Appeal No 1332 of 1966
Appeal from the judgment and order dated August 25 1964 of the Punjab High Court Circuit Bench at Delhi in Letters Patent Appeal No 37 D of 1964
B Sen DK Kapur BP Maheshwari and RK Maheshwari for the appellant
RM Mehta and SP Nayar for the respondents
The Judgment of the Court was delivered by Bachawat J
The appellant Ms Hind Trading Company imported 165000 pieces of Chinese Silver Dollars from Yatung in Tibet to Kalmnpong via Nathula pass and Rangpo through 535 Sikkim State under two Reserve Bank import licences dated April 22 1957
As there were two Reserve Bank licences the dollars were divided into two lots at Yatung
Each lot consisted of 66 bags containing 82500 dollars
One lot of bags bore the mark HD and serial numbers 1 to 66 and the other lot bore the mark HN and srl
1 to 66
On May 15 1957 the appellant made two applications bearing Nos 32 and 34 to the officer in charge Land Customs Station Kalimpong for the grant of permits for passing the goods across the frontier
Application No 32 related to the bags marked HN Application No 34 related to the bags marked HD On May 16 the two consignments arrived at the land customs station Kalimpong and were examined and appraised by the land customs officer in charge of the station
On the duty being paid the officer endorsed the two applications certifying that the duty was paid and permitting the import of the goods
The consignments loaded in trucks then passed out of the customs house and on the way to Siliguri were checked at the Teesta Bazar check post at
845 pm on May 16
On the night of May 16 they reached Siliguri and were delivered to Ms Amalgamated Transport Co for carriage by air to Dum Dum
On the morning of May 17 one consignment of 82500 dollars packed in 66 bags together with the import application No 34 was sent by plane from the Sonapur airstrip to Dum Dum airport and on the same date the consignment reached Dum Dum and was delivered to the appellant at Calcutta
On May 18 1957 the Range Officer Matidhar seized the second consignment of 82500 dollars packed in 66 bags bearing the mark HD together with the application No 32 when they were about to be despatched by air from the sonapur airstrip
The seizure was made under section 5 3 of the on the Found that the mark on the bags was HD whereas the accompanying import application No 32 related to HN bags
On July 7 1957 the Collector of Land Customs Calcutta issued a notice to the appellant to show cause why the dollars seized on May 18 1957 should not be confiscated and why a penalty should not be imposed upon the appellant under sections 53 and 71 of the  and section 1678 read with section 19 of the as made applicable by section 23A of the Foreign Exchange Regulation Act 1947 as there was reason to believe that the goods had been imported by the appellant by land from Tibet into India on May 16 1957 through Indo Tibet border i without a valid permit under section 5 of the  and ii without valid permission granted by the Reserve Bank of India under notification No F 384 EF VII56 dated May 4 1956 issued under sec
81 of the Foreign Exchange Regulation Act
That notification prohibited  the 536 import into India of silver coins current in the Tibet region of China without the permission of the Reserve Bank of India
On July 30 1957 the appellant showed cause against the proposed action by a letter stating that the first consignment of 82500 dollars was packed in bags marked HN that by inadvertence the carriers Ms Amalgamated Transport Co had sent import application No 34 with the first consignment and had kept application No 32 with the bags marked HD that the two consignments were covered by valid Reserve Bank licences and import passes that the seizure of the dollars kept in HD bags under section 5 3 of the was not justified and that there was no ground for confiscating the goods or imposing any penalty
The appellant was heard by the Collector an August 26 and December 11 1957
On January 10 1958 the Collector passed an order adjudging that offences under sections 53 and 71 of the and section 1678 of the had been committed and directing confiscation of the goods under those sections read with section 23A of the Foreign Exchange Regulation Act
The Collector held that i the goods were liable to confiscation under section 5 3 of the as they were not covered by the accompanying import application No 32 ii the appellant failed to prove that the first consignment of 66 bags bore the mark HN or that by inadvertence of the carriers application No 34 had been sent with it and iii had the first consignment of 66 bags borne the mark HN the Range Officer
Matidhar and the officers at Dum Dum would have detected and rioted this fact and the appellant could have produced before the customs officials at Calcutta bags with the mark HN immediately after May 18 1957
An appeal against this order was dismissed by the Member Central Board of Revenue on May 17 1958
A revision petition against the last order was dismissed by the Secretary to the Government of India Ministry of Finance Department of Revenue on January 16 1961
On November 16 1962 the appellant filed a writ petition in the Punjab High Court for quashing the aforesaid decisions and for setting aside the order of confiscation of the silver dollars
On May 14 1964 Shamsher Bahadur J dismissed the petition
He held that there was no error of law apparent on the face of the record
