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TMI Blog1960 (4) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Madras and were cleared on or about February 12, 1959. The petitioners having received a proforma invoice for further payment of Rs. 1,65,074.06 issued instructions for delivery to the petitioners through their bankers at Madras against payment of the above sum of Rs. 1,65,074.06. After further payment the goods were delivered and received in possession of Messrs. C.J. Sheth of Madras being an associate and sister concern of the petitioners. All these goods except 125 drums of sodium hydrosulphite were later despatches according to instructions of the petitioners from Madras to be delivered to the petitioners at Bombay. On February 28, 1959, 125 drums of sodium hydrosulphite were seized by "Customs" at Madras from Messrs. C. J. Sheth of Madras 90 drums of Rangolite C, which were being loaded under instructions of the petitioners for consigning from Bombay to Ahmedabad were seized by the Customs authorities at Bombay on March 1st 1959. On March 1st 1959 Pavitraray D. Tolia a partner of the petitioners gave his statement to the customs and thereby gave due information in respect of all the goods purchased by the petitioners. By this statement Pavitraray inter alia disclosed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der authentication of one Madan Mohan being an Assistant Controller "for C.C.I. E." The authentication of this amendment, dated October 15, 1957 is also by Madan Mohan. The last amendment, dated December 25, 1957 authorised imports of Rangolite C and Sodium Hydrosulphite as under the licence. The Customs authorities at Madras received bill of entry, dated February 12, 1959 bearing No. B from the shipping agents of the importers who applied for clearance of the goods of import. Upon receipt of "clearance advise" from the Calcutta customs as under the above licence the goods were allowed to be cleared by the Madras customs on February 12, 1959. On February 13, 1959 these goods were gazetted in the "daily list of Imports and Exports" published by "Customs", Madras. On February 27, 1959 one D.R. Sundaram being Director of Administration and Joint Chief Controller of Imports and Exports, New Delhi, had telephonic conversation with the 1st Collector of Customs at Bombay. By his letter, dated February 27, 1959 he informed the 1st respondent that it was reported that the licence of the importers had been unauthorisedly amended for the import of Sodium Hydrosulphite and Rangolite C by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment, dated December 25, 1957 is not of Mandan Mohan. Their case appears to be that Madan Mohan unauthorisedly endorsed the licence for amendment. Madan Mohan ought not to have done that before an application in writing for the amendment was received in the office of the Chief Controller of Imports and Exports. It is admitted that under the provisions of law Madan Mohan as Assistant Controller in the office of the Chief Controller of Imports and Exports was an authority entitled to authenticate the issue of licence as also amendments therein. On these facts the respondents' case is that the seizure of the goods and documents of 'the petitioners is legal. Reliance is placed on the provisions of Sections 172 to 181 and 167(8) and 19 of the Sea Customs Act as also Section 3 of the Imports and Exports (Control) Act, 1947 and clause 3 of the Imports (Control) Order, 1955. The petitioners' contentions as made before me may be summarised as follows :- (1) There is no jurisdiction in customs to seizure or confiscate goods which have been once granted clearance for home consumption under the provisions of the Sea Customs Act; (2) Failure of the authority upon deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows :- "smuggled : to convey clandestinely—in order to avoid duty or in contravention of some enactment". He also relied upon the provisions of Section 39 and Section 183 of the Act. Section 39 provides for further assessment in respect of short-levy made or erroneous refund granted. Under that section the power can be exercised only upon service of a notice of demand within three months from the date of the first assessment or making of the refund. The result is that upon expiry of three months, short levied duty and refunds made cannot be recovered or realised. Under Section 183 officer adjudging confiscation is bound to give the owner of goods option to pay fine in lieu of confiscation Mr. Mehta contends that if evasion is ascertained after one confiscation it will not be possible for the customs to adjudicate confiscation once again and that supports his argument that goods which can be seized under Sections 172 and 178 must be the subject matter of clandestine secret smuggling. 7.The above arguments of Mr. Mehta are contrary to the clear provisions of Section 178 and item (8) and other items in Section 167 providing for penalty of confiscation. Section 178 provides "A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der which was passed ad voc and protanto by the customs officer. Every order of clearance is conditional upon the goods not being liable to confiscation under any offence committed by the owner of the goods. The order in terms is not an absolute order which prevents the Collector from confiscating the very goods in respect of which he has passed the clearance order. A conditional right is conferred upon the owner that he has authority to clear the goods but that authority may cease lo exist if there is a liability upon the goods to be confiscated under any provision of the Sea Customs Act. 9.In the case of Babulal v. Collector of Customs - 57 S.C.R. 1110 whilst considering the provisions of Section 178A of the Sea Customs Act, it was observed that though the word 'smuggling' is not defined in the Act, it must be understood as having the ordinary dictionary meaning, namely, carrying of goods clandestinely into a country. 