Holding

A substantial question of law did arise, warranting interference, and the Supreme Court set aside the High Court and Tribunal orders, remitting the case to the Tribunal.

Summary

The respondents were detained for carrying 551 foreign‑origin gold biscuits, and the Commissioner of Customs held that they failed to discharge the burden of proof under Section 123 of the Customs Act, ordering confiscation and penalties. The Appellate Tribunal set aside the confiscation orders, finding that the respondents had produced documentary evidence of legal purchase, but the Revenue appealed to the High Court under Section 130E. The High Court dismissed the appeal, holding that no substantial question of law arose for its consideration. The Supreme Court held that the High Court erred, as the Tribunal had ignored material facts, misapplied trade‑practice evidence, and failed to apply legal principles, thereby raising a substantial question of law. Consequently, the Supreme Court set aside both the High Court and Tribunal orders and remitted the matter to the Tribunal for fresh consideration. The decision clarifies the scope of "substantial question of law" under Section 130E and re‑affirms the burden of proof on the possessor of gold under Section 123.

Issues considered

Whether the High Court was correct in holding that no substantial question of law arose under Section 130E of the Customs Act.
Whether the Tribunal erred in ignoring material evidence and relying on alleged trade practices.
Whether the respondents discharged the burden of proof under Section 123 of the Customs Act.
Whether the confiscation orders under Section 111(D) should be set aside.

Legislation cited

Customs Act, 1962s. 111(D), s. 123, s. 130E

Subjects

Customs ActGold smugglingBurden of proofSection 123Section 130ESubstantial question of lawTribunalHigh CourtConfiscation orderTrade practice

Judgment

A COMMISSIONER OF CUSTOMS (PREVENTIVE) ~ -
\I

VIJA Y DASHARA TH PATEL

MARCH 8, 2007

B [S.B. SINHA AND MARKANDEY KA TJU, JJ.]

Customs Act, 1962-ss.130(£), 123 and 11 J(D):

Gold bars offoreign origin,Confiscation orders passed by Commissioner
c ofCustoms- Set aside by Tribunal-Appeal by Revenue u/s. i'30(E)-Dismissal
of, by High Court on ground that no substantial question of law arose for
its consideration-Propriety of-Held, not proper-Substantial question of
law varies from case to case-It arises when material and relevant facts have
been ignored and legal principles have not been applied in appreciation of
D evidence-On facts, the Tribunal did not consider the entire evidence on
record and also erred in law in relying upon the prevailing trade practices
in gold/bullion market-Hence, a substantial question of law did arise for .,., .._
consideration of the High Court.

Respondents were detained for carrying gold biscuits of foreign origin.
E The Commissioner of Customs held that Respondents had not discharged their
burden of proof in terms of Section 123 of the Customs Act, 1962 to prove
that the gold bars were not smuggled and accordingly directed that the gold
bars be confiscated u/s 111 (D) of the Customs Act and penalties be imposed
on the Respondents. Appeals before Tribunal were dismissed. High Court
directed the Tribunal to consider the matter afresh. On re-wnsideration, the
F Tribunal held that Respondents had produced sufficient documentary evidence :ir

to prove that they had acquired the gold bars legally and accordingly, the
confiscation orders and the penalties imposed were set aside. Revenue filed
appeal before High Court u/s 130(E) of the Customs Act, but the High Court.
declined to interfere on the premise that no substantial question of law arose
G for its consideration. Hence the present appeals.

Allowing the appeals, the Court
r .....
HELD: 1.1. Section 130E of the Customs Act, as it stood then, provided

H 738
COMMNR. OF CUSTOMS (PREVENTIVE)1·. VI.IA Y DASHARATH PATEL 739
.• for an appeal from an order passed in appeal by the Appellate Tribunal, save A
-* and except those specifically mentioned therein, only in the event a satisfaction
is arrived at by the High Court that the same involves a substantial question
of law. The High Court's jurisdiction in this behalf is limited. What would be
substantial question oflaw, however, would vary from case to case.
!Paras 20 and 22! [750-D, Fl
B
1.2. Moreover, although, a finding of fact can be interfered with when it
is perverse, but, it is also trite that where the courts below have ignored the
weight of preponderating circumstances and allowed the judgment to be
influenced by inconsequential matters, the High Court would be justified in
considering the matter and in coming to its own independent conclusion.
!Para 23] 1750-G]
c
1.3. The High Court shall also be entitled to opine that a substantial
question of law arises for its consideration when material and relevant facts
have been ignored and legal principles have not been applied in appreciating
the evidence. Arriving at a decision, upon taking into consideration irrelevant D
factors, would also give rise to a substantial question of law. It may, however,
be different that only on the same set of facts the higher court takes a different
~
view. Even in a case where evidence is misread, the High Court would have
"""" power to interfere. !Paras 24 and 25] 1750-H; 751-A, CI

