Judgment:
1. The petitioner is a partnership firm represented by its partner one Boddu Ramaiah. The firm deals in Stainless Steelware. While the partner was out of station, the officers of the Custom House, Visakhapatnam, questioned Boddu Atchutharama Gupta, son of he partner, who was present in the shop, as to whether he was in possession of they goods of foreign origin and seized certain goods consisting of Cassette Recorder etc. on the ground that they were imported illegally. The seizure is said to have take place on 7-9- 1978. Thereafter the requirement of the show cause notice and other formalities were dispensed with, as in his statement, the junior partner has stated that the case may be adjudicated without a show cause notice. On the basis of the material, the Assistant Collector, Customs, respondent No 3, on 11- 9-1978 held that the seized goods were illegally imported and acquired in violation of the prohibition imposed under Section 3 of the Imports and Exports (Control) Act, 1974 read with Section 11 of the Customs Act, 1962. It was also held that the said Atchutharama Gupta is liable to penalty under Section 105 of the Customs Act as he was in possession of the contraband goods and a sum of Rs. 300/- was levied as penalty. Aggrieved by that order, the petitioner filed an appeal to the 2nd respondent who held that there is circumstantial evidence to hold that the goods are smuggled goods and upheld the order of the 3rd respondent. Against the order of the Appellate Authority, a revision was preferred to the 1st respondent. The revision was also dismissed and that order is assailed in this writ petition.
2. In the counter-affidavit, inter alia, it is stated that Section 11(g) of the Customs Act, 1962 has no application, as the confiscated goods were purchased by Atchutarama Gupta from some unknown persons as per his statement dated 7-9-1978. It was further stated that even if there was illegality in the seizure it would not vitiate the confiscation as the same was done following the seizure. Therefore, it was prayed that the order of confiscation may be held as legal and valid.
3. Sri Subrahmanya Narasu, the learned counsel for the petitioner, contends that the authorities proceeded on the assumption that the goods in question were acquired in violation of the prohibition imposed under Clause 3 of the Import Control Order read with Section 3(1) of the Imports and Exports (Control) Act, 1974 and Section 11 of the Customs Act, 1962 and confiscated the goods under Section 111(d) of the Customs Act. In the absence of anything on record, it cannot be assumed that the goods were brought into India in violation of the said provision and as such confiscation under Section 111(d) is bad in law.
Section 111(d) of the Customs Act, 1962 reads as follows :
'111. CONFISCATION OF IMPROPERLY IMPORTED GOODS, ETC. :- The following goods brought from a place outside India shall be liable to confiscation :
(a) ..............
(b) ...............
(c) ..............
(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any provision, imposed by or under this Act or any other law for the time being in force'.
A perusal of the section, extracted above, makes it clear that for confiscation of the said goods, it must be shown that the goods are imported contrary to the prohibibition clause in the Customs Act, 1962 or any other law for the time being in force.
4. The learned Standing Counsel for the respondent submits that the goods, which have been imported in contravention of the provisions of the Customs Act are liable for confiscation and relied upon the decision of the Supreme Court reported in Assistant Collector of Customs, Calcutta v. Sitaram - (1) : 1966CriLJ712 .
5. There is nothing on record to show that the goods in questions have been notified under Section 3 read with Section 11 of the Customs Act, 1962 or that they were imported into India contrary to the said section. Merely because the goods were seized in Visakhapatnam Town, it cannot be assumed that the goods in question have been imported into India in contravention of the above said provision. For being liable to confiscation, it has to be shown under Section 111(d) of the Customs Act that they were imported contrary to the provisions of the Act. Therefore, in my view, the goods cannot be confiscated.
6. The decision cited by the learned Standing Counsel may not be of any assistance to him. In paragraph 13 of the Lordships of the Supreme Court observed as follows :
'It is well settled by the decision of the Court that goods which have been imported against the prohibition or restriction imposed under Chapter-IV of the Act are liable to confiscation at any time after import and this liability extends even in the hands of third persons who may not have had anything to do with the actual import. So long as it is proved that the goods had been imported against the restriction imposed under Chapter IV, the goods remain liable to confiscation whenever found even if this is long after the import is over and even if they are in possession of persons who had nothing to do with the actual import. It is also well settled by the decisions of this Court that the second part of the penalty relating to any person applies only to a person concerned in the importation or exportation of the goods and does not apply to a person found in possession of the smuggled goods who had nothing to do with the importation or exportation thereof'.
In the above case it is clearly laid down that once it is proved that the goods are illegally imported goods, their confiscation from the hands of the third parties is valid. In the instant case there is no record to show that the goods are smuggled or imported into India in contravention of the provisions of the Act. Therefore, the order of confiscation passed in not sustainable.
7. It is next contended by the learned counsel for the petitioner that the order of penalty under Section 112 of the Customs Act cannot be passed against the petitioner-firm. It is worth noticing that no attempt is made in the counter-affidavit to justify the order or penalty. Further under Section 112 penalty can be levied only if the person is in possession of the goods has knowledge that the goods in question are liable to confiscation under Section 111. In the decision of the Supreme Court quoted above, it is clearly laid down that the penalty of fine leviable under the Act does not apply to a person, found in possession of the smuggled goods, who has nothing to do with the importation or exportation thereof. That apart, once it is held that there is no record to show that the goods in question were imported in contravention of the Act, the question of levying penalty does not arise. Further, for levying penalty under Clause (d) of Section 111, the fact that the possessor has knowledge of the goods being liable for confiscation under Section 111, has to be proved. In the instant case no such knowledge has been proved. In my view, therefore the order of penalty is not sustainable.
8. The impugned order, so far as it is relevant, reads as follows:
'Government observe that the finding of the appellate authority that there is adequate circumstantial evidence in this case to prove that impugned articles were illegally imported into India and that they were kept in the shop for sale is correct and accordingly reject the revision application'.
A perusal of the order shows that the order of respondent No. 2 was sustained by the 1st respondent on the ground that the goods are kept in the shop for sale. This was not the subject-matter of the charge. Further the goods in question were not seized and penalty was not imposed on the ground that the said goods are kept for sale. For this reason alone, the order under revision is liable to be quashed.
9. For the above reasons, the writ petition is allowed. But, in the circumstances of the case, there shall be no order as to costs.