G.P. Agarwal, Member (J)
1. The following alleged questions of law have been proposed by the applicant said to have arisen out of Order No. A/438/86-NRB dated 22.7.1986 passed by this Tribunal in Appeal No. CD/Del/2438/83-NRB, for being referred to the Hon'ble Supreme Court:
(i) Whether on the facts and the circumstances of the case, the adjudgment of the confiscation of goods and the imposition of the penalty was lawful, independent of the observance of the provisions of Section 122 of the Customs Act, 1962.
(ii) Whether under the facts and circumstances of the case the show cause notice dated 24.8.1982 having been issued under the signatures and authority of the Assistant Collector of Customs, Luck-now without being directed by the Additional Collector of Muzaffarpur was violative of the mandatory provisions of Section 122 read with Section 124 of the Customs Act.
(iii) Whether under the facts and circumstances of the case, the show cause notice under Section 124, as mentioned above, could legally be issued without having recourse to the provisions of Section 122 of the Customs Act.
(iv) Whether under the facts and circumstances of the case, the Asstt. Collector of Customs, Lucknow, who has no jurisdiction to pass the impugned adjudication order, was vested with legal jurisdiction to issue the show cause notice against the applicant under Section 124 of the Customs Act.
(v) Whether under the facts and circumstances of the case, the show cause notice dated 24.8.1982 was an integrated part of the proceedings as contemplated within the term "Adjudged" as used in Section 122 of the Customs Act.
(vi) Whether under the facts and circumstances of the case, the confiscation of the Indian currency on the basis that it represented the sale proceeds of the smuggled goods was without any evidence.
(vii) Whether under the facts and circumstances of the case, the falsity of the applicant's explanation as regards the nature of the seized currency was adequate in law to presume the seized currency as the sale proceeds of the smuggled goods, in the absence of any direct evidence.
2. Brief facts of the case leading to this application may be stated as under:
Acting on prior information the Customs Officers concerned searched the business premises of the applicant firm styled as M/s. Janta Watch House, Lucknow on 24.4.1982 and recovered watches and electronic cells and also unaccounted Indian Currency. A person by name Kamal Kumar, who was also present at the time of the search was found to have concealed in his legs beneath the socks worn by him 55 automatic wrist watches. In the statement on the spot the applicant stated that out of the recovered watches, 3 recovered watches were purchased by him for marriage purpose and 8 watches were received for repairs. Regarding the other 75 watches, 3 time pieces and electronic cells, he stated that these had been given to him shortly before the officers' visit by one Harbhajan Singh for safe custody but that he had not turned up thereafter. The applicant was, however, unable to give any particulars regarding the said Harbhajan Singh to facilitate enquiry. The said Kamal Kumar, on interrogation, stated that he brought the said 55 automatic wrist watches so concealed to sell them to the applicant with whom he had past transactions in smuggled watches. This was confirmed by the applicant also. Regarding the Indian currency the applicant stated that it was the sale proceeds of Indian watches sold by him on 23.4.1982 at Sultanpur and Pratapgarh. During investigation it was found that the version of the applicant regarding the Indian currency was false. As a follow-up action a Show Cause Notice was issued and ultimately the Adjudicating Authority ordered for the confiscation of the wrist watches being of 3rd country origin and the Indian currency being the sale proceeds of the smuggled watches and also imposed a personal penalty of Rs. 10,000/- on the applicant. On appeal, this Tribunal upheld the order of confiscation and the penalty but having regard to the facts and circumstances of the case modified the order of absolute confiscation of the Indian currency and gave option to the applicant to redeem the same on payment of a fine of Rs. 7,000/- in lieu of confiscation.
3. We have heard Snri S.K. Effendi, learned Counsel for the applicant and Smt. Nisha Chaturvedi, learned SDR for the respondent.
4. Regarding Question Nos. (i), (vi) & (vii):
These questions relate to the appreciation and the sufficiency of the evidence on record. This Tribunal after considering the evidence on record and the arguments advanced by the party, concluded against the applicant. Hence being questions of facts the same are not referable to the Hon'ble High Court or Supreme Court.