10.Mr. Mehta relied upon these observation in support of his contention that the provisions of Sections 178 and 167 do not relate to goods for which clearance for home consumption is granted. The observations of the Supreme Court in my view do not convey the mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s :- "when anything is seized, or any person is arrested under this Act, the officer or other person making such seizure or arrest shall, on demand of the person in charge of the thing so seized, or of the person so arrested, give him a statement in writing of the person for such seizure or arrest." The complaint of the petitioners is that in spite of oral demands made by Pavitraray a statement in writing of the reason of seizure of the petitioners thereupon addressed a letter, dated March 6, 1959 demanding such a statement. Reply was much too delayed. The reply dated March 21st, 1959 in fact gives no reasons and the statement contained therein are so vague and no communicative of real reasons for seizure. In the result there was complete violation and breach of obligations cast under Section 181. The petitioners claim that accordingly whatever the offence and whether the offence was committed or not the seizure should be held to be illegal and the petitioners' goods directed to be restored to the petitioners. It is necessary to point out that 90 drums of Rangolite C were seized on March 1st, 1959, whilst they were being loaded in a motor truck under instructions of the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any demand for reason and that since they were in charge of the goods at material times, the petitioner, contention is wholly unjustified. In my view the purpose and the object of Section 181 must be that every person concerned which are interested in the goods seized should be entitled to a statement in writing of the reason for seizure thereof having regard to that purpose the words "person in charge" in Section 181 must be construed as including not only the agents in charge of the goods at the time of the seizure but also the principles of such agents. This last contention raised on behalf of the respondents must accordingly be negatived. 17.Having regard to the scheme of Chapter XVII of the Act and necessity of due and proper enquiry and adjudication in respect of offences mentioned in Section 167 and the necessity of seizure of goods liable to confiscation under the Act it is not possible to hold that failure to carry out, the obligation cast under Section 181 must in all cases result into invalidation of the seizure and detention of goods under Sections 178 and 179. 18.It is however unnecessary to make the above finding in this case having regard to the conclusion to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of reasons given for seizure of goods. I cannot accept the contention of Mr. Mehta that the statement of reasons as given in the letter, dated March 21st, 1959 is vague or insufficient and that the customs ought to have mentioned in that letter the further fact that the licence had been forged. It is true that there was delay in giving reasons. That may be the result of investigations which may have been undertaken by the Customs. That may also be due to the fact that drums of Sodium Hydrosulphite were despatched from Madras and were in transit and arrived at Bombay on 9th and 14th March 1958. The delay in this case under all the circumstances does not appeal to me to be such as must invalidate the seizure of the petitioners' goods. 20.It is necessary to mention that it was wrong for the customs not to have delivered a statement of reasons immediately on demand and that in all cases it is incumbent on the customs to comply with demand made under Section 181 forthwith and immediately. 21.In this connection Mr. Mehta has rightly pointed out that having regard to the letter, dated December 9, 1959 from the respondents solicitors the reason mentioned in the letter, dated Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 24.In the case of M.P. Sharma v. Satish Chandra - 1978 (2) E.L.T. (J287) (S.C.) = 1954 S.C.R. 1027 the questions raised related to seizure of documents in execution of warrants issued under Sections 94 and 96 of the Code of Criminal Procedure arid a contention made was that Section 96(1) offended Article 19 of the Constitution. In that connection the relevant observations at Page 1081 are as follows :- A search by itself is not a restriction on the right to hold and enjoy property. No doubt a seizure and carrying away is a restriction of the possession and enjoyment of the property seized. This however, is only temporary and for the limited purpose of investigation. A search and seizure is therefore, only a temporary interference with the right to hold the premises searched and the articles seized. Statutory regulation in this behalf is necessary and reasonable restriction cannot per se be considered to be unconstitutional * * *. We are unable to see how any question of violation of Article 19(1)(f) if involved in this case in respect of the warrants in question * * *." At Page 1096 the relevant observation is :- "A power of search and seizure is in any system of jurisp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in violation of freedoms guaranteed under Articles 19(1)(f) and 19(1)(g) and 31 of the Constitution. In support of this contention