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Hiralal Sarawgi v. Collector Of Central...
Structured Summary of the Opinion
Factual and Procedural Background
The petitioner, Hiralal Sarawgi (Jain), a businessman of Gauhati and owner of the firm "Messrs Premsukh Hiralal" (the shop of the petitioner), was the subject of a search on 8 January 1959 by the Deputy Superintendent (Preventive) of Central Excise and Land Customs, Gauhati, pursuant to a search warrant issued by the Sub-divisional Magistrate at Gauhati. The search was conducted in the petitioner’s absence but in the presence of his employee Sri Dungarmall Jain, and a number of articles were seized.
The Department issued a notice to show cause under Section 167(8) of the Sea Customs Act. The petitioner filed an objection, contending that the items had been purchased by him from various persons on different dates (he claimed purchases in the years 1951 to 1955). After an inquiry with personal hearing and material evidence taken by the departmental officer, the Assistant Collector of Central Excise and Land Customs, Gauhati, by order dated 20 October 1959, directed confiscation of a number of the thirty-four seized items, ordered redemption on payment of duty for some, and imposed a personal penalty of Rs. 100 under Section 167(8).
The petitioner appealed to the Collector of Central Excise and Land Customs, Assam, Manipur and Tripura, Shillong. By order dated 31 December 1960 the Collector allowed the appeal in respect of certain items but rejected the appeal in respect of specified items (including various torch lights, blades, "Hindoo No. 1 'Nibs'", and Midiane cigarette papers), directing their confiscation and maintaining the penalty. The present petition under Article 226 of the Constitution challenges that order.
Legal Issues Presented
- Whether, in proceedings under Section 167(8) of the Sea Customs Act (which provides for confiscation and penalty where importation is prohibited or restricted), the burden of proof lies on the customs authorities to prove that the goods were imported in contravention of prohibition or restriction orders.
- Whether the departmental authorities properly discharged that burden by rejecting the petitioner's claim of bona fide purchase (i.e., does failure of the petitioner to prove bona fide purchase allow an inference that the goods were illegally imported?).
- Whether the evidence on record (for example as to manufacture date or appearance of goods such as 7 O'clock blades and torch lights) was sufficient to establish that the goods were imported during the period when restrictions or absolute prohibitions were in force.
- Whether the principle underlying Section 106 of the Evidence Act (that facts especially within a person's knowledge are to be proved by him) applies so as to shift the onus to the petitioner in this context.
Arguments of the Parties
Petitioner's Arguments
- The burden to prove that the goods were imported in contravention of prohibition or restriction orders lay on the Department; proceedings under the Sea Customs Act are penal in character and the rule of criminal jurisprudence (onus on the prosecution) applies.
- The petitioner claimed he had purchased the seized goods from various persons on different dates (specified as between 1951 and 1955), and that the departmental authorities only negatived his claim of bona fide purchase.
- The petitioner argued that merely because he failed to prove bona fide purchase, it does not follow that the goods were necessarily imported in contravention of the Imports and Exports (Control) Act, 1947.
Department's Arguments
- The Department treated the matter as one where confiscation and penalty under Section 167(8) were appropriate because the goods were allegedly imported in contravention of orders issued under the Imports and Exports (Control) Act and/or Section 19 of the Sea Customs Act.
- With respect to the 7 O'clock blades, the Department contended that these blades were manufactured after the imposition of an absolute restriction (suggesting they must have been imported during the restricted period).
- Regarding torch lights, the Department observed the receipts showed recent purchase and that most torch lights were serviceable and in good condition, implying they could not be old stocks and therefore were imported after restriction—leading to rejection of the petitioner's claim.
- The Department relied on the departmental inquiry and the appellate authority's itemwise assessment to maintain confiscation and penalty for certain items.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Amba Lal v. Union of India, AIR 1961 SC 264 | Affirmed that proceedings under the Sea Customs Act are penal in character; customs authorities bear the burden of proof to establish guilt in such inquiries and must adducesatisfactory evidence that goods were imported in contravention of restrictions. | The court relied on this authority to hold that the customs/department failed to adduce evidence establishing that the seized goods were imported after the imposition of restrictions; therefore the departmental order could not stand. |
| Shambu Nath Mehra v. State of Ajmer, 1956 SCR 199; AIR 1956 SC 404 | Explains the limits of applying the principle underlying Section 106 of the Evidence Act (that facts especially within a person's knowledge must be proved by him) and reiterates the general rule that, save in exceptional cases, the burden is on the prosecution and does not shift. | The court invoked this precedent to reject the contention that Section 106 (or its underlying principle) effectively shifted the onus to the appellant in customs confiscation proceedings; used to support the conclusion that the Department retained the burden of proof. |
Court's Reasoning and Analysis
The court proceeded by reference to the relevant statutory framework and the record of the departmental inquiry. It reviewed Section 167(8) of the Sea Customs Act (which makes goods imported contrary to prohibition or restriction liable to confiscation and authorizes penalties), Section 19 of the Sea Customs Act (empowering the Central Government to prohibit or restrict the bringing of goods into or out of India), and Section 3 of the Imports and Exports (Control) Act, 1947 (by which the Government may control import and export and whose orders are deemed to be prohibitions or restrictions under Section 19).
