Supreme Court Upholds Customs Confiscation of Vessel Under Sea Customs Act for Concealed Gold Smuggling; Foreign Shipping Company Not Entitled to Article 19 Protection. Section 52A Prohibits Entry of Vessels with Concealment Adaptations, and Fine of Rs 25 Lakh in Lieu of Confiscation Was Not Excessive.

Civil appeal by special leave and writ petition under Article 32 challenging confiscation of a vessel under the Sea Customs Act, 1878 and the constitutional validity of Section 52A.

The appellant sought to set aside the order of confiscation of the motor vessel 'Eastern Saga' and the alternative fine of Rs 25 lakhs, and to declare Section 52A of the Sea Customs Act ultra vires Articles 14, 19 and 31(1) of the Constitution.

Customs authorities confiscated the appellant's vessel after discovering 1,458 bars of gold concealed in a specially adapted space behind wall panelling, leading to proceedings under Section 167(12A) for contravention of Section 52A; the appellant challenged the confiscation and constitutional validity.

The Additional Collector of Customs ordered confiscation with option to pay Rs 25 lakh fine; the Central Board of Revenue rejected the appeal on May 12, 1959; the Central Government dismissed the revision on December 17, 1960.

Whether the vessel 'Eastern Saga' contravened Section 52A of the Sea Customs Act, 1878 by entering the port of Calcutta with construction or adaptation for concealing goods. Whether mens rea is a necessary ingredient for contravention of Section 52A. Whether the fine of Rs 25 lakhs in lieu of confiscation was excessive. Whether Section 52A of the Sea Customs Act was ultra vires Articles 14, 19 and 31(1) of the Constitution. Whether the Central Board of Revenue and the Central Government, acting as appellate/revisional authorities, are tribunals under Article 136 so as to entertain an appeal by special leave. Whether the liability under Section 167(12A) read with Section 183 requires the adjudicating officer to give an option to pay fine in lieu of confiscation.

Appellant contended that the order of confiscation was based on a misconstruction of Section 52A, as the mere existence of holes or spaces in the vessel's panelling did not establish that they were made for concealing goods, and absence of mens rea or knowledge on the part of the owners/master precluded liability. Appellant argued that the fine of Rs 25 lakhs was excessive and disproportionate. Appellant challenged Section 52A as ultra vires Articles 14, 19 and 31(1), claiming violation of fundamental rights. Respondents submitted that the vessel had clearly contravened Section 52A because it had construction/adaptation for concealing goods, evidenced by the concealed gold bars, and mens rea was not required. Respondents contended that the fine was justified as a deterrent against rampant gold smuggling, and that Section 52A was a reasonable restriction in the interest of the general public and not violative of Articles 14, 19 and 31(1).

Section 52A of the Sea Customs Act absolutely prohibits the entry of vessels which have construction, adaptation, alteration or fitting made for the purpose of concealing goods; proof of mens rea or guilty knowledge of owners or master is not required. Section 167(12A) and Section 183 must be read together: though confiscation is a statutory corollary, the adjudicating officer must give the owner an option to pay fine in lieu of confiscation, and the ultimate penalty is discretionary. The Central Board of Revenue and Central Government, while acting as appellate/revisional authorities under the Act, are tribunals invested with judicial power of the State and amenable to Article 136. A foreign company cannot claim the benefit of Article 19; the plea under Article 31(1) and Article 14 fails because it depends on Article 19(1)(f).

In order to prove the offence of s. 52A against a vessel, what is to be moved is that there has been a construction, adaptation, alteration of fitting and the said construction, adaptation, alteration or fitting had been made for the purpose of concealing goods. It is not necessary for the purpose of s. 52A to prove mens rea against the person responsible for the contravention of s. 52A. Section 167(12A) and s. 183 have to be read together. Though confiscation is a statutory corollary of the contravention of s. 52A, s. 183 expressly requires the adjudicating officer to give an option to the owners of the offending vessel to pay fine in lieu of confiscation. The fine of Rs. 25 lacs was not excessive. Illegal importation of gold had assumed the proportions of a major problem facing the country and it was open to the Customs authorities to take the view that the best way to check smuggling was to impose deterrent fines whenever those offences were discovered and proved. The scheme of the Sea Customs Act, 1878, the nature of the proceeding brought before the appellate and revisional authorities, the extent of the claim involved, the nature of the penalties imposed and the kind of enquiry which the Act contemplates, all indicate that both the Central Board of Revenue and the Central Government, while acting as appellate or revisional authorities, constitute Tribunals under Art. 136 of the Constitution because they are invested with the judicial power of the State and are required to act judicially.

The vessel 'Eastern Saga' arrived at Calcutta on October 29, 1957. Customs rummaging on October 30-31 and November 12, 1957 discovered concealed spaces; 1,458 gold bars found in one space. Show cause notices issued to agents and master on November 12 and 13, 1957. The Additional Collector of Customs passed an order confiscating the vessel under Section 167(12A) with option to pay Rs 25 lakh fine. The Central Board of Revenue rejected the appeal on May 12, 1959. The Central Government dismissed the revision on December 17, 1960. The appellant filed Civil Appeal No. 770 of 1962 by special leave and Writ Petition No. 138 of 1961 under Article 32, which were heard together.

• Sea Customs Act, 1878: 52A, 167(12A), 183, 188, 190A, 191
• Constitution of India: Article 14, Article 19, Article 31(1), Article 136