Suresh Kumar Agarwal v. Collector Of Customs, Madras

(1) The petitioner was travelling on 14 - 6 - 1984 by madras to howrah coramandal express. The customs officers at vishakhapatnam had received reliable information on that day that certain person with prohibited/smuggled zip fasteners was travelling by the said train. At about 9 p. M. At waltair railway station the customs authorities combed the said train and found few gunny bags and other containers during the course of search in the compartment bearing no. 7203 of the said train. The petitioner was found sitting along with one other person just by the side of the said luggage on a seat. The petitioner was then questioned and the petitioner gave certain information disowning title to the articles in the said packages and contended that the goods were given to him only for the purpose of carrying them from madras to bubaneshwar. It was stated that the person who gave these articles was unknown to the petitioner and the petitioner was only required to carry them for certain consideration. The said bags contained zip fasteners, rubber bands and certain other articles. As the articles were reasonably believed to be liable for confiscation under the provisions of the customs act the same were taken incharge. The petitioner was later on summoned before the customs , authorities and again questioned. He was given due opportunity to explain the source of the said things. After the due enquiry the respondent no. 2 who was the appropriate authority under the customs act passed orders under section lll (d) of the customs act confiscating all the goods including certain cash which was found in it. The said cash was confiscated under section 119 25 of the customs act. Further respondent no. 2 imposed penalty of rs. 10,000/ - on the petitioner under section 112 of the customs act.

(2) The order of respondent no. 2 was challenged before the customs exciseand gold (control) appellatte tribunal (cegat). The said appeal, being in appeal no. 142 of 1985 was dismissed with certain modifications and the modification was in respect of confiscation of the cash amount of rs. 1,800 which cegat found as not connected with the sale proceeds of any smuggled goods. The cegat order is dated 30 - 4 - 1986. The said order is challenged.

(3) It may be stated at the outset that though the order of cegat has been 35challenged, cegat has not been made as a proforma party to this petition. In the petition the petitioner has referred to this order as order having been passed by respondent no. 1. Respondent no. 1 is the collector of customs at madras. It is therefore clear that the writ petition cannot be decided in absence of necessary party. Though it is true that cegat is a proforma party, it cannot be said that it is not a necessary party. If the order of cegat is to be challenged the said tribunal had to be shown as the proforma party.

(4) The writ petition, however, need not be dismissed on technical ground that cegat is not made as a party tc the writ petition. Even on merits i am 45 inclined to think that the petition will have to be dismissed.

(5) The only ground raised in the petition is that the zip fasteners in questionwere not shown to be smuggled goods or articles of which import was prohibited under any provision of the customs act. Further it is argued that there was no reason to believe that they were smuggled goods. It was therefore alleged that the order of confiscation as well as of imposing of penalty was unsustainable.

(6) In the first place it is argued that the zip fasteners were never prohibitedgoods under section 111 of the customs act. Under section 123 of the act there is a presumption that seized goods are smuggled when they are reasonably believed to be smuggled. Therefore, it was necessary to show in the first instance that the goods in question were reasonably believed to be smuggled goods. Unless they were reasonably believed to be smuggled the power of seizure under the act could not be exercised. Section 123 of the act 15 reads as follows:

"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 (a) in a case where such seizure is made from the possession of any person, - (i) on the person from whose possession the goods were seized; and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any, who claims to be the owner of the goods so seized. (2) this section shall apply to gold, (and manufactures thereof,) watches, and any other class of goods which the central government may by notification in the official gazette specify."

(7) Sub - section (2) shows that the section applies not only to gold, watches but also to any class of goods if the central government by notification in the official gazette so specifies. It is not disputed that zip fasteners were 35 notified under section 123 of the act as prohibited goods by a notification no. 204/84 - customs, on 20 - 7 - 1984. Item no. 10 of the said notification was concerning zip fasteners. Similarly under the powers conferred by sec. 11 - b of the customs act by a notification of even date the central government had specified zip fasteners as one of the articles in respect of which special measures for the purpose of checking the illegal import, circulation and disposal were to be taken. However, the learned counsel for the petitioner says that the alleged incident took place on 14 - 6 - 1984 while the notification regarding the zip fasteners under section 123 of the act was issued only on 45 20 - 7 - 1984 and therefore at the time when the incident took place zip fasteners were not prohibited goods. The learned counsel appearing for the central government answers this argument by contending that the order passed by the primary authority (r - 2) was on 26 - 2 - 1985. When the order of confiscation was passed the notification dated 20 - 7 - 84 was already there and therefore r - 2 was entitled to consider the said notification retrospectively. The learned counsel for the respondents brings to my notice a decision in "balumal jamnadas vs. State of maharashtra" in support of his argument. The facts of this case may be stated in brief for understanding the point urged. In that case the accused was found in possession of certain goods on 21 - 4 - 67. The goods were, at that point of time, not notified as prohibited goods under section 123 of the act. The notification was issued but the said was made in the official gazette only on 26 - 8 - 67. Thus, the notification was made almost four months later. The proceedings were initiated in the matter on 30 - 10 - 1968. The argument was advanced that as the goods were not notified as prohibited on the date when they were found in the possession of the accused, the subsequent notification did not help the prosecution. The hon'ble supreme court observed as follows in the matter: "5. It is true that lighters and flints were notified as provided in section 123 (2) in the official gazette of 26 - 8 - 1967. Nevertheless, as the provisions of section 123 (1) of the act only lay down as procedural rule, they could be applied when the case came up for trial before the presidency magistrate who actually decided it on 15 - 7 - 1969. Indeed, the complaint itself was filed on 30 - 10 - 68. It is immaterial that the appellant was found in possession of the goods on 21 - 4 - 1967. " it will thus be seen that at the time of taking action if the notification existed it could be read retrospectively. Section 123 (1) lays down only a procedural rule and therefore procedural law can be construed as retrospective also. It appears that the said reasoning was adopted even subsequently by the karnataka high court in a decision in w. P. No. 135 of 1984 wherein it was held that what is contained in section 123 of the act relates to proof and it is therefore a procedural matter and the procedural provisions of law can be given retrospective effect. The notification dated 20 - 7 - 1984 regarding zip fasteners had thus retrospective effect. It is therefore futile to argue that the zip fasteners were not prohibited goods as required under section 123 of the act for purposes of passing the impugned orders by respondent no. 2.

