M/S. RAJMAL LAKHICHAND AND ANR.versusCOMMR. CEN. EXC. & CUSTOMS, AURNAGABAD

                            [2011] 7 S.C.R. 850


A              M/S. RAJMAL LAKHICHAND AND ANR.
                                      v.
        COMMR. CEN. EXC. & CUSTOMS, AURNAGABAD
               (Civil Appeal No. 4919 of 2011)
                            .    JULY 4, 2011
B
                 [DR. MUKUNDAKAM SHARMA AND
                        ANIL R. DAVE, JJ.]

            Customs Act, 1962: s.130(3) - Reference - Scope of -
  C Confiscation of seized silver.:... Silver weighing 194.250 kgs.
       which was locally purchased confiscated uls. 120(2) and silver
       weighing 1713. 807 kgs. imported illegally from abro_ad
       confiscated uls. 111 (d) - Tribunal directed confiscation of
       entire quahtity of silver u/s; 120(2) - Provision of s. 120(2) was .
o      not· _invoked in· the show cause notice for- silver weighing
     '194.250 kgs. .:.. Reference application· before High Court -
       Question referred to High Court that whether Tribunal was ·
      justified in invoking s. 120(2) tO order confiscation of silver
       when the said provision was not invoked in. the show cause
  E notice and when the appellants were not given any opportunity
       of being heard in the matter by the Tribunal - High Court
       answered the reference in favour of appellant holding that
       Tribunal was not justified in invoking s120(2) to confiscate
       entire silver - It refused to expand the scope of reference to
  I= confiscation of silver to the extent of 1713. 807 Kgs. and
       restricted it to the silver weighing 194. 250 Kgs. only -
       Correctness of- Held: Correct - Tribunal was not justified in.
       invoking the provisions of s. 120(2) to order confiscation of
       silver when the said provision was not invoked in the show
. G cause notice and when the appellant was not given any
     · opportuhity of being heatd in the matter by the Tribunal - High
       Court was justified in refusing to expand the scope of the
       reference so as to include the silver Weighing 1713.807 kgs.
       which was confiscated uls. 111(d) of the Act while hearing the
       reference with regard to silver weighing 194. 250 kgs. but ·
H        ·             ·.   ·.       850.       .   ·         .     • .
~JMAL LAKHICHAN v. COMMR. CEN. EXC. & CUSTOMS, 851
                      AURNAGABAD

confiscated under a different provision of law, namely, u/           A
s. 120(2) of the Act - High Court rightly held since two different
laws are applicable there was no scope of expanding
reference to include silver weighing 1713. 807 Kgs also -
Reference.

     During search, the Directorate of Revenue                       B
Intelligence, seized silver weighing 1913.256 Kgs. from
the premises of the appellants. Pursuant to the same, a
show cause notice was issued to the appellants. The
adjudicating authority discharged the show cause notice
holding that the evidence collected were not convincing              C
enough to hold the allegations as proved. The Tribunal
allowed the appeals and ordered for confiscation of the
seized silver absolutely and also imposed penalty on the
appellants.
                                                                     D
    The appellants filed applications in which they
framed as many as 11 questions and prayed for reference
to the High Court. The Tribunal by its order dated
26.09.1996 rejected the reference applications holding
that none of the questions raised therein required                   E
consideration by the High Court and also directed
confiscation of silver weighing 194.250 kgs. which was
locally purchased from "Mis. D" and for confiscation of
another quantity of silver weighing 1713.807 kgs. as it
was imported illegally from abroad.
                                                                     F
    Aggrieved, the appellants filed the application under
Section 130(3) of the Customs Act before the High Court
seeking direction to the Tribunal to refer the questions of
law which the Tribunal refused to refer. The High Court
passed the order to the effect that the question of law G
arose whether the Tribunal was justified in invoking the
provisions of Section 120(2) of the Customs Act, 1962 to
order confiscation of silver weighing 194.250 kgs.
purchased from "Mis. D" when the said provisions was
not invoked in the Show Cause Notice and when the . H
   852     SUPREME r,ouRT REPORTS            [2011) 7 S.C.R.


A appellant was not given any opportunity of being heard
  in the matter by the Tribunal.