Mr. Mehta has rightly asked me to read the provisions in Section 167(8) in conjunction with the provisions of the Imports and Exports (Control) Act, 1947, and Imports (Control) Order, 1955 read with Section 19 of the Sea Customs Act. 28.Mr. Mehta has developed this contention in deverse ways. He has contended that any fetter and restriction on trade and deprivation of property to be valid must be reasonable and for the welfare of the general public. The provision in Section 167(8) cannot be regarded as reasonable in so far as it seeks to affect the property of innocent purchasers. That is more so according to him in respect of goods which are cleared through customs and gazetted in the "Daily list of imports and Exports". The provision in Section 167(8) enabling confiscation of goods from such purchasers must be held to be excessive and unreasonable. The goods having been cleared and the duty chargeable having been paid and recovered confiscation would have no relation with non-payment of duty. If such confiscation is permitted no purchaser and tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.R. 759, Thakur Raghubir Singh v. Court of Wards - 1953 S.C.R. 1049, Commissioner of Income-Tax v. Haji Aziz - 57 Bom. L.R. 485, and certain other cases. The principles as found in these decisions are well established. The phrase "reasonable restriction" as contained in Article 19 cannot as that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word "reasonable" implies intelligent care and deliberation. That is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by Clause (6) of Article 19, it must be held to be wanting in that quality." "The nature of the right alleged to have been infringed the underlined purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition the prevailing conditions at the time should all enter into the judicial verdict". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est that there should be unfettered and unrestricted freedom of export and import or that the policy of the Government in regard to export and import should be fixed and not changed according lo the requirements of the country". 34.In considering the contentions raised by Mr. Mehta the first thing that strikes me as important to consider is as to whether the Legislation as found in Section 167(8) is intended or seeking to affect or deal with the subject matter of the freedoms guaranteed under Articles 19(1)(f) and 19(1)(g), and is directed against a citizen's freedom to acquire, hold and dispose of property or to practice any profession, or to carry on any occupation, trade or business. It is relevant to point out that in the case of A.K. Gopalan v. State of Madras - 1950 1 S.C.R. 88 in considering the question of freedoms guaranteed under Articles 19(1)(a) to 19(1)(e) in relation to the Preventive Detention Act, 1950 Kania C.J. observed at Page 100 as follows : "'The article has to be read without any preconceived notions. So read, it clearly means that the legislation to be examined must be directly in respect of one of the rights mentioned in the sub-clauses. If there is a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the fundamental rights was indirect and, therefore, the Act could not be challenged for breach of the fundamental rights under Article 19(1)". 36.The Supreme Court considered in the light of the above observations the impact of the legislation impugned in that case on the fundamental rights guaranteed under Article 19(1). 37.The question accordingly in this case is whether the impact of the provisions in Section 167(8) of the Sea Customs Act on the fundamental rights as enshrined in Articles 19 and 31 is indirect and could not constitute breach of fundamental rights under Articles 19(1) and 31 as contended for and on behalf of the respondents or whether the impact is direct and directly violates the fundamental rights. Now in this connection it is necessary to point out that Section 3 of the Imports and Exports (Control) Act makes a provision for prohibiting, restricting and otherwise controlling inter alia exports and imports of goods. Under sub-section (2) of Section 3 all goods to which any order made under sub-section (1) applies are directed to be deemed to be goods of which import or export has been prohibited or restricted under Section 19 of the Sea Customs Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slation, the right under any of the sub-clauses under Art. 19(1) is abridged, the question of application of Art 19 does not arise." 39.He then referred to the case of A.K. Gopalan as also the decision of the Supreme Court in the case of Chiranjitlal and several other decisions and held that the question of reasonableness of the Statute therefore was immaterial. In appeal also the finding of the Trial Court was accepted as correct by a Division Bench of that Court. The case went before the Supreme Court (See 1959 S.S.R. 821). It appears that before the Supreme Court and contention that the provisions of Section 167(8) are in violation of Articles 19(1) and 31 of the Constitution were not raised. 40.It is accordingly in this case unnecessary to consider the reasonableness of the provisions in Section 167(8). It may however be stated that the legislation which is punitive and in enforcement only of the other part of the legislation which is admittedly in the interest of the general public must be held to be necessary and in the interest of the public and reasonable. To endorse the provisions of Sea Customs Act relating to collection of duty and the policy of law as regards impo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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