TMI Blog2010 (4) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. Sakhare, Sr. Counsel with R.G. Sheth and Ms. Nikita Trivedi i/b R.G. Sheth Associates, for the Appellant. S/Shri A.S. Rao with R.B. Pardeshi, for the Respondent. [Judgment per : V.C. Daga, J.]. - This is a reference made by the Customs, Excise and Gold (Control) Appellate Tribunal ("Tribunal" for short) pursuant to the order dated 17th March, 1999 passed by this Court under Section 133(3) of the Customs Act, 1962. Statement of Case: 2. The factual context giving rise to the present reference, in brief, is as under : On the basis of the information gathered by the DRI that large quantity of about 132 bricks of silver had been smuggled through sea route and diverted to Jalgaon, while melting of silver was undergoing, the officers commenced investigations and succeeded on 13th February, 1993 in identifying the concerned parties, who had received smuggled silver. 3. Premises of the applicants - M/s. Rajmal Lakhichand at Jalgaon were searched. The owner thereof Mr. Ishwarlal Lalwani was not present at the time of search. The search resulted into recovery of silver in Choursa form weighing 1,913.256 kgs. Statements of various persons were recorded. Shri Lalwani wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting the reference application, the applicants moved this Court by way of application under Section 130(3) of the Customs Act. The said application came up for hearing before the Division Bench of this Court on 17th March, 1999. The Division Bench after hearing both parties opined that only one question of law arising from the order of the Tribunal dated 26th September, 1996 needed consideration at the hands of this Court. 12. The Tribunal was, accordingly, directed to refer only one undermentioned question of law for the opinion of this Court under Section 130(3) of the Customs Act. Accordingly, the Tribunal has forwarded statement of case and referred the question reading as under : "Whether the Tribunal was justified in invoking the provision of Section 120(2) of the Customs Act, 1962 to order confiscation of silver weighing 194.250 Kgs. purchased from M/s. Dilipkumar Hirachand Sons, Jalgaon, when the said provisions had not been invoked in the Show Cause Notice and when the applicants were not given any opportunity of being heard in the matter by the Customs, Excise Gold (Control) Appellate Tribunal?" (Emphasis supplied) 13. Subsequent to the receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rao further submits that pursuant to the order of this Court dated 17th March, 1999 passed in Customs Application No. 2/1997, reference was already made by the Tribunal vide its order dated 23rd October, 2001. Thereafter, the question was never modified by the Tribunal or by this Court. The words "weighing 194.250 Kgs. purchased from M/s. Dilipkumar Hirachand Sons, Jalgaon" were allowed to be deleted finding them to be surplus. As such the texture of the original question referred by the Tribunal and modified by this Court under order dated 17th March, 1999 did not change the meaning and/or scope of the question referred. Mr. Rao, in order to buttress the submission, took us through the eleven questions which were framed by the applicants in the reference applications for being referred to this Court and brought to our notice question No. 11, which was identical as one reproduced in para-12 (supra). 17. Mr. Rao submits that all the while parties to the reference were ad adem that silver weighing 194.250 Kgs. was the only quantity of silver confiscated under sub-section (2) of Section 120 of the Customs Act. He, thus, submits that the submission advanced by the applicants to wid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Rao again strongly opposed above submission reiterating submissions already made by him to shoot down the attempt of the applicants to widen the scope of the question under consideration. Consideration : 23. At the outset, having heard both parties, the submissions advanced by Mr. Sakhare by no stretch of imagination can be accepted. The opposition canvassed by Mr. Rao needs acceptance in toto. 24. The Tribunal vide its impugned order dated 20th September, 1996 has confiscated silver of 194.250 Kgs. shown to have been purchased from M/s. Dilipkumar Hirachand Sons, Jalgaon under sub-section (2) of Section 120 of the Customs Act, which provides that, where smuggled goods are mixed with other goods in such manner that the smuggled goods cannot be separated from such other goods, the whole of the goods shall be liable to confiscation. 