The court noted that orders under the Imports and Exports (Control) Act were issued from time to time (including an order dated 7 December 1955), and that the nature of the restrictions had varied — sometimes absolute, sometimes conditional (license-based). The court emphasised that, in those circumstances, it was incumbent on the Department to prove that the particular seized goods were imported during the specific period when the relevant restriction or absolute prohibition applied.
The court analysed the departmental and appellate findings itemwise and found them insufficient as evidence to discharge the departmental burden:
- For the 7 O'clock blades, the Department asserted they were manufactured after the absolute restriction, but there was no evidence proving the date of manufacture; therefore the Department did not discharge its burden.
- For the torch lights, the appellate authority inferred from the condition and receipts—i.e., that most torch lights were serviceable and receipts showed recent purchase—that they must have been imported after the imposition of restrictions. The court held that such inferences drawn from mere appearance or generalized receipt entries were inadequate to establish illegal importation.
- For Midiane cigarette papers and other items, similar conclusions by the departmental authorities were deemed unsupported by evidence showing importation during prohibited periods.
The court then applied the principles from cited Supreme Court authorities (notably Amba Lal and Shambu Nath Mehra). Those authorities established that proceedings under the Sea Customs Act are penal in character and that fundamental principles of criminal jurisprudence require the customs authorities to bring home the guilt by adducing satisfactory evidence; while the principle underlying Section 106 of the Evidence Act may be of universal application in limited cases, it cannot be used to undermine the basic rule that the burden of proof rests on the prosecution in penal matters.
Applying these principles to the facts, the court concluded that the Department had not discharged the burden upon it to show that the goods were imported in contravention of applicable import restrictions. The appellate authority's summary treatment and reliance on inferences from appearance or incomplete receipts were insufficient.
Holding and Implications
Holding: The petition is allowed. The court quashed the order of the Collector of Central Excise and Land Customs that had directed confiscation of specified items and maintained the penalty. The court directed that the confiscated properties be released forthwith and that the penalty and incidental charges, if paid, be refunded. The petition was allowed with costs assessed at Rs. 100. (S.K. Dutta, J. concurred.)
Implications:
- Direct effect on the parties: the departmental order of confiscation and the penalty are set aside; the petitioner is entitled to release of the specified goods and refund of penalty and incidental charges, and to costs of Rs. 100.
- No broader legal innovation is declared by the court in this opinion; the decision rests on application of established principles (as cited) concerning burden of proof in penal-style customs proceedings and the sufficiency of evidence to prove importation during periods of restriction. The opinion does not purport to set a new precedent beyond applying those existing authorities to the facts before the court.
This summary is strictly based on the content of the provided opinion and does not add or infer facts or reasoning not present in the text.
Mehrotra, C.J:— This rule was issued on an application under Article 226 of the Constitution. The petitioner Hiralal Sarawgi (Jain) is a businessman of Gauhati and is the owner of the firm named and styled as “Messrs Premsukh Hiralal” situated at Fancy Bazar, Gauhati which will hereinafter be referred to as “the shop of the petitioner”. On the 8th January, 1959 the Deputy Superintendent (Preventive) of Central Excise and Land Customs at Gauhati searched the shop of the petitioner, on a search warrant received from the Sub-divisional Magistrate at Gauhati. In the course of the search which was conducted in the absence of the petitioner but in the presence of his employee Sri Dungarmall Jain, a number of articles were seized. We are not concerned with the complaint made by the petitioner in his petition as regards the manner of the search. A number of properties were seized. Thereafter notice was issued to the Petitioner to show cause as to why action should not be taken under Section 167(8) of the Sea Customs Act against the petitioner. In response to the notice issued by the Department the petitioner filed an objection. His contention was that these items were purchased by him from various persons on different dates.
