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TMI Blog1983 (9) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... the cleaner could produce any documents. Therefore, the Patrol Party made over the truck with the goods as well as the driver and cleaner to the Customs Officers of Ranaghat Preventive Post on 19-7-1981. The Customs Officers seized the goods on the reasonable belief that the goods and the truck are liable to be confiscated under the provisions of the Act. Besides the textile goods certain Bangladesh currencies, some documents, Indian currencies, wristwatches were also seized. 3. On the strength of the documents recovered from the truck the premises of M/s. Continental Carriers were searched on 3-8-1981. One Radio Cassette Recorder and 2 U.S. Dollars were seized since Shri Kalyan Kumar Bhowmick could not produce any document. The search also revealed that Shri Kalyan Kumar Bhowmick had incurred an expenditure for the purchase of a tyre of the truck which was intercepted by the B.S.F. Patrol Party on 17-7-1981. 4. On 18-8-1981, on the basis of certain documents seized from the premises of M/s. Continental Carriers, the Customs Officers carried out search in the house and shop premises of the present appellant, Shri Kanayalal Bhagnani and they seized certain goods of foreign origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e receipt of the replies to the show cause notices, from the appellant and Shri Kalyan Kumar Bhowmick, the Collector of Central Excise Customs, West Bengal, Calcutta gave one more personal hearing to the appellant and the appellant appears to have been represented by a Barrister and an Advocate. On consideration of the materials collected during the investigation and after considering the arguments advanced on behalf of the appellant, the Collector as stated earlier, directed confiscation of the Indian currency of Rs. 2,86,500/- on the ground that they represented the sale proceeds of smuggled goods. He, however, released all other articles seized from the residence of the appellant. He also imposed a penalty of Rs. 10,000/- under Section 114 of the Act. Feeling aggrieved by the order of confiscation and penalty as mentioned earlier, the appellant has come up with this appeal. 8. We heard the arguments on 10-5-1983 and 11-5-1983. Shri M.A. Razack, the learned Advocate for the appellant vehemently contended that the charge made in the show cause Notice dated 8-2-1982 was that the appellant imported by land from foreign territory into India on or before 18-8-1981 through unauthor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant were searched on 18-8-1981, The Department collected information in connection with the attempted export of textile goods carried in the truck in question. The Letter dated 27-5-1982 written by the Assistant Collector disclosed that the Department had information that the appellant was the financier for the illegal export and his counterpart in Bangladesh was also known to them. When all these information were with the Department, the Department chose to issue a show cause notice as late as on 8-2-1982 making an allegation that the appellant had only imported the seized goods from foreign territory through an unauthorised route. There was not even a whisper in the show cause notice that the appellant was in any way concerned or connected with the attempted export of the textiles goods found in the seized truck. Therefore, it is not open to the Department or to the Collector to change their front later and charge him with the attempted export. Lastly, Shri Razack urged that the currency notes are not notified goods . They do not fall under Section 123 of the Act. The burden of proof of establishing that the currency notes found in the premises of the appellant are th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any satisfactory account. In the circumstances, the learned Collector was fully justified in drawing an inference that the cash found in the house represented the sale proceeds of the smuggled goods. He, therefore, prayed for dismissing the appeal. 10. Having regard to the rival contentions, the points that fall for determination are : (i) whether the appellant had been found guilty of the charge which was not alleged against him in the show cause notice? (ii) whether the order passed by the Collector is unjustified on the facts and circumstances of the case and whether the same is required to be interfered with? 11. The show cause notice in this case is dated 8.2.1982. The first two pages of this show cause notice is in cyclostyled form. Having regard to the contention of the parties it is considered necessary to set out the salient features of the show cause notice. It is addressed to the appellant as : Whereas on the evidence hereto annexed it appears that the goods/currencies as shown in the schedule (which were found in your charge) and now under seizure have been imported (by you) by land from foreign territory into India on or before 18.8.1981 through unauthorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Collector stated : The next question is regarding the Indian currency of Rs. 2,86,500/- allegedly seized from the residence of Shri Kanayalal Bhagnani, as being the Sale Proceeds of goods smuggled. Shri Bhagnani has claimed that the money was withdrawals from Bank. I have, however, considered the factors discussed herein before which prove that the money is unaccounted for and there is nothing to show either that these were the Sale Proceeds in course of his normal official business. It has been found that bales of sarees were often being sent by him to the bordering areas