(8) Thus, the main ground on which the petitioner relies upon goes away, however, it is urged that there was no reasonable belief for the authorities to consider that the zip fasteners were smuggled ones. This contention is also not of much substance. Whether or not the officer concerned entertains reasonable belief cannot be looked under a microscope. It is only from the circumstances attending the incident that can form the basis of such belief. It is not open for the courts to scrutinise the action of the concerned officer with minute details and considerations. It is only the experienced eye of the concerned officer which can form the opinion. The opinion formed by the officer cannot be wholly objective, it has some undoubted elements of subjective thinking. It would be wrong for the court to consider the matter as if the court is sitting in appeal over the conclusions reachedby the concerned officer. If the circumstances and material which was before the appropriate officer prima facie gives sufficient ground to entertain the belief which he entertained, it is immaterial as to whether the court on its own might or might not have entertained a similar belief, the belief which is referred to in section 123 is " reasonable belief". Therefore what is to be seen is whether a reasonable man placed in the situation in which the appropriate officer was, would entertain such belief or not. In forming the said belief the condition of mind has to be considered in the given circumstances. Keeping this in view if we appreciate these circumstances and material existing at the time when the petitioner was found in possession of the articles, it is difficult to contend that the officer concerned could not entertain a reasonable belief that the articles in question were smuggled ones. In the first place the finding of fact recorded is that the petitioner immediately admitted the possession of the gunny bags and other bags in which the zip fasteners were found though ownership was denied. The quantity of zip fasteners was not insignificant. Those zip fasteners were found concealed with other articles in four different bags. The total number of zip fasteners was more than 40,000. The authorities had prior information. The said information was substantiated by a finding of the goods in the very same train. The zip fasteners were prohibited goods. They were ykk - zaglan nylon zip fasteners. Such zip fasteners were then essentially foreign made. The petitioner gave extraordinary explanation when he was questioned immediately. He contended that some unknown person had given those bags for carrying them from madras to bhubaneshwar. He was unable to give any particulars of the said unknown person. He produced certain documents of the firm from where these goods were allegedly purchased. The said firm was found non - existent at madras. It was only after this material that action was proposed to be taken. Thus, there was sufficient material to have reasonable belief that the articles were smuggled ones.

(9) The learned counsel for the petitioner relies upon certain rulings forcontending that there was no material to show that what constitutes materials sufficient for forming a reasonable belief that the goods in question are smuggled. It is not necessary to look into those rulings because each case depends on the facts of a particular case.

(10) Having regard to all the circumstances and position of law the petitioner has failed to make out any case for seeking relief under article 226 of the constitution of india. The petition therefore, deserves to be dismissed.

(11) There is one aspect which has not been argued in this petition beforeme. It appears that under section 125 of the act

"whenever confiscation of any goods is authorised, the officer adjudging such confiscation may, in case of any goods, the importation or exportation, where for, is prohibited under this act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods (or, where such owner is not known the person from whose possession or custody such goods have been seized,) an option to pay in lieu of confiscation such fine as the said officer thinks fit."

the limits of fine have also been prescribed under the proviso. Thus, when the goods are prohibited the officer concerned has a discretion either to confiscate the goods or to ask the concerned person to pay fine in lieu of confiscation. When such discretion is given by the act it is normally expected that the officer concerned would exercise such discretion unless there are good grounds for not exercising it. The discretion is given by the statute for the purpose of exercising it. Therefore, if the discretion is not exercised, normally there should be some reason for not exercising the same. It may not be necessary that the concerned authority should give elaborate reasons for not exercising the discretion but there must be some indication somewhere as to why the discretion vested in the authority has not been exercised by it. The reasons may be brief but the order should indicate that the authority was aware of the fact that it was vested with discretion and that the authority is refusing to exercise the same for some reason. As stated already this point has not been raised before me. If such a point is raised it may be necessary to decide the same authoritatively.

(12) With the aforesaid observations, the writ petition is dismissed.