      The appellant sought modification of the order which
  subsequently came to be modified deleting the words
  "weighing 194.250 kgs. purchased from M/s. D".
8 Consequent upon the said modification, the modified
  question was referred to the High Court deleting the
  words "weighing 194.250 kgs. purchased from M/s. D".
  The High Court answered the said question in favour of
  the appellant and held that the Tribunal was not justified
C in invoking the provision of Section 120(2) of the
  Customs Act, 1962 to confiscate the seized silver to the
  extent it was confiscated in exercise of that power in
  absence of any show cause notice and also in absence
  of opportunity of being heard. By the said judgment and
D order, however, the High Court refused to expand the
  scope of reference to the confiscated seized silver to the
  extent of 1713.807 kgs. and restricted it to the silver of
  194.250 kgs. only. The instant appeal was filed
  challenging the order of the High Court.
E
      Dismissing the appeal, the Court

       HELD: 1. Since, silver weighing 1713.807 kgs. was
  confiscated under Section 111 (d), law applicable to the
  said confiscation was totally different from the
F confiscation of silver weighing 194.250 kgs. which was
  directed to be confiscated by applying the provisions of
  Section 120(2) of the Customs Act. The High Court was
  right in holding that since two different laws are
  applicable there is no question of getting the scope of
G reference expanded to include the silver weighing
  1713.807 Kgs also for consideration while hearing the
  reference restricted only to the sliver weighing 194.250
  Kgs. The confiscation of silver weighing 194.250 Kgs. by
  applying provisions of Section 120(2) of the Act was
H illegal' and without jurisdiction as the show cause notice
 RAJMAL LAKHICHAN v. COMMR. CEN. EXC. & CUSTOMS, 853
                  AURNAGABAD

. was not issued proposing to make the said provisions          A
  applicable and, therefore, there was a violation of
  principle of natural justice. Section 120(2) of the Customs
  Act on which the confiscation of silver weighing 194.250
  kgs. was concerned, cannot by any stretch of imagination
  be said to be similar or applicable to the other quantity     B
  of silver which was confiscated. Legal position is totally
  different and legal principles which are applicable also
  being different there was no scope for extending the
  reference by the High Court nor was there any scope for
  reframing or redrafting the question referred by including    c
  another separate and independent question of
  confiscation of silver weighing 1713.870 kgs. [Paras 13,
  14] [860-E-H; 861-A-B]
      2. Bare reading of Section 130(4) shows that the said
 provision came into the statute book only with effect from     D
 2003 and, therefore, said provision is not applicable to the
 facts of the instant case. Section 1308 is also not
 applicable to the instant case for the said provision
 applicable only for the purpose of amendment of the
 statement of the case. It has no relevance so far as the       E
 issue with regard to redrafting or reframing of a question
 of law is concerned. Therefore, the High Court was
 justified in refusing to expand the scope of the reference
 so as to include the silver weighing 1713.807 kgs. which
 was confiscated under Section 111(d) while hearing the         F
 reference with regard to silver weighing 194.250 kgs. but
 confiscated under a different provision of law, namely,
 under Section 120(2) of the Customs /\ct. [Paras 16, 18,
 19] [861-D-G-H; 862-A-B]
                                                                G
     CIVIL AP PELLATE JURISDICTION : Civil Appeal No.
 4919 of 2011.
     From the Judgment & Order dated 20.4.2010 of the High
 Court of Bombay in Custom Reference No. 1 of 2002.
                                                                H
    854       SUPREME COURT REPORTS                 (2011) 7 S.C.R.