The appellant filed a Letters Patent appeal against the order
On August 25 1964 the Divisional Bench dismissed the appeal
It held that 1 section 5 3 of the applied to the case 2 the fact that the 66 bags bore the mark HD and the accompanying application No 32 related to HN bags
showed conclusively that the dollars contained in those bags were imported without proper licence and import permit and without payment of duty and 3 the finding of fact that there was no mistake on the part of the carriers with regard to the despatch 537 of the consignments and accompanying documents could not be set aside in a writ application
If he present appeal has been filed by the appellant after obtaining a certificate from the High Court
Mr B Sen for the appellant contended that the seizure and confiscation of the goods was not authorized by section 5 3 of the  2 the finding that the appellant had committed offences under that section and other provisions of law was perverse and liable to be quashed and 3 the impugned orders were passed in contravention of the principles of natural justice
These contentions were disputed by Mr RM Mehta
The provided for the levy of duties of customs on articles imported or exported by land from or to territory outside India
The Act extended to the whole of India section 1 
Section 2 was the definition section
Section 3 authorised the appointment of land customs collectors and officers
The Range Officer Matidhar was a land customs officer working under the Collector of Land Customs Calcutta having jurisdiction over Sonapur where the dollars were seized
Section 4 authorised the establishment of land customs stations and the determination of routes by which alone goods imported or exported by land could pass
The Central Board of Revenue established Kalimpong as the land customs station and prescribed the following routes by which alone dutiable goods could pass out of Tibet into India a road leading from Yatung in Tibet to Kalimpong via Jelapala pass and pedong through Sikkim State b road leading from Yatung in Tibet to Kalimpong via Nathula pass and Rangpo through the Sikkim State
Section 5 provided for permitsgoods passing across frontier
Section 6 dealt with personal baggage
Section 7 prescribed penalties
Section 8 prescribed certain dates and times when the goods were not to be passed
Section 9 made applicable for the purposes of levy of land customs under the Act certain provisions of the including section 167 8 with necessary modifications and adaptations
Sections 18 19 and 19A of the and the whole of the Foreign Exchange Regulation Act though not expressly incorporated in the applied their own force to goods imported or exported by land
Duty on imports and exports by land was imposed by section 5 of the Indian Tariff Act 1934
The had now been repealed by the Sea 
It is necessary to read sections 4 5 and 71 of the  Section 4Establishment of Land Customs Stations and determination of routes The Chief Customs Authority may by notification in the Official Gazette 538 a establish land customs stations for the levy of land customs in any land customs area and b prescribe the routes by which alone goods or any class of goods specified in the notification may pass by land out of or into any foreign territory or to or from any land customs station from or to any foreign frontier
Section 5
Permit for goods passing across frontier 1 Every person desiring to pass any goods whether dutiable goods or not by land out of or into any foreign territory shall apply in writing in such form as the Chief Customs Authority may by notification in the Official Gazette prescribe for a permit for the passage thereof to the Land Customs Officer in charge of a Land Customs Station established in land customs area adjoining the foreign frontier across which the goods are to pass
2 When the duty on such goods has been paid or the goods have been found by the Land Customs Officer to be free of duty the Land Customs Officer shall grant a permit certifying that duty has been paid on such goods or that the goods are free of duty as the case may be 3 Any Land Customs Officer duly empowered by the Chief Customs Authority in this behalf may require any person in charge of any goods which such officer has reason to believe to have been imported or to be about to be imported by land from or to any foreign territory to produce the permit granted for such goods and any such goods which are dutiable and which are unaccompanied by a permit or do not correspond with the specification contained in the permit produced shall be detained and shall be liable to confiscation Provided that nothing in this sub section shall apply to any imported goods passing from a foreign frontier to a Land Customs Station by a route prescribed in that behalf
4 The Chief Customs Authority may by notification in the Official Gazette direct that the provisions of this section or any specified provisions thereof shall not in any land customs areas specified in the notification apply in respect of goods of any class or value or specified
Section 7
