at the material time was in charge of vehicle and, therefore, was the agent of the owner, ran away would prove his clear knowledge about the illicit nature of the goods.6. i have considered the submissions made by both sides. from the order of the collector it is seen that the driver of the truck was employed by the appellant's father only a week before the seizure. the statement reveals that the driver when he was deputed to perform the functions of a driver, in absence of regular driver, was given a specific assignment; he did not turn up again. subsequent investigations reveal that even the address of the driver was fictitious. the very fact that the driver ran away when the truck was intercepted would indicate driver's knowledge about the illicit nature of the goods. the case of ramesh kumar ghai (supra) cited above by the ld. advocate itself supports confiscation of trucks in such cases. it was held by tribunal in this order that since the truck was carrying contraband and smuggled goods which were not claimed by any party, the truck is liable to confiscation under section 115(2) of the customs act, 1962. in case of laxmi sahni v. addl. collector (custom) -1990 (47) e.l.t. 108 (t), it was held by tribunal that conduct of driver in running away from the spot does not prove ignorance but on the contrary proves that he had the knowledge of the nature of the goods smuggled. in case of balbir singh v. addl. collector (customs) in 1991 (53) e.l.t. 12 (tri.) it was held that since driver's statement indicated that he was aware of the smuggled nature of the goods, the vehicle is liable to confiscation though in this case it was allowed to be redeemed on redemption fine by the tribunal.6.2 in case of shipping corporation of saudi arabia v. addl. collector of customs, 1990 (45) e.l.t. 389 (bom.), though the hon'ble bombay high court held that confiscation of vessel was not maintainable, it was, however, so held because of conflicting findings of the addl. collector in his order, since at one place he had held that neither the master nor the owner had the requisite knowledge of goods. on the other hand, as held by tribunal in case of laxmi sahni v. addl. collector (customs) (supra) that mens rea is not an essential part in this matter and that for the action of the agent, i.e., the driver, the appellant is vicariously liable in view of the plain meaning of the section 115(2) of the customs act. the fact that owner had no knowledge and was not himself in the truck when it was intercepted was, while upholding the order of confiscation, taken only as an extenuating factor in converting absolute confiscation to redemption fine of rs. 25000/-, 7. in regard to penalty under section 112 of the customs act, however, the case of the appellant, the owner, stands on a different footing.the show cause notice merely sets out that the appellant had engaged a driver a week prior to the incident in absence of the regular driver and subsequent operations conducted reveal that the driver had given fictitious address. apart from this, there is no evidence whatever in support of the action proposed under section 112 of the customs act.collector in his order only states that the negligence "if not collusion, is compound by the fact that admittedly the address of the driver is found to be fictitious" and the finding is only in regard to inability of the owner to prove absence of knowledge on his part or on the part of his agent. while, as indicated earlier, the very conduct of the driver in running away would appear to point clearly to his knowledge and, therefore, justify order of confiscation of the truck, this would not necessarily attract, in case of owner, the liability to penalty under section 112 of the customs act, apart from the fact that show cause notice does not indicate whether penalty is proposed for an act under clause 'a' or clause 'b' of section 112 of the customs act.no statement, as pointed out by the advocate, was obtained to implicate the owner by connecting him with the goods nor any evidence was produced to show that the owner himself had any link with the goods.the driver who would have provided vital testimony was not interrogated. in case of balbir v. addl. collector (customs), mujaffarnagar in 1991 (33) ecr 684, the tribunal, while upholding confiscation set aside the orders related to penalty under section 112 of the customs act, on the ground that there was no evidence that the appellant was concerned with the smuggling of ball bearings in question from nepal to india. in case of sh. raghbir singh baba v. collector (customs), new delhi, 1984 ecr 2326 (t),the confiscation of the car was upheld since there was clear evidence that driver had engaged this car in transporting contraband goods. keeping in view that the owner was held to have no relation with the goods, the car was allowed to be redeemed on payment of fine.7.2 in regard to penalty on the first appellant, shri satwant singh, who is the owner of the truck, collector only refers to negligence of the owner in entrusting the truck to a driver without making enquiries about his antecedence