A        Soli Sorabjee, Preetesh Kapur, Seema Bengani, Sanbha
    Giri Rumnong, Dr. Kailash Chand for the Appellants.
         B. Bhattacharya, ASG, Rajiv Nanda, Sunita Rani Singh, B.
    Krishna Prasad for the Respondent.
B         The Judgment of the Court was delivered by
          DR. MUKUNDAKAM SHARMA, J. 1. Leave granted.
       2. This appeal is directed against the judgment and order
  dated 20.04.2010 passed by the Bombay High Court in
C Custom Reference No. 1 of 2002 whereby the High Court
  answered the question referred to it by the Customs, Excise
  and Gold (Control) Appellate Tribunal [for short "the Tribunal"]
  in favour of the appellant and against the Revenue holding that
  the Tribunal was not justified in invoking the provision of Section
o 120(2) of the Customs Act, 1962 to confiscate the seized silver
  to the extent it was confiscated in exercise of that power in
  absence of any show cause notice and also in absence of
  opportunity of being heard. By the aforesaid judgment and
  order, however, the High Court refused to expand the scope
E of reference to the confiscated seized silver to the extent of
  1713.807 kgs. and restricted it to the silver of 194.250 kgs. only.
        3. The Directorate of Revenue Intelligence [for short "the
  ORI"] searched the premises of the appellants on the basis of
  information gathered by it to the effect that large quantity of
F about 132 bricks of silver had been smuggled through sea
  route and diverted to Jalgaon. During the aforesaid search the
  ORI seized silver in Choursa form weighing 1913.256 kgs.
  Pursuant to the same, a show-cause notice was issued to the
  appellants dated 07.08.1993 to which they submitted their
G replies. The adjudicating authority took up the matter for
  cor>siderat:on and by its order dated 30.08.1994 discharged
  t.he show-cause notices holding that the evidence collected were
  not convincing enough to hold the allegations as proved. The
  Central Board of Excise and Customs, New Delhi exercising
H powers under Section 1290 of the Customs Act directed the
RAJMAL LAKHICHAN v. COMMR. CEN. EXC. & CUSTOMS, 855
    AURNAGABAD [DR. MUKUNDAKAM SHARMA, J.]

collector to apply to the Tribunal for determination of the issues · A
specified in the review order, consequent upon which, the
Tribunal was approached. The Tribunal by its order dated 19th
March, 1996 allowed the appeals by setting aside the
impugned order and ordered for confiscation of the seized silver
absolutely. The Tribunal further held that Mr. lshwarlal Lalwani s
and M/s. Rajmal Lakhichand, in whose custody the seized silver
was found were liable for imposition of penalty under Section
112(b) of the Customs Act. Accordingly, a penalty of Rs. 10
lakhs was imposed as personal penalty on Mr. lshwarlal
Lalwani for acquiring the smuggled silver. The Tribunal, c
however, did not impose separate penalty on Mis. Rajmal
Lakhichand since personal penalty on the person managing the
affairs of the firm was imposed. The Tribunal also imposed
penalty of Rs. 1 lakh on Mr. Sureshkumar Seth who had
procured smuggled silver and delivered it to Mr. lshwarlal
                                                                     0
Lalwani. Mis. Rajmal lakhichand and Mr. lshwarlal Lalwani being
aggrieved by the order dated 19th March, 1996 filed two
reference applications in which they framed as many as 11
questions and prayed for reference to the High Court. The
Tribunal by its order dated 29.09.1996 rejected the reference
applications holding that none of the questions raised therein E
required consideration at the hands of the High Court.
     4. Being aggrieved by the aforesaid order of the Tribunal
rejecting the reference applications the appellants moved the
High Court by way of application under Section 130(3) of the        F
Customs Act. By filing the aforesaid applications the appellant-
assessee sought for a direction to the Tribunal to refer the
questions of law which the Tribunal refused to refer. The High
Court took up the aforesaid application for consideration anCI
passed an order on 17.03.1999 to the following effect: -            G
     "2. We have heard the learned counsel for the parties. The
     learned counsel for the Petitioners has submitted redrafted
     questions which according to him bring out the real
     controversy that arises from the order of Tribunal. We have
     carefully considered the questions proposed by the             H
    856       SUPREME COURT REPORTS                [2011] 7 S.C.R.


