1972 (1) TMI 115 - HC - Central Excise

Summary

Issues Involved:
1. Validity of the penalty order by the Collector of Customs.
2. Procedural irregularities and breach of natural justice.
3. Jurisdiction of the Collector of Customs and Excise.
4. Appropriateness and reasonableness of the penalties imposed.

Issue-Wise Detailed Analysis:

1. Validity of the Penalty Order by the Collector of Customs:
The appellant contested the validity of the Rs. 25,000 penalty imposed by the Collector of Customs. The seizure of ten slabs of gold, which were concealed on the person of Sare Veerayya, led to the confiscation of the gold and penalties on multiple individuals. The Collector's decision was based on the reasonable belief that the gold was smuggled, and the penalties were imposed following an adjudication process. The appellant's subsequent appeals to the Central Board of Excise and Customs and the Government of India were rejected due to non-compliance with the deposit requirement under Section 129 of the Customs Act, 1962.

2. Procedural Irregularities and Breach of Natural Justice:
The appellants argued that the inquiry by the Collector of Central Excise violated principles of natural justice, particularly because Veerayya and Lakshminarayana were not called for cross-examination. The court noted that the statements of these individuals were furnished to the appellant, and no request was made for their cross-examination during the inquiry. The court held that the rules of natural justice were not breached as adequate opportunity was given to the appellants to explain adverse features. The tribunal's acceptance of the statements without cross-examination was deemed appropriate since the appellant did not request it.

3. Jurisdiction of the Collector of Customs and Excise:
The appellant raised a jurisdictional issue, arguing that the Collector of Central Excise lacked jurisdiction to decide on the alleged violation of the Foreign Exchange Regulation Act. The court found this plea unconvincing, noting that the point was not argued before the lower court. The court affirmed that the Collector had the competence to initiate proceedings under the Customs Act, and the gold was rightly confiscated under Section 111, attracting penalties under Section 112.

4. Appropriateness and Reasonableness of the Penalties Imposed:
The court scrutinized the penalties imposed on the four individuals, totaling Rs. 50,000. It found the penalties arbitrary and lacking a rational basis. The court emphasized that the penalties should be deterrent, not retributive, and should consider the past conduct of the individuals involved. The court noted that the firm had not been engaged in similar activities previously, making the penalties excessive. The court quashed the penalties and directed the Collector of Customs to reconsider and levy appropriate penalties in light of the observations made.

Conclusion:
The court allowed the writ appeals, quashing the penalties imposed by the Collector of Customs and directing a reconsideration of appropriate penalties. The court emphasized the need for judicial discretion in penalty imposition and highlighted the importance of adhering to principles of natural justice and procedural fairness. The parties were directed to bear their respective costs.