TMI Blog1978 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... the city. He directed the staff to stop them infront of the Cotton Mill. 3.The person of Ladhulal was got searched by Bhanwarlal Inspector in the presence of 'motbirs' Kailashchandra and Pannalal. On search three gold biscuits with foreign markings "Johnson Matthey 999.0 London 10 Totals" each were recovered from the pocket of his pant. He prepared the seizure memo Ex. P/1 wherein the description of the gold biscuits was mentioned and the reasons for recovery were mentioned as seized under the relevant provisions of the Act, Foreign Exchange Regulation Act, 1947, and the rules of the Defence of India (Amendment) Rules 1963. The white trousers was also recovered vide memo Ex. P/2 and the signatures of the accused Ladhulal were obtained on both these memos. After obtaining necessary sanction of the Collector, Customs and Central Excise, New Delhi, a complaint was presented on 30-6-1972 in the Court of City Magistrate, Bhilwara, but the same stood transferred to the Court of Munsif and Judicial Magistrate, First Class, Bhilwara, on separation of Judiciary from the Executive. After preliminary inquiry the accused Ladhulal was summoned and thereafter prosecution evidence was recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rosecution to prove that the gold biscuits were smuggled goods and that the accused knew or had reason to believe that they are liable to confiscation under Section 111 of the Act. The learned counsel urged that Shri A.D. Chaudhary was in receipt of the information that Sobhalal goldsmith and one boy Ladhulal had gone to Bombay and are bringing smuggled gold and in pursuance of this information when he alongwith the Excise party checked both of them when they were seen coming from towards the city at about 9.45 in the night and on search gold biscuits with foreign markings were found and in the recovery memo the reasons for recovery were clearly mentioned to be contravention of the relevant laws. In these circumstances Shri Kachhawah urged that it cannot be said that Shri Chaudhary had no reasonable belief that the goods seized are smuggled goods. He also urged that it is true that the question of reasonable belief is a justiciable issue and no doubt the requirements of law is that there should not only belief but it should be a belief based on reasons, that is, it should be reasonable. He urged that the learned Magistrate has not cared to look into the statement of Shri A.D. Chaud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection reliance has been placed by the learned counsel on Khedu Mohton and others v. State of Bihar (AIR 1971 S.C. 66) (7) and Chetano Piedade Fernandes and another v. Union Territory of Goa, Daman Diu (AIR 1977 S.C. 135) (8). 7.I have given my serious and anxious consideration to the contentions advanced before me by both the sides. It would be proper to reproduce Section 123 and the Section 135 of the Act as they stood prior to the Customs, Gold (Control) and Central Excises and Salt (Amendment) Act, 1973, whereby certain amendments were effected in both the sections, for facility of reference :- "123. Burden of proof in certain cases. - (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession the goods were seized. This section shall apply to gold, diamonds, manufactures of(2) gold or diamonds, watches, and any other class of goods which the Central Government may by notification, in the Official Gazette specify." "135. Evasion of duty or prohibitions. - Without prejudice to any action that ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clause (i) or (ii) of clause (b) of Section 135, as the case may be. It would appear that the goods are liable to confiscation and if any person is found in possession of such goods knowing or having reason to believe that the goods are liable to confiscation, it would amount an offence punishable under Section 135(b) of the Act. Section 111 clause (d) provides that any goods, which are imported or attempted to be imported or are brought within the Indian Customs water for the purpose of being imported, contrary to any prohibition imposed by or under the Act or any other law for the time being in force, are liable to confiscation. 9.It may be mentioned that the controversy in the present case, lies within a narrow compass. It is not disputed before me that the entry of gold biscuits with foreign marking in India is prohibited, save with the permission of the Reserve Bank of India. It is also not in dispute before me that not only the actual importer is liable to be punished if gold biscuits are imported, but any subsequent holder of gold biscuits who is not in a position to account for it and is not an innocent receiver, will also fall within the mischief of Section 135 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of placing the burden on the person from whose possession the goods have been seized, was considered. In order to curb the evil of smuggling, this provision was enacted. Their Lordships of the Supreme Court in this case after canvassing to its facts held that there was ample material at the stage of seizure on the basis of which it could be said that a reasonable belief could be entertained that the gold seized was smuggled. The facts of this case in brief were that Nandgopal, second respondent, an employee of the first respondent, was intercepted first by the Head Constable and his clothes were searched and four blocks weighing about 1,000 tolas were seized. The seized gold was then handed over by him to the Inspector of Police, Criminal and investigation Department. This Inspector forwarded the gold to the Inspector Customs (Special Division) with a forwarding letter. Nandgopal had no receipt of any kind for the purchase of the gold and he had a letter addressed by the first respondent to some Bullion merchant Bombay intimating that cash to the extent of Rs. One lakh was being sent through the representative. If Nandgopal's story would have been true, the letter would not have re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten carry it in this manner in a nouli concealed under trousers. That may well be so. Here, however, there is an additional circumstance that a pointsman of the Railway, not expected to have so much gold in his possession, was carrying the gold, which was, as already mentioned, in six blocks and 22 bars apart from some small pieces and one pair of murkies. The total quantity was as much as 286 tolas and 11 annas, that is, about three kilograms. When all these circumstances are taken together, it is not possible to accept learned counsel's suggestion that he might be carrying gold innocently having purchased it from somebody." 