Amba Lal vs The Union Of India And Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 153 of 1956

Decision Date: 3 October 1960

Coram: Bhuvneshwar P. Sinha, J.L. Kapur, P.B. Gajendragadkar, K.N. Wanchoo, Subbarao

The Court noted that the petition was titled Amba Lal versus the Union of India and others and that the judgment was delivered on 3 October 1960. A Bench of Justice Bhuvneshwar P. Sinha, Justice J. L. Kapur, Justice P. B. Gajendragadkar and Justice K. N. Wanchoo heard the case, with Chief Justice Subbarao also mentioned among the judges. The decision was reported as 1961 AIR 264 and 1961 SCR (1) 933, and the citation record includes references such as RF 1971 SC 44 (38), D 1974 SC 859 (29,41,44) and D 1975 SC2288 (13). The customs authorities conducted a search of the appellant’s house on 22 June 1951 and seized ten articles. During the inquiry before the Collector, the appellant claimed that the first five articles had been brought by him in 1947 from Pakistan after the Partition. He also asserted that he was a bona fide purchaser of the remaining five articles. The Collector found that the appellant had failed to establish his case. He concluded that the goods had been imported in violation of Section 3 of the Imports Exports Control Act, 1947, read with Sections 19 and 167(8) of the Sea Customs Act, 1878. He also held that the goods violated Sections 4 and 5 of the Land Customs Act, 1924, read with Section 7 of that Act. That finding was upheld on appeal by the Central Board of Revenue and again by the Central Government on revision. The appellant advanced two principal contentions. First, he argued that the onus of proving that the initial five articles were smuggled lay with the customs department, which he said had failed to meet that burden. Second, he maintained that even if the latter five articles were smuggled, he was not responsible for their importation. The Court held that the burden of proof rested with the authorities to demonstrate that the first five articles entered India after March 1948. That date marked the first establishment of the customs barrier between India and Pakistan. The authorities had not produced any evidence to meet that requirement, and consequently the appellant could not be convicted of any of the charges. The Court further explained that the burden did not shift by reference to Section 178A of the Sea Customs Act because that provision was not in force at the relevant time. Nor did Section 5 of the Land Customs Act apply to the facts of this case. Section 106 of the Indian Evidence Act could not be used to overturn the established principle that the prosecution bears the burden of proof. The decision relied on the precedent set in Shambu Nath Mehra v. The State of Ajmer, [1956] S.C.R. 199.

The Court observed that even if the appellant denied any responsibility for the importation of the other five articles, he remained liable to the penalty prescribed in section 7(1)(c) of the Land Customs Act, 1924, because he kept those articles while knowing that they were smuggled goods. The appeal was a civil appeal numbered 153 of 1956, filed against the judgment and order dated 3 November 1954 of the Punjab High Court in Civil Writ No. 253‑D of 1954. Counsel for the appellant consisted of Veda Vyasa, S. K. Kapur, K. K. Jain and Ganpat Rai, while the respondents were represented by H. N. Sanyal, Additional Solicitor‑General of India, together with H. R. Khanna and T. M. Sen. The appeal was heard on 3 October 1960, and the judgment was delivered by Justice Subba Rao. This appeal by way of certificate challenged the order of the Punjab High Court that had dismissed the appellant’s petition under article 226 of the Constitution. For the purpose of the appeal, the Court summarized the factual background. The appellant, who presently resided in Barmer, Rajasthan, had before 1947 lived in a locality that now lay within the territory of Pakistan. On 22 June 1951, the Deputy Superintendent of the Land Customs Station at Barmer searched the appellant’s house and seized ten distinct items. The seized items comprised a silver slab weighing 2,600 tolas valued at Rs 5,200; twenty‑nine sovereigns of King Edward VII valued at Rs 2,262; nine pieces of gold bullion weighing 201 tolas and nine mashas valued at Rs 22,193; four pieces of silver bullion weighing 114 tolas valued at Rs 230; five hundred and seventy‑five uncurrent silver coins valued at Rs 865; gold bars weighing 49 tolas and nine mashas valued at Rs 5,475; two hundred and fifty‑five phials of liquid gold valued at Rs 9,875; twenty‑three torches, three dozen playing cards valued at Rs 400, and forty‑eight packets of glass beads. The aggregate estimated value of the seized articles was approximately Rs 46,500.

