IN CONFISCATION NOTICE IS TO BE ISSUED NOT ONLY TO THE OWNER OF GOODS BUT ALSO TO THE INTERESTED PARTIES

[Mr. M. GOVINDARAJAN]

In 'Commissioner of Customs, Lucknow V. Rajesh Kumar Soni' - 2010 (258) ELT 169 (All) the officers of Customs Department have recovered 14 gold biscuits of two Nepali nationals on the premise that the gold biscuits had been smuggled into India from Nepal, while traveling in a bus on 18.04.1999. Their names were Sri Dil Prasad Sapkota and Gyan Hari Sapkota. The gold biscuits of foreign origin were seized under Sec. 110 of the Customs Act as the same were liable to be confiscated under Section 111(d) of the said Act.

During the course of interrogation one of the Nepali informed that one Ram Prasad of Nawal Parsi, Nepal had given the gold for delivering it to Ram Chandra Jaiswal of Deoria. In a follow up action on 19.04.1999, the Customs Authorities had raided the house of Ram Chandra Jaiswal and during search operation, a telephone diary and usual packing material for smuggled gold was recovered. During the search operation, Ram Chandra Jaiswal was not available at the premises. However it appears that no gold biscuit was recovered from the premises of Chandra Jaiswal.

During the course of search on 19.04.1999, one Krishan Prasad Keshari had confirmed the officers of the Customs Department at the house of Ram Chandra Jaiswal and Krishan Prasad Keshari tried to run away. However, he was caught hold by the customs officers and an amount of Rs.2,50,000/- was recovered from Krishan Prasad Keshari in the denomination of Rs.500/-.

In his statement Krishan Prasad Keshari stated that he is a servant of M/s Laxmi Readymade Garments, Ballia and the amount of Rs.2,50,000/- recovered from him was given by Mr. Ajay Kumar Verma, S/o Laxmi Verma for handing over to Ram Chandra Jaiswal. The house was raided by the Customs Authority at the cost of give gold biscuits of foreign origin. The Customs authorities believed the said amount of Rs.2.5 lakhs as the sale proceed of smuggled foreign origin gold and seized under Section 110 of the Customs Act. On 06.09.1999 a show cause notice under Section 124 of the Act was issued to Ram Prasad, Dil Prasad Sapkota, Gyan Hari Sapkota, Ram Chandra Jaiswal, Krishan Prasad Keshari, Ajay Kumar Verma and M/s Laxmi Readymade Garments. The respondent submitted reply.

The Joint Commissioner, Customs, Lucknow had passed an order on 29.02.2000 holding that the amount of Rs.2.5 lakhs was the sale proceed and was rightly confiscated. He has relied upon the statement of Krishan Prasad Keshari recorded under Section 108 of the Customs Act. Only Rajesh Kumar Soni and Krishan Prasad Keshari have challenged the order before the Tribunal. The Tribunal allowed the appeal on 30.07.2003 and remitted the matter. The Tribunal took a view that no notice under Sec. 124 of the Act was issued to Rajesh Kumar Soni. The Tribunal observed that when Rajesh Kumar Soni raised claim with regard to the amount of Rs.2.5 lakhs then he should have been given opportunity of hearing by serving a notice under Sec. 124 of the Act. It recorded a finding that the Customs Department has never been a case that the seized currency or any part thereof was the sale proceeds of 14 gold biscuits which were confiscated under the impugned order.

The Department filed an appeal before the High Court under Sec. 35G of the Central Excise Act, 1944.

Before the High Court the Department contended as follows:

The statement of Krishan Prasad Keshari recorded under Sec. 108 of the Customs Act put a seal to the fact that Rs.2.5 lakhs was the sale proceed and no other view may be taken;

The Supreme Court in 'K.I. Pavunny V. Assistant Collector, Central Excise' - 2008 -TMI - 44456 - SUPREME COURT OF INDIA, and in Naresh J. Sukhwani V. Union of India' - 2008 -TMI - 44244 - SUPREME COURT OF INDIA, held that the statement recorded under Section 108 of the Customs Act shall deem to be a statement given in a judicial proceeding;

Notice under Sec. 124 of the Act may be given to only owner of the seized items and not to other persons.

The High Court observed as follows:

The Department has not pointed out any evidence on record which may show that an amount of Rs.2.5 lakhs was the sale proceed of confiscated gold biscuits;

There appears no dispute with regard to search and seizure of 14 gold biscuits from the possession of two nepali nationals;

The controversy relates to Rs.2.5 lakhs which was seized from the possession of Krishan Prasad Keshari on 19.04.1999 during the search operation of the house of Ram Chandra Jaiswal in Deoria District;

Though Krishan Prasad Keshari had made a statement that he is a servant of M/s Laxmi Ready made garments and the amount was given to him by Mr. Ajay Kumar Verma for handing over to Ram Chandra Jaiswal;

But it was disbelieved and the amount was confiscated;

There appears no evidence which may indicate that the amount of Rs.2.5 lakhs is the outcome of the sale of some contraband goods or gold biscuits.

Shri Rajesh Kumar Jaiswal moved a representation showing that the amount in question belongs to him;

Though the statement made under Sec. 108 may be believed, but it does not mean that other persons who have got interest over the property, do not have got any right to represent their cause.

The Court did not accept the arguments of the Department. It analyzed the provisions of Sec. 124 of the Act. Sec. 124 of the Act deals with the issue of show cause notice before confiscation of goods. It provides that no order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person-

a)      is given a notice in writing with the prior approval of the officer of customs not below the rank of a Deputy Commissioner of Customs, informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;

b)      is given an opportunity of 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

Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may at the request of the person concerned be oral.

The High Court held that now it is settled rule of interpretation that every word of statute should be given a meaning. The provisions contained in Sec. 124 of the Act provide that no order of confiscating any goods or imposing any penalty on any person shall be made under the said Chapter unless the owner of the goods or such person is a given a notice enabling him to provide reasonable opportunity of being heard.

The High Court pointed out that the Legislature to their wisdom has used the words 'any person' followed by word 'owner or such person' that means during the course of proceedings, owner as well as other interested persons shall have the right to raise their claim. Once Rajesh Kumar Soni has moved a representation showing his interest with regard to the amount involved, then he should have been served with a notice. The Court refrained from recording any finding leave it open for further adjudication if necessary.