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Commissioner of Customs Preventive, Patna Versus Smt. Nirmala Mitra

2016 (9) TMI 1169 - PATNA HIGH COURT

Confiscation of seized gold under Sections 111(d) and 111(p) of the Customs Act, 1962 - imposition of penalty under Section 112(b) of the Customs Act, 1962 - contravention of the provisions of Section 11 of the Customs Act, 1962 read with Section 3(1) of the Import & Export (Control) Act, 1947 - foreign marked gold weighing 19831.805 gms - import of gold prior to or after prohibition - prohibition in import of gold bars vide notification dated 25th of August, 1948 - whether the gold bars acquire .....

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be kept as such for a long period as alleged that it was imported between the years 1941 to 1949. In fact, the prohibition of import of gold came into force on 25th of August, 1948. Therefore, for more than two years, it is unbelievable that imported gold will be retained as such. Such stand of the Revenue has to be examined keeping in view the stand taken by the assessee that he purchased the gold when there was no prohibition and also stated that he purchased it from Reserve Bank of India thr .....

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een purchased from the Reserve Bank of India. - there is no proof of any of these facts - learned Tribunal erred in law in holding that mere assertion that gold has been purchased cannot partake the character of proof of legal purchase. - Seizure and confiscation of gold bars justified - petition disposed off - decided in favor of Revenue. - Civil Reference No.1 of 2012 Arising out of Tax Case No. 12 of 2002 - Dated:- 27-9-2016 - Hemant Gupta And Ahsanuddin Amanullah, JJ. For the Petitioner& .....

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ribunal") on 19th of June, 2001 in Appeal No. C-416/99. 2. Earlier this Court in Tax Case No. 12 of 2002 directed the Tribunal to submit statement of facts after framing the following two questions of law:- "(a). Whether in the obtaining factual matrix the tribunal is justified in coming to hold that there was no seizure of gold bars from the present respondent, who is the legal representative of Santo Kumar Mitra, on the ground that the concept of seizure in essentiality has not been .....

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mbay Police instituted a case against Late Santo Kumar Mitra for defalcation of Government money on 04.11.1950 when it seized amongst others foreign-marked gold bars from his residential premises in Bombay. The case of the police was that out of the defalcated money, Late Sri Mitra acquired movable and immovable properties. Sri Mitra was tried for the offences under Sections 409, 420, 467 and 120B of the Indian Penal Code. Though the statement of facts does not make mention about the result of t .....

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osited ₹ 17,95,375/- towards the fine and other awards. After such order was passed, the Assistant Collector, Central Excise filed a petition before Judicial Commissioner, after serving notice to the learned Advocate appearing on behalf of Smt. Nirmala Mitra, to the effect that the State Bank of India, Main Branch, Ranchi should give delivery of the valuables to Smt. Nirmala Mitra in the presence of the Central Excise and the representative of the Deputy Commissioner, Ranchi whereas foreig .....

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idavit to this effect that she will keep the gold of Foreign Origin in safe custody of the State Bank of India, Main Branch, Ranchi and an intimation to this effect after doing so will be given to this Court by 12.1.93. The Central Excise will be at liberty to take legal steps with regard to the gold of Foreign origin after the same is deposited by Smt. Nirmala Mitra in safe custody with the Main Branch of the State Bank of India. The Central Excise will be at liberty to initiate necessary enqui .....

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imported in India. After giving notice to State Bank of India to produce the foreign origin gold on 4th of March, 1993, and to the respondent, a seizure- memo was prepared on 4th of March, 1993. The seizure-memo mentions that the goods have been seized from Smt. Nirmala Mitra. She is signatory to such seizure-memo. 6. The Assistant Collector of Central Excise & Customs served a notice on 12th of April, 1993 to Mrs. Nirmala Mitra as to why the gold seized on 4th of March, 1993 bearing foreign .....

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. The relevant extract from the reply reads as under:- "(2) That the gold with foreign markings had been purchased by Shri S.K. Mitra during the period from 1941 to September, 1949 and the Customs Act, 1962 at the time was not in force. At that period of time, Sea Customs Act, 1878 was in operation. Section 178 A of the Sea Customs Act, 1878 which was/is parallel to the Section 123 of the Customs Act, 1962 was first incorporated vide Sea Customs (Amendment) Act, 1955. Thus Section 178A of t .....

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estion. Even no inquiry has been made with the gold dealer M/S Choksi Manilal Chimanlal & Company of Bombay whose bag was seized alongwith gold by the Bombay police during 1950. (6) That in his deposition before the Judicial Commissioner, Ranchi Shri S.K. Mitra had also told that he had purchased and imported the gold through Reserve Bank of India had hence a false allegation has been made in the show cause notice that the impugned gold was smuggled into India. No evidence in support of the .....

