Case: Issardas Daulat Ram And Others Vs. The Union Of India And Others

The appellants are the partners of a Joint Hindu Family firm carrying on business in Bombay in inter alia gold and jewellery. On September 14, 1954 the appellant-firm had despatched to the Bombay Bullion Refinery for the purpose of melting about 500 tolas of gold. Certain Customs Officers received information that some quantity of gold which was believed to be smuggled was being sent to the refinery for melting and in pursuance of this information they went to the refinery and found the gold bullion which is the subject of these proceedings placed in a crucible for the purpose of being melted. These officers ascertained from the Manager of the refinery that this gold belonged to the appellant-firm who were later contacted and who admitted their ownership of the gold. The gold was thereupon seized and investigation started for ascertaining whether the gold was or was not smuggled gold after which the Assistant Collector of Customs issued a notice to the appellants on January 31, 1955 to show cause why the gold should not be confiscated under S. 167 (8) of the Sea Customs Act. The appellants appeared in response to this notice and were granted a personal hearing, their Counsel being heard in support of their plea that the gold was not smuggled and so not liable to be confiscated. Their defence was, however, rejected and the Collector of Customs who adjudicated in this matter under S. 182 of the Sea Customs Act passed an order on August 25, 1955 directing the confiscation. From this order appeals and revisions were preferred which were unsuccessful. Thereafter the appellants filed a Writ Petition before the High Court of Punjab with the result already stated.

Court's reasoning:
Though, no doubt, there was no direct evidence that the gold which was the subject of adjudication had come into the country after March 25, 1947 when the first notification under the Foreign Exchange Regulations Act placing a ban on the importation of gold was issued, it is not as this could not be deduced or inferred otherwise. There has been little or no importation of gold from outside the country since 1947.If the gold now in question had been imported earlier it would be extremely improbable that the gold would remain in the same shape of bars and with the same fineness as when imported after the passage of this length of time. It was precisely for this reason that at the stage of the enquiry before the Collector the principal point which was urged on behalf of the appellants was to deny that the seized gold was of foreign origin and it is the nature of the defence that accounts for the order of the Collector dealing almost wholly with the consideration of that question. In order to reach his finding about the gold being smuggled, the Collector has referred to the conduct of the appellants in connection with (a) the credibility of the story about the purchase of this gold from three parties, (b) the price at which the gold was stated to have been purchased which was less than the market price, and (c) the hurry exhibited in trying to get the gold melted at the refinery with a small bit of silver added so as to reduce the fineness of the gold and thus approximate the resultant product to licit gold found in the market. These were undoubtedly relevant pieces of evidence which bore on the question regarding the character of the gold, whether it was licit or illicit. Learned Counsel is, therefore, not right in his submission regarding the absence of material before the Collector to justify the finding recorded in Para. 6 we have set out earlier. The Writ Petition was therefore properly dismissed by the learned Judges of the High Court.