A         Petitioners before Tribunal and the redrafted questions
          submitted before us. We have also heard Mr. R.V. Desai,
          learned counsel for the Respondent. In our opinion, the
          following question of law arises from the order of the
          Tribunal:
B
                 "Whether the Tribunal was justified in invoking the
                 provisions of Section 120(2) of the Customs Act,
                 1962 to order confiscation of silver weighing
                 194.250 kgs. purchased from M/s. Dilipkumar
                 Harichand & Sons, Jalgaon, when the said
c                provisions had not been invoked in the Show Cause
                 Notice and when the applicants were not given any
                 opportunity of being heard in the matter by the
                 Customs, Excise & Gold (Control) Appellate
                 Tribunal?"
D
          3. We accordingly direct the Tribunal to refer the above
          question to this court for opinion under Section 130(3) of
          the Customs Act, 1962. Rule is made absolute in the
          above terms."
E
       5. It is thus established from the aforesaid order passed
  by the High Court that only one question of law was found to
  have arisen from the order of the Tribunal dated 26.09.1996
  which required consideration at the hands of the High Court.
  The prayer before the High Court was also to refer the other
F questions but the High Court felt that only the reframed question
  to the aforesaid effect only is a question of law arising from the
  order of the Tribunal, which was accordingly directed to be
  referred. Consequent upon the said order the Tribunal prepared
  the statement of case and referred the aforesaid question for
G the consideration of the High Court for its opinion under Section
  130(3) of the Customs Act, 1962. Subsequent to the receipt
  of the aforesaid statement of case from the Tribunal the
  assessee took out a motion to the minutes of the order dated
  17th March, 1999 passed by the High Court and sought
H modification of the order which subsequently came to be
RAJMAL LAKHICHAN v. COMMR. CEN. EXC. & CUSTOMS, 857
    AURNAGABAD [DR. MUKUNDAKAM SHARMA, J.)

modified deleting the words "weighing 194.250 kgs. purchased           A
from M/s. Dilipkumar Hirachand & Sons, Jalgaon". Consequent
upon the aforesaid modification, the modified question thus
referred to the High Court for its opinion reads as under: -

     "Whether the Tribunal was justified in invoking the provision     B
     of Section 120(2) of the Customs Act, 1962 to order
     confiscation of silver, when the said provisions had not
     been invoked in the Show Cause Notice and when the
     applicants were not given any opportunity of being heard
     in the matter by the Customs, Excise & Gold (Control)             C
     Appellate Tribunal?"

     6. The aforesaid reference was taken up for consideration
by the High Court and during the course of arguments counsel
appearing for the appellant sought to get the scope of the
reference extended by making the submission that the question          D
referred would also bring within its fold the entire quantity of
silver weighing 1913.256 kgs. and not restricted to only 194.250
kgs. purchased from Mis. Dilipkumar Hirachand & Sons,
Jalgaon. It was also submitted on behalf of the appellant that
while considering the question referred to the High Court for          E
its opinion it would have to deal with the legality of the
confiscation of the entire quantity of silver weighing 1913.256
kgs. and if that is not done the very purpose of deleting the
aforesaid words would get frustrated and would be rendered
otiose.                                                                F
      7. The counsel appearing for the respondent, however,
re'·Jted the aforesaid submissions contenting inter alia that the
High Court cannot expand the scope of the reference by
including for its consideration the entire quantity of siiver, i.e.,
1913.256 kgs. It was also submitted by him that the attempt to         G
widen the scope of the question to bring within its fold entire
quantity of the confiscated silver weighing 1913.256 kgs. is
nothing but an attempt to bring the question for consideration
before this Court through back door which is not permissible
in law. It was also submitted that the deletion of the words           H
    858      SUPREME COURT REPORTS                 (2011] 7 S.C.R.


A referred to hereinabove would in no way enlarge the scope of
  the question referred for so far as the silver weighing 194.250
  kgs. is concerned, as the same stood on completely different
  footing than the silver which was imported illegally and,
  therefore, confiscated. It was submitted by him that the silver
B weighing 1713.807 kgs. was confiscated under Section 111
  (d) of the Customs Act, whereas rest of the silver weighing
  194.250 kgs. was confiscated under sub-Section (2) of Section
  120 of the Customs Act and, therefore, law applicable being
  different, the two types of silver stood apart from each other. It
c was also submitted by him that the two types of silver being in
  issue and only one of it having been referred there is no
  question of reframing or recasting the question of law as
  suggested by the counsel appearing for the appellant as the
  other quantity of silver weighing 1713.807 kgs. involves and
  revolves around a completely different law, namely, Section
0
  111 (d) and, therefore, cannot be held to be permissible to be
  raised on the same question as that of silver weighing 194.250
  kgs.

