1970 (3) TMI 57 - SC - Customs

Whether the statements, if any, alleged to have been made by the two Mohammads and Ghulam Rasool were inadmissible in evidence as having been made while they were in police custody? Whether there was no material on record to connect him with the alleged smugglers or with the smuggled gold or with the act of smuggling and there was no basis for a reasonable belief that he was a person concerned in the importation of the gold? Whether the maximum penalty which could be imposed under Section 167(8) of the Sea Customs Act was only ₹ 1,000/-? Held that - A faint argument was made that the statements of the two Mohammads or Ghulam Rasool were inadmissible in evidence as having been made before a police officer as in our view there is no substance in this point because the statements were recorded by a Customs Officer duly investigating into a case where allegations were made about the smuggling of gold. At that stage no criminal case had been started against them in respect of such smuggling and it is difficult to see how such statements can be said to be inadmissible in evidence. As regards to penalty it is a matter of no moment as the order of the Collector passed on 9th August, 1959, clearly showed that the confiscation had been ordered under Section 167(8) of the Sea Customs Act, read with Section 19 of the Act as made applicable by Section 23A of the Foreign Exchange Regulation Act and the personal penalty was imposed under these provisions of law. Thus if the gold smuggled weighed 692 tolas of which the value would not be less than rupees one lakh a penalty of ₹ 50,000/- was certainly not out of proportion to the gravity of the offence No substance in the argument that the appellant could not be said to be a person concerned in the smuggling of gold even if it were to be held that he had paid ₹ 16,000/- to the other three persons for bringing the gold into India. If the Collector was free to proceed on the basis of the statements recorded which went to show that gold of the value of rupees one lakh was smuggled into India at the instance of and for the benefit of the appellant who had paid out a large sum of money for the purpose, it is difficult to see how he could be said to be a person not interested or concerned in the act of smuggling. Appeal dismissed.

Issues:
1. Challenge to the order of the Collector of Central Excise
2. Admissibility of statements made by individuals in police custody
3. Failure to respond to show cause notice and subsequent penalties
4. Natural justice principles in the case
5. Imposition of personal penalty exceeding statutory limits

Analysis:

1. The appellant filed a writ petition challenging the order of the Collector of Central Excise on various grounds. The appellant argued that the statements made by individuals while in police custody were inadmissible as evidence. Additionally, the appellant claimed there was no material connecting him to the alleged smuggling activities. The appellant also contended that the penalty imposed exceeded the statutory limit. The appellant alleged that his written reply to the show cause notice was not considered, and he was denied a fair hearing, violating the rules of natural justice.

2. The Collector of Central Excise affirmed that no reply was received from the appellant to the show cause notice. The Collector considered the statements made by the individuals before the Customs authorities, indicating the appellant's involvement in the smuggling activities. The High Court's single Judge rejected the appellant's arguments, stating that the appellant had an opportunity to respond but failed to do so. The Judge found no violation of natural justice principles and upheld the penalty imposed by the Collector.

3. Appeals were filed by other individuals challenging the Collector's order, and the Division Bench accepted the Collector's affidavit, confirming the lack of responses from the relevant parties to the show cause notice. The Division Bench held that the omission of the appellant's name in the notice did not prejudice him. The Bench also ruled that the Collector's decision was not subject to direct evidence rules and upheld the penalty imposed by the Collector.

4. The Division Bench referred to a previous court decision to support the imposition of penalties exceeding Rs. 1,000 and restored the penalties imposed by the Collector. The Bench emphasized that the Collector had the authority to proceed based on the available evidence and upheld the penalty imposed on the appellant. The Division Bench's decision was influenced by the legal interpretation of the term "concerned in any such offence" in the penalty provision.

5. The Supreme Court dismissed the appellant's appeal, rejecting arguments related to the admissibility of statements made to Customs officers and the imposition of a personal penalty exceeding statutory limits. The Court upheld the Collector's decision, emphasizing the seriousness of the offense and the appellant's involvement in the smuggling activities based on the evidence presented. The Court found no merit in the appellant's arguments and upheld the penalties imposed by the Collector.

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