Madan Lal v. Mst. Gopi & Anr., AIR (1980) SC 1754; Collector of E
Customs, Bombay v. Swastic Woollens (P) ltd. & Ors., 11988! Supp. SCC 796;
Metroark Ltd. v. Commissioner of Central Excise, Calcutta, 120041 12 SCC
505; West Bengal Electricity Regulatory Commission v. CESC ltd., 120021 8
SCC 715 and Commissioner of Customs, Mumbai v. Bureau Veritas & Ors.,
120051 3 sec 265, relied on.
F
..,,_ Mis. Dutta Cycle Stores & Ors. v. Gita Devi Sultania & Ors., 1199011
j
sec 586, referred to.
2. I. In the present case, the Commissioner of Customs, inter alia, has
gone into the entire materials brought on records by the parties. It has taken
G
into consideration a number of circumstances in arriving at its findings. The
Tribunal, however, inter alia, proceeded on the basis that one of the carriers
.... -f had been let off but also the purported normal fashion of transport of gold
bars for which no evidence was brought on records. !Para 2711715-F!

2.2. It was contended by the Respondents that the Tribunal consists not H
740 SUPREME COURT REPORTS [2007] 3 S.C.R.

A only of judicial member but also of technical member and in that view of the
matter the Tribunal could take judicial notice of the trade practice prevailing ~ -
in a particular trade and, thus, no illegality has been committed thereby. No
evidence, however, admittedly, was laid in relation to the .i>urported trade
practices. Therefore, the said contention cannot be accepted. !Para 28]
1751-G, H; 752-A]
B
2.3. The Tribunal furthermore noticed only the last statements made by
the proceedees. The purported subsequent statements, in lhe light of their
earlier statements, were not taken into consideration. It had furthermore not
taken into consideration in regard to the connectivity of the gold bars imported,
in respect whereof the custom duty had been paid and the 1:0Id bars seized.
c Therefore the contention of Respondents that no question of law had been
raised cannot be accepted. It was done by the Revenue in its grounds. Even
the error of law committed by the Tribunal in relying upon the trade practices
had expressly been taken by the Revenue. Similarly, in regard to the fact of
non-payment of consideration had been raised by the Revenu:e in its grounds.
The Commissioner had opined that their existed serious discrepancies in the
D bills or vouchers. The Tribunal should have dealt with the aforementioned
findings of the Commissioner. !Paras 29, 30, 31, 32, 33 andl 361

""' .
1752-G-H; 753-A; 754-A-C; 755-C]

Hukma v. State of Rajasthan, AIR (1965) SC 476 and Meenakshi Mills,
Madurai v. The Commissioner of Income Tax, Madras, 11956) SCR 691,
E referred to.

3. For the reasons aforementioned, the High Court may not be entirely
correct in holding that no substantial question of law arise for its
consideration. Ordinarily, although, this Court has referred tile matters back
to the High Court, having regard to the fact that this Court ha!: itself examined
F the findings of the Tribunal and the findings of the Commissioner, instead of
,./
remitting the matter back, interest of justice would be met if upon setting ''
aside the judgment of the High Court and Tribunal, the matt1~rs are remitted
to the latter for considering them afresh. !Para 39) (755-H; 756-AI

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1204 of2007.
G
From the Order dated 30.1.2006 of the High Court of Gujarat at Ahmedabad
in T.A. No. 1923/2005. t

WITH

H Civil Appeal Nos. 1205-1209/2007.
COMMNR. OF CUSTOMS (PREVENTIVE) 1·. VIJA Y DASHA RA TH PA TEL [S.B. SINHA, J] 74 J

Mohan K. Parasaran, ASG, Naveen Prakash, Devadatt Karnath, B. Krishna A
--• Prasad for the appellant.

Joseph Vella Palli, Anand Narin Haskar, S.H. Sanganwalla, S.S.
Sanjanwalla, Hemantika Wahi, Shivangi for the Respondent.

The Judgment of the Court was delivered by B
S.B. SINHA, J. I. Leave granted in S.L.Ps.

2. These appeals are directed against a judgment and order dated 30th
January, 2006 passed by the High Court of Gujarat at Ahmedabad in Tax
Appeal Nos. 1923, 1924, 1925, 1930, 1928 and 1929 of 2005 respectively, c
whereby and whereunder the appeal preferred by the appellant herein was
dismissed holding that no substantial question of law for its consideration
had arisen therein. The factual matrix obtaining herein is not in dispute. Eight
persons including the respondents herein were detained for carrying 551 gold
biscuits of foreign origin, the details whereof are as under :
D
Sr.No. Name Foreign Quan Nature of
Mark -tity possession
-..
of gold of gold
bars
E
I. Sh. Shailesh Ratilal ARGOR SUISSE 100 Kept in
Patel, Proprietor of 4 plastic
Mis. S.K. Jewellers packets
each of
25 bars
F
.,., 2. Sh. Vijaybhai CREDIT CX) A small
~

Dashrathlal Patel, HERAEUS green bag
Proprietor of Mis. carried by
Paras Bullion him
(Respondent herein) G
3. Smt. Rasilaben Rathod ARGOR 95 Under her
HERAEUS attire tied
with a
waist belt
H
742 [2007] 3 S.C.R.