and, thereafter, records that since owner has not been able to prove that it was used without his knowledge or that of his agent, the truck is liable to confiscation. beyond that there is nothing in the order of collector indicating how the first appellant, the owner, has rendered himself liable to penalty under section 112 of the customs act. even show cause notice does not contain any material linking the owner with the contraband goods in the truck. show cause notice proposes action against both the appellants under section 112 without specifying whether action is proposed to be initiated under clause 'a' or clause 'b' of section 112 of the custom act. order of collector too does not specify whether liabilities are attracted under section 112 clause 'a' or clause v of customs act, 1968 .should be 1962 - ed 8. it was held by hon'ble madras high court in case of b. laxmichand v.govt. of india, 1983 (12) e.l.t. 322 (mad.) that if the penal action is proposed to be taken and proceedings initiated which are likely to culminate in the imposition of the penalty then the authorities must be clear in the mind as to whether clause 'a' or clause 'b' of section 112 will apply or both, failing which proceedings were liable to be quashed. in order to bring home offence to an accused person, the onus of establishing essential ingredients of a penal provision is on the deptt. in the absence of any statutory provision in that behalf. the hon'ble court further held that where it was not held as to which of the clauses of section 112 of the customs act, 1962, was relevant and would be attracted, it could be said that there was a failure to apply one's mind. the court relied on the judgment of the hon'ble apex court in case of gian chand v. state of punjab, air 1962 sc 496, where in the context of the section 167 of the sea customs act, 1878, the hon'ble court held that in absence of any valid statutory provision in that behalf the onus of establishing the essential ingredients under the provision necessary to bring home the offence to an accused is on the prosecution. obviously, the stress was on the essential ingredients which go to make up the offence. the hon'ble madras court also relied on the judgment of calcutta high court in case of charan dass v. addl.collector (customs), air 1968 cal 28 where the court held that the person concerned had been asked to show cause why he should not be penalised in accordance with the provisions of the section 112 without charging him with the ingredients of the offence which would expose him to a penalty and, therefore, he can neither give an appropriate answer nor can adequately defend himself. the notice should contain the allegations that the person concerned did or omitted to do anything which he was required to do under the law or had knowledge that the contraband goods had been smuggled into the country.9. there is no material in the show cause notice nor in discussions/findings in the orders of collector to even remotely connect the owner with the contraband goods. investigations conducted or the statements recorded do not any where implicate the owner who had stated that the driver concerned was not his regular driver, employed by him in absence of his driver only a week back, and he was not at all aware of the activities of the driver. the ingredients of the offence under section 112 have neither been spelt out nor discussed nor any findings arrived at. no penalty in the circumstances on the first appellant, the owner of the truck, can be sustained. i, therefore, set aside the penalty on the appellant sh. satwant singh.10. in regard to the second appellant, sh.- mohd. islam, show cause notice as well as orders of collector only indicate that he along with the other persons was travelling in the truck at the material time. a discrepancy in the two statements regarding place from where he was coming has been made the basis of the collector's findings holding him guilty. investigations made have not disclosed any connection of the appellant, who is said to have been a hawker only, with the goods. this is not the evidence such can establish a charge against the appellant.the appellant had denied any connection with the goods right from the beginning. the only person who could have thrown light on this matter was the driver who, however, escaped. there is no evidence, no even such circumstantial evidence, as could lead to the conclusion that second appellant, mohd. islam, attracted liability under clause 'a' or clause 'b' under section 112 of the customs act, apart from the fact that specific clause is not mentioned in the show cause notice. there may be suspicion, but suspicion is not proof, and no verdict of "guilty" can be returned on suspicion. i, therefore, set aside the penalty on sh. mohd. islam, the second appellant. (1) confiscation of the truck is upheld, but the redemption fine imposed, considering the facts and circumstances of the case, is reduced to rs. 25000/- (rupees twenty five thousand only). 2. penalties on both the appellants, viz., shri satwant singh and shri mohd. islam, are set aside