13.In Vallabhdas Liladhar v. Asst. Collector of Customs (1983 (13) E.L.T. 1408 (S.C.) = AIR 1965 S.C. 481) (9) the appellants were goldsmiths and they displayed due haste in the disposal of gold, made it quite clear that it was of foreign origin and the appellants could not be unaware of this, particularly as they work as goldsmiths. The contention advanced was that the ingredients of Section 167(81) are not satisfied in this case. This contention was replied in the following terms:- "We have not been able to understand this argument at all. Once it is pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned in dealing with prohibited or restricted goods. It was also held that he had necessary knowledge and intent to evade the prohibition or the restriction even though he dealt with the goods after the smuggling was over and was not in any way concerned with actual smuggling. It may be stated that the question of reasonable belief did not arise for consideration, but the circumstances of the case revealed that the matter was persuaded on the reasonable belief. 15.In Balkrishna Chhaganlal Soni v. State of West Bengal (5) the offence was Defence of India Rules, 1962, regarding possession of gold without declaration and a charge under Section 135(b) of the Customs Act was also framed. The facts were that one Shri Soni was engaged in bullion business and he attracted the attention of the customs authorities. On May 10, 1965, a preventive officer of the Department went to the appellant's jewellery shop armed with the authorisation for search. It was as a result of timely and accurate intelligence received that he went for search. His presence surprised the accused who was reclining on a pillow, laid on a mattress, underneath which slept two gold bars with foreign markings. His Lordhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontain cigarette lighters of "Imco Triplex Junior" brand "Made in Austria". Each of the six boxes were tightly packed with 1,200 lighters. The remaining five boxes contained fifty sealed tins of flints for cigarette lighters which bore the following writing : "Tego Lighter Flints of Superior Quality Made in Germany". On the wooden boxes containing the lighters were found written "Dubai" and "Made in Austria". The five boxes containing flints had the words "Dubai" and "Made in West Germany" inscribed on them. A 'panchnama' was prepared. An objection was taken in this case that the goods were not seized under the Customs Act. On behalf of the State it was contended that Section 106, read with Section 114 of the Evidence Act; was sufficient to enable the prosecution to ask the Court to presume that the appellant knew that the goods have been smuggled or imported in contravention of the law. The appellant had not produced evidence to show that the goods were legally brought into India. In support of his contention reliance was placed on behalf of the prosecution on : Collector of Customs, Madras v. D. Bhoormal, 1983 (13) E.L.T. 1546 (S.C.) = AIR 1974 S.C. 859 = (1975 Cri LJ 545) (10); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusive possession of the accused. After observing so, the question of applicability of Section 178A was considered and it was held that the issue of reasonable belief having been entertained at the time of seizure or not, is a justiciable issue and on facts it was found that the prosecution has not proved that the seizure was effected as a result of reasonable belief. The facts of the case were that Shri J.P. Tandon, Deputy Superintendent, Customs, Sri Ganganagar, received information on 14-9-1958 that the accused Budhram was in possession of some dutiable and prohibited goods. He, therefore, obtained a search warrant from the First Class Magistrate Ganganager and in execution of the warrant Heersingh, Inspector, Land Customs searched the house of the accused the same night and recovered eleven bars of gold which contained foreign markings. The defence was that the accused's brother Ramjas lived with him in the same house and the gold was recovered from the room occupied by Ramjas, but Budhram accused made statements before the Customs Authorities Ex. P/1 and Ex. P/2 in which he admitted practically the prosecution case that the gold was smuggled one and he had purchased the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olice. The accused Padmaram got down from the train towards the second line. Mohan Singh, Inspector Central Excise Department, asked him as to what he was carrying in bag, to which he replied that he did not know. Mohan Singh further said that the accused told him that the bag was given to him by some 'Bania', who was travelling with him in the same compartment. That excited suspicion. Thereafter the accused was searched in the presence of two 'motbirs' and it was found that tied in two pieces of cloth, which in turn were wrapped in towel, there were two lots containing ten flat pieces of gold, biscuits shaped, and each of these pieces, weighing ten tolas, had a seal on it bearing the name of 'N.M. Botchild and Sons' and the figures 999 thereon. A recovery list was prepared. In the light of these facts the question of burden of proof was considered. In this connection it was observed as under :- "The reason is that the real requirement of the provision is not a mere belief which would be entirely subjective, but a 'reasonable belief' that is , a belief which should be supported by reasons. And to prove such a requirement, the mere repetition on the part of the seizing Officer tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eizing-officer or officers had, at the time