ORDER
P.C. Jain, Vice President
1. Revenue’s case is that acting on intelligence officers of DRI kept a watch on the persons coming to Kanishka Hotel on 5-1-1987 in the evening. They noticed from lobby of the hotel that the appellant herein and Harish Verma had moved up and down in the lift. Thereafter they noticed the appellant moving towards the basement parking lot. A team of officers alongwith two panchas reached the parking lot and found the appellant sitting in Driver’s seat in white Maruti Car DDB 5871. They intercepted the appellant there, took his search and found 13 gold biscuits of 10 tolas each from a packet of newspaper found on his person. They also searched a briefcase in the possession of the appellant. On search of the same, 43 more gold biscuits were recovered from the said briefcase.
2. In the meantime, another associate of the appellant, namely Harish Verma had been intercepted by Customs Officers at the reception of the Hotel. He led the Customs Officers to the hotel room No. 1318. The said Harish Verma had himself opened the said room with a key in his possession. In the said room, search of Harish Verma resulted in recovery of 4 gold biscuits from his person. On search of a Safari suit lying in the said hotel room a cloth container was found to contain another 60 gold biscuits.
3. A Panchnama of recovery of the gold biscuits (120 in all) was made in the room of the hotel. Preparation of Panchnama went past the midnight upto 0.30 hrs on 6-1-1987. Panchas (witness to the recovery) were two persons namely (i) Randhir Singh, Security Officer of the hotel and (ii) Mohan Joshi a Security Guard posted in the hotel at that time.
4. It is stated by Revenue that after preparation of the Panchnama the appellant and Harish Verma were served a summons under Section 108 of the Customs Act to appear before the DRI at 1.00 A.M. on 6-1-1987 in DRI Office. Ld. Advocate for the appellant states that statement from the appellant was recorded under threat, duress and coercion or he was made to sign on some blank papers. Statement dated 6-1-1987 recorded from the appellant is a confessional statement as to how he had come in contact with one Khan, through Harish Verma. They had been disposing of the gold smuggled by Khan into the country on the commission basis. On this occasion too 175 gold biscuits had actually been brought by Khan. They had already disposed of about 55 gold biscuits. 120 gold biscuits were left which had been recovered and seized as above.
5. Part of the sales proceeds (i.e. about Rs. 14.5 lakhs) of the said 55 gold biscuits – Rs. 10 lakhs from the shop of the appellant in Kucha Mahajani and Rs. 80,000/- from the shop of Harish Verma – were recovered by the D.R.I. Officers on the strength of the statements recorded from them on 6-1-1997 (early hours). Remaining sales proceeds are admitted to have been spent by the appellant herein within two days or so.
6. On adjudication, apart from confiscation of the seized gold and the Maruti Car, the adjudicating authority has imposed penalty of Rs. 5 lakhs and 3 lakhs on the appellant under the Customs Act and the Gold (Control) Act respectively, apart from penalty on other persons.
7. Appellant’s case on the other hand is that the entire case has been foisted on him by the Customs Officers. He had gone to Kanishka Hotel in the evening of 5-1-1987 for dinner. He knew Harish Verma only to the extent that their shops were in the same street and no more. He does not know ‘Khan’ at all. He has never dealt in gold. He was dragged to the Car DDB 5871 in basement parking lot of the hotel. Thereafter he was dragged to the room No. 1318. He was made to sign on the so called Panchnama. He does not know the owner of the Car. There was no question of recovery of Rs. 10 lakhs from his shop. No prudent man will leave such a huge sum overnight unattended in his shop. Recovery of gold and currency made by the DRI Officers is sought to be foisted on him. Entire case is concocted.
8. Ld. Advocate Shri L.P. Dhir for the appellant urges as follows in his written submissions made before the adjudicating authority and reiterated now before us :-
“The movements of the Noticee alongwith one Shri Harish Verma up and down the lift etc., are figments of imagination and have not been supported by any of the witnesses who are supposed to have signed the so-called Panchnama dated 5-1-1987. The so-called allegations that the Noticee was found sitting in Car No. DDB 5871 (White Maruti) has not been confirmed by Shri R. Singh, Security Officer, the main alleged witness, not even by Shri B.S. Vasudeva, the Assistant Director incharge of the operations. Both of them have only heard about the alleged interception of the Noticee. This is purely,a hearsay and not evidence. What is more, it has been stated by Shri Mohan Joshi, the second alleged witness that the alleged recovery of gold biscuits was not finalised in the basement and the gold biscuits were counted only in Room No. 1318 of the Hotel. I do not know any person by the name Nageen Chand Jain of Ashok Vihar, Delhi nor he has been offered as witness as the owner of the said car, to arrive at the truth. Also even Shri Parameshwaran, the I.O. the alleged searching officer, has clearly stated that the Briefcase was lying on the back seat of the car. It is also submitted that the presumption that the Briefcase was in the possession of the Noticee also falls to the ground. There are too many serious contradictions and loopholes to the evidence of the witnesses to connect the Noticee with the so-called events of recovery of 120 gold biscuits from the hotel room. The allegations are improbable, unnatural and against normal human conduct or behavior.