Judgment:
1. These appeals are directed against the Order in Original No.: 1-Collar/Cus./90, dated 1-3-1990 of Collector (Customs), Kanpur, and were heard together.

2. The facts in brief are that Police Officers of Thana Chakeri, Kanpur, intercepted one truck carrying goods of foreign origin concealed under sugarcane. The driver of the truck, Sh. Nanhey, managed to escape from the spot and the other two passengers, namely, S/Shri Mohd. Zamal and Mohd. Islam, were arrested by the Police. Truck was found to carry goods of foreign origin like cloves, cameras and crockery, etc., totally valued at Rs. 6,52,000/-. Pursuant to Show Cause Notice issued to the owner of the truck Sh. Satwant Singh and the two passengers found travelling in the truck, the proceedings culminated in confiscation of truck and imposition of penalty of Rs. 25,000/- on the Appellant, Sh. Satwant Singh, the owner of the truck, and penalty of Rs. 5,000/-among others on Mohd. Islam, the second appellant. The truck was allowed to be redeemed on payment of redemption fine of Rs. 1,00,000/- 3. Arguing for the appellants, the Ld. Advocate submitted that there was no evidence at all indicating knowledge or connivance of the owner.

The owner, Shri Satwant Singh, in his statement had stated that he had remained out of Kanpur from 22-3-1988 to 29-3-1988 on another truck. It was only on 29-3-1988 that he learnt from his father that the appellant's truck has been intercepted by Police/Customs for carriage of third country goods. He submitted that the Panchnama made does not bear signature of the driver, Sh. Nanhey, nor of the two passengers, Sh. Zamal and Islam. Customs did not make any enquiry from the Police with regard to the alleged escape of Shri Nanhey. The Appellant had no knowledge either about the nature of the goods nor that the truck was being used for transporting these goods. He presented copy of unreported order A 904-905 CAL/84, dated 13-9-1984 of Tribunal East Regional Bench in case of Sh. Ramesh Kumar Ghai and Satnam Dass Ghai v.Collector of Customs, Patna, in support of his contention that no penalty should be imposed.

4. In case of the second appellant, Sh. Mohd. Islam, he submitted that the mere discrepancy, which is very minor, in the statement taken in the Jail has been taken as evidence against the appellant. He was merely travelling as a passenger in the truck and is a hawker and had consistently maintained that he had nothing to do with the goods.

5. Ld. D.R. submitted that from the records it is clear that the address of the driver was fictitious. The owner was expected to have made necessary enquiries in regard to driver before entrusting his truck to him. The very fact that the driver who at the material time was in charge of vehicle and, therefore, was the agent of the owner, ran away would prove his clear knowledge about the illicit nature of the goods.

6. I have considered the submissions made by both sides. From the Order of the Collector it is seen that the driver of the truck was employed by the appellant's father only a week before the seizure. The statement reveals that the driver when he was deputed to perform the functions of a driver, in absence of regular driver, was given a specific assignment; he did not turn up again. Subsequent investigations reveal that even the address of the driver was fictitious. The very fact that the driver ran away when the truck was intercepted would indicate driver's knowledge about the illicit nature of the goods. The case of Ramesh Kumar Ghai (supra) cited above by the Ld. Advocate itself supports confiscation of trucks in such cases. It was held by Tribunal in this Order that since the truck was carrying contraband and smuggled goods which were not claimed by any party, the truck is liable to confiscation under Section 115(2) of the Customs Act, 1962. In case of Laxmi Sahni v. Addl. Collector (Custom) -1990 (47) E.L.T. 108 (T), it was held by Tribunal that conduct of driver in running away from the spot does not prove ignorance but on the contrary proves that he had the knowledge of the nature of the goods smuggled. In case of Balbir Singh v. Addl. Collector (Customs) in 1991 (53) E.L.T. 12 (Tri.) it was held that since driver's statement indicated that he was aware of the smuggled nature of the goods, the vehicle is liable to confiscation though in this case it was allowed to be redeemed on redemption fine by the Tribunal.

6.2 In case of Shipping Corporation of Saudi Arabia v. Addl. Collector of Customs, 1990 (45) E.L.T. 389 (Bom.), though the Hon'ble Bombay High Court held that confiscation of vessel was not maintainable, it was, however, so held because of conflicting findings of the Addl. Collector in his Order, since at one place he had held that neither the Master nor the owner had the requisite knowledge of goods. On the other hand, as held by Tribunal in case of Laxmi Sahni v. Addl. Collector (Customs) (supra) that mens rea is not an essential part in this matter and that for the action of the agent, i.e., the driver, the appellant is vicariously liable in view of the plain meaning of the Section 115(2) of the Customs Act. The fact that owner had no knowledge and was not himself in the truck when it was intercepted was, while upholding the order of confiscation, taken only as an extenuating factor in converting absolute confiscation to redemption fine of Rs. 25000/-, 7. In regard to penalty under Section 112 of the Customs Act, however, the case of the appellant, the owner, stands on a different footing.

The Show Cause Notice merely sets out that the appellant had engaged a driver a week prior to the incident in absence of the regular driver and subsequent operations conducted reveal that the driver had given fictitious address. Apart from this, there is no evidence whatever in support of the action proposed under Section 112 of the Customs Act.

Collector in his Order only states that the negligence "if not collusion, is compound by the fact that admittedly the address of the driver is found to be fictitious" and the finding is only in regard to inability of the owner to prove absence of knowledge on his part or on the part of his agent. While, as indicated earlier, the very conduct of the driver in running away would appear to point clearly to his knowledge and, therefore, justify order of confiscation of the truck, this would not necessarily attract, in case of owner, the liability to penalty under Section 112 of the Customs Act, apart from the fact that show cause notice does not indicate whether penalty is proposed for an act under Clause 'a' or Clause 'b' of Section 112 of the Customs Act.

No statement, as pointed out by the Advocate, was obtained to implicate the owner by connecting him with the goods nor any evidence was produced to show that the owner himself had any link with the goods.