        8. In the light of the aforesaid submissions of the counsel
E appearing for the parties we have considered the records. It is
  disclosed from the records that the Tribunal by its order dated
  29.09.1996 directed for confiscation of silver weighing 194.250
  kgs. which was locally purchased from Mis. Dilipkumar
  Hirachand & Sons, Jalgaon, whereas the Tribunal also directed
F for confiscation of another quantity of silver weighing 1713.807
  kgs. as it was imported illegally from abroad. Despite the fact
  that the silver weighing 194.250 kgs. was locally purchased the.
  Tribunal directed for confiscation of the said quantity of silver
  also by applying the provisions of Section 120(2) of the
G Customs Act which provides that where smuggled goods are
  mixed. with other goods in such a manner that the smuggled
  goods cannot be separated from such other goods, the whole
  of the goods shall be liable for confiscation. The Tribunal also
  held that it was not possible to separate the quantity of silver
H weighing 194.250 kgs. from the rest of the smuggled silver and,
RAJMAL LAKHICHAN v. COMMR. CEN. EXC. & CUSTOMS, 859
    AURNAGABAD [DR. MUKUNDAKAM SHARMA, J.]

. therefore, by virtue of Section 120(2) of the said quantity was    A
  also held liable for confiscation.

      9. The aforesaid order of the Tribunal also makes it crystal
 clear that out of the entire quantity of silver weighing 1913.256
 kgs., silver weighing 1713.807 kgs. was confiscated under
                                                                     8
 Section 111 (d) wnereas silver weighing 194.250 kgs. was
 confiscated under Section 120(2) of the Customs Act.

     10. The High Court in the impugned order took notice of
the aforesaid difference of the orders of confiscation and the
two types of silvers by applying two different provisions of law. C
The High Court observed that the Tribunal also considered the
prayer of the counsel appearing for the appellant-assessee
regarding the reframing of the question of law referred by the
Tribunal to the High Court in terms of the order of the High Court
as also the effect of the deletion of few words from the said D
question and that thereafter the Tribunal held that the deletion
would not make any difference either way because the said
deletion was in respect of applicability of the provisions of
Section 120(2) of the Customs Act inasmuch as the powers
under Section 120(2) were exercised with respect to the silver E
weighing 194.250 kgs. only.

      11. Despite the deletion of the aforesaid words the issue
 that was required to be considered was only in respect of the
 provisions applicable being sub-Section (2) of Section 120 of
 the Customs Act and, therefore, in any event and even after F
 the deletion of the said words the question of law which was
 referred and was required to be answered by the High Court
 was restricted only to the said quantity of silver weighing
 194.250 kgs. for which only provisions of sub-Section (2) of
 Section 120 of the Customs Act was being made applicable. G
      12. in the present case, 11 questions were raised by the
 appellants before the Tribunal seeking for reference of the
 same as questions of law to the High Court by way of
 reference. The Tribunal rejected the said application seeking       H
    860      SUPREME COURT REPORTS                   [2011) 7 S.C.R.


A   for reference holding that none of the said 11 questions could
    be referred to the High Court by way of reference. As against
    the aforesaid decision of the Tribunal, the High Court directed
    that only one question out of the said 11 questions, particularly,
    question No. 11 is a question of law which could be referred
B   to the High Court for its opinion and not any other question. At
    that stage, the appellant-assessee had the remedy to approach
    this Court as against the aforesaid order by the High Court
    calling for just one question out of the 11 questions to be
    referred to the High Court. The aforesaid remedy which was
C   available to the appellant at that stage was not resorted to and
    only one question was then referred for the consideration and
    answer by the High Court. While the aforesaid question of law
    which was referred to the High Court for its opinion was being
    considered and argued, effort was made by the appellant-
    assessee to get the scope of reference expanded to other
D   question for which earlier reference was sought and rejected
    by the Tribunal as also by the High Court.
          13. Since, silver weighing 1713.807 kgs. was confiscated
    under Section 111 (d), law applicable to the said confiscation
E   was totally different from the confiscation of silver weighing
    194.250 kgs. which was directed to be confiscated by applying
    the provisions of Section 120(2) of the Customs Act. The High
    Court in the impugned judgment and order held that since two
    different laws are applicable there is no question of getting the
F   scope of reference expanded to include the silver weighing
    1713.807 kgs. also for consideration while hearing the
    reference restricted only to the silver weighing 194.250 kgs. The-
    High Court held that the confiscation of the aforesaid silver
    weighing 194.250 kgs. by applying provisions of Section 120(2~
G   of the Customs Act is illegal and without jurisdiction as the shov.-
    cause notice is not issued proposing to make the aforesaic
    provisions applicable and, therefore, there was a violation o-
    principle of natural justice.
         14. The aforesaid provision on which the said confiscatior
H   of silver weighing 194.250 kgs. is concerned, cannot -by an-
RAJMAL LAKHICHAN v. COMMR. CEN. EXC. & CUSTOMS, 861
    AURNAGABAD [DR. MUKUNDAKAM SHARMA, J.]