25. The Tribunal found that it was not possible to separate the quantity of silver weighing 194.250 Kgs. from rest of the smuggled silver, hence by virtue of Section 120(2) the said quantity was held liable for confiscation. It is, thus, clear that out of entire quantity of silver weighing 1,913.256 Kgs., silver weighing 1,713.807 Kgs. was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question one cannot bring in what was left out by the Court with conscious exercise of the power. In the circumstances, alternate prayer made by Mr. Sakhare requesting this Court to recast or reframe the referred question is liable to be rejected. Order accordingly. On Merits : 28. Having said so, let us turn to the merits of the question requiring consideration as reproduced in para 13 (supra). Rival Submissions : 29. Mr. Sakhare, learned senior counsel appearing for the applicants advanced his submissions with respect to entire quantity of silver confiscated under the impugned order. However, for the reasons recorded herein, it is not necessary for us to consider legality of the confiscation of the silver weighing 1,713.807 Kgs. confiscated under Section 111(d) of the Customs Act because it is beyond the scope of question referred. Our consideration is, thus, restricted to the legality of the confiscation of silver weighing 194.250 Kgs. confiscated in exercise of powers under Section 120(2) of the Customs Act. 30. Mr. Sakhare submits that the total quantity of silver of 194.250 Kgs., which was included 6 silver ingots and choursas weighing 180.545 Kgs., was purchased f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoked for confiscating the silver. 34. Alternatively, without prejudice to his above submission, Mr. Rao further submits that no prejudice is caused or suffered by the applicants in view of invocation of provision of Section 120(2) of the Customs Act. In his submission, the question of law as referred to does not arise for the reason that Section 120(2) was never relied upon or invoked in the main show cause notice. According to him, in para-35 of the show cause notice, entire silver was sought to be confiscated which means that Section 120(2) was also invoked by the respondent. Lastly, he submits that non-mentioning of provision of Section 120(2) specifically is not fatal as the ingredients of Section 120(2) can be gathered from the show cause notice itself, as such confiscation of silver of 194.250 Kgs. cannot be said to be incorrect or illegal. He placed reliance on the Apex Court judgment in the case of Central Excise, Calcutta v. Pradyumna Steel Ltd., 1996 (82) E.L.T. 441; wherein the Apex court ruled that mere mentioning wrong provision of law when the power exercised is available even though under different provision, is by itself not sufficient to invalidate the exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mixed with other goods in such manner that the smuggled goods cannot be separated from such other goods, the whole of the goods shall be liable to confiscation under Sec. 120 of the Customs Act, 1962. Any goods, which are used for concealing smuggled goods shall be liable to confiscation under the provisions of Sec. 119 of the Customs Act, 1962. Where any goods imported in the baggage are liable to confiscation, the baggage and any other goods imported in that baggage shall also be liable to confiscation under the provisions of Sec. 118(a) of the Customs Act. 34(ii) The silver having been imported and brought into India, contrary to the prohibitions imposed by or under the Customs Act, 1962, and the other laws for the time being in force has rendered itself liable to confiscation under Sec. 111(d) of the Customs Act, 1962. The silver converted into chaurasas form has also been rendered liable to confiscation under the provisions of Section 120 of the Customs Act, 1962." 38. In addition to the above, show cause notice also makes a reference to Section 120 of the Customs Act in para-35(xi) on the following canvas : "35(xi) The aforesaid persons and firms in their individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to be confiscation vide Sec. 111(d) of the Customs Act. 19.2 Silver weighing 194.250 Kg. shown to have been purchased from M/s. Dilipkumar Hirachand is not proved to have been of smuggled origin and confiscation thereof cannot be ordered under Sec. 111(d) of the Act. However, Sec. 120(2) of the Act provides that when smuggled goods are mixed with other goods in such a manner that separation is not possible, the whole goods shall become liable to confiscation. Here it is not possible to separate the said quantity of silver and hence by virtue of Section 120(2) of the Act, the said quantity also become liable for confiscation. Same criteria also applies to the copper added in converting the silver into Chaurasas. 19.3 Sec. 120(1) of the Act permits confiscation of smuggled goods irrespective of any change and as such the silver in Chaurasa form become liable to confiscation. 20. Considering all these aspects therefore, the order of release of seized silver cannot be sustained and is therefore set aside and same is ordered to be confiscated under Sec. 111(3) of the Customs Act, 1962 read with Sec. 120 of the said Act." (Emphasis supplied) 41. With the aforesaid factual s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 120 of the Customs Act. Therefore, reading of para-34 would unequivocally go to show that Section 120 was invoked only in relation to the addition of the copper in the smuggled silver and not in relation to the silver which was legally purchased weighing 194.250 Kgs. from local market at Jalgaon. 