# [1962] Supp. 1 S.C.R. 358

- **Citation:** [1962] Supp. 1 S.C.R. 358
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Case number:** CIVIL .APPELLATE JURISDICTION : Civil Appeal No. 591 of 1960
- **Bench:** P. B. Gajejwragadkar, A. K. Sarkau, K. N. Wanchoo, K. c. DAS GUPTA ancl N. RAJAGOPALA AYYANGAR
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1962-supp-1-s-c-r-358-2426
- **Pages:** 6

## Headnote

Smuggled Good..-Confiscation by Co/l<clor of G1UwmaEt>idente-lf dfr•cl evidmce ea•enlial-lnter/erc11ce of findi719 by
wm-Sea 01Uwms Act, 1878 (8 of 1878), a. 167(8)-Con·
•luulion of India, A11. 226.
On September 14, 1954, the appellant sent a quantity of
gold to a refinery in Bombay for the purpose of melting it. On
receipt of information that the gold which was being melted
was believed to be smuggled, the customs authorities made
some enquiries at the refinery and seized the gold. The
Collector of Customs found that the gold was of foreign origin
and had been importd into India in contravention of the
Foreign Exchange Regulations Act, 1947, and made an order
confiscating it under s. 167(8) of the Sea Customs Act, 1878.
The a1,>pcllant filed a petition under Art. 226 of the Constitution
of India before the Punjab High Court challenging the legality
of the order of confiscation on the ground that there was no
evidence before the Collector of Customs to show that the gold
had been imported after restrictions had been imposed in
March 19+7 by notification under the Foreign Exchange
Regulations Act, 1947, and consequently the finding that the
gold had been smuggled was unsustainable.
In reaching the
conclusion that the gold had been smuggled the Colletor
of Customs considered
the
credibility
of
the
story
put
forward
by
the appellant
about the purchase of
the gold and the price at which the gold was stated to have
been purchased which was less than the market price and also
the conduct of the appellant in trying to get the gold melted
at the refinery with a small bit ohilvcr added so as to reduce
the fineness of the gold and thus approximate the resultant
product to licit gold found in the maket.
Held, that though there was no direct evidence to show
that the gold had been imported in contravention of the
notification i!sucd under the Foreign Exchange Regulations
Act, 1947, the evidence relied on by the Collector of Customs
in coming to the conclusion that the gold was smuggled could
justify the finding and that the matter did not call for inter·
fcrcncc under Art. 226 of the Constitution.
(1) S.C.R. SUPREME COURT RFPORTS
359
CIVIL .APPELLATE JURISDICTION : Civil Appeal
No. 591 of 1960.
Appeal by special leave from the jmlgment
and order dated November 6, 1958, of the Punjab
High Court (Circuit Bench) at Delhi in Civil Writ
No. 417-D of 1958.
A. V. Viswanatha Sustri, J. B. Dadachunji,
0. C. Mathur and Ravinder Narain, for the appellants.
P. K. Chatterjee and T. M. Sen, for the respondents.
1961. November 13. The Judgment of the
Court was delivered by
AYYANGAR, J.-This appeal comes before us by
virtue of leave granted by this Court uuder Art.136(1)
of the constitution and is directed against the judgment and order of the Punjab High Court by which
a Writ Petition filed before it by the appellants,
under Art. 226 of the constitution was summarily
dismissed.
The point raised for our consideration relates
to the legality of an order of confiscation, by the
Customs Authorities, of certain gold belonging to the
appellants on the ground of its being smuggled. The
appellants are the pa1tners ofa Joint Hindu Family
firm carrying on business in Bombay in inter alia
gold and jewellery. On September 14, 1954, the
appellant-firm had despatched to the Bombay Bullion Refinery for the purpo8'3 of melting about 500
tolas of gold. Certain Customs Officers received
information that some quantity of gold which was
believed to be smuggled was being sent to the
refinery for melting and in pursuance of this
information they went to the refinery and found
the gold bullion which is the subject of these proceedings JJ!aced in a crucible for the pui·pose of
being melted. These officers ascertained from the
Mana.ger of the refinery that this gold belongecl
to the appellant-firm who were later contacted and
lssardas Daiiiat Ram
v.
Tk Union of India
AyJangar J.
JUI
lssardas Dauiat RtU11
'·
'Fht U11fon of India
AJ7angar J,
360 SUPREME COURT REPORTS [1962) SVPP

