ORDER
S.S. Sekhon, Member (T)
1. These two appeals are directed against the Order of Confiscation of precious stones of foreign origin, taken charge of after a search of the Workshop and Office Premises of the 4th and 3rd Floor of 14, Muktaram Babu Street, Kolkata-7 by the Customs Officers, and that of Indian Currency of Rs. 6,98,880.00 (Rupees six lakhs ninety-eight thousand eight hundred and eighty) under Section 121 of the Customs Act, 1962. Personal penalty of Rs. 15.00 lakhs (Rupees fifteen lakhs) each has also been imposed on both Shri Sachin A. Mehta, son of Late Arvind S. Mehta residing at 6, Sarat Bose Road, Flat No. 7A, Lands Downe Height, Kolkata-700 020 and Shri Satish A. Mehta son of Late Sukhmal M. Mehta, Manager of M/s. Sachin residing at 14, Mukta Ram Babu Street, Kolkata-700 007.
2. The Commissioner, after considering the submissions, has ordered the confiscation of the stones of foreign origin valued at Rs. 1,50,13,475.00 (Rupees one crore fifty lacs thirteen thousand four hundred and seventy-five) under Section 111 of the Customs Act, 1962. However, he has given an option to redeem the same on payment of a fine of Rs. 80.00 lakhs (Rupees eighty lakhs) and Customs Duty at appropriate rate. The other stones not covered by examination and valuation report by Government-approved valuer, were ordered to be released to the noticees. Indian currency of Rs. 6,98,880.00 was ordered to be confiscated under Section 121 of the Customs Act, 1962 and a personal penalty of Rs. 15.00 lakhs each was imposed on both S/Shri Sachin A. Mehta and Satish A. Mehta under Section 112 of the Customs Act, 1962.
3. These two appeals have been filed by Shri Sachin A. Mehta and Shri Satish A. Mehta and were heard. After hearing both sides duly represented by Shri B.N. Chattopadhyay, learned Consultant for the appellants and Shri T.K. Kar, learned S.D.R. for the Revenue, it is found as under :-
3(a). The brief facts of the case as also the findings of the Commissioner are required to be reproduced to appreciate the submissions of the appellants and the findings thereon. Accordingly, we reproduce the same as under :-
“Shri Sachin Mehta owner of M/s. Sachin also denied the charges and allegations against him as narrated in the subject show-cause-notice. In his letter dated 25-9-2000, he also retracted his earlier statement. He also protested that the description and value of the goods were entirely wrong and also denied the charges of illegal importation and foreign originality of the goods. Mr. Mehta submitted that the goods were seized under Customs Act, 1962 for “reasonable belief” that the goods are of foreign origin, but there is no evidence and even no indication in the seizure list that the goods are of foreign origin and there having no mention that the Customs officials had “reasonable belief” that the goods are liable to confiscation and he submitted that the goods could not be seized and require to be released. In his defence he cited the case list :-
1991 (56) E.L.T. 108 (T)
1992 (58) E.L.T. 283 (T)
1991 (32) ECR 571 (T)
1999 (110) E.L.T. 157 (S.C.) = 1983 ECR 2198D (S.C.)
1983 (14) E.L.T. 1715 (Delhi)
Shri Mehata, in his written submission dt. 29-6-2001 challenged valuation report of M/s. S.K. Mehata & Co. and raised the question of genuinity and qualification of the said valuer. He stated that department had to produce any evidence that the goods under seizure are of foreign origin. He also prayed for giving permission to him/his authorised Advocate to cross-examine Shri S.K. Mehta at the time of personal hearing. He further submitted that the goods under seizure are not under purview of Section 123 or notified under Section 11 of the Customs Act, 1962, therefore, the burden of proof lies on the department. In this point Shri Sachin Mehta has cited some case reference of Hon’ble Tribunal which are reproduced below :-
(a) A-1133-Cal/2000, dt. 27-7-2000 of Hon’ble Tribunal, ERB, Cal. (Copy enclosed) [2001 (137) E.L.T. 563 (Tribunal)].
(b) 1992 (56) E.L.T. 108 (T), 1992 (56) E.L.T. 108 (T) Himat Lal D. Shah v. Commissioner of Customs (Prev.), Calcutta.
(c) 2001 (127) E.L.T. 454 (Tri) KGK Enterprises v. Commissioner of Customs (Prev.), Mumbai.
Regarding seizure of Indian Currency of Rs. 6,98,880/- Mr. Sachin Mehta denied the charges that the seized Indian currency are the sale proceeds of illegally imported goods. In this regard he also cited the following decisions of the Hon’ble Courts :-
(i) 1998 (25) RLT 299 (T)
(ii) 1993 (46) ECR 44 (T)
(iii) 1993 (65) E.L.T. 558(T)
(iv) 1992 (61) E.L.T. 650 (T)
Mr. B.N. Chattopadhyay and T.K. Ghosh, Advocate duly authorised by both the noticees appeared on the date fixed for personal hearing, they reiterated their stand already given by each of the noticees dated 26-6-2001 in response to the show-cause-notice.