5. Regarding Question Nos. (ii), (iii), (iv) & (v):
These questions are inter-linked. During the course of hearing the main thrust of the arguments of the learned Counsel for the applicant was that in the instant case Show Cause Notice was issued by the Assistant Collector and not by the Collector of Customs or by the Additional Collector himself. He submitted that the Show Cause Notice ought to have been issued by the Adjudicating Authority himself. In support of his contention he relied upon the decision of a single judge of the Kerala High Court rendered in the case of V. Ramcmanda v. Collector of Customs . In reply the
learned SDR relied upon the decisions rendered in the case of Mohanlal Devdanbhai v. M.P. Mondkar AIR 1977 Bombay 320; Manilal Bhanabhai Patel v. Kaul and Ors. ; and Tarak Nath Sen v. Union of India . Shri Effendi, learned
Counsel for the applicant while elaborating his arguments submitted that since the view of the single judge of the Kerala High Court taken in the case of V. Ramananda, supra, is in conflict with the view taken by the other High Courts, these, questions may be referred to the Hon'ble Supreme Court in terms of Section 130-A of the Customs Act, 1962. After giving our due consideration to the arguments so advanced, we are of the view that the legal position is quite clear and there is absolutely no conflict in the decisions of the High Courts in respect of these questions. It may be mentioned here at the outset that these very questions, by way of arguments, were raised at the time of hearing of the appeal on merits itself and were rejected in the following terms:
We have given careful consideration to the submissions made by the learned Counsel and the learned SDR. On the question of the legality of the Show Cause Notice issued by the Asstt. Collector to show cause to Additional Collector, it is observed that the position in law has been set out very clearly in the case of Tarak Nath Sen v. Union of India and in Naraindas M.
Kapadia v. Union of India Cr.L.J. 1303. In the former case it has been observed while considering Section 124 of the Customs Act relating to issue of Show Cause Notice that what the law requires is that such notice must contain grounds on which it is proposed to confiscate the goods or to impose a penalty. A notice under Section 124, the court observed, is akin to summons in a civil suit, and it is partly ministerial and really serves the purpose of being an intimation of initiation of proceedings without involving any judicial determination. The court further observed that a Show Cause Notice issued by an officer other than the adjudicating authority must ask the parties to show cause direct to the adjudicating officer concerned, and hence the court held in that case the notice by the Asstt. Collector asking petitioner to show cause to the Additional Collector who had jurisdiction to adjudicate is not invalid. Similar observations were made in the other case cited above wherein it was observed, "it is true that notice is a condition precedent for an order of adjudication. But giving of the notice is not interwoven with the power to adjudicate on the question of confiscation." Even in the case law cited by the learned Counsel, the defect in notice was that the notice did not provide opportunity of hearing before the adjudicating authority concerned. In the present case, the notice though issued by the Assistant Collector directed party to show cause to Additional Collector who is the adjudicating authority and hence, in the light of the above judicial decisions, there was no infirmity in such a notice.
After hearing the arguments we again tried to find out as to whether there is any conflict in the decisions of High Courts in respect of these questions but we are unable to persuade ourselves to agree with the contentions of the learned Counsel for the applicant.
6. Section 122 of Customs Act, 1962 deals with the adjudication of confiscation and penalties and provides that such confiscation or penalty may be adjudged,-
(a) without limit by a Collector of Customs or a Deputy Collector of Customs;
(b) where the value of goods liable to confiscation does not exceed Rs. 25,000/-, by an Asstt. Collector of Customs; and
(c) where the value of the goods liable to confiscation does not exceed Rs. 25,00/-, by a gazetted officer of Customs lower in rank than an Asstt. Collector of Customs.
Section 124 of the Customs Act, 1962 deals with the issuance of show cause notice before confiscation of goods etc. and provides that no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person,-
(a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;
(b) is given an opportunity by making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and
(c) is given a reasonable opportunity of being heard in the matter.