of Aurangabad and Agartala and there were medicines in bulk, like vitamin B2 and Tetracycline which are very common items of smuggling on the import side from Bangladesh. The seized truck No. OSU 1532 had a secret cavity in its hood. Scrapings and remnants in the cavity, on examination by Forensic Scientists, were found to be Tetracycline. There is another consideration also. Shri Kalyan Kumar Bhowmick is found to be known to Kanayalal Bhagnani in course of the latter s business. Name of Kanayalal Bhagnani appeared in the documents seized from Kalyan Kumar Bhowmick. In course of the seizure, informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to account for the cash. Shri Chatterjee further urged that the Letter dated 27-5-1982 clearly spelled out that the appellant was being charged for being connected with the attempted export and, therefore, the contention now put forward that the appellant had no knowledge about the charge and he was thereby prejudiced, cannot be accepted. 16. Now it is necessary to examine these arguments of Shri Chatterjee. We have already referred to the various aspects found in the show cause Notice dated 8-2-1982. This show cause notice nowhere indicates that the appellant is charged with the illegal export or in any way concerned or connected with the export of any goods to Bangladesh. On the other hand, the definite charge made against the appellant was that the goods seized have been imported by him from foreign territory into India on or before 18-8-1981 through unauthorised route. In the said circumstances, the contention of Shri Chatterjee that in the show cause Notice dated 8-2-1982 the appellant was informed about his being connected with the export cannot be accepted. It is true that in the Letter dated 27-5-1982 which Shri Chatterjee contended as the second show cause notice, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this connection, we may usefully refer to the decision of the Gujarat High Court reported in AIR 1972 Guj. Page 115 (Motilal v. L.M. Kaul). In that case also, the charge mentioned in the show cause notice was that the person was dealing in goods of foreign origin and the amount in question represented the sale proceeds of such goods but the case found after hearing was that the amount represented the sale proceeds of prohibited articles which was not a recognised port or place for purpose of export. On those facts, the Division Bench of the Gujarat High Court held that prejudice was caused to the appellant as he was debarred of sufficient opportunity to defend himself. 20. Now from the order of the learned Collector, it is clear that his finding was that the cash amount seized from the house of the appellant represents the accumulated sale proceeds of the clandestine export or attempted export. It is this finding which gave jurisdiction to the Collector to order confiscation and levy penalty. Under law, the Collector was required to issue a show cause notice before passing an order confiscating any goods or imposing any penalty. Section 124 of the Act is clear and explicit. It r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to whom the appellant should make representation, whether it is to the Assistant Collector or to the Adjudicating Authority or some other authority. It is also not stated in this letter that within what time the appellant was required to make his representation? The letter is silent as to whether the Adjudicating Authority proposes to confiscate the cash amount and proposes to impose a penalty. In the absence of these particulars, this letter cannot be considered as a show cause notice contemplated by section 124 ibid. The question, therefore, that arises is whether the Collector gets jurisdiction to confiscate the seized goods and to impose a penalty without complying with the provisions of Section 124. Section 124 is a new provision and similar provision was not found in the Sea Customs Act. This section embodies the principles of natural justice. If the mandate of this provision is not complied with, all further proceedings and the imposition of penalty and confiscation order become illegal. In this view of the matter, the order of the Collector shall have to be set aside. 22. Coming to the merits of the case also, we are inclined to think that the materials placed before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Authorities and requested investigation. The Income Tax Authorities did hold an enquiry. The appellant s wife filed a Return for the Assessment Year 1981-82 and had shown the amount seized by the Customs and the Income Tax Authorities finalised the assessment for the year 1981-82 and the income assessed to was only Rs. 35,000/- and thus the Income Tax Authorities were satisfied that the cash found was accounted money. In the said circumstances, Shri Razack urged that no inference could be drawn from the possession of huge cash that it represents the sale proceeds of the smuggled goods. 24. Though we have no definite evidence before us as to whether the Income Tax Authorities have concluded the investigation it may not be unreasonable to draw an inference that the Income Tax Authorities were satisfied about the accountability of the cash or else, they would not have finalised the assessment for the year 1981-82. It is significant to mention that the Customs authorities did not place any material before us to show that the Income Tax Authorities are still investigating. If, prima facie, the huge cash found in the house was accounted to the satisfaction of the Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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