Subsequently, on 14 July 1951, the Assistant Collector of Ajmer issued a notice to the appellant requiring him to show cause why the seized goods should not be confiscated under section 167(8) of the Sea Customs Act and section 7 of the Land Customs Act. In his response, the appellant contended that the first five items had been brought by him from Pakistan after the 1947 partition, whereas items six through ten had been purchased in Barmer in good faith for a proper price. On 27 October 1951, the appellant appeared before the Collector of Central Excise, where an inquiry was conducted. During this proceeding, the appellant admitted that items six through ten were indeed smuggled goods that had originated from Pakistan, but he reiterated his claim that the initial five items had been brought into India by him in 1947. After considering the appellant’s statements, the Collector of Central Excise concluded that the appellant had failed to prove that the first five items had been brought into India in 1947, and he likewise rejected the appellant’s assertion that he was a bona‑fide purchaser of items six through ten. Accordingly, the Collector held that the appellant was liable for the confiscation and penalty, as outlined in the preceding findings.

The Collector found that all articles had been brought into India in violation of section three of the Import‑Export Control Act, read in conjunction with sections nineteen and 167(8) of the Sea Customs Act. The same finding also covered violations of sections four and five of the Land Customs Act, each read together with section seven of that Act. Consequently, the Collector issued an order of confiscation of the said articles under section 167(8) of the Sea Customs Act and under section seven of the Land Customs Act. However, invoking section 183 of the Sea Customs Act, he offered the appellant the opportunity to redeem the confiscated goods within four months from the date of the order upon payment of Rs. 25,000. In addition, a penalty of Rs. 1,000 was imposed and the appellant was directed to pay the import duty payable on all the items together with other charges before goods could be released from customs control. Feeling aggrieved by these orders, the appellant filed an appeal before the Central Board of Revenue. The Central Board of Revenue concurred with the Collector’s view that the burden of proving the importation of the goods rested upon the appellant. Regarding items one to five, the Board dismissed the appellant’s plea principally because of a statement that he was alleged to have made at the time the articles were seized. Consequently, the Board dismissed the appeal. A revision of the order was filed by the appellant before the Central Government, but that revision was also dismissed on August 28, 1953. Subsequently, the appellant instituted a writ petition under article 226 of the Constitution in the High Court of Punjab, which a division bench rejected on November 3, 1954. The present appeal therefore arises from those earlier dismissals. For the sake of clarity, the Court found it convenient to consider the matter in two parts, the first dealing with items one to five and the second with items six to ten. The decision concerning items one to five hinges entirely on the allocation of the burden of proof. Both the Collector of Central Excise and the Central Board of Revenue held that the appellant bore the onus of establishing that the goods had been lawfully imported. No evidence was produced by the customs authorities to show that the appellant had smuggled the goods into India after the customs barrier against Pakistan was raised in March 1948. Similarly, the appellant offered only his own declarations made at the time of seizure and during the inquiry, in which he claimed to have brought the items into India in 1947, and no other admissible proof. Given these circumstances, the question of who bears the burden of proof becomes critical, and the outcome depends on that determination. The Court has previously observed that a customs officer does not constitute a judicial tribunal and that proceedings before such an officer do not amount to a prosecution. Nevertheless, it cannot be denied that the relevant provisions of the Sea Customs