Penalties 1 Any person who a in any case in which the permit referred to in section 5 is required passes or attempts to pass any 539 goods by land out of or into any foreign territory through any land customs station without such permit or b conveys or attempts to convey to or from any foreign territory or to or from any Land Customs Station any goods by a route other than the route if any prescribed for such passage under this Act or 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 shah be liable to penalty not exceeding where the goods are not dutiable fifty 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 scheme of sections 4 5 and 7 1 of the with regard to imports by land was as follows Goods could pass by land out of foreign territory or from a foreign frontier to a land customs station by a prescribed route only section 4b
To import goods by an unauthorised route or an attempt to do so was an offence section 71b
No permit could be obtained for importing goods by an unauthorised route
The goods could be brought by the prescribed route from the foreign frontier to the land customs station without a permit proviso to section 53
Subject to exemptions if any under section 54 a permit was required for the passage of goods through the land customs station
Passing of goods through the land customs station without a permit or an attempt to so pass the goods was an offence Is
7 1 a
The importer was required to apply for the permit to the officer in charge of the land customs station Is
51
The goods were brought to the station for examination and appraisement of duty
On the duty being paid or on its being found that the goods were free of duty the officer issued the permit allowing the passage of the goods and certifying that the duty had been paid or the goods
were free of duty as the case might be Is
5 1 and 2
Dutiable goods
in respect of which an offence was committed was liable to confiscation
What is stated above applied mutatis mutandis to exports by land
In this setting let us examine the provisions of section 53
That sub section required that all goods imported or about to be exported must be accompanied by a permit for the passage thereof issued by the officer in charge of a land customs station
It was an offence to take the goods through the land customs station 1
without a permit
A duly authorised land customs officer could enforce this requirement by asking any person in charge of the goods to produce the permit
Dutiable goods unaccompanied by 540 a permit or not corresponding to the specifications contained in the permit produced had to be detained and was liable to confiscation
It is to be noticed that the sub section referred to goods unaccompanied by a permit and to any person in charge of any goods
 It obviously contemplated cases where the goods should be accompanied by the permit and the person in charge of the goods was under a duty to produce the permit
In view of sections 5 and 7 1 it was necessary that the goods should be accompanied by a permit when they passed through the land customs station
Rules under the Act could also prescribe that the goods must be accompanied by a permit for some time even after such passage
In such cases section 5 3 was infringed if the goods were not accompanied by the permit
The Central Board of Revenue framed the Chinese Silver Dollars import Rules on March 29 1958 in exercise of the powers conferred by section 91 of the 
Rule 62 provided that on its journey from the Kalimpong laud customs station to its ultimate destination any consignment of Chinese silver dollars imported from Tibet into India must be accompanied by a permit ie the importer s copy of the relative import application bearing the endorsement of the officer in charge of the Kalimpong land customs station permitting the clearance of the consignment
The permit must be produced at the land customs check post at Teesta Bazar along with the consignment if the destination was Teesta Bazar or beyond also be produced on demand by any land customs officer at any time during the journey of the consignment upto its ultimate destination
These Rules were framed on the assumption that independently of the Rules the importer was not obliged to keep the permit with the dollars after they passed out of the Kalimpong land customs station
The Rules were not in force on May 18 1957 when the dollars were seized by the Range Officer Matidhar
There was no provision in the Act or the Rules in force on May 18 1957 which required the appellant to keep
the permit at Sonapur airstrip with the dollars seized on that date
The contention of the Revenue is that section 5 3 required that all imported goods must always at all times and at all places be accompanied by a permit
We are unable to accept this contention  After the import the goods became a part and parcel of the mass of other like goods in India
There was No duty to keep the permit with the consignment of imported goods for all times and at all places
Nor was the importer under a duty to keep the consignment intact in his hands
He could sell portions of it to different buyers and obviously he could not give the permit to every consumer
He could import rubies from Burma by land 
and by sea
It was not necessary to keep any permit with the rubies imported by sea after their clearance from
the customs 541 house
Nor was the position different in case of rubies imported by land
A consumer wearing a necklace made of rubies was not expected to carry the permit for the rubies in her bag
Under the a customs clearance permit was necessary for the passage of goods imported or about to be exported through the land customs station