FINDINGS
I have examined the facts of the case carefully and it is seen that on the basis of specific information the Customs Officer of P&I Branch, Kolkata effected a seizure of miscellaneous stone (Panna, Rubi, Chuni) of foreign origin valued of Rs. 1,79,47,462/- and Indian currency 6,98,880/- from the workshop and office premises of M/s. Sachin, 14, Muktaram Babu Street, Kolkata-700007 on 16-9-2000 on the strength of search warrant. On the date of seizure the Manager of the Company Mr. Satish Mehta who claimed himself the uncle of Mr. Sachin A. Mehta, the proprietor of the said firm, could not produce any valid documents in support of his licit importation of the said seized precious stones on demand. He could not also produce any valid document in support of his business in the form of Sales Tax Registration, Trade Licences, Stock Register, Purchase Sell Voucher bill. Just immediate after seizure Mr. Satish Mehta stated that by his long experience he ascertained the origin of Neelam & Ruby the stone under seizure as of foreign origin. He also could not explain the source of receipt of the seized Indian currency, he also accepted the valuation of the stones under seizure which was done by M/s. S.K. Mehta & Co. a Govt. approved valuer. It appears from the statement of Shri Sachin Mehta and his submission in response to show-cause-notice that the entire business of precious stones is being carried out by Sachin A, Mehta without any bill, challan/cash-memo for purchase and sale of stone and also did not maintain any record and he use to purchase some cut Ruby, Blue Saphire and Garnets Spinal through some brokers without issuance any Bill/Challans which clearly indicates that the goods are imported illegally into India. Mr. Sachin Mehta also could not produce the valid documents in support of his possession of Indian currency amounting to Rs. 6,98,880/-. It appears that the same Indian currency had been acquired as sale proceeds of smuggled stones of foreign origin.
The Advocate of the Noticee party has also relied upon CEGAT judgment as mentioned in the foregoing paras, however, the facts, circumstances of finer points are different in the present case.
The party relied upon CEGAT Order No. A-1133-Cal/2000, dt. 27-7-2000 in the case of Sachin Mehta v. C.C.P., West Bengal cannot be made applicable in this case inasmuch as there was no expert opinion available in the above referred case as against the present case before me where a professional and Government approved valuer has given his expert opinion that goods are of foreign origin.
As regards affording opportunity for cross-examination of Government approved valuer I observe that goods under seizure are of foreign origin has been given by a professional and Government approved valuer therefore I do not find any compelling reasons for cross-examination of professional. I rely on following judgments : –
(1) Cross-examination not a part of natural justice but only that of procedural justice and not a 'sine qua non' Poddar Tyres (Pvt) Ltd. v. Commissioner - 2000 (126) E.L.T. 737. (2) Right to confront witnesses is not an essential requirement of natural justice where the statute is silent and the assessee has been offered an opportunity to explain allegations made against him Kumar Jagdish Ch. Sinha v. Collector - 2000 (124) E.L.T. 118 (Cal H.C.). (3) Strict rule of burden of proof applicable to criminal prosecution may not be applicable to proceedings before Customs authorities. A.K. Hanbeen Motarred v. Collector - 2000 (125) E.L.T. 173 (Mad HC). (4) (a) Cross-examination is not a must in each and ever adjudication proceedings (b) when rejected, reasons to be given. International Electron Devices Ltd. v. Commissioner - 1999 (107) E.L.T. 238 (T). (5) Constitutional Bench (consisting of 5 judges) in the case of State of J & K v. Bakshi Gulam Mohammed as appeared in AIR 1967 S.C. 122 (V-54-C23) Para 20. (6) Hon'ble High Court of Calcutta for the case of Tapan Kr. Biswas v. UOI - 1996 (63) ECR 546 (Cal) (7) Another case as AIR 1967 (Cal), Page 80, Kishanlal v. Collector.
Shri Satish Mehta, the Manager of M/s. Sachin in response to summon Under Section 108 of Customs Act’ 62 in his statement recorded on 16-9-2000 Under Section 108 of C.A.’62 has deposed that some Stones are of Ceylon (Sri Lanka) origin the fact of which Shri Satish Mehta has reiterated again in his statement recorded on 18-9-2000. Further, Shri Satish Mehta in his statement dated 28-9-2000 recorded Under Section 108 of C.A/62 has again confirmed that some of the Stones are of Ceylonees origin.