.
SUPREME COURT REPORTS

A 4. Shri Jaswantbhai K. ARGOR 95 Hidden in
Patel HERAEUS sole of the -
PAMP shoes
SUISSE (j)
JOHNSON
MAIBEY (j)
B
5. Bhikhabhai T.K. Patel CREDIT 55 Hidden in
SUISSE ;ole of the
;hoes

c 6. Arvindbhai K.K. Patel ARGOR
HERAEUS
55 Hidden in
;ole of the
.;hoes

7. Shri Nandubhai Brijlal UBS 51 Hidden in
Soni :;ole of the
.D :;hoes

8. Nathubhai @ Nitinbhai CREDIT 55 Hidden in
B. Patel SUISSE :;ole of the
,.. • JI.
shoes

3. Out of the said 551 of gold biscuits, 200 belonged to Shri Vijaybhai
E
Dashrathlal Patel, Proprietor of Mis. Paras Bullion, whereas 351 belonged to
Shri Shailesh Ratilal Patel, Proprietor of Mis. S.K. Jewellers. Both of them were
arrested. They made their statements under Section 108 of the Customs Act,
1962 ('the Act', for short). Shri Vijaybhai Dashrathlal Patel, respondent herein,
allegedly, in his statement disclosed that he had purchased the said 200 gold
F biscuits from one Ridhi Siddhi Bullion Ltd. who had produced a delivery
challan of ABN AMRO Bank issued in its favour. Other than the said delivery K
{_
challan, allegedly, he could not produce any other document. The purported
letter of ABN AMRO Bank dated 12.11.1999 addressed the Assistant
Commissioner of Customs, Ahmedabad is in the following terms :

G "We wish to inform you that we had sold 100 Ten Tola Gold Bars and
150 Ten Tola Gold Bars to the captioned company under our invcice
numbers 991BAR/l 38 dated 25th October, 1999 for Rs.55,53,6401- and
991BAR/139 dated 25th October, 1999 for Rs.81,49,025.'-. ""
The above Ten Tola Gold Bars were out of the consignment stock of
H 1000 TT bars imported by us from Credit Suisse First Boston, Zurich
COMMNR. OF CUSTOMS (PREVENTIVE) r. VIJA Y DASllARA TH PATEL {S.B SINHA. JJ 743

_, under AWB No.085-1490-2753 dated 20th September, 1999. We had
paid the applicable customs duty at the time of clearance of the
A
consignment on 22nd September, 1999. We also confirm that the
delivery was effected on our behalf by Mis. Brinks Arya (India) Pvt.
Ltd., Ahmedabad.

This letter has been issued at the request of Mis. Riddhisiddhi Bullions B
Ltd. We hope the above information is sufficient and shall be glad to
furnish any further information you may require."

4. According to him, he had sold 200 gold biscuits to one Devangbhai
Patel on 23.10.1999, but had no document to establish the same or that he had
not received any payment therefor. It was the further statement of the said c
respondent that he had sold 300 gold biscuits to Shailesh Patel, but again
therefor no commercial invoice or delivery challan had been issued. A further
statement was made to the effect that out of the said 300 gold biscuits, 130
having UBS marking were purchased from one K.L. Chokshi and remaining
170 were purchased from different parties, but again therefor no payment was
made either in cash or cheque. Statement of Shailesh Patel was recorded on
D
24.10.1999 under Section I 08 of the Act when he disclosed that he had

- ..,., purchased 300 gold bars from Paras Bullion but no bill had been issued
therefor nor any payment has been made by him. On the said date, statement
ofNaresh Chokshi was also recorded, wherein, allegedly, he did not make any
statement to the effect that he had sold any gold bar of UBS mark to Paras E
Bullion. The second statement of Shailesh Patel was recorded on 29. l 0.1999,
wherein he reiterated his earlier statement, stating :

" ... On being further questioned, I have to state that the details of the
receipt/purchase of the said foreign mark gold biscuits are narrated in
the prior statement given by me ..." F

5. In his statement recorded on 28.10.1999, Vijay Dasharath Patel had
made a statement that details of purchases of the gold biscuits could be
furnished only upon perusal of his books of accounts.

6. We need not refer to the other statements made by other persons G
recorded by the Customs Officers on that date, being not relevant for the
purpose of this case. We may, however, notice that proceedees retracted from
their statements on l l .11. I 999, alleging that he had the requisite documents
to support their contentions that gold seized were not smuggled ones.
H
744 SUPREME COURT REPORTS [2007] 3 S.C.R.

A .7. However, according to Vijay Dasharath Patel, 300 gold bars were sold
to Mis. S.K Jewellers, out of which 20 I were purchased from M/s. K.L. t-
Chokshi and the rest were purchased from other jewellers. According to him,
he did not maintain any stock register. He further stated that he had sold 200
gold bars to Patel Bullion on 23.10.1999, although he had not received any
B payment from the said vendee.

8. A show cause notice was issued upon the respondents on 1.3.2000
asking them to show cause as to why the seized gold bars should not be
confiscated and penalty should not be imposed. Cause having been shown
and the matter having been heard, the Commissioner, by his order dated
C 28.2.200 I, inter alia, held :

" .... substantial number of foreign marked gold bars i.e. 361 pieces,
were found to have been concealed in the shoes, body parts of the
noticees ..... .