For this reason section 53 read with section 1a required that the goods so passing through the land customs station must be accompanied by the permit
The Rules could provide that the imported goods should be accompanied by the permit even after such passage
As already stated
the Rules required that imported Chinese silver dollars should be accompanied by the permit during the entire journey up to their ultimate destination
In such cases
section 53 was infringed if the permit covering the goods was not produced on demand by any land customs officer
Except in such cases section 53 did not apply and it was not necessary to keep the permit with the goods
We hold that section 53 was not infringed when the carriers did not produce the permit covering the goods at the Sonapur airstrip on May 18
1957 and the goods could not be confiscated under section 5 3
Nor were the goods liable to confiscation under section 71 of the 
The appellant imported 165000 dollars from Tibet under two Reserve Bank licences and two import permits
There was no distinguishing mark on any dollar
The appellant was found in possession of 165000 dollars only
No attempt was made to prove that the appellant was in possession of another consignment of 82500 dollars
At  the time of import the dollars were packed in 66 bags marked HN and 66 bags marked HD The Range Officer seized 82500 dollars packed in 66 bags marked HD There is no evidence to
show that the seized dollars were not covered by the permits and licences held by the appellant
The onus was on the respondents to prove that the first consignment of 66 bags bore the mark HD Application No 34 accompanied the first consignment
There was no noting on application No 34 by the customs officer at Sonapur or at Dum Dum indicating that they had examined the bags or that the bags were found to bear the mark HD The summary of the diary of the Range Officer Matidhar set out in the order of confiscation does not show that the officer examined the bags
The note in the diary that the mark checked was HD could have been made on the basis of the mark HD shown in the accompanying application No 34
Before the issue of the show cause notice on July 17
1957 the appellant had no occasion to produce before the constoms authorities any of the 66 bags marked HN which had reached Calcutta
No inference has been drawn against the appellant from their inability to produce any bags marked HN after July 17 1957
On the materials on
the record it is impossible to hold that the dollars seized on May 18
C 169 2 542 1957 were smuggled goods
There was no noting by the customs officers at Sonapur and Dum Dum on application No 34
If the appellant desired to send smuggled HD bags from Sonapur to Dum Dum they could easily obtain application No 34 from Calcutta and send it with the consignment seized at Sonapur
Moreover the customs officers had not put any mark or initials on the bags and there was nothing to prevent the appellant from putting the mark HN on other bags and using them for the carriage of the dollars
The conclusion is irresistible that due to the inadvertence of the carriers the permits were inter changed and that application No 34 was sent with HN bags and application No 32 was kept with HD bags
No inference of smuggling could be drawn from the fact that HD bags were found with application No 32
In the circumstances
the finding that the appellant had smuggled the goods and was guilty of an offence under section 7 1 of the must be characterized as perverse
Nor was it proved that the appellant committed any offence under sections 8 1 and section 23A of the Foreign Exchange Regulations Act read with sections 19 and 1678 of the Sea 
An offence under those sections can be proved by circumstantial evidence see Issardas Daulat Ram vs Union of India1
In the present case there was no evidence either direct or circumstantial to prove the offence
The appellant had valid Reserve Bank licences for the import of 165000 dollars
Those licences were not examined nor seized by the customs officials and no attempt was made to prove
the licences did not relate to the dollars seized on May 18 1957
It follows that the dollars were not liable to confiscation under any provision of law
Having regard to the facts on the record no tribunal could reasonably come to the conclusion that the dollars were liable to confiscation if they properly understood the relevant enactments
In the circumstances the order of the Collector confiscating the goods is liable to be quashed by a writ of certiorari see Halsbury s Laws of England 3rd ed
II article 19 pp 62 63
In Regina vs Medical Appeal Tribunal2 the Court held that an assessment of 20 disablement must having regard to
the facts appearing on the record be held to be erroneous in point of law and based upon a misconstruction of Regulation 25 of the National Insurance Industrial Injuries Benefits Regulation 1948 and the award of the Medical Appeal Tribunal was therefore liable to be quashed by a writ of certiorari
Denning L 1
observed  No reasonable person
who had proper regard to regulation 25 could have come to such a conclusion
1962 supp
1 SCR 358
2 1957 I QB 574 582
543 It is now settled that when a tribunal come to a conclusion which could not reasonably be entertained by them if they properly understood the relevant enactment then they fall into error in point of law see Edwards Inspector of Taxes vs Bairstow 1956 AC 14 When the primary facts appear on the record an error of this kind is sufficiently apparent for it to be regarded as an or on the face of the record such as to warrant the intervention of this Court by certiorari