The driver who would have provided vital testimony was not interrogated. In case of Balbir v. Addl. Collector (Customs), Mujaffarnagar in 1991 (33) ECR 684, the Tribunal, while upholding confiscation set aside the orders related to penalty under Section 112 of the Customs Act, on the ground that there was no evidence that the appellant was concerned with the smuggling of ball bearings in question from Nepal to India. In case of Sh. Raghbir Singh Baba v. Collector (Customs), New Delhi, 1984 ECR 2326 (T),the confiscation of the car was upheld since there was clear evidence that driver had engaged this car in transporting contraband goods. Keeping in view that the owner was held to have no relation with the goods, the car was allowed to be redeemed on payment of fine.

7.2 In regard to penalty on the first appellant, Shri Satwant Singh, who is the owner of the truck, Collector only refers to negligence of the owner in entrusting the truck to a driver without making enquiries about his antecedence and, thereafter, records that since owner has not been able to prove that it was used without his knowledge or that of his agent, the truck is liable to confiscation. Beyond that there is nothing in the Order of Collector indicating how the first appellant, the owner, has rendered himself liable to penalty under Section 112 of the Customs Act. Even show cause notice does not contain any material linking the owner with the contraband goods in the truck. Show Cause Notice proposes action against both the appellants under Section 112 without specifying whether action is proposed to be initiated under Clause 'a' or Clause 'b' of Section 112 of the Custom Act. Order of Collector too does not specify whether liabilities are attracted under Section 112 Clause 'a' or Clause V of Customs Act, 1968 .Should be 1962 - Ed 8. It was held by Hon'ble Madras High Court in case of B. Laxmichand v.Govt. of India, 1983 (12) E.L.T. 322 (Mad.) that if the penal action is proposed to be taken and proceedings initiated which are likely to culminate in the imposition of the penalty then the authorities must be clear in the mind as to whether Clause 'a' or Clause 'b' of Section 112 will apply or both, failing which proceedings were liable to be quashed. In order to bring home offence to an accused person, the onus of establishing essential ingredients of a penal provision is on the Deptt. in the absence of any statutory provision in that behalf. The Hon'ble Court further held that where it was not held as to which of the Clauses of Section 112 of the Customs Act, 1962, was relevant and would be attracted, it could be said that there was a failure to apply one's mind. The Court relied on the Judgment of the Hon'ble Apex Court in case of Gian Chand v. State of Punjab, AIR 1962 SC 496, where in the context of the Section 167 of the Sea Customs Act, 1878, the Hon'ble Court held that in absence of any valid statutory provision in that behalf the onus of establishing the essential ingredients under the provision necessary to bring home the offence to an accused is on the prosecution. Obviously, the stress was on the essential ingredients which go to make up the offence. The Hon'ble Madras Court also relied on the Judgment of Calcutta High Court in case of Charan Dass v. Addl.

Collector (Customs), AIR 1968 Cal 28 where the Court held that the person concerned had been asked to show cause why he should not be penalised in accordance with the provisions of the Section 112 without charging him with the ingredients of the offence which would expose him to a penalty and, therefore, he can neither give an appropriate answer nor can adequately defend himself. The Notice should contain the allegations that the person concerned did or omitted to do anything which he was required to do under the Law or had knowledge that the contraband goods had been smuggled into the country.

9. There is no material in the show cause notice nor in discussions/findings in the orders of Collector to even remotely connect the owner with the contraband goods. Investigations conducted or the statements recorded do not any where implicate the owner who had stated that the driver concerned was not his regular driver, employed by him in absence of his driver only a week back, and he was not at all aware of the activities of the driver. The ingredients of the offence under Section 112 have neither been spelt out nor discussed nor any findings arrived at. No penalty in the circumstances on the first appellant, the owner of the truck, can be sustained. I, therefore, set aside the penalty on the appellant Sh. Satwant Singh.

10. In regard to the second appellant, Sh.- Mohd. Islam, show cause notice as well as Orders of Collector only indicate that he along with the other persons was travelling in the truck at the material time. A discrepancy in the two statements regarding place from where he was coming has been made the basis of the Collector's findings holding him guilty. Investigations made have not disclosed any connection of the appellant, who is said to have been a hawker only, with the goods. This is not the evidence such can establish a charge against the appellant.

The appellant had denied any connection with the goods right from the beginning. The only person who could have thrown light on this matter was the driver who, however, escaped. There is no evidence, no even such circumstantial evidence, as could lead to the conclusion that second appellant, Mohd. Islam, attracted liability under Clause 'a' or Clause 'b' under Section 112 of the Customs Act, apart from the fact that specific clause is not mentioned in the show cause notice. There may be suspicion, but suspicion is not proof, and no verdict of "guilty" can be returned on suspicion. I, therefore, set aside the penalty on Sh. Mohd. Islam, the second appellant.

(1) Confiscation of the truck is upheld, but the redemption fine imposed, considering the facts and circumstances of the case, is reduced to Rs. 25000/- (Rupees Twenty Five Thousand Only).

2. Penalties on both the Appellants, viz., Shri Satwant Singh and Shri Mohd. Islam, are set aside