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Issues Involved:
1. Legality of the condition imposed by the Collector of Central Excise for the production of a "no objection" certificate from the Reserve Bank of India. 2. Violation of the principle of natural justice due to the consideration of a report by the Assistant Collector of Central Excise without giving the petitioners an opportunity to refute it. Issue-wise Detailed Analysis: 1. Legality of the Condition Imposed by the Collector of Central Excise: The petitioners argued that the Collector of Central Excise's order dated 24th November 1953, which required them to produce a "no objection" certificate from the Reserve Bank of India, was illegal. They contended that Section 183 of the Sea Customs Act did not authorize the imposition of such a condition. The court examined Section 167(8) of the Sea Customs Act, which outlines penalties for the importation or exportation of prohibited or restricted goods. Section 183 of the Sea Customs Act states that the officer adjudging confiscation must give the owner an option to pay a fine in lieu of confiscation. However, Act VIII of 1952 amended the Foreign Exchange Regulation Act, making the provisions of the Sea Customs Act applicable to restrictions under Sections 8 and 23A of the Foreign Exchange Regulation Act, with Section 183 being modified to replace "shall" with "may." The court noted that Section 8(1) of the Foreign Exchange Regulation Act empowers the Central Government to prohibit the importation of foreign currency without the Reserve Bank's permission. The court also referred to a notification dated 25th August 1948, issued under Section 8(1), which restricted the importation of certain goods, including foreign currency, without Reserve Bank permission. In light of these provisions, the court concluded that the Collector of Central Excise had the authority to impose the condition of producing a "no objection" certificate from the Reserve Bank of India. Therefore, the argument of the petitioners on this point was rejected. 2. Violation of the Principle of Natural Justice: The petitioners contended that the Collector of Central Excise relied on a report from the Assistant Collector of Central Excise at Kalimpong, which stated that 1,030 Chinese silver dollars were released to Chiring Wangdi on 3rd July 1952. This report was considered after the petitioners had shown cause and presented their arguments. The report was not shown to the petitioners, and they were not given an opportunity to refute its contents. The court found that the Collector of Central Excise had rejected the petitioners' explanation solely based on this report, which was highly prejudicial to them. The court emphasized that the principle of natural justice requires that parties be given a fair opportunity to correct or contradict any prejudicial statements. The court cited a Division Bench decision in Gopi Krishna Prasad v. State of Bihar, which held that a person should not be condemned on ex parte statements and must be given an effective opportunity to refute allegations. The court also referenced Lord Loreburn's statement in Board of Education v. Rice, which underscored the duty to act in good faith and fairly listen to both sides. In the present case, the court held that there was a violation of the principle of natural justice, rendering the order of the Collector of Central Excise dated 24th November 1953, made under Section 167(8) of the Sea Customs Act read with Section 23A of the Foreign Exchange Regulation Act, without jurisdiction. Conclusion: The court, exercising its authority under Article 226 of the Constitution, set aside the order of the Collector of Central Excise dated 24th November 1953. The court directed that the case be reheard by the Collector of Central Excise, who must provide the petitioners an opportunity to address the statements made in the report of the Assistant Collector of Kalimpong and make a fresh order in accordance with law. The application was allowed, but no order was made regarding the costs of the hearing.
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