KATTA N SUBBAIAH SETTY PROPRIETOR FREE INDIA WATCH CO ANANTAPUR Vs. DEPUTY COLLECTOR CENTRAL EXCISE GUNTUR

JUDGEMENT

(1.) On 15th May, 1964, the Deputy Collector of Central Excise, Guntur issued a notice to the petitioner requiring him to show cause why certain wrist watches and time pieces seized from him on 22nd March, 1964, should not be confiscated under section 111 of the Customs Act, 1962 read with section 3 (2) of the Import and Export Control Act, 1947 and why a penalty should not be imposed unaer section 112 of the Customs Act. The allegation mentioned against him in the notice was that he acquired possession of 68 wrist watches and three time pieces of foreign origin having purchased them from a Marwari of Narayana Mudali Street, Madras on or about 21st March, 1964 in contravention of section in (d) of the Customs Act read with section 3 of the Import and Export Control Act, 1947, that he concealed the wrist watches in paper and cloth rolls, that while alighting at Anantapur on 22nd March, 1964, from the Bus APA 1885 plying between Tadpatri and Kalyandrug via Anantapur he suspected the presence of Customs and Central Excise staff who were after him and threw the small paper parcel and the cloth wrapped parcel unaerneath the driver's seat in the bus. The watches and time pieces were stated to have been seized by the detecting officer under a mahazar. The petitioner was directed to produce at the time of showing cause all evidence upon which he intended to rely in support of his defence. He was also asked to indicate in his explanation whether he wished to be heard in person. A copy of the mahazar dated 22nd March, 1964, a list of watches seized from the petitioner and copies of statements recorded from the petitioner and Babiah, the driver of the bus were enclosed. The mahazar and the statement of the petitioner showed that when the Central Excise Officers questioned the petitioner he admitted that he had in his possession smuggled watches of the value of Rs. 50,000 and prayed that he may be excused. When he was taken to the office and searched, three time pieces only were found with him, but not the watches. When questioned where the watches were the petitioner gave false information that the watches were coming by parcel post. As the conduct of the petitioner was suspicious the Central Excise Officers searched the bus and on the information of the driver they recovered two parcels which had been thrown by the petitioner under the driver's seat. Questioned again the petitioner admitted that he threw the parcels under the driver's seat. The parcels were opened and the watches were recovered. In the statement of the petitioner he further admitted that he was aware that the watches were imported against the provisions of law and that it was the reason why he concealed them as he was afraid of the check by the Central Excise Officers. He stated that he purchased the watches secretly from a Marwari in Narayana Mudali Street at Madras, but that he did not know the name of the Marwari or his address.

(2.) On 26th June, 1964, the petitioner submitted his written explanation. The petitioner claimed that the watches were purchased by him from one Sha Gainmal Veerchand, General Merchant, No. 14, Kasichetti Street, Madras for a total sum of Rs. 6,079, that he paid Rs. 6,000 and promised to send the balance after he returned to Anantapur. The merchant at Madras retained the bill with him and promised to send it after receiving the balance of Rs. 79. He left Madras on the night of the 21st reached Tadpatri next morning and proceeded to Anantapur by bus. When he was alighting from the bus the Central Excise Officers accosted him and asked whether he had bought any watches and when he replied that he had purchased watches from a dealer at Madras they told him that he was under arrest and took him to the office of the Assistant Collector where he was made to sign a statement under duress and threat. It was stated in the explanation that the contents of the mahazar as well as the statements said to have been recorded from him were false. Along with the written explanation the petitioner also produced a copy of a cash bill given by Gainmal Veerchand, Madras. He prayed for a personal hearing. In the written explanation he did not however montion that he proposed to examine any witnesses or adduce any evidence. The adjudicating authority gave a personal hearing on 3rd August, 1964, at which the petitioner was representted by an Advocate and product d the original cash bill. Finally on 24th May, 1965, the adjudicating officer passed an order confiscating the watches and imposing a penalty of Rs. 1000. The adjudicating officer rejected the contintion of the petitioner that the statements recorded from him were the result of threat and coercion, as such a story had not been put forward at any time between 22nd March, 1964 and 26th June, 1964. He was not satisfied with the genuineness of the bill produced from Gainmal Veerchand as he was of the view that it was brought into existence collusively by the petitioner and Veerchand. He summarised his conclusions as follows :-

(3.) It may be noticed here that the adjudicating authority did not rely upon burden of proof mentioned in section 123 of the Customs Act to arrive at his conclusion. The petitioner preferred an appeal to the Appellate Collector of Customs, Madras who rejected the appeal by his order dated 20th September, 1965. It appears to have born argued before the Appellate Authority that the burden of proof mentioned in section 123 could not be invoked in this case and meeting this argument the Appellate Authority held that the burden was on the petitioner as mentioned in section 123. A further revision preferred by the petitioner to the Government was also rejected and thereupon the petitioner has filed the present Writ Petition to quash the orders of the edjudicating officer, the Appellate Authority and the Government of India. The first submission of Sri K.Venkataramaiah on behalf of the petitioner is that the show cause notice issued to the petitioner under section 124 of the Customs Act does not mention that the detecting officer had any reason to believe at the time of seizure that the goods are liable to confiscation and in fact there were no grounds which could reasonably induce him to entertain such beliefat that time and therefore the seizure and all proceedings following and consequent on the Seizure, including the adjudication of confiscation and penalty are illegal. He argues that the authorities wrongly relied upon the presumption under section 123 of the Customs Act since this is not a case where circumstances indicate that the detecting officer had any reasonable belief that the goods were smuggled goods. In order to appreciate the argument of Sri Venkataramaiah it is necessary to refer to the relevant provisions of the Customs Act, 1962. Section in enumerates the classes of goods which shall be liable to confiscation. In so far as it is relevant for the present case section 111 is as follows :- '111. The following goods brought from a place outside India shall be liable to confiscation. (a)..................to..............(c) (d) any goods which are imported or attempted to be imported or are brought within the Indian Customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force ; (e)..........to............(} Section 112 provides for the imposition of a penalty on, among others a person acquiring possession of any goods which he knows or has reason to believe are liable to confiscation under section 111. Section 122 provides for adjudication of confiscation or penalty by prescribed officers. It may be mentioned here that adjudicating officers discharge quasi-judicial functions when acting under section 122. Section 124 prescribes the procedure for confiscation of goods and imposition of penalty. It states :