The Court explained that the Sea Customs Act and the Land Customs Act are statutes of a penal nature, granting the appropriate customs authority the power to conduct inquiries into alleged offences, to summon and examine witnesses, to determine whether an offence has been committed, to order the confiscation of goods involved in the offence, and to impose penalties on the person concerned, as provided in sections 168 and 171A of the Sea Customs Act and sections 5 and 7 of the Land Customs Act. Although the provisions of the Code of Criminal Procedure and the Evidence Act do not apply unless they are expressly made applicable by statute, the Court held that the fundamental principles of criminal jurisprudence and natural justice must nevertheless govern these proceedings. Consequently, the burden of proof lies with the customs authorities, which must establish the guilt of the person alleged to have committed an offence under the statutes by presenting satisfactory evidence. In the present case, the Court observed that no such evidence was offered; in fact, there was an absence of any evidence capable of proving the customs authorities’ case. The respondents argued that the burden of proof had shifted to the appellant for three reasons: (i) reliance on section 178A of the Sea Customs Act, (ii) reliance on section 5 of the Land Customs Act, and (iii) reliance on section 106 of the Evidence Act. The Court rejected the applicability of section 178A of the Sea Customs Act because that provision was inserted by Act No. XXI of 1955, while the order of confiscation under dispute had been issued on 18 January 1952, making the provision prospective and therefore inapplicable to the present order. The Court further held that section 5 of the Land Customs Act did not apply to the facts of this case. Under subsection 1 of that section, a person who wishes to move goods by land into or out of any foreign territory must submit a written application for a permit to the Land Customs Officer in charge of the land customs station. Subsection 2 provides that, if the requisite duty has been paid or the goods are found to be duty‑free, the Land Customs Officer may grant the permit. Subsection 3 empowers a Land Customs Officer, duly authorized by the Chief Customs Authority, to require any person in charge of goods that the Officer believes have been imported or are about to be exported by land from or to any foreign territory to produce the permit; any dutiable goods that are not accompanied by a permit or that do not match the specifications in the permit may be detained and become liable to confiscation. The Court concluded that none of these provisions could be invoked to shift the burden of proof to the appellant in the present matter.

This provision does not affect the question of which party must prove what. The provision clearly applies only when a permit is required for the land importation of goods from a foreign country into India. It gives the Land Customs Officer, who has reason to suspect that goods have been brought in by land from a foreign territory, the authority to demand the permit and to check whether the imported goods match the description contained in that permit. If the importer does not possess a permit, or if the goods do not correspond with the specifications set out in the permit, the law makes those goods liable to be detained and confiscated. The operation of this provision depends on the legal requirement that a permit must be obtained. Where no permit is required for the import of goods into India, the provisions of the section cannot be invoked.

In the present matter the customs barrier was erected only in March 1948, which is after the appellant claims the goods were brought into India. Consequently, the Court could not accept the argument that, under section 106 of the Evidence Act, the onus was on the appellant to prove that he had imported the goods in 1947. Section 106 of the Evidence Act does not apply to proceedings under the customs statutes. Nevertheless, the principle behind that section—namely that a fact which is especially within a person’s knowledge must be proved by that person—may be regarded as universally applicable. The Court cited Shambu Nath Mehra v. The State of Ajmer, wherein the Court, after reviewing earlier Privy Council decisions, observed that section 106 cannot be used to overturn the well‑settled rule that, except in very exceptional cases, the burden of proof lies with the prosecution and never shifts.

If section 106 is applied by analogy, the fundamental principles of criminal jurisprudence must also be applied. Accordingly, the burden of proving the case against the appellant rested on the customs authorities. The Court found that the authorities failed to meet that burden with respect to items 1 to 5, and therefore set aside the confiscation orders concerning those items.

Before concluding this part of the case, the Court noted the manner in which the appellant’s statement, made when the goods were seized, was used against him by the customs officials. The orders of both the Collector of Central Excise and the Central Board of Revenue reveal that the officials relied on the statement alleged to have been made by the appellant at the time of the search of his house in order to reject his case.

In this case, the record indicated that the appellant had brought some of the goods into India in the year 1947. The appellant, in his response to the show‑cause notice, complained that his statement had been taken in English, that he did not know what was recorded, and that his application for inspection and for a copy of his statement had been denied. The case file shows no evidence that a copy of the statement was ever given to him or that he was permitted to inspect it. Consequently, the Court noted that the customs authorities were not justified in relying upon alleged discrepancies in that statement to reject the appellant’s subsequent version. If the authorities wished to rely on the statement, they should have provided the appellant an opportunity to inspect it and, at the very least, should have supplied him a copy. Turning to items 6 to 10, the Court found no reason to reject, as the petitioners requested, the declaration contained in the order of the Collector of Central Excise dated 27 October 1951, which recorded that the appellant had accepted that items 6 to 10 were smuggled goods from Pakistan. It would have been better if the customs authorities had taken that admission in writing, because a written admission would prevent the retraction of the concession on second thoughts. Nevertheless, it is reasonable to expect a body entrusted with customs functions to take such precaution when its decision depends primarily on such an admission. Considering the circumstances under which the concession was made and the manner in which it was obtained, the Court had no reason to doubt the correctness of the factual statements made in the customs orders. Accordingly, the finding that the appellant purchased the smuggled items was accepted, and the order of confiscation of those five items was upheld. The appellant’s counsel also contended that the customs authorities erred in imposing a penalty under section 167(8) of the Sea Customs Act. That provision states that if any goods whose import or export is prohibited or restricted by Chapter IV of the Act are imported or exported contrary to such prohibition, the goods shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding three times the value of the goods or not exceeding one thousand rupees. The appellant argued that although he purchased the smuggled goods, he was not involved in the prohibited importation contemplated by the section, and therefore the offence should not apply to him.

