Judgment per : Arijit Pasayat, J -
In these appeals the Commissioner of Central Excise, Jaipur (hereinafter referred to as the “Commissioner”) calls in question legality of the judgment passed by a Division Bench of the Rajasthan High Court at Jodhpur dealing with an application under Section 130 of the Customs Act, 1962 (in short the “Act”). The Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (in short the “Tribunal”) held that the proceedings initiated, by the Customs authorities against the respondent (hereinafter referred to as the “assessee”) were without legal sanction. An application was filed as noted above under Section 130 of the Act proposing the following questions for determination by the High Court :
(i) “Whether the Silver bearing foreign marking can be released on the ground that these were not smuggled into country when the same had not been disclosed in their Wealth Tax return filed in the year 1958 and seized under Section 110 of the Customs Act, 1962 in contravention of restrictions imposed vide Notification No. 12(ii) F/1/48, dated 25-8-1948 as amended issued under Section (1) of FERA, 1947 read with section 11 of the Customs Act, 1962.
(ii) “When it has not been fully proved/established that silver in questions were brought into country before the issue of Notification No. 12(11) F/1/48, dated 25-8-1948 issued under Section 8(1) of FERA, 1947 and the goods before foreign mark; can the goods be released to the party on the basis that onus of proof was on the department that these were brought, smuggled without payment of duty into the country, when the burden of proof has not been shifted to the department.”
2.The High? Court found that the questions posed were really based on finding of facts giving rise to no question of law.
3.The basic? issue which arose revolved around the question whether 85 silver bars which had foreign markings thereon were smuggled goods in view of the Notification No. 12(11) F 1/48, dated 25th August, 1948. Said notification related to restrictions on import of gold and silver. It provided that silver bullion or silver sheets or plates cannot be brought or sent to India from outside India except with the general or special permission of the Reserve Bank. This articles in question were seized during search and seizure which was conducted in the months of July and August, 1965. There appears to be lot of controversy as to the years in which these articles came to possession of the assessee. According to the appellant it was after the date of notification initially proceedings were initiated by the Collector, Chittorgarh under the Treasure and Trove Act, 1878 (hereinafter referred to as “Treasure Act”) treating that the articles were antique articles. He held, that on the date of find, the articles were more than 100 years old and were liable to be forfeited. Though the Collector, Chittorgarh found these articles to be antique articles, the Board of Revenue, Ajmer found that they were hidden between 30 to 50 years before discovery and held that since the discovery was on the basis of the information it was not a find or a property bona vacanta. The finding was challenged by State and its functionaries by filing a writ petition which was dismissed. A special leave petition was filed before this Court which was also dismissed. After the search and seizure, in proceedings before the Wealth Tax Officer, B-Ward, Circle-I, “Indore (in short the “WTO”) the articles were claimed to have come to possession of the concerned persons much before the date of notification. The WTO considered the question whether the acquisition was in the year they were found or related to an earlier period. Taking, note of several factor it was concluded that the articles had come into possession of the assessee long back.
4.In response? to the show cause notice issued on 2-2-1966 the assessee took the stand that the Notification No. 12(11)F-I/40, dated 25-8-1948 issued under Section 8(1) of the erstwhile Foreign Exchange and Regulation Act, 1947 (in short the “Act” read with Section 11 of the Act had no application. The Commissioner held that the various circumstances highlighted by the assessee were not sufficient to discharge the burden that lay on him to rule out the application of the notification in question. The Commissioner directed confiscation of the articles in question. The assessee filed appeal before the CEGAT which held that though Section 123 of the Act had no application in principle, yet the assessee had discharged the burden which lay on him to prove that the articles had come into his possession much before the notified date. The revenue filed application for reference for adjudication of the formulated questions. As noted above, the High Court held that as no question of law was involved the application was to be rejected.
5.In support? of the appeals Mr. A.K. Ganguli, learned Senior Counsel submitted that the approach of the CEGAT was erroneous. Even if the applicability of Section 123 of the Act is not there, it was within the special knowledge of the assessee as to when the articles came to his possession and since no definite material was produced, the Commissioner's view should not have been interfered with by the CEGAT. He pointed out that though great stress was laid on the order of the WTO that related to an entirely different issue and had no direct bearing of the issue regarding the period of possession. In response Mr. S.S. Ray, learned Senior Counsel submitted that the findings recorded by the CEGAT are findings of fact. The High Court was therefore justified in holding that no question of law was involved.
6.It is to be? noted that Section 123 of the Act raising statutory presumption placing burden on the assessee to prove that the articles are not smuggled. The said provision reads as follows :-
Burden of proof in certain casesWhere any goods?. - (1) 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.
This section shall apply to gold?(2) (manufacturers thereof) watches, and any other class of goods which the Central Government may by notification in the Official Gazettee, specify.
7.It is to be? noted that silver bullion was not one of the notified items prior to 1984. Therefore Section 123 of the Act had really no role to play in the present dispute. But the question is whether the assessee has been able to prove that the articles were not smuggled goods and he had come to possession of the articles before the notified date. Several materials were considered by the CEGAT to hold that the assessee had discharged its burden. It referred to the orders passed by the authorities under the Treasure Act. The WTO came to a definite conclusion that the assessee had proved that it had possessed the articles prior to the notified date. These essentially are conclusions on facts. A question of law can arises if the forum deciding the case acts on irrelevant materials, or, partly on relevant materials and partly on irrelevant materials or keeps out of consideration on relevant material. In the second category of case the question arises because it is not known as to what extent irrelevant materials have influenced the conclusion. If a finding of fact is arrived at by the Tribunal after improperly rejecting evidence a question of law arises. As observed in Dhirajlal Girdharilal v. C.I.T. (1954) 26 ITR 736 (S.C.) where a court of fact acts on materials partly relevant and partly irrelevant it is impossible to say to what extent the mind of the court was affected by the irrelevant material used by it in arriving at the finding. Such a finding is vitiated because of the use of the inadmissible material and thereby an issue of law arises (Also see C.I.T. v. Daulat Ram Rawatmull (1973) 87 ITR 349 (S.C.). A question of fact becomes a question of law if the finding is either without any evidence or material, as observed by this Court in Chhabildas Tribhuvandas Shah v. C.I.T. (1966) 59 ITR 733 (S.C.), or if the finding is contrary to the evidence, or the finding is perverse or there is no direct nexus between the conclusion of fact and the primary fact upon which that conclusion is based. If findings of fact are based on some evidence sufficiency thereof does not give rise to a question of law. As noted in Sree Meenakshi Mills Ltd. v. C.I.T. (1957) 312 ITR, 28 (S.C.), a finding or a question of fact gives rise to a question of law when there is no evidence to support it or if it is perverse when the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of facts.
8.In the? instant case the conclusions arrived at by CEGAT are with reference to documents, and materials and they cannot be said to be perverse or without basis. It is not a case where CEGAT has based its conclusions on any irrelevant material or has kept out of consideration any relevant material.
9.That being? so, the High Court was justified in holding that no question of law arises out of the order of the CEGAT.
10.The? inevitable result is that, the appeals deserve to be dismissed which we direct.
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