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9 pcs. of foreign marked gold biscuits in square shape weighing 16855.925 gms. were in the form of 24 gold biscuits which bore the inscription of N.M. Rothschild & Sons 996-Fine-London. (b) The second category of 24 Gold Biscuits were in rectangular shape which weighed 2799.600 gms, this also bore the inscriptions of N.M. Rothschild & Sons 996-Fine-London. This clearly suggests that both the category of Gold Biscuits were of foreign origin. (c) Half Sovereign of 22 carrot of foreign orig .....

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the Assistant Collector of Customs & Central Excise, Ranchi on 19.01.1993 alongwith her daughter Smt. Ela Ghosh who failed to submit any documents in support of lawful import of the foreign marked gold in question. They were again directed to come with necessary documents on 25.01.1993 to satisfy the authorities regarding lawful import of the impugned gold but they failed to turn-up on the date. They were again directed to appear on 08.02.1993 alongwith necessary evidences but they failed to .....

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lice in the year 1950 when Imports & Exports (Control) Act, 1947 and Section 19 of Sea Customs Act, 1878 were already in force. A prohibition/restriction in respect of import of any class or category of goods imposed under Section 3(1&2) of Imports & Exports (Control) Act was also deemed to be prohibited under Section 19 of the Sea Customs Act, 1878 which was not repealed but re-enacted as Section 11 of the Customs Act, 1962." 9. The Adjudicating Authority also recorded a findin .....

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in support of his purchase of gold from Reserve Bank of India. 10. The Adjudicating Authority also recorded that the impugned gold bars detected and initially seized by the officers of C.I.D. Branch in the year 1950 when Imports & Exports (Control) Act, 1947 and Section 19 of the Sea Customs Act, 1878 were in force. A probation/restriction in respect of import of any gold or category of goods under Section 3 of Imports & Exports (Control) Act, 1947 was also deemed to be prohibition unde .....

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seized by the police, and subsequently transferred to the customs cannot be held to be a seizure under the Customs Act so as to invoke the provisions of Section 178A of Sea Customs Act, 1878 or the provisions of Section 123 of the Customs Act 1962? (2). Even if the seizure is held to be by the custom authorities, whether the provisions of the said two sections will not apply inasmuch as they were not in existence at the time of original seizure by the police? 13. In respect of first issue, the T .....

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t, 1962 against the appellants for placing the onus upon them as regards the non-smuggled nature of the gold in question. We also draw support from the decision of the Tribunal in the case of Shri K. Deeman v. CC, Madras-1987 (11) ECR 333 (CEGAT-SRB) and in the case of Shri R. Ramesh v. CC, Madras- 1987 (10) ECR 614 (CEGAT-SRB)." 14. In respect of second ground, the Tribunal held that onus to prove non-smuggled nature of gold was not on the appellant (the respondent herein) as when the gold .....

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corded the following finding:- "8. The appellant also succeeds on the second ground. Admittedly the gold in question was seized by the police in the year 1950, when the provisions of section 178A of the Sea Customs Act, 1878 or the provisions of Section 123 of the Customs Act, 1962 were not in operation. The question arises as to whether the said provisions can be made retrospective in operation and burden to prove can still be placed upon the accused. We find that the Hon ble Supreme Court .....

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visions of section 178 of Sea Customs Act, 1878 were not made applicable to the seizure made before the date of insertion of the said section. As such by following the earlier decisions we hold that the section 178 of Sea Customs Act, 1978 or section 123 of Customs Act, 1962 were not applicable to the facts and circumstances of the case." 15. After returning such finding, the Tribunal returned a finding that the Commissioner has not referred to any positive evidence on record to show that t .....

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was that the gold was acquired by Sri Mitra by defalcation of money during the period 1941 to 1949, therefore, there is no evidence produced by the Revenue to show that the gold was smuggled and acquired illegally in the year 1950. Consequently, the appeal was allowed and confiscation and penalty imposed were set aside. 16. Before this Court, learned counsel for the parties agreed that since seizure of the gold was in the year 1950, it was Sea Customs Act, 1878 ( for short "the Act") w .....

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gued that it cannot be taken into consideration as it has no retrospective operation. 17. Learned counsel for the Revenue argued that Section 3 of the Import and Export (Control) Act, 1947 (hereinafter referred to as "the Control Act") empowers the Central Government to make provision for prohibiting, restricting or otherwise controlling in all cases or in specified class of cases, the import/export of goods of any specified description. It is pointed out that such Control Act came int .....

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king by sea or by land goods of any specified description into or out of British India or any specified part of British India. 178. Any thing liable to confiscation under this Act may be seized in any place, either upon land or water, by any officer of Customs or other person duly employed for the prevention of smuggling. 179. All things seized on the ground that they are liable to confiscation under this Act shall, as soon as conveniently may be, be delivered into the care of any Customs- offic .....

