A. H. KOTHARI, Petitioner, and K. P. W. FERNANDO (H. M. Customs), Respondent

110-NLR-NLR-V-74-A.-H.-KOTHARI-Petitioner-and-K.-P.-W.-FERNANDO-H.-M.-Customs-Respondent.pdf


Kothari v. Fernando
403
1971 Present: H. N. G. Fernando, C.J., and Thamotherain, J.
A. H. KOTHARI, Petitioner, and K. P. W. FERNANDO (H. M.Customs), Respondent
S.C. 1S6J69—In the matter of an Application under Section 35Gof the Criminal Procedure Code
Customs Ordinance (Cap. 235)—Sections 43, 125, 129, 14G, 147, 152, 154—Goodsseized as forfeited—Penally not paid—Subsequent charge of unlawful importation—Acquittal of accused—Such acquittal does not entitle accused to restorationof the goods—Remedy of person whose goods have been wrongly seized as forfeited. 1
1 (I960) GO N. L. R. 419.
464
H. N. G. FERNANDO, C.J.—Kothari v. Fernando
Certain goods (synthetic stone.s), the importation of which was suspectedto havo been prohibited by s. 43 of the Customs Ordinance, were found in thopossession of the accused-petitioner. They were seized by Customs officersunder s. 125 as forfeited by s. 43 and, in addition,'a penalty of Es. 10,000 wasimposed under s. 129. As the penalty was not paid, a prosecution was institutedagainst tho accused under s. 146. The Magistrate acquitted tho accusedmainly for tho reason that it was not proved beyond doubt that the importationof tho goods was prohibited by the relevant Regulations. At tho same timeho refused an application made by tho accused for tho return of the goods tohim. Thereupon the accused moved tho Supremo Court in revision for thereturn of the goods.
Reid, that the acquittal of tho accused in tho prosecution under s. 146 didnot entitle him to tho return of tho seized goods. Where goods have bconwrongly seized on suspicion as forfeited by law under s. 43, the proper remedyof tho person who claims the restoration of tho goods to him is to instituteproceedings in accordance with s. 154 in a competent Court.
Seyctl Ahamed v. Fernando (73 N. L. R. 139) not followed.
Obiter: In a prosecution under ST46, tho burden of proving unlawfulimportation of goods is on tho prosecution.
Application to revise an order of a Magistrate’s Court in aprosecution under the Customs Ordinance.
M. Kanagasunderam, for the petitioner.
V. S. A. Pullenayegum, Deputy Solicitor-General, with Ananda deSilva, Crown Counsel, and Tyrone Fernando, Crown Counsel, for theCrown.
Cur. adv. vult.
September 2, 1971. H. N. G. Fernando, C.J.—
On 19th February 1968, Customs officers found in the possession ofthe accused eleven packets of synthetic stones suspected to have beenmanufactured in Switzerland. The importation of such stonc3 hadbeen prohibited by certain Regulations which came into force in January1963.
On the day of this discovery, the packets of stones were seized underSection 125 of the Customs Ordinance ; in addition a penalty of Rs. 10,000was imposed under s. 129 of the Ordinance.
The penalty of JRs. 10,000 was not paid by the., accused, and aprosecution was instituted against the accused for an offence unders. 116 of the Customs Ordinance. The learned Magistrate acquittedthe accused mainly for tho reason that tho prosecution had failed toprove beyond reasonable doubt that tho stones found in the possessionoi the accused had boon imported into Ceylon after tho date on whichthe importation of such stonos was prohibited by tho relevant Regulations.
H. X. G. FERNANDO, C.J.—Kothari v. Fernando-JG5
After the acquittal of tho accused, lie made an application to theMagistrate for the return to him of tho stones which had been seized bythe Customs officers. This application was refused by order of theMagistrate, and the present application to this Court is for the remsionof that order.