7. The fact that in the Show Cause Notice the applicant was asked to show cause to the Additional Collector of Customs and the case was adjudicated by the Additional Collector of Customs is not disputed before us and rightly so, because according to Section 2(8) of the Customs Act "Collector of Customs" includes an Additional Collector of Customs. What is disputed is that the Show Cause Notice was issued by the Assistant Collector of Customs and not by the Additional Collector of Customs himself. In the case of Tarak Nath Sen v. Union of India , a direct question which fell for consideration
before their Lordships of the Calcutta High Court was as to whether notice issued by the Asstt. Collector directing a party to show cause to Additional Collector was a valid notice under the Customs Act. In that case the show cause notice was issued by the Asstt. Collector of Customs, Preventive (I), Calcutta and the Additional Collector of Customs passed the adjudication order confiscating the seized gold and also imposed a personal penalty Under Section 112 of the Customs Act and the Defence of India Rules. While repelling the contention that the notice issued by the Asstt. Collector was illegal their Lordships after taking into consideration the various provisions of the Customs Act and the Adjudication Manual issued by the Government of India, Ministry of Finance, Central Board of Excise and Customs, held as under:
Under Section 2(8) of the Customs Act, 1962, the 'Collector of Customs' includes an Additional Collector of Customs. The learned Advocate for the petitioners did not contend before me that the Additional Collector of Customs had no jurisdiction to pass final orders in the above adjudication proceedings. According to the learned advocate for the petitioners the show cause notice was a part of the adjudication proceeding, and, therefore, the Assistant Collector who was not competent in law to either confiscate the seized gold or to impose penalties of Rs. 10,000/- on each of them and the initiation of the adjudication was without jurisdiction and void ab initio. I have elaborately considered the point mentioned above in my judgment in Kumud Chandra Narandas Kapadia v. Union of India C.P. No. 5486 (W) of 1969 and C.R. No. 1463 (W) of 1970, dated October 4, 1972 (Cal). I find no reason to take any different view in the instant case. Therefore, it is unnecessary to again elaborately set out the points. The three requirements of Section 124 of the Customs Act, 1962 are really embodiment of the well-known principle of Audi Alteram Partem. The fulfilment of these requirements of natural justice has been statutorily provided. The Clause (a) of Section 124 in the first place provides for issue of a notice to appear before the Adjudicating Authority. The law requires that such notice must contain grounds on which it is proposed to confiscate the goods or to impose penalty. In other words, a notice under Section 124(a) is in the nature of a charge against a person proceeded under the said provision. In so far as the notice under Section 124(a) is akin to a summons of a civil suit it is partly ministerial and really serves the purpose of being an intimation of initiation of a proceeding without involving any judicial determination. The para 15, Chap. Ill of the Adjudication Manual, 2nd Edition, Govt. of India, Ministry of Finance, Central Board of Excise and Customs, 1970 specifies the authority to issue show cause notices. The same contains observations that there was no legal objection to the issue of show cause notices by officers or other than the adjudicating authority. But a show cause notice issued by the Officer other than the adjudication authority must ask the parties to show cause direct to the adjudicating officer concerned. In the instant case, the Assistant Collector of Customs had asked the petitioner to show cause to the Additional Collector of Customs who had admittedly jurisdiction under Section 123 of the Customs Act, 1962.
Presumably the grounds mentioned in the notice under Section 124 are formulated by making prima facie inference. As a result of an investigation of Chapter XIII of the Customs Act a charge once issued however becomes part of a quasi-judicial proceeding. I fail to see how framing of such charge by an officer other than the adjudicating authority may prejudice a person who is asked to show cause. If on the other hand, the grounds contained in the show cause notice are formulated by an officer other than the adjudicating authority then the adjudicating authority may have no occasion to look into the grounds before conducting the adjudication proceeding. There will be less chance of bias or formation of any prior opinion by the adjudicating authority. When Section 124 (b) does not specifically provide that the person who passes the adjudication order must issue the show cause notice. I am not prepared to accept the submission of the learned Advocate for the petitioners on this point.
