RAJENDRA PRABHU Vs. UNION OF INDIA

JUDGEMENT

(1.) The second petitioner as an eligible passenger imported 42 gold biscuits weighing 4897.2 grms. and paid customs duty of Rs. 1,07,738/- as borne out by Ext. P1 baggage receipt dt. 19.10.1994. Out of the aforesaid 42 gold biscuits, the second petitioner on 22.10.1994 entrusted the first petitioner (a goldsmith by profession) 30 gold biscuits for finding out intending purchasers. While the first petitioner was going to Coimbatore in a taxi car with the 30 gold biscuits, the Circle Inspector of Police, Chalakudy apprehended the first petitioner at Potta junction, Chalakudy at about 3 a.m. on 22.10.1994 during the course of a routine search of vehicles and took into custody an air bag containing the aforesaid gold biscuits under a mahazar. Thereafter the police handed over the first petitioner and the gold to the Superintendent of Customs, Special Unit, Kodungallur on the evening of 22.10.1994. The Customs authorities prepared Ext. P2 mahazar and seized the gold under S.110 of the Customs Act. On 23.10.1994 Ext. P3 statement of the first petitioner was recorded under S.108 of the Customs Act. The first petitioner was produced before the Addl. Chief Judicial Magistrate, Economic Offences, Ernakulam at 6.30 on 24.10.1994 with a remand report. Ext. P4 is the bail application preferred by the first petitioner stating that the gold in question belongs to the second petitioner supported by Ext. P1 copy of the duty paid baggage receipt. However, the first petitioner was remanded to judicial custody till 31.10.1994. In the meantime the second petitioner importer vide Ext. P5 letter to the Customs Superintendent, claimed ownership of the gold in question. On 29.10.1994 the first petitioner vide Ext. P6 retracted from Ext. P3 statement. In Ext. P6 it is stated that the gold in question belonged to the second petitioner and duty in respect of the same was paid vide Ext. P1 baggage receipt On 31.10.1994 the first petitioner was released on bail. Again on 14.11.1994 the first petitioner gave a retracted statement with correct details regarding the ownership and the fact that the gold in question is part of legally imported gold covered by Ext. P1. On the same day the second petitioner gave Ext. P7 statement under S.108 of the Customs Act before the Superintendent, Special Customs Preventive Unit, Kodungallur reiterating what has been stated by him in Ext. P5 letter and requesting to drop further proceedings and return of the gold. Thereafter, Ext. P8 notice was issued to the petitioners by the Deputy Collector (Customs) to show cause as to why the gold in question shall not be confiscated under S.111(d) of the Customs Act, 1962 and why a penalty shall not be imposed under S.112 of the Act. Ext. P8 show cause notice was followed by Ext. P11 order of adjudication passed by the third respondent Commissioner of Central Excise and Customs, Kochi absolutely confiscating the entire gold and imposing penalty of Rs. 5 lakhs. Exts. P.12 and P.13 are appeals preferred by the petitioners against Ext. P.11. The second respondent Tribunal (CEGAT) passed Ext. P14 common judgment confirming the order of confiscation and reducing penalty to Rs. 4 lakhs from Rs. 5 lakhs. On being found that Ext. P14 contain factual mistakes and omissions going to the root of the matter, the first petitioner filed an application for rectification of mistake which was dismissed as per Ext. P15 order. The challenge in this Original Petition is directed against Ext. P8 show cause notice, Ext. P.11 order of adjudication confiscating the gold and imposing penalty and Ext. P14 judgment of CEGAT confirming Ext. P.11 and for a consequential direction to return the 30 gold biscuits seized from the first petitioner.