Shri Satish Mehta on his own volition has written a letter dated 11-10-2000 addressed to Supdt. Customs in which he has not denied or reiterated his earlier statements referred Supra. However, Shri Satish Mehta again on his volition has written another letter dated 12-10-2000 addressed to Commissioner, Customs in which he has retracted his statement dated 28-9-2000. HOWEVER, IT IS IMPORTANT TO NOTE THAT SHRI SATISH MEHTA HAS NOT RETRACTED HIS STATEMENT DATED 16-9-2000 AND STATEMENT DATED 18-9-2000 RECORDED UNDER SECTION 108 OF C.a., 1962.
The statement recorded Under Section 108 of C.A.’62 are admissible even in the Court of Law. Even the retraction of statement dated 28-9-2000 by Shri Satish Mehta in his letter dated 12-10-2000 has no evidentiary value as it has been made after a gap of about one month and also it is pertinent to note that in his letter dated 11-10-2000 written on his own volition has not denied/retracted his earlier statement. Therefore, I hold his letter dated 12-10-2000 as tainted and an afterthought.
I, also observe that Shri Sachin Mehta in his letter dated 18-9-2000 addressed to Commissioner has not retracted statement dated 16-9-2000 and 18-9-2000 deposed by Shri Satish Mehta, the Manager of the firm.
It is well settled down in the law that the belated retraction do not have evidentiary value and therefore not admissible. Following judgments are relied upon :-
(1) 1993 (65) E.L.T. - 117 (Tri.), Syed Mohammad v. Collector of Customs, (2) 1992 (60) E.L.T. - 501 (Tri) - M.T. Chauhan v. Collector of Customs & C. Ex., (3) 1992 (60) E.L.T. - 347 (Tri.) - Sillendranath Seta v. Collector of Customs., (4) 1989 (39) E.L.T. - 91 (Tri.) - Pannaben v. Collector of C. Ex., (5) 1988 (38) E.L.T. - 705 (Tri.) - G.V. Chaudakutty and Ors. v. Collector of C. Ex., (6) 1988 (33) E.L.T. - 741 (Tri) - Kadar Babu v. Collector of C. Ex., (7) 1987 (32) E.L.T.- 479 (KER) - Asstt. Collr. v. Kallatra Abdul Kadar and Ors., (8) 1997 (89) E.L.T. 646 (S.C.), (9) 1997 (90) E.L.T. 241 (S.C.), and (10) 1996 (83) E.L.T. 258 (S.C.).
The investigation have conclusively proved that Stones under seizure are of foreign origin on the strength of examination and valuation report dated 18/19-9-2000 by the Government approved valuer namely M/s. S.K. Mehta & Co. of 57A, Aravinda Sarani, (3rd Floor), Kolkata – 700 005 whereas the noticee parties have failed to produce even a single bill/voucher/bill of entry etc. to prove licit importation of the Stones.
Therefore, the burden to prove that goods are smuggled one gets shifted to the noticee parties. The Supreme Court in the case of Kanungo and Co. v. Collector of Customs has held that the “burden of proof” shifts from the Department to the assessee if the Department has disclosed all the evidence on record which militates against the assessee and the assessee is not able to meet the inference arising therefrom. The Court further held that the burden will also shift on the assessee if false evidence is given by them. Similarly, where the incorrect or forged documents are seized from the assessee, burden shifts on to him to prove his bona fides.
Therefore, I hold stones valued at Rs. 1,50,13,475/- to be of foreign origin as per the above Government approved valuer’s examination/valuation report and have been smuggled into India through unauthorized route in violation of provision of Section 7 of C.A/62, Section 3(3) and Section 11(1) of the Foreign Trade (Development and Regulation) Act, 1992 read with Para 4.9 of EXIM POLICY, 1997-2002 notified under Section 5 of the Foreign Trade (Devolepment and Regulation) Act, 1992 and Section 11 of C.A.’62.
I also hold Indian currency amounting to Rs. 6,98,880/- as sale proceeds of smuggled goods as no documents whatsoever have been produced to prove otherwise. Therefore, Indian currency of Rs. 6,98,880/- are liable for confiscation.
I also hold noticee parties (1) Shri Satish Mehta of Kolkata, and (2) Shri Sachin A. Mehta, cf Kolkata, as the persons acquiring possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation Under Section 111 of C.A/62, therefore, liable for penalty Under Section 112 of C.A/62.”