43. Proceeding further, if one turns to sub-para-(ii) of para-34, the recitals reads thus : "The silver converted into chaurasas form has also been rendered liable to confiscation under the provisions of Section 120 of the Customs Act, 1962". (Emphasis supplied) Again reading of the aforesaid para of the show cause notice would show that Section 120 was invoked because the smuggled silver was converted into chaurasa form. Thus change of form was the cause for invocation of provision of Section 120 of the Customs Act. 44. Proceeding further, again in text of para-35, we find reference to Sections 111(d) and 120 of the Customs Act. Again the foundation of invocation of Section 120 is in relation of conversion of silver into chaurasas. So far as the quantity of 194.250 Kgs. is concerned, there is no separate reference in any para of the show cause notice relating to local ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of smuggled goods irrespective of any change and as such the silver in Chaurasa form become liable to confiscation. 20. Considering all these aspects therefore, the order of release of seized silver cannot be sustained and is therefore set aside and same is ordered to be confiscated under Sec. 111(3) of the Customs Act, 1962 read with Sec. 120 of the said Act." (Emphasis supplied) Reading of the aforesaid paras clearly reveal that powers flowing from two different Sections of the Customs Act were invoked to confiscate the seized silver viz. Section 111(d) to confiscate silver weighing 1,713.807 Kgs. whereas Section 120(2) to confiscate silver weighing 194.250 Kgs. The Revenue could not prove that the silver weighing 194.250 Kgs. was of smuggled origin, as such confiscation thereof could not have been ordered under Section 111(d) of the Customs Act. The Tribunal found that it was not possible to separate the quantity of locally purchased silver weighing 194.250 Kgs., hence under Section 120(2) of the Act, the said quantity was held liable for confiscation. The same criteria was made applicable to confiscate copper added in the silver to convert it in chourasas. In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 120(2) of the Customs Act, the applicants had no real opportunity to meet the case of the Department in that regard. Hence there is a non-compliance of the basic principles of natural justice. 49. The show cause notice issued by the Department for confiscation of silver ought to have taken alternate stand in relation to seized silver weighing 194.250 Kgs. and ought to have put the applicant on notice of their intention to exercise power under Section 120(2) of the Customs Act or, at any rate, the Tribunal ought to have followed this procedure. 50. It is necessary to observe that show cause notice is not merely an empty formality. But opportunity to show cause has to be the real and substantive which means the noticee concerned must know as to why the adjudicating authority is holding that the seized silver or part thereof is within the sweep of the Customs Act. It is always expected on the part of the adjudicating authority to disclose material facts and particulars in support of the allegations made in the show cause notice so as to enable the noticee to meet the case sought to be made out against him. When an obligation is cast upon the authority to give notice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of the principles of natural justice that no man should be condemned unheard intends to prevent the authority from acting arbitrarily affecting the rights of the concerned person. No decision must be taken which will affect the right of any person without his/her first being informed of the case and giving him/her an opportunity of putting forward his/her case. An order involving civil consequences must be made consistently with the rules of natural justice "Civil consequences' covers infraction of not merely property or personal right but of civil liberties, material deprivations and non-pecuniary damages. In its comprehensive connotation every thing that affects a citizen in his civil life inflicts a civil consequence. 'Civil rights' have been defined to be such as belonging to every citizen of the State or country ... they include ... rights capable of being enforced or redressed in a civil action . . . Even an administrative order which involves civil consequences must be made consistently with the rules of natural justice." "There can be no distinction between a quasi-judicial function and an administrative function for the purpose of principles of natural justice. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the court depended upon the facts and circumstances of each case, the law applicable, the nature of the right claimed by the person affected and so on. It is, no doubt, true that the principles of natural justice cannot be reduced to any hard and fast formula. 60. It has been judicially noticed that natural justice "is no unruly horse, no lurking land mine, nor a judicial cure-all". If fairness is shown by the decision-maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of (see The Chairman, Board of Mining Examination Chief Inspector of Mines v. Ramjee, AIR 1977 SC 965). 61. Mr. Sakhare urged that had the opportunity been given to the noticee- applicants, it would have been possible for them to demonstrate and segregate the locally purchased silver weighing 194.250 Kgs. since smuggled silver and melting thereof had taken place on different dates and record in that behalf was maintained by the applicants. He tried to place certain documents before us in support of his submission on merits of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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