In Velupillai v. The Collector of Customs J, tho accused was chargedwith the'unlawful importation of goods which were liable to customsduty and on which the duty had not been paid. Tho Magistrateacquitted the accused, holding that there was not even prima facieevidonce that the goods in question wore dutiable or that they wereimported goods. But he made order that the goods which had beenseized from the possession of tho accused be returned to the Customsauthorities. Wijeyewardene J. held that in these circumstances thoonly proper course to adopt is to return the goods to the accused. But. the following observations of the learned Judge are relevant for presentpurposes:—
“ There is some reference in tho judgment to an order of forfeitureby the Customs authorities, jlt; is sufficient to say that there is noevidence of such an order, as, of course, the statement of Counselafter the acquittal of the accused cannot bo considered as evidence.Moreover neither the plaint nor the written sanction of the PrincipalCollector of Customs refers to a section of the Customs Ordinanceunder which these goods could have been forfeited. It is not, therefore,necessary to consider in this case what the effect of such an order of forfeiturewould have been. ”
Tho sentence which I have italicized indicates at the least thatWij'oyewardene J. did contemplate that if goods are seized by Customsauthorities as forfeited under the Customs Ordinance the acquittal ofan accused on a charge of unlawful importation may not have to bofollowed by the return to the accused of goods seized from his possession.But tho point was not actually considered because there was no ovidencoof the forfeiture. In the present case there is the evidence of one of thoCustoms officers as to the forfeiture of the stones found in the possessionof the accused.
Tho facts of the recent case of Seyed Ahamad v. Fernando – are similarto tho present facts. Certain goods in tho possession of the accusedhad been seized on the suspicion that they had been imported contraryto the Regulations of January 1963 to which I havo already referred,and subsequent^' the accused was charged with an offence unders. 116 of tho Customs Ordinance. After some evidence of Customsofficers had been recorded at the trial, the prosecuting officer informedtho Magistrate that he was not proceeding with tho case. This wasapparently because of an admission by one of tho Customs officerstliat tho seized goods could have been imported into Ceylon priorto 1963 or could havo been lawfully purchased at a public auction held
1 (1943) 45 N. L. R. 93.1 (1970) 73 N. L. R. 139.
4GGH. N. G. I'EENAXDO, C.J.—Kolhari v. Fernando
by tho Customs. The accused was thereupon discharged, but hisapplication for the return of tho goods was refused by the Magistrate ontho ground that they had “ rightly or wrongly ” been forfeited undertho Ordinanco.
In referring to the circumstances of the case, Wijayatilake, J. rightlyobserved that the goods had been seized only on the suspicion thatthey had been unlawfully imported into Ceylon. But I doubt whetherhe could rightly assume that “ the Customs acknowledged tho seizureand forfeiture to be wrongful and therefore illegal and void in lawEven if the prosecuting officer made such an acknowledgment, thequestion of the legality of a forfeiture depends not on the opinion of aprosecuting officer, but on tho relevant provisions of law.
Schedule B to the Customs Ordinance contains a “ Table of Prohibitionsand Restrictions Inwards ”, which includes articles the importationof which is prohibited by regulations such as those of 1963. Section43 of the Ordinance provides that “ if any goods enumerated in thetable of prohibitions and restrictions in Schedule B shall be importedinto Ceylonsuch goods shall be forfeited”.
In the case of Palasamy Nadar v. Lanltree 1, Gratiaen J. referredto the different phrases used in the Ordinance “shall be forfeited”,and “liable to be forfeited”. He pointed out that in a case inwhich it is declared that goods shall bo forfeited on the happeningof a given event, “ tho owner is automatically and by operationof law divested of his property so soon as tho event occurs ”. If thenany goods are in fact unlawfully imported in contravention of s. 43,they are forfeited by operation of law and become the property of thoState at the moment of importation, even if the Customs may be unawareof tho unlawful importation. But naturally, possession remains in tlioimporter unless and until he is physically deprived of the goods by aseizure.