(2.) We heard learned counsel on both sides,

(3.) The question to be considered is whether the order of confiscation as confirmed by the Appellate Tribunal can be legally sustained or not. While dealing with this petition, we are conscious of the settled legal position that while exercising our extra ordinary jurisdiction under Art.226 and 227 of the Constitution of India, it is not open to this court to reappreciate the evidence produced before the statutory authorities and on the basis of such re-appreciation of the evidence to arrive at a finding different from that recorded by such authorities thereby converting itself into a court of appeal. But then it is a principle equally well settled that the finding of fact recorded by the subordinate tribunal can be set at naught by this court once it is found that the finding is based on no evidence or if such a finding can be regarded as perverse. Another principle which is well settled is that in proceedings under the Customs Act, the initial burden of proving that the goods in question are smuggled goods is on the department which burden on the department can be satisfactorily discharged by circumstantial evidence. The department is not required to prove its case with mathematical precision to a demonstrable degree. Even so, we are of the opinion that the department is not relieved of its obligation to establish the guilt of the offender with such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. In other words, since it is exceedingly difficult, if not absolutely impossible for the department to prove facts which are especially within the knowledge of the offender, it is not obliged to prove them as part of its primary burden. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may suffice. The department would be deemed to have discharged its burden if it adduces only so much evidence circumstantial or direct, as is different to raise a presumption in its favour with regard to the existence of the facts sought to be proved. (See in this connection Issardas Daulat Ram v. Union of India, AIR 1966 SC 1867 , M/s. Kanungo & Co. v. The Collector of Customs, Calcutta, AIR 1972 SC 2136 and Collector, Customs v. D. Bhoormull ( AIR 1974 SC 859 ). Applying the aforesaid principles of law as settled by judicial pronouncements of the Apex Court, we have no hesitation in holding that the orders impugned in this writ petition cannot be legally sustained as it is based on no evidence. First of all, it has to be noted that the seizure in question was made during the course of a routine search by the police officers and not on any information furnished by informants. A casual look at Ext. P1 baggage receipt would show that 42 numbers of gold biscuits were imported and cleared by payment of duty on 19.10.1994 and the seizure was made on 22.10.1994 which will probabilise the case of the petitioners that the second petitioner after importing the gold in question has sold a substantial part of it to the first petitioner. The department has no case that Ext. P1 is forged or fabricated. It has not succeeded in discharging its initial burden of proving that the goods in question are smuggled goods either by direct evidence or by circumstantial evidence. In fact, there was no evidence at all in respect of the fact in issue. Ext. P3 statement given by the first petitioner cannot be treated as voluntary and true in many respects and not being a voluntary one, the first petitioner retracted from it at the earliest opportunity. In Ext. P4 bail application the first petitioner made it crystal clear that the gold in question belonged to the second petitioner who has paid duty for it as evidenced by Ext. P1. By Exts. P5, P6 and P7 also it was made known and clear to the department that the gold in question is duty paid vide Ext. P1 and not smuggled. Whatever suspicion was probable stood dispelled by Exts, P1, P4, P5, P6 and P7. The true effect and import of material evidence in .the form of Exts. P1 and P4 as well as Exts. P5, P6 and P7 are not considered in the right perspective. In fact, we feel that the authorities skirted an impartial enquiry into the truth of the case that the goods in question are imported after paying duty as borne out by Ext. P1. Under the facts and circumstances disclosed, we are satisfied that no confiscation or penalty proceedings as contemplated under S.111 and 112 of Customs Act was called for. At best there was only a suspicion that the gold in question was smuggled. There is no material to enable the police or the Customs Authorities to hold that the gold in question was smuggled one. The petitioners declared vide Exts. P4 to P7 that the gold in question belonged to the second petitioner which was duty paid. No attempt was made to prove that the gold seized is not part of the 42 gold biscuits regularly imported by the second petitioner. An enquiry into this vital fact and attendant circumstances was conveniently avoided by the department in their anxiety to proceed with the confiscation. In this connection, we have to remind ourselves that no amount of suspicion can form the foundation for a confiscation proceedings under the Customs Act. Suspicion, however strong, cannot take the place of proof. Apart from a suspicion which also stood dispelled by Exts. P1 and P4 and other documents, there was nothing before the respondents which would justify a confiscation proceedings. Before proceeding with the confiscation the third respondent is duty bound to enquire into and find out whether in the light of the case put forward by the petitioners in their reply to the show cause notice, there is ground for belief that the gold in question is smuggled. The fact that on 19.10.1994 the second petitioner imported 42 gold biscuits vide Ext. P1 and the claim of the petitioners that the gold in question forms part of the said imported gold is probable in all respects ought to have weighed with the authorities. Instead, what has been done is a mechanical exercise of statutory power based on no evidence resulting in miscarriage of justice. No doubt, the second respondent Tribunal has relied on certain judicial pronouncements in support of its decision. However, we are of the view that those decisions relied on by the second respondent are rendered on entirely different set of facts. The Tribunal being the first Appellate Authority has also failed to consider the true effect and import of Exts. P1 and P4 to P7 in the right perspective. Thus, on a consideration of the totality of the facts and circumstances canvassed before us, we have no hesitation in holding that the finding recorded by the statutory authorities is based on no evidence and can be regarded as perverse. Therefore, the findings are liable to be interfered with notwithstanding the existence of alternate remedy by way of appeal as contended by the learned counsel for the Revenue. Accordingly, Exts. P8, P 11 and P14 are hereby quashed and there will be a direction to the third respondent to return the 30 gold biscuits seized from the first petitioner forthwith.