D * * * *
... .In their initial statements recorded before the Custom; Officers on
24.10.99 both Shri Shailesh R. Patel and Shri Vijay D Patel admitted
that they had no documents for legal importation ....

* * * *
E
.... Section 123 of the Customs Act, 1962, which casts the burden in
respect of "Gold", on the person from whose possession it is recovered,
to prove that it is not smuggled ...

.... Statements were not recorded under any duress or mental torture."
F 9. According to the Commissioner of Customs, the respondents had not
discharged their burden of proof in terms of Section 123 of the Act, in support
whereof the following findings were recorded :

* The delivery challan issued by ABN AMRO Bank to Riddi Siddi
Bullion does not in any way account for the possession of gold
G
bars by Vijay Dashrath Patel.

* Shailesh Patel although stated that he had purchased 300 gold ·
bars from Paras Bullion, no bill was issued in his name by the
aforesaid firm nor he has made any payment towards purchase
of 300 foreign marked gold bars.
H
COMMNR. OF CUSTOMS (PREVENTIVE) 1·. VI.IA Y DAS HARATH PATEL [S.B. SINHA, J.] 745

A
* Statements dated 24.0.1999 were retracted on 29.10.1999 but
retractions cannot be relied upon.

* In the absence of any mention of identity or brand specifications
of the gold bars and also in face of a clear admission that no
payments have been made or received and no bills having been B
issued, it is fully established that all 500 gold bars were not
legally imported or acquired.

* The bills bearing Nos.5877, 5960 and 5936 which have been
produced by Vijay Patel to prove his possession of 200 gold
biscuits cannot be relied upon at all. The gold biscuits seized are
not of the same brand for which the bills have been produced.
c
* On 24.10.1999, Vijay Dasharath Patel has stated that he had
purchased 200 pieces of foreign mark gold bars of "CREDIT
SUISSEE" mark from Mis Riddi Siddi Bullion on 23.10.1999.
However, from the statement of Shri Dinesh authorised signatory D
of M/s Riddi Siddi Bullion did not mention whether the gold
biscuits delivered to Mr. Vijay Dasharath Patel were of CREDIT

- y SUISSEE mark. It was also observed that the alleged Bill No.294/
GL/99/2000 dated 23.10.1999 also does not show the markings of
the brand name of the gold biscuits.
E
* Statement of Ashwinbhai Patel is relied upon to show that Bill
No.11931 was a complete after thought and it had been in fact
prepared on 24. I0.1999. Ashwinbhai Patel had stated that his
maternal nephew Shri Devang Patel had phoned him on 24.10.1999
and informed him about the recovery of the gold biscuits by
police and on being called by him, he had gone to the residence F
)' of Shri Vijay Dasharath Patel on 24.10.1999 and he had prepared
the Bill No.11931.

* Both Vijay Dasharath Patel, Proprietor of Paras Bullion and Shailesh
Patel admitted that no payment has made for the 300 pieces of
foreign mark gold bars covered by Bill No.11931. Further, the G
alleged Bill No.294/GL/99/2000 purported to be issued by Riddi
Siddi Bullion in favour of Paras Bullion for 350 gold bars does
not contain the details regarding identity/brand of the gold bars
nor the printed or pre-printed SI.No. of the Bill. Also no evidence
of payment made by M/s Paras Bullion to M/s Riddi Siddi Bullion H
746 SUPREME COURT REPORTS [20071 3 S.C.R.
A has been produced.

* Mis Riddi Siddi Bullion had relied upon Bill No.27 53 dated
22. l 0.1999 issued by Anjali Exim Pvt. Ltd. in favour of Mis. Riddi
Siddi Bullion for 200 gold brars of UBS mark. However, tis found
that there are no gold biscuits of foreign origin of UBS brand
B among the 500 gold biscuits and, therefore, the said bill has no
relevance with the gold biscuits under seizure.

* The plea taken by Vijay Dasharath Patel in his statement dated
11.11.2004 regarding the gold biscuits in his possession, is an
after thought and the same is not acceptable. In view of the facts
c which have been initially stated in the statement dated 24.10.1999
and which have been corroborated by Shailesh Pa':el in his
statement dated 24.10.1999, it is established that there was no
document to show the source of 300 gold bars sold by Vijay to
Shailesh Patel.
D * It was found on close scrutiny of the documents that bills,
delivery challans, vouchers produced by the notices that none
of these is serial numbered or pre-serial numbered. Ad hoc numbers
have been given to these documents and hence these do not
:...
inspire confidence and hence the documents produced have no
credibility.
""
E
* Although it was admitted by Vijay Dasharath Patel an:l Shailesh
Patel that no bills, vouchers, delivery challans were issued in
respect of the sale of 300 gold bars. Entries have been made and
Bill No.11930 and 11931 have been subsequently prepared on
24. l 0.1999 to legalise the sale.
F
* 72 entries of purchase and sale have been made in the stock
account of Mis Paras Bullion after the alleged tram.actions of )(

bills No.11930 and 11931. It is humanly impossible that all these
entries can be made within one hour and that the entrie:s in which
stock register of Mis Paras Bullion were made with a view to
G
create the impression of legal purchase and sale of 500 foreign
mark gold biscuits.