 This conclusion is sufficient to dispose of the appeal
It is therefore unnecessary to examine the contention that the impugned orders were passed in contravention of the principles of natural justice
In the result the appeal is allowed with costs
The order passed by the High Court is set aside and the writ petition filed by the appellant is allowed
The order of confiscation of the Chinese silver dollars is quashed and the respondents are directed to return them to the appellant
GC Appeal allowed


Summary:
The appellant imported 165000 pieces Chinese silver dollars from Tibet through Sikkim State under two Reserve Bank import licences
As there were two licences the dollars were divided into two lots
One lot bore the mark HD  and the other HN  The appellant made two applications hearing Nos 32 and 34 to the Officer in charge Land Customs Station for the grant of permits for passing the goods across the frontier
Application No 32 related to the lot marked HN  and the application No 34 related to the lot marked HD  On May 16 1957 the two consignments arrived at the land customs station Kalimpong and were examined and appraised by the land customs officer in charge of the station
On the duty being paid the officer endorsed the applications certifying that the duty was paid and permitting the import of the goods The consignments there were then delivered at Siliguri to the carriers for carriage by air to Dum Dum
On May 17 1957 one consignment together with application No 34 was sent by plane from the Sonapur airstrip and on the same date reached Dum Dum and was delivered to the appellant at Calcutta
On May 18 1957 the Range Officer Matidhar seized the second consignment bearing the marks HD  together with application No 32 when they were about to be despatched from the Sonapur airstrip
The seizure was made under section 53 of the Land Customs Act on the ground that the mark on the consignment was HD whereas the accompanying import application No 32 related to the consignment marked HN  The Collector of Land Customs Calcutta after hearing the appellant held that offences under section 53 and section 71 of the  and section 1678 read with of the had been committed by the appellant
He directed confiscation of the goods under those sections read with section 23A of the Foreign Exchange Regulation Act 1947
Departmental remedies having failed the appellant filed a writ petition in the High Court
Appeal in this Court was filed by the appellant with certificate
The questions that came up for consideration were inter alia i whether the seizure and confiscation
of the goods was authorised by section 53 of the  and ii whether the finding that the appellant had committed offences under that section and other provisions of law was perverse and liable to be quashed
HELD i Section 53 of the 
by itself does not require that all imported goods must always at all times and at all places be accompanied by a permit
After the permit the goods become a part and parcel of the mass of other like goods in India
There is no duty 534 to keep the permit with the consignment for aH times and at all places
Nor is the importer under a duty to keep the consignment in his hands
He can sell portions of it to different buyers and obviously he could not give the permit to every consumer
540 G H Before March 29 1968 when the Central Board of Revenue framed the Chinese Silver Dollars Import Rules there was no provision in the Act or Rules in force which required the appellants to keep the permits at Sonapur airstrip with the dollars seized on that date
Section 53 was not infrinrged when the carriers did not produce the permit concerning the goods at the Sonapur airstrip on May 18 1957 and the goods could not be confiscated under section 53
541 C ii Nor were the goods liable to confiscation under section 71 of the 
There was no evidence to show that the seized dollars were not covered by licences
On the materials on record the conclusion was irresistible that due to the inadvertence of the carriers the permits were inter changed and that application No 34 was sent with HN  consignment and application No 32 was kept with HD  consignment
No inference of smuggling could be drawn from the fact that HD  consignment was found with application No 32
In the circumstances the finding that the appellant had smuggled the goods and was guilty of an offence under section 71 of the must be characterised as perverse
541 D E 542 B C iii It was also not proved that the appellant committed any offence  under sections 81 and 23A of the Foreign Exchange Regulations Act read with sections 19 and 1678 of the 
Although the offence under these sections may be proved by circumstantial evidence in the present case there was no evidence direct or circumstantial to prove the offence
542 D Issardas Daulat Ram vs Union of India 1962 Supp1 SCR 358 referred to
iv Having regard to the facts on the record no tribunal could reasonably come to the conclusion that the dollars were liable to confiscation if they properly understood the relevant enactments
In the circumstances the order of the Collector confiscating the goods was liable to be quashed by a writ of certiorari
542 F Regina vs Medical Appeal Tribunal   582 applied