of effecting the seizure, a reasonable belief that the goods recovered from the accused were smuggled one. It must follow therefore, that the burden that the goods were not smuggled statutorily shifted on to the shoulders of the accused and such proof is utterly lacking in this case. There is, therefore, no escape from the conclusion that the goods recovered must be held to be smuggled one within the meaning of the Sea Customs Act. With regard to knowledge and intention in order to constitute essential ingredients of an offence under Section 167(81), it was observed that in a case where a presumption can be properly raised under Section 178-A and the accused had furnished no explanation whatsoever for his possession of a dutiable or a prohibited commodity and or the explanation offered by him is unworthy of credence then all that would be necessary to satisfy the ingredient of knowledge within the meaning of Section 167(81) would be for the prosecution to prove that the accused was in conscious possession of the goods in question or was otherwise consciously concerned with them in any of the modes mentioned therein and on facts it was fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smuggled one. In my opinion, it was wrong on the part of the learned Magistrate not to have applied Section 123 of the Act to the facts of this case. The learned Magistrate was also wrong in referring to Ex. D1, the order of the Appellate Collector of Customs whereby the order of imposition of penalty was set aside. On the evidence and material on record the question of reasonable belief of the seizing officer has to be determined and Ex. D/1 has no relevancy. When once it is established that the seizure was effected in the reasonable belief that the goods were smuggled, the burden shifted on the accused to prove that the goods were not smuggled, which burden the accused has failed to discharge in the present case. Rather he has come out with a false case that no recovery was effected from him and one Mahendra Kumar picked up the gold biscuits and delivered to the customs officers. In this view of the matter, in my opinion, acquittal of the respondent cannot be sustained. Being a saraf, in my opinion, the respondent was conscious of the fact that the gold biscuits with foreign markings were smuggled ones and he has failed to prove that he was an innocent receiver thereof. He has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs have been a long ordeal deterrent enough to inhibit future anti-social adventures, and some jail term he has already undergone. Counsel submits that his client will now turn a new leaf if he is not returned to prison. We decline to be moved by this dubious prospect. The new horizons in penal treatment with helpful hues of correction and rehabilitation are statutorily embodied in India in some special enactments; but crimes professionally committed by deceptively respectable members of the community by inflicting severe trauma on the health and wealth of the nation - and the members of this neo criminal tribe are rapidly escalating - from a deterrent exemption to humane softness in sentencing. The penal strategy must be informed by social circumstances, individual factors and the character of the crime. India has been facing an economic crisis and gold smuggling has had a disastrous impact on the State's efforts to stabilise the country's economy. Smugglers, hoarders, adulterators and others of their like have been busy in their underworld because the legal hardware has not been able to halt the invisible economic aggressor inside. The ineffectiveness of prosecutions in arre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sentencing him forthwith. The wording of Section 4(1) of the Probation of Offenders Act are wide and would evidently include offences under the Customs Act and the Gold Control Rules. The Probation of Offenders Act is a reformative measure and its object is to reclaim amateur offenders who, if spared the indignity of incarceration, can be usefully rehabilitated in society. A jail term should normally be enough to wipe out the stain of guilt but the sentence which the society passes on convicts is relentless. The ignominy commonly associated with a jail term and the social stigma which attaches to convicts often render the remedy worse than the disease and the very purpose of punishment stands in the danger of being frustrated. In recalcitrant cases, punishment has to be deterrent so that others similarly minded may warn themselves of the hazards of taking to a career of crime. But the novice who strays into the path of crime ought, in the interest of society, be treated as being socially sick. Crimes are not always rooted in criminal tendencies and their origin may lie in psychological factors induced by hunger, want and poverty. The Probation of Offenders Act recognizes the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n could be given even otherwise, as there was no legislative inhibition. The interdiction has only been introduced by the 1973 Amendment Act, which came in to force on 1st September, 1973 on introduction of Section 140A. After the amendment still benefit of probation can be extended to a person under eighteen years of age. It may be stated that his Lordship Krishna Iyer J. concede that penal treatment should be tailored to the individual but for professional economic offenders, he observed that incarceration is peculiarly potent, but his Lordship was not dealing with a case of a young economic offender. So looking to the age of the accused and having regard to this factor that more than a decade has passed, in my opinion, ends of justice would be served if the respondent Ladhulal may be given the benefit of probation instead of sentencing him to any term of imprisonment. 24.There is one more point to be considered in this appeal. On behalf of the appellant it is urged that the order of the learned Magistrate is wrong in ordering confiscation of the gold biscuits to the State of Rajasthan. Admittedly the legal position is that the gold biscuits have already been confiscated by the ..... 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