3. It is also submitted that the Noticee was arrested by the DRI Officers at about 19 Hours on 5-1-1987 and continued to be in their custody right upto 15 hours on 7-1-1987. Therefore, all the so-called statements, searches, etc., are all make-believe and there is no ring of truth in any of these fake documents. The Noticee denies that an amount of Rs. 10 lakhs was recovered from his shop. It is also improbable that the Noticee would have left such a huge amount unattended during the night, wrapped in newspaper in his shop when the crime in Delhi has been so rampant even in 1987. This again is unbelievable. The Noticee, therefore, states that he has nothing to do with the so-called recovery of 13 gold biscuits by alleged personal search, 43 gold biscuits allegedly found from Briefcase and Rs. 10 Lakhs in Indian currency allegedly recovered from his shop at Kucha Mahajani. Therefore, the question of levy of penalty under Section 112 of the Act read with Section 74 of the Gold (Control) Act, 1968, does not arise.
4. (a) It has been alleged in the show cause notice that at about 6.45 P.M. on 5-1-1987, the Noticee was observed entering alongwith Shri Harish Verma and going up the lift and a little later they both were observed coming down again by the lift and coming into the lobby. That the Noticee proceeded to the basement parking lot and that DRI officers followed the Noticee where he was observed getting into a white Maruti Car and was intercepted. That personal search of the Noticee in the presence of two Panchas resulted in the recovery of 13 gold biscuits (foreign mark) of 10 tolas each. Also that the brown colour briefcase in his possession, was opened which resulted in the recovery of 43 gold biscuits. All these events are the figment of imagination as said above and there is no evidence whatsoever to prove this. To repeat, the cross-examination of the witnesses does not support this theory. The Department has chosen not to question and offer Shri Nageen Chand Jain, the alleged owner of the Car whom the Noticee does not even know. Similarly, the Noticee has no Jink with either the booking of the Room No. 1318 where 120 Gold Biscuits are allegedly found. Of course, the Noticee was wrongly dragged to that Room while in the custody of the DRI Officers. Some statements were got written of him and he was forced to sign even on blank papers. The Noticee denies his involvement in all these events.”
9. Ld. Advocate has been taken us through the Cross-examination statements of B.S. Vasudeva, Assistant Director in DRI, Randhir Singh, Mohan Joshi & Parameshwaran, I.O.
10. He submits on the basis of the evidence of the 4 witnesses that they have given different and conflicting versions which demolish the case as alleged in the show-cause notice. According to him, following position emerges from the Cross-examination evidence of the witnesses of Revenue :-
(i) None of the witnesses has seen the appellant arriving in Kanishka Hotel.
(ii) No authorised officer intercepted the appellant in the car parked in basement.
(iii) Shri Vasudeva has clearly admitted that the appellant was neither intercepted by the Officers nor searched physically in his presence. He was only told about it because he was supervising the overall operations and he could not be present everywhere all the time. Ld. Advocate urges that this is nothing but hearsay evidence.
(iii) Shri Parmeshwaran I.O. is too hazy about recovery of gold biscuits. He clearly admits not having seen the appellant moving towards the basement parking lot.
(iv) Briefcase was reported to be lying in the back seat of the car whose glasses were perhaps open because the witnesses did not remember this aspect. In other words, briefcase was not in possession of the appellant as alleged in the show cause notice.
(v) Nageen Chand Jain, owner of the car has not been brought on record by the Revenue, Revenue’s case that the said car was used by the appellant or at the behest of Khan for disposal of 55 biscuits of gold remains unapproved.
(vi) The two witnesses do not appear to be knowing the contents of Panchnama.
(vii) Department has felt shy of disclosing the names of other officers who participated in the search operations.
(viii) There is no evidence connecting the appellant either with the car, or the briefcase or with Harish Verma or Sanjay Verma (who booked the hotel room) or with Ratan Lal who purchased gold biscuits from Harish Varma, or with Nageen Chand Jain, owner of the car.
(ix) Somebody else was present in room No. 1318 when Harish Varma accompanied by Officers knocked at the door, as evident from the cross-examination statement of Mohan Joshi. That ‘somebody else’ has not been brought on record.