Tho provision for seizure is s. 125, which enacts that “ all goods whichby this Ordinance are declared to be forfeited shall and may be seizedby any officer of Customs ”. It is clear from this section that the poweris to seize what has already been forfeited by operation of law. It isnot that goods are seized and then forfeited, but rather that goods aroseized becauso they have become forfeited by law.
Of course, it commonly happens that a Customs officer only suspectsthat goods have been imported contrary to law, and therefore onlysuspects that -they have been forfeited by law. But nevertheless theOrdinanco contemplates that there can be cases of the soizuro of goods,which arc not in law forfeited, and a seizure is not unlawful merely becauseit is subsequently found that the goods were lawfully imported. Aparallel is seen in s. 32 (I) (6) of the Criminal Procedure Code, underwhich a peace officer may arrest a person if reasonable suspicion oxists
(1010) 51 A7. L. II. 510.
H. N. G. KERXAXUO, G'.-J.—Kot/iari v. Fernando
407
that ho has been concerned in any cognisablo offence. An arrestupon reasonable suspicion is thus a lawful arrest-., even though the personarrested may actuaHj' be innocent.
The provisions of the Ordinance relating to the consequences of aseizure do contemplate that the Customs have power to seize goodsupon tho suspicion that they were unlawfully imported. Section 154empowers the Customs to deal with all goods seized as forfeited, unlesstho person concerned within one month of the date of seizure givesnotico to tho Collector of intention to prosecuto a claim to the goods,and unless proceedings arc instituted within one month in a competentCourt for tho recovery of tlie goods. When such proceedings areinstituted, s. 152 definitely imposes on tho claimant the burden ofproving that the goods had been lawfully imported.
Lot me now apply the relevant statutory provisions to a case in whichthe Customs (as in the instant case and that of Ahaniad v. Fernando)suspect that goods have been imported in contravention oftheKegulationsof 1963, and aro therefore forfeited b}' law, and proceed to seize thegoods.
If a claimant to the goods wishes to contest the forfeiture and seizure,S. 154 provides for tho procedure by which ho may do so. If thenproceedings are duly instituted in accordance with s. 154 in a competentCourt, the Court will decide whether or not the forfeiture operated byreason of an unlawful importation. And if the claimant dischargestho burden of proving lawful importation, the Court will order restorationof the goods. Indeed, s. 154 provides also that a claimant can obtainrestoration while such proceedings are ponding, if he gives proper security.What is important for present purposes is that s. 154 affords a clearremedy for a case of seizure on a suspicion which turns out to boincorrect.
If no claim is made in accordance with s. 154 to goods thus seized onsuspicion, or if such a claim is rejected by the Court, tho matter becomesfinalised, and the forfeiture is no longer open to question.
It thus appears that tho Legislature did have it in mind that theremay bo a seizure of goods lawfully imported and therefore not subjectto forfeiture. The fact that a competent Court may subsequentlydocide, in proceedings referred to in s. 154, that tho goods were notforfeited by the operation of s. 43, does not by itself render the seizureunlawful. I revert to tho case of an arrest under s. 32 (1) (6) of thoCriminal Procedure Code : it is surely not the case that every such arrestof an accused jjerson on suspicion becomes wrongful and unlawful,if the person is not subsequently charged or is acquitted on being charged.