* No man of ordinary prudence will transport legally imported
foreign mark gold biscuits in the way notices have been found
G to be doing. The facts and circumstances of the recovery of the
COMMNR OF CUSTOMS (PREVENTIVE)». VI.JAY DASHA RATH PATEL [S.B. SINHA. J J 747

_, gold bars by way of concealment in shoes and other body parts A
of the notice is a positive circumstancial evidence to suggest that
the gold was illegally acquired and hence it was transported in
a surreptitious and clandestine manner more often adopted by
smugglers.

* Satishbhai Patel, who is the accountant of Mis S.K. Jewellers, B
was also liable as he had abetted Shailesh Patel in contravention
of the various provisions of the Customs Act.

* All the carriers of gold bars had not demanded any document in
support of the illicit import/ acquisition of the gold biscuits
received by them from Satish Patel and Vijay Dasharath Patel and c
as such have abetted Shailesh Patel and Vijay Dasharath Patel in
committing contravention of law.

* Accordingly, it was directed that the 500 gold bars weighing
58.320 Kgs. valued at Rs.2, 70,00,000/- be confiscated under section
111 (D) of the Customs Act. Penalties were also imposed on the D
notices."
;. -v

I0. Appeals filed by Respondents before the Tribunal, by reason of an
order dated 5.6.2003 were dismissed.

11. Applications for rectification of mistakes were filed alleging that E
various aspects had not been considered in the original order. Special Civil
Application No. 5468 of2004 was also filed before the High Court of Gujarat
at Ahmedabad against the said order of 5.6.2003.

12. The Tribunal by an order dated 7.1.2004 allowed the applications for F
")
; rectification of mistakes filed by the respondents.

13. Against the said order dated 7.1.2004, the Revenue filed Special Civil
Application No.2640 of2004.

14. The High Court set aside the order dated 7.1.2004 passed by the G
Tribunal in the applications for rectification of mistakes and on the same day
allowed the said Special Civil Application filed by the respondents, in terms
whereof the order of the Tribunal was set aside and the matter was directed
to be considered afresh.

15. The Tribunal, thereafter, passed an order on 30.9 .2005, wherein, inter H
748 SUPREME COURT REPORTS [200~'] 3 S.C.R.

A alia, it was held :
'" ...... This finding of the Commissioner cannot be upheld since the
Appellant has produced documentary evidence of having purchased/
procured the 200 bars from RBL who in tum have got the ;ame from
Mis. ABN Amro Bank, Ahmedabad, the importers of TT bars at
B Ahmedabad, one of the permissible route as per the findings of the
Commissioner. In any case, the Commissioner and the department do
not reject the letter dt.12. I 1.99 of ABN Amro Bank certifying, "CREDIT
SUSSE" TT bars to RBL nor does the Commissioner find RBL to have
given forged/fabricated delivery challan/invoices to the appellants,
ABN Amro Bank or RBL or Mis. K.L. Chokshi or and Mis. Amrapali
c Industries are not being questioned on their credibility the TT bars
supplied by them cannot be found to be non duty paid or and cleared
from an unauthorized port without payment of duty and thus liable to
confiscation under Section 11 !(d) of the Customs Act, 1962 ...

D * * * *
... Therefore, there was no reason to believe that gold covered by the
ABN Amro Bank document was not duty paid ..... "

16. Dealing with the submissions made on behalf of the proceedees, it ,
E was held:
" .... These submissions have force and discharge the burden of the TT
bars to be duty paid and not smuggled ...

* * * *
F ... Further, in their statements recorded on 24.10.1999 itself, everybody
i.e. Dinesh C. Jain ofRBL, Sh. Naresh K. Chokshi of Mis. K.L. Chokshi
and Shri Yeshwant A. Thakkar of Amrapali Ltd., not only admitted
having sole! the gold to the appellants but also provided documentary
evidence of having purchased the gold from Banks. By not issuing
any Show Cause Notice to those persons, we find that the Revenue
G agrees and were fully satisfied that the gold was legally acquired by
them and supplied to the appellants.

* * * *
* Nandubhai Soni, one of the carriers was let off although he was
H similarly placed as other carriers.
COMMNR. OF CUSTOMS (PREVENTIVE),.. VIJA Y DAS HARA TH PATEL [S.B. SINHA. J.j 749

* Transportation of gold in shoes appears to be a normal fashion A
~•
of transporting gold bars, by carriers in the bullion market,
irrespective of the fact whether they have bills or vouchers.

* Satishbhai Patel, the Accountant of S.K. Jewellers cannot be said
to have abetted Shaileshbhai Patel by preparing ante dated bills.
The proven practice of sales in this market would led us to find B
nothing amiss in invoices being written/prepared with or without
brand marks.