3(b) From a perusal of the above findings in the impugned order and on considering the submissions of the learned Advocate as regards non-existence of reasonable belief to seize the goods, it is observed, that to arrive at a conclusion of seizure, a reasonable belief cannot be considered in appeal i.e. as regards the question as to whether the belief in the mind of the officer who effected the seizure was reasonable or not no court would sit in appeal over that decision of the said officer. All that a court can consider is whether there is ground which prima facie, justifies the said reasonable belief. In the present case, a large quantity of coloured stones and other valuables have been found in a business premises known to be belonging any such goods. No documents could be produced for the legal acquisition of the same and the goods have, therefore, been seized. We cannot find any conflict with the same. However, it is found that Section 105(2) of the Customs Act, 1962 provides that the provisions of the Code of Criminal Procedure relating to searches shall apply subject to the modification that the word ‘Magistrate’, wherever it occurs, the words ‘Collector of Customs’ were to be substituted. The Select Committee to the Bill while going through the Customs Bill had observed as under :-
“The Committee feel that the record containing the grounds of belief, etc. to be maintained under the provisions of Section 165 of the Code of Criminal Procedure, 1898, should be forwarded to the Collector of Customs and not to the Magistrate in order to enable the former to keep proper control over the customs officers authorising search of premises.”
This amendment has been incorporated. Therefore, the control on the exercise of the powers by the Assistant Commissioner under Section 105 of the Customs Act, 1962, as a proper officer’s belief, to save the citizens from vexatious seizures, the effective remedy has been introduced by making it mandatory in the records of the seizure to be placed before the Collectorate. In the present case; no evidence has been brought to the effect that the same were produced before the Collector. It was imperative to have brought this facts in the proceedings or pleaded by the Revenue before us. In the absence of the same, we cannot find whether this provision of the law was complied with or not. In any case, it is on record that the appellants had approached the Collector, vide various letters placed on record in the paper book complaining against the said seizure. Therefore, it can, be only now in the realm of assumption, that the Collector had applied his mind to the seizure at certain stage, as that, the seizure was not set aside by him, which he could have; would indicate that the reasonable belief entertained by the proper officer, was confirmed by him.
3(c) We find force in the submissions of the learned Advocate for the appellants that all the goods have not been proved to be of foreign origin.
The statement of Shri Satish A. Mehta relied upon would only indicate that some of the goods are of foreign origin. Shri Satish A. Mehta’s statement as submitted by the learned Advocate, cannot be relied upon, as he is posing as a Manager of M/s. Sachin, when no such firm is found to have existed or proved to be at the premises. The goods under seizure were the property of the business of the father of Shri Sachin A. Mehta, who had dies a few days earlier, as indicated in the records and accepted by both sides. Therefore, the statement of Shri Satish A. Mehta which is false as regards his being Manager of the non-existing firm, cannot be accepted, to prove the foreign origin of even certain part of the goods as alleged to have been stated by him before the Officer under a statement recorded from him. The other material which indicates the foreign origin of the goods is certificate of the Government-approved valuer under the Income-tax Act to evaluate the jewellery and precious stones. This valuer was not produced for cross-examination. Therefore, we cannot accept his certification as regards the foreign origin to be established. When there is no material to establish the foreign origin of the goods under seizure, the seizure cannot be proceeded with under the provisions of the Customs Act, 1962. The confiscation arrived at under Section 111 without indicating the sub-sections thereof, is therefore, set aside.
3(d) We have considered the facts and the submissions made to the effect that the coloured precious stones are not covered by Section 123 of the Customs Act, 1962. It is a well settled law that the onus of proving the smuggled nature of the goods lies on the Customs. The investigations in this case have not been proceeded with to establish as to from what route the said coloured precious stones have been imported into India by violating the rules of import and the Customs barrier. It is a known fact that rough coloured stones are being imported into India for polishing at various stations for the last so many centuries. The stones under consideration are claimed to be non-workable, inasmuch as it was difficult to cut and polish them and thus they could not be sold. No evidence as relied upon by the adjudicator, has been brought by the investigator, to prove whether this claim of the appellants was correct or incorrect. In view of this claim not being challenged, we cannot determine the stones to be of recent imports. In any case, the onus to prove the illegality of the import of the stones in question, which was on the Department, has not been discharged.
3(e) When the illegal import and the foreign origin of the goods in question, are not established, there is no question of their liability for confiscation merely because the documents evidencing their acquisition, cannot be produced.
3(f) As regards confiscation of the Indian currency, the same is not upheld, since it is not proved as to what are the smuggled goods and whether the currencies seized by the Customs are the sale proceeds of the smuggled goods in question. Therefore, their confiscation is also required to be set aside. We order accordingly.
3(g) When the confiscation of the precious stones and the Indian currency is not being upheld, there is no question of imposition of personal penalty upon the appellant, Shri Sachin A. Mehta under Section 112 of the Customs Act, 1962. The order of imposition is, therefore, required to be set aside. We order accordingly.
4. In view of setting aside the orders of confiscation of precious
stones and Indian currency, the imposition of penalty upon Shri Satish A.
Mehta is also set aside. Both the appeals are accordingly allowed.