In the instant case, as also in tho case of Ahaniad v. Fernando, therewas a seizure of goods on tho ground that they were forfeited by s. 43,-and also a penalty imposed by the Customs. In each case there was a
46S
H. N. G. FERNANDO, C.J.—Kothari v. Fernando
prosecution under s.,146, but only because, in terms of the Provisoto that Section, tho Collector was of opinion that tho penalty couldnot bo recovered. A resort to s. 146 is a resort to the criminal law andto the sanctions which attach to tho commission of an offence. HowardC. J. held in Soma-sunderam v. Assistant Collector of Customs *, that in sucha prosocution, there is no burden on tho accused to prove his innocence.With respect, I think that my brother Wijayatilake who took a eontrar)'view in his recent judgment, failed to take account of tho limited scopeof s. 152 of the Customs Ordinance :—
“ If any goods shall be seized for non-payment of duties or anyother cause of forfeiture, and any dispute shall ariso whether thoduties have been paid for the same, or whether the same have beenlawfully imported, or lawfully ladon or exported, tho proof thereofshall lie on the owner or claimer of such goods, and not on the Attorney-General or the officer who shall seizo or stop the same. ”
When there has been a seizure of goods, a dispute can arise only ifsome person claims restoration of the goods. Such a claim is no differentfrom a claim by a plaintiff in an ordinary civil action that goods havebeen wrongfully taken from him ; and tho burden which s. 152 imposeson a claimant resembles the burden which a plaintiff in such an actionhas to discharge.
Bub when a person is prosecuted under s. 146, the issue is not whethersoizod goods should be restored to him, but whether ho was guilty ofthe act of unlawful importation.
Moreover a person can be prosecuted under s. 146, although no goodswere seized from his possession. Suppose that a passenger arrivingat tho Port of Colombo is seen by a Customs officer to be carrying aprohibited article, and that the passenger prevents seizure by throwingthe articlo into the water. Although tho article is not seized and producedin Court, the passenger ma}' yet be convicted of unlawful importationunder s. 146, if tho evidence of the Customs officer is accepted as truebeyond reasonable cloubt. But what if tho article is recovered from thowater and seized by the Customs ? Is the burden of proof now cast ontho passonger when ho is prosecuted under s. 146 ? I can seo nothingin s. 152 which might lead to so unreasonable a result, and I iospcctfullyagree with Howard C.J. that in a prosecution under s. 146 there is noburden cast on tho accused to provo his innocence. I
I hold that s. 152 applies onty when a claimant of goods’seized as forfeitedsocks restoration on the ground that the goods wero not in law forfeited.The claimant may seek such restoration at some Departmental inquiry,or else in a Court in proceedings referred to in s. 154, and the burdenin such a case will bo on the claimant.
1 (1942) 45 N. h. B. 43.
THAMOTHERAM, J.—Kothnri v. Fernando
4G0
To hold that a Magistrate has jurisdiction to restore goods seized asforfeited, because a claimant is acquitted of an ofTenco charged unders. 146, is to ignoro the express provision in s. 154 which gives finalityto the question of forfoituro if proceedings for restoration arc not dulyinstituted in accordance with s. 154. The jurisdiction to order restorationof goods seized as forfeited is vested by s. 154 in the Court in which suchproceedings aro instituted, and not in a Magistrate’s Court.
This conclusion, that a Magistrate has no jurisdiction to orderrestoration of seized goods, does not conflict with tho principles of naturaljust ice. Those principles are satisfied by s. 154 of the Customs Ordinance,which 2>rovides for the institution of proceedings in which a claimantof seized goods can seok, and can in a fit case obtain, restoration of thogoods.
I hold for these reasons that in tho instant case the Magistrate rightlyrefused to order restoration of the seized articles, despite the fact thathe acquitted tho accused of tho charge under s. 146.
The application in revision is dismissed, with costs fixed at Rs. 210.Thamotheram, J.—
I agree with my Lord the Chief Justico that tho application in revisionshould be dismissed.?
On 19th February 196S Customs officers seized 11 packets of syntheticstones which th©3r found in the possession of the accused. They suspectedthem to have been manufactured in Switzerland. The importation ofsuch stones had been prohibited by certain regulations which camointo force in January 1963. They had no means of knowing whethertlieso stones woro impiortcd before or after 1963.
Under Section 152 of the Customs Ordinance "if any goods shouldbo seized for non-payment of duties or any other cause of forfoituro
and any dispute shall arisewhether tho (goods) have been lawfully
importedtho proof thereof shall lie on the ouner or tho
elaimor of such goods ”.