* ABN AMRO Bank letter dated 12.11.99 confitms that the gold
was legally imported.
c
* Although the documents do not show that the gold bars were
of a particular origin, there is no statutory requirement which
prescribe invoices to describe foreign marks.

* Admitted fact that no payments were made as on the date of
seizure in respect of the seized gold bars. However no adverse . D
inference could be· drawn .

• ..,, * We do not consider anything to be amiss in payments for the 500
bars not having been effected.

* We are arriving at our findings that the entire 551 gold TT bars ..... E.
To be duty paid gold ....

* Dinesh, Jain, Naresh Chokshi and Yeshwant Thakkar of Amrapali
admitted having sold gold bars to the Appellants. The Revenue
had not issued any show cause to these persons.
F
>
~
* Confiscation order and penalty set aside."

17. As indicated hereinbefore, on an appeal preferred against the said
judgment by the Revenue, the High Court refused to interfere on the premise
that no substantial question of law arise for its consideration.
G
18. Mr. Mohan K. Parasaran, learned Additional Solicitor General
appearing for the Union of India would contend that the High Court committed
a manifest error in opining that no substantial question of law arose for its
consideration, although, it is evident that the Tribunal had failed to consider
the well reasoned judgment of the Commissioner of Customs in its proper
perspective. The learned counsel urged that the High Court failed to notice H
750 SUPREME COURT REPORTS [20071 3 S.C.R.

A that the ;rribunal had referred to several trade practices in support whereof
the proceedees did not adduce any evidence. It was submitted that the
Tribunal furthermore failed to consider the question as to whether the
proceedees had discharged their burden of proof cast upon them in tenns of
Section 123 of the Act.

B 19. Mr. Joseph Vella Palli and Mr. Anand Narain Haksar, learned Senior
Counsel appearing on behalf of the respondents, on the other hand, would
submit that from a bare perusal of the order of the learned Tribunal, it would
appear that the reasonings of the Commissioner of Customs had been
considered in great details therein and, thus, this Court should not interfere
C therewith. It was urged that no question of law was raised in relation to the
specific findings of fact arrived at by the Tribunal and in that view of the
matter, having regard to the provisions of Section 130 of the Act.. the findings
of fact being binding on the High Court, no error has been committed by it
in opining that no substantial question of law arise for its consideration.

D 20. Section l 30E of the Customs Act, as it stood then, provided for an
appeal from an order passed in appeal by the Appellate Tribunal, save and
except those specifically mentioned therein, only in the event a satisfaction
is arrived at by the High Court that the same involves a substantial question
of law.

21. Before the High Court, as also before us, several questions of law
have been raised. We, however, in view of the order proposed to be passed,
need not deal with all of them in details.

22. We are not oblivious of the fact that the High Court's jurisdiction
F in this behalf is limited. What would be substantial question of law, however,
would vary from case to case. .ll,

23. Moreover, although, a finding of fact can be interferi!d with when
it is perverse, but, it is also trite that where the courts below have ignored
the weight of preponderating circumstances and allowed the judgment to be
G influenced by inconsequential matters, the High Court would be justified in
considering the matter and in coming to its own independent conclusion.
{See Madan Lal v. Mst. Gopi & Anr., AIR (1980) SC 1754.}

24. The High Court shall also be entitled to opine that a substantial
H question of law arises for its consideration when material and relevant facts
COMMNR OF CUSTOMS (PREVENTIVE) 1·. VIJA Y DAS HARA TH PATEL [S.B. SINHA. J] 751

have been ignored and legal principles have not been applied in appreciating A
~' the evidence. Arriving at a decision, 11pon taking into consideration irrelevant
factors, would also give rise to a substantial question of law. It may, however,
be different that only on the same set of facts the higher court takes a
different view. {See Collector of Customs, Bombay v. Swastic Woollens (P}
ltd. & Ors., (1988] Supp. SCC 796; and Metroark ltd. v. Commissioner of B
Central Excise, Calcutta, (2004] 12 SCC 505.}

25. Even in a case where evidence is misread, the High Court would
have power to interfere. {See West Bengal Electricity Regulatory Commission
v. CESC Ltd., (2002] 8 SCC 715 and also Commissioner of Customs, Mumbai
v. Bureau Veritas & Ors., (2005] 3 SCC 265.} C

26. In Mis. Dutta Cycle Stores & Ors. v. Gita Devi Sultania & Ors.,
(1990] l SCC 586], this Court held:

"Whether or not rent for the two months in question had been
duly paid by the defendants is a question of fact, and with a finding D
of such fact, this Court does not ordinarily interfere in proceedings•
under Article 136 of the Constitution, particularly when all the courts
• "f. below reached the same conclusion. But where the finding of fact is
based on no evidence or opposed to the totality of evidence and
contrary to the rational conclusion to w.hich the state of evidence E
must reasonably lead, then this Court will in the exercise of its discretion
intervene to prevent miscarriage of justice."