2. The inquiry was held, personal hearing was given to the petitioner and the material evidence was taken by the departmental officer. Thereafter by his order dated the 20th October, 1959 the Assistant Collector of Central Excise and Land Customs, Gauhati directed that out of thirty-four items of the properties seized, a number of the properties should be confiscated. He further directed the petitioner to get them redeemed on payment of duty and imposed a personal penalty of Rs. 100/- under Section 167(8) of the Sea Customs Act. The petitioner went up in appeal against the aforesaid order to the Collector of Central Excise and Land Customs, Assam, Manipur and Tripura a Shillong, who by his order dated the 31st December 1960 allowed the petitioner's appeal in respect of certain items of properties. In respect however of certain items namely, “Hindoo No. 1 ‘Nibs’,” 7'O clock blades marked D-1 torch light No. 335, torch light Wingston brand No. 7019, seal spot light torch No. 366, lion flash light No. 4445, latez 3 cell spot light. Bear brand spot-light, sky master torch light (express), lion torch light No. 777, H.K mark torchlight and Midiane cigarette papers, he rejected the appeal and directed that these items should be confiscated. He further maintained the order with regard to the penalty. Page: 40It is against this order that the present petition has been filed.
3. The point taken by the petitioner is that the burden has been cast by the department wrongly upon the petitioner. Although under Section 167(8) of the Sea Customs Act a special jurisdiction is conferred on the authorities to confiscate certain goods which have been imported, in contravention of the order of prohibition issued by the Central Government either under section 19 of the Sea Customs Act or under the Imports and Exports (Control) Act, 1947, still the petitioner is tried of an offence and the rule of criminal jurisprudence that the burden is on the prosecution applies with equal force to the proceedings under the Sea Customs Act. His contention is that the petitioner has claimed that he had purchased these goods in various years from 1951 to 1955. The authorities have only negatived the contention of the petitioner that he had purchased these goods in the years mentioned by him. Having rejected the plea of the petitioner of bona fide purchase, they have inferred that the goods India in contravention of the restrictions imposed were of illicit origin and they were imported in under the provisions of the Sea Customs Act. The contention is that the burden being on the department, it is not enough for the department to hold that as the petitioner has failed to prove the bona fide purchase of the goods, it necessarily follows that the goods were imported into India in contravention of the provisions of the Imports and Exports (Control) Act, 1947.
4. The contention of the department with regard to the 7O'clock blades is that these were manufactured after the absolute restriction was imposed. There is no evidence on the record from which it could be shown that the blade was manufactured after the period when the absolute restriction was imposed in the year 1957. In the absence of any evidence to that effect on the record it cannot be said that the department has discharged even the burden on it that the goods were imported into India in contravention of the orders issued under the Imports and Exports (Control) Act, 1947.
5. Section 167(8) of the Sea Customs Act provides that—
“If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported or exported from India contrary to such prohibition or restriction, such goods shall be liable to confiscation and any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees.”
6. section 19 of the Sea Customs Act is under Chapter IV of this Act and it says—
“The Central Government may from time to time, by notification in the Official Gazette prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontier as defined by the Central Government.”
7. Section 3 of the Imports and Exports (Control) Act, 1947 lays down as follows:—
“3(1) The Government may, by order publish in the Official Gazette, make provision for prohibiting, restricting or otherwise controlling. In all cases, or in specified classes of cases, and subject to such exceptions, if any, as may be made by or under the order:—
(a) the import, export carriage coastwise or shipment as ship's stores of goods of any specified description;
(b) the bringing into any port or place in India of goods of any specified description intended to be taken out of India without being removed from the ship or conveyance in which they are being carried.
(2) All 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 (VIII 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.
(3) Notwithstanding anything contained in the aforesaid Act, the Central Government may, by order published in the Official Gazette, prohibit, restrict or impose conditions on the clearance, whether for home consumption or for shipment abroad, of any goods or class of goods imported into States of India.”
8. In pursuance of the powers conferred under section 3 from time to time orders were issued by the appropriate Government. On the 7th December, 1955 an order was issued by the Government of India by which the import of certain articles including the articles in question is said to have been restricted. The nature of the restriction was also varied from time to time. For some period the restriction was in absolute terms. During some time the restriction was partial inasmuch as the goods could be imported after obtaining the license. The department therefore in our opinion by merely holding that the petitioner has failed to prove the, bona fide purchase of the goods has not discharged the burden on it to the effect that these goods were imported in contravention of the restrictions imposed under the provision of the Imports and Exports (Control) Act, 1947. No evidence has been led by the department to show that these goods were imported during the period when the imposed restrictions were in force.