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of confiscation such fine as the officer thinks fit. Foreign Exchange Regulation Act, 1947 8. Restrictions on import and export of certain currency and bullion.-(1) The Central Government may, by notification in the Official Gazette, order that, subject to such exemptions, if any, as may be contained in the notification, no person shall, except with the general or special permission of the Reserve Bank and on payment of the fee, if any, prescribed bring or send into the States any gold or silve .....

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rmission of the Reserve Bank or the written permission of a person authorized in this behalf by the Reserve Bank, take or send out of the States any gold, jewellery or precious stones, or India currency notes, bank notes or coin or foreign exchange other than foreign exchange obtained from an authorised dealer. Import and Exports (Control) Act, 1947 3. Powers to prohibit or restrict imports and exports.- (1) The Central Government may by order published in the Official Gazette, make provision fo .....

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goods to which any order under sub-section (1) applies shall be deemed to be goods of which the import or export has been prohibited or restricted under Section 19 of the Sea Customs Act, 1878 (8 of 1878), and all the provisions of that Act shall have effect accordingly, except that Section 183 thereof shall have effect as if for the word "shall" therein the word "may" were substituted. Notification No. 12(II)-F.1/48 published in the Gazette of India, Extraordinary, New Delh .....

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ny place in French or Portuguese territories in India, (a) any gold coin, gold bullion, gold sheets or gold ingot whether refined or not, or (b) any silver bullion, any silver sheets or plates which have undergone no process of manufacture subsequent to rolling or any uncurrent silver coin." 18. Learned counsel for the Revenue argued that Section 8 of the Foreign Exchange Regulation Act, 1947 prohibited to bring or send into States any gold or silver or any currency notes or bank notes or c .....

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lates that the Central Government may prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of British India or any specified part of British India. It is also pointed out that the show-cause notice mentioned violation of the Control Act but the notification issued under the Foreign Exchange Regulation Act, 1947 has to be read under the Control Act as well as under the Act. 20. It is, thus, contended that foreign marking gold having recovere .....

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Therefore, the contravention of the provisions of the Act and that of Foreign Exchange Regulation Act, 1947 is established. Thus, the Revenue has discharged the onus of recovery of smuggled goods justifying confiscation of goods. It is also argued that taking over of the goods was not from police custody in terms of the order of the Judicial Commissioner but in fact from the respondent, after conclusion of trial and on deposit of the fine etc. The goods were free from any encumbrance or control .....

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he seized goods from the Court after conclusion of the criminal case so as to initiate confiscation proceedings under the Act. Such seizure was to initiate proceedings under the Act and it cannot be said to be seizure of goods from the police. 21. The stand of the respondent is that Sri Mitra has purchased the gold from Reserve Bank of India. Learned counsel for the assessee supported the order passed by the Tribunal and submitted that the seizure of the foreign marked gold bars was not from the .....

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in contravention of the statutory prohibition. It is argued that the prohibition for importing gold came into force only on 25th of August, 1948 whereas, the stand of Sri Mitra was that the gold was purchased between the years 1941 to 1949. Therefore, the onus was on the Revenue to prove the import of gold when the prohibition was in force. Since the Revenue has not proved any such fact, therefore, the order of the Tribunal cannot be said to be giving rise to any substantial question of law for .....

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sdiction of the Judicial Commissioner in terms of the liberty granted by Ranchi Bench of the Patna High Court. The order passed by the Judicial Commissioner on 8th of January, 1993 as reproduced in Paragraph 4 of the order is that Smt. Nirmala Mitra shall give an undertaking to the effect that she will keep the gold of foreign origin in safe custody of the State Bank of India and Central Excise would be at liberty to take legal steps with regard to gold of foreign origin after the same is deposi .....

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but kept in joint custody by virtue of an order passed by the Judicial Commissioner. Since there is no challenge to the order passed by the Judicial Commissioner, the physical possession of the foreign gold bars shifted from the police to Smt. Nirmala Mitra though there was restraint on physical delivery of goods to her. It is thereafter, the goods were actually seized by the Custom Authorities when a notice was served on the Bank and to Smt. Nirmala Mitra for seizure of such goods. Thus, the g .....

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resent case, the order of the Judicial Commissioner on 5th of January, 1993 orders the delivery of the goods to Smt. Nirmala Mitra but circumscribed it when another order was passed on 8th of January, 1993. Some of the relevant extracts have been reproduced above. Therefore, the judgment in Gian Chand s case (supra) cannot be extended to the facts of the present case. 25. Therefore, in respect of the second substantial question of law, it is held that symbolic possession of the articles initiall .....