27. We have hereinbefore noticed the judgment of Tribunal as also the
one rendered by the Commissioner of Customs. The Commissioner of Customs,
inter alia, has gone into the entire materials brought on records by the parties. F
It has taken into consideration a number of circumstances in arriving at its
findings. The Tribunal, however, as noticed hereinbefore, inter alia, not only
proceeded on the basis that one of the carriers had been let off but also the
purported normal fashion of transport of gold bars for which no evidence was
brought on records.
G
28. Mr. Joseph Vella Palli would submit that the Tribunal consists not
only of judicial member but also of technical member and in that view of the
matter the Tribunal could take judicial notice of the trade practice prevailing
in a particular trade and, thus, no illegality has been committed thereby. No
evidence, however, admittedly, was laid in relation to the purported trade H
752 SUPREME COURT REPORTS :2007] 3 S.C.R.

A practices. We, therefore, cannot accept the said contention. This Court, in
Hukma v. State of Rajasthan AIR (1965) SC 476, laid down the law in the
following terms :

" ..... Learned counsel rightly pointed that while S.178-A has the result.
of placing the burden of proof that the gold was not smuggled on the
B accused, it is of no assistance to the prosecution to prove that the
accused was carrying the gold knowingly to evade the prohibition
which was for the time being in force with respect to the import of
gold into India. Once, however, it is found, as it must be found in this r
case, in consequence of the provisions of S.178-A (the accused has
c not tried to discharge the burden that lay on him that the gold was
not smuggled) that he was carrying smuggled gold, the circumstances
under which the gold was discovered, the manner in which he was
carrying the gold, the considerable quantity of the gold that was
being carried and the form in which gold was being carried, namely,
blocks and bars in which the major portion of the gold was found, all
D these circumstances establish beyond a shadow of doubt that the
accused was carrying the gold knowingly and with the intention of
evading the prohibition that was in force with respect to the import
of gold into the country. Mr. Kapur tried to argue that when gold is .,. .
carried by persons, they often carry it in this manner in a nouli
concealed under trousers. That may well be so. Here, :~owever, there
E
is an additional circumstance that a pointsman of the Railway, not
expected to have so much gold in his possession, was carrying the
gold which was, as already mentioned, in six blocks and 22 bars apart
from some small pieces and one pair of murkees. The: total quantity
was as much as 286 to las and 11 annas, that is, about three kilograms.
F When all these circumstances are taken together, it is ~10t possible to
accept learned counsel's suggestion that he might b1~ carrying the
gold innocently having purchased it from somebody. In our opinion,
the High Court has rightly held that all the ingredients of the offence
under S.167(81) of the Sea Customs Act have been established ...."

G . 1.ui '
29. rile Tribunal furthermore noticed only the last statements made by
the proceedees. The purported subsequent statements, in the light of their
earlier statements, were not taken into consideration.

30. It had furthermore not taken into consideration in regard to the
H connectivity of the gold bars imported, in respect whereof the custom duty
COMMNR OF CUSTOMS (PREVENTIVE} 1·. VIJA Y DASHA RA TH PATEL [S.B. SI:'.!IA, l] 753
·.~

~'I
had been paid and the gold bars seized. A
31. We, therefore, do not accept the contention of Mr. Vella Palli that
no question of iaw had been raised. It was done by the Revenue in its
grounds, stating :

"That the Ld. Tribunal has erred in holding that the finding of the B
commissioner is not sustainable because Shri Vijay D. Patel, Prop. of Mis.
Paras Bullion has produced documentary evidence of purchasing 200 bars
from Mis. Riddhisidhi Bullion Ltd., which was received by the said Riddhisidhi
Bullion Ltd. from ABN Amro Bank, Ahmedabad. It is worthwhile to note that
the document was not accompanying the consignment at time of detection by
the police and was produced subsequently at the time of statement of Shri c
Vijay D. Patel, on 24-10-1999. The Ld. Tribunal has recorded this finding by
stating reasons that the commissioner and the department has not rejected
the letter dated 12.11.1999 of the ABN Amro Bank certifying "Credit Suisse"
IT bars to RBL nor they have alleged that RBL has given false/fabricated
delivery challans/invoices to the noticees. It is respectfully submitted that the D
Ld. Tribunal has recorded the above finding without any material or evidence

"
. ., on record and without even looking into the content of the letter dated
12.11.1999 of the ABN Amro Bank. It is submitted that the bank's letter
referred to invoices dated 25.10.1999 and in such circumstances the question
of effecting delivery by the bank to the authorized dealer under delivery
challan dated 23.10.1999 which is two days prior to the'date of invoice is not E
credit worthy. It is also against normal trade practice and makes the transaction
suspect. Further, a bare glance at the documents of the bank undoubtedly
establishes that the stock of FM GB shown in the delivery challan does not
establish that the said challan relates to the gold pieces seized under
panchnama dated 28/29.10.1999. It is submitted that no convincing record/ F
,., evidence is led before the competent authority that the 200 seized pieces of
....-
gold bars are clearly linked/part (including the same brand name) of the stock
shown in the aforesaid delivery challans and invoices. Thus, a vital link of
sale transaction of the seized gold is not fully established. It is the duty of
the person purchasing foreign mark gold bars to see that the correct description
G

- t
of the goods is entered in the respective challans"

32. The aforementioned letter dated 12.11.1999 issued by the ABN
AMRO Bank was the main fulcrum of the reasonings of the Tribunal. It was,
therefore, in our considered view, required to be considered at some details.