The appellant contended that the penalty imposed under section 167(8) of the Sea Customs Act was improper because that provision, according to its language, applies only to a person who is involved in the importation of goods that are prohibited or restricted under Chapter IV. The appellant argued that his liability should not arise from the purchase of the goods after they had already been imported, and therefore the section should not apply to him. While the court recognised that there was some merit in that line of reasoning, it refrained from making a definitive determination on the applicability of section 167(8). Instead, the court focused on the appellant’s liability under section 7(1)(c) of the Land Customs Act, 1924. That provision reads: “Section 7(1): Any person who—(c) aids in so passing or conveying any goods, or, knowing that any goods have been so passed or conveyed, keeps or conceals such goods, or permits or procures them to be kept or concealed, shall be liable to a penalty not exceeding, where the goods are not dutiable, fifty rupees, or, where the goods or any of them are dutiable, one thousand rupees, and any dutiable goods in respect of which the offence has been committed shall be liable to confiscation.” The court found that the appellant, with full knowledge that the goods had been smuggled into India, retained possession of those goods. Accordingly, the appellant fell squarely within the scope of section 7(1)(c) and was rightfully subject to the penalty prescribed therein. The court therefore affirmed that the penalty imposed on the appellant was proper and justified.

The appellant further challenged the authority of the Collector of Central Excise to impose certain conditions for the release of the confiscated goods. The Collector’s order stipulated that, before the goods could be released from Customs control, the import duty and any other applicable charges must be paid, and that the necessary formalities must be completed. The court noted a similar dispute in the case of Shew. Pujanrai Indrasanrai Ltd. v. Collector of Customs, where the Collector of Customs had attached two conditions—production of a Reserve Bank of India permit for the gold within four months and payment of the appropriate customs duties and charges within the same period—to the release of confiscated gold. In that precedent, the Supreme Court, agreeing with the High Court, held that the Collector of Customs lacked jurisdiction to impose those conditions. The Additional Solicitor General acknowledged that the earlier decision was applicable to the present facts. Although the court did not express a definitive view on whether the earlier ruling could be distinguished, it accepted the concession and concluded that the conditions imposed by the Collector of Central Excise were severable from the remainder of the order and therefore should be removed. The appellant then argued that the order’s provision allowing him to redeem the confiscated goods for home consumption within four months upon payment of Rs 25,000 was predicated on the validity of the confiscation of all the items, and that, given the court’s determination that confiscation was invalid for items 1 through 5, the amount of the penalty should be proportionally reduced.

In this matter, the Court observed that the confiscation of ten items had been declared invalid with respect to items numbered one through five, referring to the earlier decision reported in (1) [1959] S.C.R. 821. Because the confiscation of those five items was held to be improper, the Court noted that the fixed penalty of twenty‑five thousand rupees ought, in principle, to be reduced in proportion to the number of items that were validly confiscated. The Court acknowledged that such a reduction was justified on logical grounds. Nevertheless, the Court explained that it could not directly lower the penalty amount because section 183 of the Sea Customs Act expressly requires the officer concerned to determine the quantum of the penalty as he deems appropriate. Given that the foundation of the original order had partially disappeared, the Court nonetheless granted the appellant the liberty to approach the customs authorities and request that he be allowed to redeem the confiscated goods upon payment of a lesser sum, taking into account the changed circumstances. Consequently, the Court held that the appeal was to be allowed in part and that the order issued by the Collector of Central Excise should be modified in accordance with the findings articulated by the Court. Since each party had succeeded on some points and failed on others, the Court directed that each party bear its own costs. The final disposition was that the appeal was partly allowed.