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foreign marked gold bars but the ornaments as well. Under Section 178 of the Act, any officer of the Custom can seize anything liable to confiscation with the object of bringing by smuggling. The goods were seized by the Custom Authorities on 4th of March, 1993 on the reasonable belief that they are liable to confiscation that they have been imported into India illegally. The violation is of the prohibition contained by Notification dated 25th of August, 1948. The goods were seized by the Bomba .....

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nt of permission from Reserve Bank of India came to be introduced only by notification dated 25th of August, 1948. Prior thereto, there was no prohibition of import of gold. Therefore, once Sri Mitra has taken a stand of purchase of foreign marked gold bars from the Reserve Bank of India, it shows that the time of import was after 25th August 1948. It is for him or for his legal heirs to prove the purchase of gold from Reserve Bank of India any time. 28. Though Section 178-A puts the onus of pro .....

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but in the absence of any proof of purchase from Reserve Bank of India, the initial burden which was on the Customs shifted to the respondent and the respondent having failed to prove the purchase, the Tribunal erred in law in holding that Sri Mitra or his wife discharged the onus only by the assertions that they have purchased it from the brokers. It may be noticed that neither any name of broker has come on record or the date of purchase or any other evidence of purchase that is invoices etc. .....

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. The Court found that if the gold had been imported earlier, it would be extremely improbable that the gold will remain in the same shape of bars and with the same fitness as when imported after the passage of this length of time. In the aforesaid case, the assessee in fact denied that the gold is of foreign origin. Considering the conduct of the appellants, it was found that it was illicit import. 30. In the case reported as Collector of Customs, Madras and others Vs. D. Bhoormall, (1974) 2 SC .....

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All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. The Court observed as under:- "30. It cannot be disputed that in proceedings for imposing penalties under clause (8) of Section 167, to which Section 178- A does not apply, the burden of proving that the goods are smuggled goods, is on the Department. This is a fundamental rule relating to proof in all criminal or quasi-criminal proc .....

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fake". El Dorado of absolute proof being unattainable, the law accepts for it probability as a working substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus, legal proof is not necessarily perfect proof; often it is nothing more than a prudent man s estimate as to the probabilities .....

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re especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden. 32. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the persons concerned in it. On the principle underlying Section 106, Evide .....

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e is, no doubt, presumptio juris; but every day s practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property", though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumptions of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against wi .....

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kind of penalty under the second part of the entry is contemplated. We have already alluded to this aspect of the matter. It will be sufficient to reiterate that the penalty of confiscation is a penalty in rem which is enforced against the goods and the second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In the case of the former, therefore, it is not necessary for the customs authorities to prove that any particular person is c .....

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t is true that no direct evidence of the illicit importation of the goods was adduced by the Department, it had made available to the Collector several circumstances of a determinative character which coupled with the inference arising from the dubious conduct of Baboothmull and Bhoormull, could reasonably lead to the conclusion drawn by the Collector, that they were smuggled goods. These circumstances have been set out by us earlier in this judgment. We may recapitulate only the most salient am .....

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a judgment reported as Sarbananda Sonowal Vs. Union of India and another, (2005) 5 SCC 665, the Court was examining the burden of proof in a criminal case and also the situation where any fact is especially within the knowledge of the accused, he has to lead evidence to prove the said fact. The Court said to the following effect: "27. Though in a criminal case the general rule is that the burden of proof is on the prosecution but if any fact is especially within the knowledge of the accused .....

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ate disproportionately difficult, for the prosecution to establish facts which are especially within the knowledge of the accused and which he could prove without difficulty or inconvenience. The word especially stresses that. It means facts that are pre-eminently or exceptionally within his knowledge. 28. In Collector of Customs v. D. Bhoormal (1974) 2 SCC 544 proceedings were initiated under Section 167(8)(c) of the Customs Act for confiscation of contraband or smuggled goods and it was observ .....

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st him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result, prove him guilty." 29. In State of W.B. v. Mir Mohd. Omar (2000) 8 SCC 382 it was held that the legislature engrafted special rule in Section 106 of the Evidence Act to meet certain exceptional cases in which not only it would be impossible but disproportionately difficult for the prosecution to establi .....

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ithin his own knowledge and proof of the fact that he had a licence lay upon him. It was further held that in the circumstances of the case the prosecution was under no necessity to give prima facie evidence of non- existence of a licence. In this case reference is made to some earlier decisions and it will be useful to notice the same. In R. v. Turner (1816) 5 M&S 206 the learned Judge observed as follows: (All ER p. 715 D) "I have always understood it to be a general rule that if a ne .....

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must prove it and the prosecution need not prove the absence of lawful authority. I think the onus of the negative averment in this case was on the accused to prove the possession of the policy required by the statute." 32. Section 9 of the Foreigners Act regarding burden of proof is basically on the same lines as the corresponding provision is in UK and some other Western nations and is based upon sound legal principle that the facts which are peculiarly within the knowledge of a person s .....

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