(x) Randhir Singh has clearly stated that he went from porch (entrance) of the hotel to room No. 1318. He never went to basement parking lot. He, therefore, submits that the entire Panchnama becomes suspect as concoted and signatures secured from various persons.
(xi) Three statements (one recorded at 1.00 A.M. on 6-1-1987, another one recorded on 6-1-1987 and the third one on 7.1.87 have been got written from the appellant during his restraint and after his arrest by DRI Officers at 17 hrs. on 5-1-1987. The appellant retracted these statements later. ,
(xii) Appellant was throughout in the custody of the DRI officers from 5-1-1987 to 7-1-1987 as is evident from the telegram sent by the wife of the appellant to Chief Justice of Delhi High Court. So has the other person, Harish Verma retracted the statements recorded from him.
(xiii) Therefore, none of the statements nor the Panchnama can be relied upon. If these documents are ignored, there is no evidence against the appellant to connect him with the case.
11. Ld. JDR Shri M.M. Dube has re-iterated the findings of the adjudicating authority who has relied on the retracted confessional statement of the appellant, has sought corroboration from the statement of retracted statements of Harish Verma, seizure of currency worth Rs.10 Lakhs from the appellants shop.
12. Both sides have placed reliance on certain judgements of the Apex Court. Most prominent among them being that of Apex Court in the case of K.I. Pavunni v. A.C.C.E. [1997 (90) E.L.T. 241]. Revenue has also placed reliance on Apex Court’s judgement in the case of Naresh ]. Sukhwani [1996 (83) E.L.T. 258 (S.C.)]as also in the case of Surjeet Singh Chhabra [1997 (89) E.L.T. 646 (S.C.)].
13. In view of the above pleadings first question before us is whether recovery of gold biscuits – 13 from the person of the appellant herein and 43 from the briefcase alleged to be in his possession when he was allegedly intercepted in case DDB 587 from the appellant was made or not.
14. Reliance placed by the Revenue, first and foremost, for this purpose is the Panchnama (of recovery) made by the Officers. It is alleged as already pointed out, that two independent witnesses Randhir Singh & Mohan Joshi witnessed the said recovery on interception of the appellant in the basement parking lot as stated in the show-cause notice as also in Panchnama dated 5-1-1987.
15. It has clearly come on record in cross-examination statements of Randhir Singh that Pancha (witness) never went to the basement parking lot. He was called from the porch of the hotel to room No. 1318. Even the other witness Mohan Joshi, while admitting that he went to basement parking lot with Customs Officer, has clearly stated that no packets said to contain gold biscuits were opened then and there. They were taken to room No. 1318 where the packets were opened and the gold biscuits were recovered. Even the I.O. Shri Parmeshwaran has also admitted in his cross-examination statement that he did not personally see the appellant going to the basement parking lot. He has also admitted that the briefcase was not opened in the parking lot because it was found to be heavy. Even the packet on the person of the appellant was not opened fully but only slightly from the middle. It has also come on record that the Customs Officers did not offer themselves for search before searching the appellant. Even the A.D. of Directorate of Revenue Intelligence has clearly stated that the appellant was not searched in his presence. Nor was he able to recall as to who recognised the appellant while in hotel thus depriving the appellant an opportunity to cross-examination of that person.
16. It is apparent from a narration of the evidence as brought out on record not only from the cross-examination statements of the Panchas (witnesses to recovery) but also of the two departmental officers offered for cross examination by the Revenue to the appellant that no recovery of gold biscuits was made from the appellant’s person in the basement parking lot, nor was the briefcase in possession of the appellant. To treat Randhir Singh as a panch witness to the happenings in the basement parking lot, as alleged in the show-cause notice, is at once wrong in view of his cross-examination statement to the effect that he did not go to that parking lot. Panchnama drawn by the Revenue as a contemporary document of recovery of gold from the appellant herein or that the appellant was found sitting in the car DDB-5871, parked in basement parking lot by Randhir Singh as a witness is wrong. Document styled as “Panchnama dated 5th January 1987” becomes a highly suspect document Recovery of gold biscuits from the person of the appellants is, therefore, in our view is not proved by the Revenue on the basis of evidence on record.
17. In view of our finding as above, statements recorded from the appellant become unworthy of reliance. If Revenue can falter so badly in drawing the document of recovery, in so far as the appellant is concerned, we cannot place reliance on other documents drawn by the Revenue Officers relating to the appellant.
18. Hence, appeal of the appellant herein succeeds so far as penalties of Rs.5 Lakhs under the Customs Act and of Rs. 3 Lakhs under the Gold (Control) Act is concerned with consequential relief to the appellant. In short, penalties under the two Acts, as aforesaid, on the appellant are set aside.