stretch of imagination could be said to be similar or applicable      A
to the other quantity of silver which was confiscated. Legal
position is totally different and legal principles which are
applicable also being different there was no scope for
extending the reference by the High Court nor was there any
scope for reframing or redrafting the question referred by            B
including another separate and independent question of
confiscation of silver weighing 1713.870 kgs.
      15. Mr. Soli Sorabjee, Sr. Advocate, appearing for the
appellant sought to rely upon sub-Section (4) of Section 130 C
of the Customs Act to contend that the High Court has the power
to hear, for reasons to be recorded, the appeal on any other
substantial question of law not formulated by it, if it is satisfied
that the case involves such question.
      16. We have considered the said submission of Mr.               0
Sorabjee, but, unfortunately, we are not in a position to agree
with him as it is clear on a bare reading of the said provision
that the said provision came into the statute book only with effect
from 2003 and, therefore, said provision is not applicable to
the facts of the present case.
                                                                      E
     17. Mr. Soli Sorabjee, Sr. Advocate, also relied on Section
1308 which is power of the High Court to require the statement
to be amended. The said Section provides that if the High Court
or the Supreme Court is not satisfied that the statements in a
case referred to it are sufficient to enable it to determine the      F
questions raised thereby, the Court may refer the case to the
Appellate Tribunal for the purpose of making such additions
thereto or alterations therein as it may direct in that behalf.
     18. We have considered the said submission also of the
counsel appearing for the appellant and are of the opinion that G
the said provision is not applicable to the present case for the
said Section 1308 is applicable only for the purpose of
amendment of the statement of the case. It has no relevance
so far as the issue with regard to redrafting or reframing of a
question of law is concerned.                                    H
    862       SUPREME COURT REPORTS                  [2011] 7 S.C.R.


A      19. Therefore, we are of the considered opinion that the·
  High Court was justified in refusing to expand the scope of the
  reference so as to include the silver weighing 1713.807 kgs.
  which was confiscated under Section 111 (d) while hearing the
  reference with regard to silver weighing 194.250 kgs. but
B confiscated under a different provision of law, namely, under
  Section 120(2) of the Customs Act.

       20.Before parting with the case, however, we would like
  to observe that in the counter affidavit filed by the respondent
  certain observations have been made regarding the order
C passed by the High Court. Subsequently, however, the person
  who has filed the aforesaid counter affidavit had submitted an
  additional affidavit tendering his unqualified apology in the
  following manner: -

D         "2. I state that the criticism, if ~ny, of the Judgment of the
          High Court on merits, in the Counter-affidavit on behalf of
          the Respondents dated 2.2.2011 is not deliberate and
          totally unintentional. The inadvertence in this regard is
          highly regretted and deponent unconditionally withdraws
E         any such criticism and tenders unconditional apology. The .
          deponent has highest respects for the Hon'ble Courts and
          is duty bound to comply the directions passed by the
          Hon'ble Courts."

          21. Although at one stage we were very unhappy with the
F language used by the deponent in the counter affidavit but since
  the concerned officer has tendered unqualified apology and has
  withdrawn the said statements made in the affidavit, we accept
  the aforesaid apology tendered and we do not intend to
  proceed any further in the matter and treat the said chapter
G closed.

        22. In terms of the aforesaid observations and findings we
    dismiss this appeal leaving the parties to bear their own costs.

H D.G.                                            Appeal dismissed.