## Text

358 SUPREME COURT REPORTS [1962] SUPP.
1~1
ISSARDAS DAULAT RAM AND OTHERS
THE UNION OF INDIA A.i.~D OTHERS
(P. B. GAJEJWRAGADKAR, A. K. SARKAU,
K. N. WANCHOO, K. c. DAS GUPTA
ancl N. RAJAGOPALA AYYANGAR, JJ.)
Smuggled Good..-Confiscation by Co/l<clor of G1UwmaEt>idente-lf dfr•cl evidmce ea•enlial-lnter/erc11ce of findi719 by
wm-Sea 01Uwms Act, 1878 (8 of 1878), a. 167(8)-Con·
•luulion of India, A11. 226.
On September 14, 1954, the appellant sent a quantity of
gold to a refinery in Bombay for the purpose of melting it. On
receipt of information that the gold which was being melted
was believed to be smuggled, the customs authorities made
some enquiries at the refinery and seized the gold. The
Collector of Customs found that the gold was of foreign origin
and had been importd into India in contravention of the
Foreign Exchange Regulations Act, 1947, and made an order
confiscating it under s. 167(8) of the Sea Customs Act, 1878.
The a1,>pcllant filed a petition under Art. 226 of the Constitution
of India before the Punjab High Court challenging the legality
of the order of confiscation on the ground that there was no
evidence before the Collector of Customs to show that the gold
had been imported after restrictions had been imposed in
March 19+7 by notification under the Foreign Exchange
Regulations Act, 1947, and consequently the finding that the
gold had been smuggled was unsustainable.
In reaching the
conclusion that the gold had been smuggled the Colletor
of Customs considered
the
credibility
of
the
story
put
forward
by
the appellant
about the purchase of
the gold and the price at which the gold was stated to have
been purchased which was less than the market price and also
the conduct of the appellant in trying to get the gold melted
at the refinery with a small bit ohilvcr added so as to reduce
the fineness of the gold and thus approximate the resultant
product to licit gold found in the maket.
Held, that though there was no direct evidence to show
that the gold had been imported in contravention of the
notification i!sucd under the Foreign Exchange Regulations
Act, 1947, the evidence relied on by the Collector of Customs
in coming to the conclusion that the gold was smuggled could
justify the finding and that the matter did not call for inter·
fcrcncc under Art. 226 of the Constitution.
(1) S.C.R. SUPREME COURT RFPORTS
359
CIVIL .APPELLATE JURISDICTION : Civil Appeal
No. 591 of 1960.
Appeal by special leave from the jmlgment
and order dated November 6, 1958, of the Punjab
High Court (Circuit Bench) at Delhi in Civil Writ
No. 417-D of 1958.
A. V. Viswanatha Sustri, J. B. Dadachunji,
0. C. Mathur and Ravinder Narain, for the appellants.
P. K. Chatterjee and T. M. Sen, for the respondents.
1961. November 13. The Judgment of the
Court was delivered by
AYYANGAR, J.-This appeal comes before us by
virtue of leave granted by this Court uuder Art.136(1)
of the constitution and is directed against the judgment and order of the Punjab High Court by which
a Writ Petition filed before it by the appellants,
under Art. 226 of the constitution was summarily
dismissed.
The point raised for our consideration relates
to the legality of an order of confiscation, by the
Customs Authorities, of certain gold belonging to the
appellants on the ground of its being smuggled. The
appellants are the pa1tners ofa Joint Hindu Family
firm carrying on business in Bombay in inter alia
gold and jewellery. On September 14, 1954, the
appellant-firm had despatched to the Bombay Bullion Refinery for the purpo8'3 of melting about 500
tolas of gold. Certain Customs Officers received
information that some quantity of gold which was
believed to be smuggled was being sent to the
refinery for melting and in pursuance of this
information they went to the refinery and found
the gold bullion which is the subject of these proceedings JJ!aced in a crucible for the pui·pose of
being melted. These officers ascertained from the
Mana.ger of the refinery that this gold belongecl
to the appellant-firm who were later contacted and
lssardas Daiiiat Ram
v.
Tk Union of India
AyJangar J.
JUI
lssardas Dauiat RtU11
'·
'Fht U11fon of India
AJ7angar J,
360 SUPREME COURT REPORTS [1962) SVPP.
who addmittcd their ownership of the gold. The
gold was thereupon seized and investigation started
for ascertaining whether the gold was or was
not smuggled gold after which the ABBistant Collector of Customs issued a notice to the appellants
on January 31, 1955, to show cause why the gold
should not be confiscated under s. 167 (8) of the
Sea Customs Act. The appellants appeared in res·
ponse to this notice and were granted a personal
hearing, their Counsel being heard in support
of their plea that the gold was not smuggled and
so not liable to
be confiscated. Their defence
was however rejected and the Colletor of Customs
who adjudicated in this matter under s.182 of the
Sea Customs Act passed an order on August 25,
1955, directing the confiscation. From this order
appeals and revisions were preferred which were
unsuccessful. Thereafter the appellants filed a
Writ Petition before the High Court of Punjab
with the result already stated.
It will be seen from the above narrative
that the case is not covered by s. 178 (A) of the
Sea Customs Act which was enacted by C'.-entral Act
21 of 1955 since the seizure and the proceedings
in this case were long anterior to the enactment
of that section and cannot obviously be governed
by its provisions.
For the reason that s. 178 (A)
was in foroe at the stage of the appeals from the
order of the Collector of Customs to the Central
Board of Revenue and the Central Government
and possibly under the impression that their case
had been decided by throwing on them the burden of proving that the gold was not smuggled,