Undor Soclion 154 of tho Ordinance “all goods which
shall have been seized as forfeited undor the Ordinance shall bo deemed
and taken to bo condemnedunless tho person from whom such
goods shall have been seizedgives notice in writing within
one month from the date of seizing of the samo that he intends to outer
a claim to the goodsand institutes proceedings before tho
proper court within 30 days from the dato of notico Tho accused didnot givo notice under Section 154.
Under Section 43 of tho Ordinance " if any goods enumerated in tho
table of prohibitionshall be imported or brought into Ceylon
■ contrary to the prohibitionssuch goods shall be forfeited”.
470
THAMOTHERAM, J.—Kolhari v. Fernando
The seizure was effected under Section 125 which states that "all goodsdoclared to be forfeited shall and may bo seizod by any officers of theCustoms
Gratiaen J. pointed out in Pal as a my Nadar v. Lanklrec 1 thatif goods aro doclared to bo "forfeited ” as opposed to "liablo toforfeiture ” on tho happening of a given event their owner is automaticallyand by operation of law divested of hisproporty inthegooclsassoonasthoevent occurs. Tho ovent in Section 43 is tho importation or tho bringinginto Ceylon these goods after January 1963. They becamo forfeit at theimportation or bringing into Ceylon and tho owner was automaticallyand by operation of law divested of his property at that time.
This then was tho position in regard to the 11 packets of syntheticstones seized from tho possession of tho accused when tho Customsauthorities came into court under Soction 140 of the Ordinance.
Section 140 reads “ if any person by reason of any act or omissionbecomes liable under tho provisions of any Section of this Ordinance to
forfeit any goodssuch person shall in addition bo guilty of an
offenco. ”
Section 1J6 is not a provision for recovery as a fine of what is alreadydue. Sections 146 and 147 deal with offences under tho Ordinance.It is to bo noted that the words aro “ if any person by reason of anyact or omission becomes liable to forfeit any goods ”. I make referenceagain to the distinction Gratiaen J. made between goods " doclared to boforfeited” and goods “liable to forfeiture ”. In a prosecution underSection 146 tho liability to forfeit must bo established by tho prosecutionand this cannot bo done without proving that the importation was afterJanuary 1963. Difficulty in proving this cannot havo tho effect of shiftingthe burden on tho accused. Ono can think of cases whore such proofwill bo available.
Section 152 of tho Ordinance cannot help tho prosecution. It rofersto a disputo as to whether tho goods havo boon lawfully imported. Ina prosecution undor Section 146 there is no reference of a dispute to theMagistrate for decision but an averment by tho prosocution that thoaccused was liable to forfeit tho goods. This must bo affirmativelyestablished by the prosecution. Failure to discharge this burden cannotalToct tho validity of the forfeiture which operated under Section 43coupled with tho accused not setting up a claim under Section 154.Tho burden which tho prosecution undertakes when it comes into courtunder Section 146 is no different to tho burdon it undertakes in anycriminal case. Tho prosocution must prove what it asserts beyondreasonable doubt.
1 (19(0) r,i x. l. R. 520.
Palaniyandi Pillai t The Labour Officer, .Vuu-oro Eliya
471
It is presumed that the Principal Collector of Customs proceeded underSection 1-1G as he was of the view that tho penalty could not or wasnot likely to bo recovered from tho accused. Vido proviso to Section146. Failure to establish this offence under tho Section does not meanthat ho should be denied the goods which have been automaticaland validly forfeited. A reading of Sections 43, 125, .152 and 154 oftho Ordinanco makes it clear that tho seizure in this caso was lawfuland tho forfeiture of tho goods was automatic and valid in tho absenceof a claim under Section 154.
Tho position regarding the goods would remain tho samo as it waswhen tho prosecution was instituted.
Tho application in revision is dismissed with costs at Rs. 210.
Application dismissed.