9. The appellate authority has disposed of the whole matter in a very summary way, taking each item separately. The appellate authority has remarked that no details have been furnished itemwise in the receipts produced by the party to show that the “Hindoo No. 1 ‘Nibs’ were sold under that receipts and that accordingly his contention that the nibs were covered by the receipts produced by him cannot be accepted. As we have already pointed out, merely because the petitioner failed to prove the bona fide purchase it does not follow that the Goods were necessarily imported in contravention of the order passed under the Imports and Exports (Control) Act, 1947. As regards the 7 O'clock blades he has only observed that the 7 O'clock blades bear marks D-1 and hence, appellant's contention cannot be accepted. There is Page: 41no reference to any evidence to show that these blades were manufactured after the imposition of the restriction.
10. Some explanation has been offered in the counter-affidavit filed before us, but there is no evidence on the record to prove that these blades were manufactured after the imposition of the restriction. As regards the torch lights the appellate authority has also observed that—
“The torch lights were Originally claimed to be rusted, out-modelled and old. The receipts produced show that these were purchased recently. Examination of the torch lights show that all of them except two are serviceable and in good condition. Appellant's contention cannot therefore be accepted”.
11. No inference can be drawn from these observations. What the authority means to suggest is that as these lights were manufactured recently, they must have been imported after the imposition of the restriction and in contravention of the restriction order. In our opinion no such inference can be drawn from the mere appearance of these torch lights an it cannot be said that the department has discharged the burden placed on it. As regards the Midiane cigarette papers a similar error has been committed by the departmental authority. Reference in this connection way be made to the case of Amba Lal v. Union of India, reported in AIR 1961 SC 264. Dealing with the question of the burden of proof it was observed by their Lordships of the Supreme Court at page 2661 as follows:—
“There is no evidence adduced by the customs authorities to establish the offence of the appellant, namely, that the goods were smuggled into India after the raising of the customs barrier against Pakistan in March 1948. So too, on the part of the appellant, except his statement made at the time of seizure of the goods and also at the time of the inquiry that he brought them with him into India in 1947, no other acceptable evidence has been adduced. In these circumstances, the question of onus of proof becomes very important and the decision turns upon the question on whom the burden of proof lies.
This Court has held that a customs officer is not a judicial tribunal and that a proceeding before him is not a prosecution. But it cannot be denied that the relevant provisions of the Sea Customs Act and the Land Customs Act are penal in character. The appropriate customs authority is empowered to make an inquiry in respect of an offence alleged to have been committed by a person under the said Acts summon and examine witnesses, decide whether an offence is committed, make an order of confiscation of the goods in respect of which the offence is committed and impose penalty on the person concerned ******. To such a situation, though the provisions of the Code of Criminal Procedure or the Evidence Act may not apply except in so far as they are statutorily made applicable, the fundamental principles of criminal jurisprudence and of natural justice must necessarily apply. If so, the burden of proof is on the customs authorities and they have to bring home the guilt to the person alleged to have committed a particular offence under the said Acts by adducing satisfactory evidence.”
12. Dealing with the applicability of section 106 of the Evidence Act it has been further remarked by there Lordships of the Supreme Court at page 267 as follows:
“We cannot also accept the contention that by reason of the provisions of section 106 of the Evidence Act the onus lies on the appellant to prove that he brought the said items of goods into India in 1947. section 106 of the Evidence Act in terms does not apply to a proceeding under the said Acts. But it may be assumed that the principle underlying the said section is of universal application. Under that section, when any fact is especially within the knowledge of any person the burden of proving that fact is upon him. This court in Shambu Nath Mehra v. State Of Ajmer., 1956 SCR 199 : (S) AIR 1956 SC 404 after considering the earlier Privy Council decisions on the interpretation of section 106 of the Evidence Act, observed at p. 204 (of SCR): (at p. 406 of AIR) thus:
“The section cannot be used to undermine the well established rule of law that save in a very exceptional class of case, the burden is on the prosecution and never shifts.”
13. Applying the same principles enunciated in this case we think that in the present case the department failed to discharge the burden upon it. In the result we quash the order of the Collector of Central Excise and Land Customs and direct that the properties confiscated should be released forthwith and the penalty and the incidental charges if paid should be refunded. The petition is allowed with cost which is assessed at Rs. 100/-.
14. S.K Dutta, J.:— I agree.
JE/M/K.S.B
15. Petition allowed.
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