the appellants raised
in their Writ Petition to
the Punjab High Court points regarding the construction and constitutionality of s. 178 (A). When
their Petition was summarily dismissed these points
were repeated in the petition for special leave to
appeal filed in this Court, and special leave appears
to have been granted mainly for the reason that
•
..
(1) S.C.R. SUPREME COURT REPOR'fS
361
the appeal invoved the question of the constitu·
tionality of s. 178 (A) cf the Sea Customs Act. The
appeal has for that reason been posted for hearing
after tho decision of this Court in Collector of Gus·
toms, .JJfadras v. Nathella Smnpathu Chettey (1), in
which the validity of section was considered and
upheld.
Section 178 (A) being put aside, it mll.y be
added, the only question now arising for decision
is whether the order of the Collector of Customs
holding the appellant's gold seized at the refinery
to be smuggled gold so as to be liable to confiscation
under s. 167 (8) of the Sea Customs Act is vitiated
by any error such as to call for interference under
Art. 226 of the Constitution. Section. 167 (8) runs
in these terms.
"167. The
offences mentioned in the first
eolumn of the following schedule shall be punishable to the extent mentioned in the third column
of the same with reference to such offences res·
pectively :-
Offences .
(8) lf any goods
the importation or
exportation
of
which is for the
time being prohi·
bited or restricted by or under
Chapter IV of
this Act, be imported into or exported from India
contrary to such
prohibition or res·
triction;
..................
. . . . . . . . . .. . . . . . . .
Section of this
Act to which
offence has
Penalties
reference.
18 & 19
such goods shall
be liable to confiscation; & any
perl!on
concern·
ed in any such
offence
sh>tll be
liable to a penalty
not
exceeding
three times
the
value
of
the
goods, or
not
exceeding
one
thousand rupees."
(I) [1962) 3 S.C.R. 786.
1961
lssardas Dau/at Ram
Y.
Thi Union of India
Ayyangar J.
1961
/s;atdds DaJJlal Ra"'
v.
11~ lJniotr •f India
AyJ<Ullar J.
362 SUPREME COL'RT REPORTS (1962] SUPP.
The finding of the Collector is recorded in para.
graph 6 of his order in these wrms :
"Taking all the available evidence into
consideration, I am satisfi<'d that the gold
bullion in question is of foreign origin and
h1>d boon imporU>d into India in contraven·
tion of Foreign Exchange Hegulations Act,
and Section 19 of the Sea Customs Act there by
establishing
an offence attracting
the
provisions of Section 167(8) of the Sea Customs
Act."
It ~as not disputed that if there was material
to support this decision the appeal must fail.
The
conclusion
of
the
Collector
involves
findings on two
di8tinct
matters : (I)
that
the gold which was the subject of adjudir.atlon
was
of foreign origin, and (2) that that gold
had
been
imported
in
contravention
of
the Foreign Exchange Regulations Act.
Mr.
Viswanatha Sastri-learnL'<i Counsel for the appellant submitted that though the several facta
mentioned by the Collector in paragraph 5 of his
order which form the basis of the finding recorded
in paragraph 6 might show that the gold was of
foreign origin, there was no evidence before the
Collt"ctor that this foreign gold had been imported
nftcr restrictions had been imposed in March 1947
by notification under the Foreign Exchange Regula·
tionB Act, a fa.ct the onus to prove which was also
on the department, am] that in the absence of any
material supporting that conclusion the finding that
the gold was smuggled was unsustainable and that
the confiscation should therefore be set aside.
'We find our8elves 1m1ble to accept the submiSBion of learned Counsel.
Though,
no doubt,
there was no direct evidence that the gold which
Ill
•
-
(I) S.C.R. SUPREME COURT REPOHTS
363
was the subject of adjudication had eome into the
country after March 25, 1947, when the first
notification under the Foreign Exchange Regulations
Act placing a ban on the importation of gold was
issued, it is not. as if this could not be deduced or
inferred otherwise. There has been little or no
importation of gold from outside the country since
1947. If the gold now in question had been imported earlier it would be extremely improbable that
the gold would remain in the same shape of bars
and with the same fineness as when imported after
the passage of this length of time. It was precisely
for this reason that at the stage of the enquiry
before the Collector the principal point which wns
urged on behalf of the appellants was to deny that
the seized gold was of foreign origin and it is the
nature of the defence that accounts for the order
of the Collector dealing almost wholly with the
consideration of that question. In order to reach
his finding about the gold being smuggled; the
Collector bas referred to the conduct of the appellants in connection with (a) the credibility of the
story about the purchase of this gold from three
parties, (b) the price at which the gold was stated
to have been purchased which was' less than the
market price, and (c) the hurry exhibited in trying
to get the gold melted at the refinery with a small
bit of ail ver added so as to reduce the fineness of
the gold and thus approximate the resultant product
to licit gold found in: the market. These were
undoubtedly relevant pieces of evidence which bore
on the question regarding the character of the gold,
whether it was licit or illicit. Learned Counsel is,
therefore, not right in his submission regarding the
absence of material before the CQllector to justify
the finding recorded in paragra.hp 6 we have set
out earlier.
The Writ Petition was
therefore
properly dismissed by the learned Judges of the
High Court.
The appeal is dismissed with costs.
Appeal diBmisaed.
1961
lssardas Daulcit Ram
v.
The Union of India
Ayyangar J.