REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4919 OF 2011 [Arising out of SLP (C) No. 29989 of 2010]

M/s. Rajmal Lakhichand & Anr. …. Appellants

Versus

Commr. Cen. Exc. & Customs,  Aurnagabad                  ….Respondent

JUDGMENT

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  

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 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 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 DRI”]  

searched  the  premises  of  the  appellants  on  the  basis  of  

information gathered by it to the effect that large quantity of  

about 132 bricks of silver had been smuggled through sea  

route and diverted to Jalgaon. During the aforesaid search  

the DRI 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 replies. The adjudicating authority took up the matter

for  consideration  and  by  its  order  dated  30.08.1994  

discharged  the  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 powers under Section 129D  

of  the Customs Act  directed the collector  to apply to the  

Tribunal  for  determination  of  the  issues  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.  Ishwarlal  

Lalwani 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. Ishwarlal Lalwani for acquiring the smuggled silver. The  

Tribunal, however, did not impose separate penalty on M/s.  

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.  Ishwarlal  Lalwani.  M/s.  Rajmal  lakhichand  and  Mr.  

Ishwarlal 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  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 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  and passed an order  on 17.03.1999 to  the  

following effect: -

“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  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:  

“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 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?”

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.”

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 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 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  

modification of  the order which subsequently  came to be  

modified  deleting  the  words  “weighing  194.250  kgs.  

purchased  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 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)  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 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  M/s.  Dilipkumar  

Hirachand & Sons, Jalgaon. It was also submitted on behalf  

of the appellant that while considering the question referred  

to the High Court for 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.  

7. The counsel appearing for the respondent, however, refuted  

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 silver,  

i.e., 1913.256 kgs. It was also submitted by him that the  

attempt to 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 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  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 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  

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  

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  M/s.  

Dilipkumar  Hirachand  &  Sons,  Jalgaon,  whereas  the  

Tribunal also directed 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 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 weighing 194.250 kgs. from the rest of the smuggled  

silver and, therefore, by virtue of Section 120(2) of the said  

quantity was 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  Section  111(d)  whereas  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.  

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 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  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  

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.

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  

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 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  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 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 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  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) of the Customs

Act  is  illegal  and without  jurisdiction  as  the  show cause  

notice  is  not  issued  proposing  to  make  the  aforesaid  

provisions applicable and, therefore, there was a violation of  

principle of natural justice.

14.The aforesaid provision on which the said confiscation of  

silver weighing 194.250 kgs. is concerned, cannot by any  

stretch  of  imagination  could  be  said  to  be  similar  or  

applicable  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  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 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. 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.  

17.Mr. Soli Sorabjee, Sr. Advocate, also relied on Section 130B  

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 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 the

said provision is not applicable to the present case for the  

said  Section  130B  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.  

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 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  

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: -

“2. I state that the criticism, if any, 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  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  

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 closed.

22.In  terms  of  the  aforesaid  observations  and  findings  we  

dismiss this  appeal  leaving the parties  to bear  their  own  

costs.

    ............................................J         [ Dr. Mukundakam Sharma ]

    ............................................J                [ Anil R. Dave ]

New Delhi, July 4, 2011.