Case: M. S. Venkitanarayana Iyer Vs. Collector of Central Excise, Madras

2. The facts may be shortly put. Upon information received that contraband gold was being carried by certain persons by train leaving Kohzi Kode station, some Customs Officers attended the station and found one person carrying 50 gold bars. That person was then arrested. Another person standing nearby thereupon threw away a belt which was found to contain another 50 gold bars. That person was also arrested. This happened after 0.30 a.m. on March 16, 1957. Upon the basis of certain statements made by the arrested persons a watch was kept outside the house of the petitioner and about 5.15 a.m. the same morning a person was observed coming out of the house and on searching him a third lot of 50 gold bars was found on his possession. The whole lot of 150 bars was seized by the Customs Officer in charge of the operations. It is not in dispute that the petitioner had sent all this gold through the three persons with whom it was found. The petitioner made a statement to the Customs Officer after his house was searched in which he said that the gold had been supplied to him by one Sreedharan and was smuggled gold. Later he said that he had been coerced into making this statement.3. Notice to show cause why action should not be taken under Section 167(8) of the Sea Customs Act, 1878 was served on the petitioner. In answer to the notice he stated that he had bought the gold through a broker named Koyo for which he had paid Rs. 3, 000/and had undertaken to pay the balance at the rate of Rs. 99/8/per tola for 1501 tolas which was the total weight of the gold. The Collector of Customs gave full opportunity to the petitioner to explain the possession of the gold but the petitioner did not call any witness to support his explanation. The Collector, relying on Section 178A of the Sea Customs Act which puts the burden of proving that the gold was not smuggled gold on the person claiming to be entitled to it, passed the order sought to be impugned by the petitioner. He found the gold to be smuggled gold.

Court's reasoning:
It seems to us that the present case is governed by this decision and therefore the petition is not maintainable. The order challenged was made by the Collector of Customs, aauthority, in the undoubted exercise of his jurisdiction under the Sea Customs Act which is fully intra vires. Even Section 178A of the Act has been held by this Court to be fully valid : See Collector of Customs v. Nathella Sampathu ChettyAIR 1962 SCcontention is entirely unfounded. We will assume that it raises a question of jurisdiction. The notice to show cause itself mentions that there was reason to believe that the goods seized had been imported clandestinely. On the facts of this case which we have earlier summarised it is perfectly clear that a belief could reasonably be entertained that the gold dealt with was smuggled gold. One does not send out emissaries with gold at 5 oclock in the morning or at 12 oclock at night. The petitioner never contended before the Collector that the seizing officer did not at the time of the seizure have reason to believe that the gold was smuggled. He cannot therefore, now complain if the belief was not specifically referred to in the order that the Collector passed. He never took the point that the Collector had no jurisdiction to apply Section 178A. We may also add here that the gold bars bore the number 999 which is a number found on imported gold only.6. Then it was said that the notice was bad because it was issued by the seizing officer. We will assume that it was so issued. We are not however satisfied that such a notice will be bad. No authority in support of such a contention had been cited tothink it enough to dispose of this point by saying that we are dealing with this matter on a writ petition under Article 32 and as no error of jurisdiction is alleged, there is no violation of any fundamental right.