H
754 SUPREME COURT REPORTS [2007] 3 S.C.R.

A Even the error of law committed by the Tribunal in relying u.3on the trade
practices had expressly been taken by the Revenue, stating : ~ ~

"The Ld. Tribunal has erroneously held that the proven practice of
sales in gold/bullion market lead to finding that there is nothing amiss
in invoices being written/prepared with or without 'xand marks,
B subsequent to sales and deliveries and thus the penalty as arrived on
the Shri Satishbhai A. Patel is to be set aside. It is submitted that Shri
Satishbhai A. Patel has also actively concerned himself in abetting the
smuggling of the seized gold as no prudent buyer or seller will buy r
or sell such a huge quantity of gold without mentioning individual
mark or details."
c
33. Similarly, in regard to the fact of non-payment of consideration had
been raised by the Revenue in its grounds.

34. In regard to the purported retracted statements, the Commissioner
D dealt with the matter elaborately, opining :
" .... The retractions are in the form of two separate (almost identical)
letters both dated 29.10.99 from Shri Shailesh R. Patel and Shri Vijay
D. Patel wherein they have merely stated that their statements were
taken forcibly. They also said that the Police and the Customs Officers
E had illegally detained them in "their own premises". Similarly, telegrams
have been received on 29.10.99 from other Noticees alkging wrongful
confinement by the Police & Customs officers ....... .

* * • •
It is observed that all these retractions are belated, i.e. after 6 days,
F during which the investigations had been carried out. The Noticees
or their family members could have sought the intervention of the
senior officers of the department during this period i.e. 23.10.99 to
28.10.99 if there was any truth in their allegations of wrongful
confinement or detention. This has not been done. Moreover, they
G have not produced any evidence to support that any physical or
mental torture was inflicted on them.

The CEGAT in their decision in the case of P. Pratap Rao Sail
v. Collector a/Customs, Cochin reported at 1988 (33) ELT 433 (Trib.)
-
had held that:
H
COMMNR OF CUSTOMS (PREVENTIVE)"· VI.IA Y DASHARA TH PATEL IS B. SINHA,!.] 755

...--·; "The detailed statement before Customs officers prima facie merits A
acceptance and by mere retraction, the original statement does not
lose all evidentiary value. "

Since the retractions are made belatedly and without any supporting
evidences, these have no evidentiary value in the eyes of law."
B
35. lt was furthermore held by the Tribunal that the bills had been
prepared subsequently.

36. The learned Commissioner had opined that there existed serious
discrepancies in the bills or vouchers. The Tribunal, in our opinion, should
have dealt with the aforementioned findings of the Commissioner. c
37. Mr. Vella Palli has strongly relied upon Meenakshi Mills, Madurai
v. The Commissioner of Income Tax, Madras, [1956] SCR 691, wherein it was
held:

" ..... On these facts, the Tribunal came to the conclusion that the D
contentions of the Department had been fully established, namely,
that the intermediaries were dummies brought into existence by the
• ~ appellant for concealing its profits, that the sales standing in their
names were sham and fictitious, and that the profits ostensibly earned
by them on those transactions were, in fact, earned by the appellant,
and should be added to the amounts shown as profits in its accounts. E
The point for decision is whether there arises out of the order of the
Tribunal any question which can be the subject of reference under
section 66(1) of the Act. Under that section, it is only a question of
law that can be referred for decision of the comt, and it is impossible
to argue that the conclusion of the Tribunal is anything but one of F
.,i, fact."

38. There is no dispute as regards the proposition of law but, as noticed
hereinbefore, same question of law did arise for consideration of the High
Court.
G
39. For the reasons aforementioned, we are of the opinion that the High
Court may not be entirely correct i11 holding that no substantial question of
law arise for its consideration. Ordinarily, although, we have referred the
matters back to the High Court, having regard to the fact that we have
ourselves examined the findings of the Tribunal and the findings of the
Commissioner, we are of the opinion that instead of remitting the matter back, H
756 SUPREME COURT REPORTS [2007] 3 S.C.R.

A interest of justice would be met if upon setting aside the judgment of the High
Court and Tribunal the matters are remitted to'the latter for considering them
afresh. The parties shall be entitled to raise their respective contentions
before the Tribunal. We intend to make it clear that our reference to the
findings of the Commissioner as also the Tribunal was made only for the
B purpose of considering as to whether any substantial question of law arose
for consideration before the High Court and for no other purpose. We may
not therefore be understood to arrive at any finding in regard to any question
which would arise for the consideration of the Tribunal.

40. For the reasons aforementioned, the appeals are allowed. The
C impugned judgments of the High Court as well as the order of the Tribunal
are set aside. The matter is remitted to the Tribunal for consideration thereof
afresh.

B.B.B. Appt::als allowed.