In the case of Manilal Bhanabhai Patel v. Kaul , a Division Bench of the Gujarat High Court held that authority issuing show cause notice and authority conducting adjudication proceedings need not be the same. In that case their Lordships framed a question of law for consideration as follows:
Whether the show cause notice contemplated by Section 124 of the Act could be issued by an authority which is not entitled to conduct the adjudication proceedings contemplated by Section 122 of the Act for the purpose of confiscation and penalties?
and after analysing the scheme, object and the provisions of the Customs Act held that the show cause notice issued by the authority other than the Adjudicating Authority is valid in law. This authority is complete answer to the questions framed by the learned Counsel for the applicant. The following observations may be extracted with advantage:
...From this analysis of the scheme there emerges nothing to show that the issuance of a show cause notice under Section 124(a) is part and parcel of adjudication proceedings held under Section 122. x x x x x
What Section 122 of the Act does is merely to make a suitable distribution of pecuniary jurisdiction to adjudicate as amongst different ranks of Customs officers. Different officers authorised to act under this section may or may not be having first hand knowledge about the circumstances under which goods are seized under Section 110. They can therefore supply the grounds for confiscation in a show cause notice under Section 124(a) only after studying materials placed before them. It would therefore be a mistake to hold that they are the only authorities who can issue show cause notices under Section 124(a).
x x x x x
Under these circumstances, we are of the opinion that it is not necessary under Section 124 of the Act that the authority giving show cause notice under Clause (a) of this Section should be the same which can undertake adjudication proceedings under Section 122. The function of issuing a show cause notice and the function of conducting adjudication proceedings under Section 122, are quite different and if Section 124 is intimately connected with any other section of the Act, it is Section 110 under which the goods are seized.
8. In the case of V. Ramananda v. Collector of Customs, supra the question was not that as to whether a show cause notice issued by the Assistant Collector of Customs was valid or not. The question which was raised was: that the show cause notice was issued by the Assistant Collector of Customs and that notice only states that the petitioner should appear before him and not before the Collector and it was held that "notice was defective in this respect namely that it only indicated that the petitioner should appear with his evidence before the Assistant Collector of Customs." In other words, the controversy in that case was that as to whether the show cause notice issued by the Assistant Collector of Customs asking the party to show cause not before the Adjudicating Authority but before him was valid or not and ultimately their Lordships held that "Section 124 of the Act required that the petitioner should have been given an opportunity of being heard before the Collector, who has made the adjudication. As no such opportunity was given..., there has been a miscarriage of justice." And, therefore, His Lordships quashed the show cause notice leaving it open to the Collector of Customs, to take proceedings from the stage of the show cause notice and after issuing a proper show cause notice and giving an opportunity to the petitioner of being heard, to pass the appropriate order. In all fairness it may be stated that while dealing with the aforesaid question regarding the validity of the show cause notice asking the party to show cause to the Assistant Collector instead of to the Collector of Customs His Lordships, in passing, did observe that "Under Section 124 of the Act, I think, the show cause notice should have been given by the Collector or by a person acting under his authority and on his behalf and should have directed the petitioner to submit his representations before the Collector and to appear before him, if the petitioner wanted personal hearing. But His Lordships did not rest here and stated as follows:
At any rate I am of opinion that Section 124 of the Act required that the petitioner should have been given an opportunity of being heard before the Collector, who has made the adjudication. As no such opportunity was given, I am inclined to think that there has been a miscarriage of justice.
From a careful reading of the said decision it is clear that the ratio of the decision is that the party concerned should be asked to show cause to the Adjudicating Authority itself which in that case was the Collector of Customs.
9. In the light of the aforesaid discussions, we are of the considered view that as stated above, there is no conflict in the decisions of the High Courts as argued by the learned Counsel for the applicant. Consequently, the application is dismissed.