ORDER
S. Kalyanam, Member (J)
1. Since the above appeals arise out of the common order of the Additional Collector of Customs, Madras, dated 11th March, 1987 and are inter-connected, they are taken up together and disposed of by a single order.
2. The appeals are directed against the order of the Additional Collector of Customs, Madras, referred to above, absolutely confiscating Integrated Circuits and transistors of foreign origin respectively valued at Rs. 2,80,000 and Rs. 1,55,000 under Section 111 (d) & (p) and further consignment of Integrated Circuits and Air conditioner & Compressor of foreign origin valued at Rs. 2,25,000 and Rs. 2,600 and recovered from the residence and out house of appellant Ralph D’Couto; and allowing Integrated Circuits and Transistors to be redeemed on payment of a fine of Rs. 2,00,000 and the Air conditioners and Compressors on a fine of Rs. 3,000 besides duty, and imposing a penalty of Rs. 2,00,000 each on appellants Anil Mansaramani, Sunil Desai and Ralph D’Couto, and Rs. 25,000 each on appellants Vikramamurthy and Srikant Jha; and a penalty of Rs. 5,000 on appellant Adrian D’ Couto under Section 112 of the Customs Act, 1962, the ‘Act’ for short.
3. On 21.9.1985 on the basis of information the Customs authorities were keeping a close surveillance on the air parcels coming from the city booking office and also from the authorised agents of Indian Airlines at the Indian Airlines Cargo Office, Meenambakkam. The authorities at about 7.00 P.M. on that day noticed 3 air parcels being unloaded from M/s. Lemuir Air Express for onward loading into Indian Airlines containers. The authorities intercepted the parcels and examined the same. The parcels were consigned to M/s. Tristar Enterprises, Nehru Place, New Delhi, and declared as components valued at Rs. 1000/- under air consignment note in 501848 dated 21.9.1985. The authorities examined the consignments and found the same to contain electronic components such as Integrated Circuits and Transistors of foreign origin as detailed in the impugned order. Since there was no evidence for licit import and transport of the goods in question, the authorities effected seizure of the same under a mahazar as per law. On 28.9.1985 the authorities effected seizure of another set of Integrated Circuits of foreign origin and a National colour video camera, a National auto air conditioner and one BD 507 compressor of foreign origin, from the residence and out house of appellant Ralph D’Couto and effected seizure of the same as there was no evidence for licit acquisition or import of the same. Appellant Ralph D’Couto gave a statement before the authorities on 28.9.1985 and a further statement on 10.12.1985 confessing to the fact that he had been illegally smuggling the goods under seizure and the goods of the sort referred to above under the guise of import of spares and foods and ship stores for Oil and Natural Gas Commission vessel ‘Sagar Prabhat’. Ralph D’Couto further stated that he had been indulging in such practices even in the past from 1984 and had been regularly receiving and forwarding such contraband goods to appellants Anil Mansaramani and Sunil Desai. Investigations further revealed the complicity of appellant Vikramamurthy and Srikant Jha in these transactions. The authorities also effected seizure of Colour video camera, a National auto air conditioner and a compressor referred to above from the out house of appellant Adrian D’Couto. It is in these circumstances, after further investigations, proceedings were instituted against the appellants, which eventually culminated in the present impugned order now appealed against.
4. Shri Chawla, the learned counsel for appellant Anil Mansaramani, at the outset submitted that the impugned order of confiscation and penalty has been passed against his client on the basis of two inculpatory statements recorded by the authorities from appellant Ralph D’Couto on 28.9.1985 and 10.12.1985 in regard to the goods under seizure. It was urged that reliance has been placed in extenso on the said inculpatory statements of appellant Ralph D’Couto under the impugned order. The learned counsel contended that by a reply to the show cause notice dated 7th April, 1986 Anil Mansaramani specifically prayed for the cross-examination of appellant Ralph D’Couto and also the officers who recorded the statements. It was urged that notwithstanding the fact that reliance has been placed against appellant Anil Mansaramani in the said two statements recorded from Ralph D’Couto, no opportunity was given to appellant Anil Mansaramani to cross-examine Ralph D’Couto or the officers who recorded the statements. The learned counsel, therefore, assailed the impugned order as violative of the principles of natural justice. The learned counsel further submitted that in the context of the case on grounds of violation of natural justice while setting aside the impugned order the appeal may not be remitted for reconsideration at this distance of time as it would result in great hardship and prejudice to his client. It was further contended that the impugned order has been passed by the adjudicating authority being conscious of the fact that appellant Anil Mansaramani was denied of an opportunity of cross-examination of Ralph D’Couto and others and in such a situation a remand is not warranted at all and the appeal should be disposed of without reference to the inculpatory statements of Ralph D’Couto.
5. Shri Habibullah Badsha, the learned counsel appearing for appellant Sunil Desai, submitted that no charge has been set out against his client in the show cause notice in respect of the goods under seizure referred to above. It was urged that there is absolutely no evidence on record in any way connecting appellant Sunil Desai with the goods under seizure. The learned counsel further urged that a huge penalty has been fastened on his client on the basis of the alleged transactions of 1984 and the two transactions viz. those of 1984 and of 1985 with which the appeal is concerned cannot be clubbed and such clubbing or misjoinder would vitiate the impugned order, since it has resulted in prejudice to appellant Sunil Desai in the conduct of his defence. The learned counsel also in particular placed reliance on paras. 35 and 36 of the impugned order wherein the gravamina of the charges against Sunil Desai have been set out and contended that the essence of the charge is only in respect of the goods under seizure and is not in any way connected with the earlier alleged transactions of 1984 which have also been incidentally adverted to in the show cause notice. The learned counsel further submitted that the proceedings being penal in nature the show cause notice should precisely contain allegations with reference to the alleged complicity of appellant Sunil Desai in regard to the goods under seizure and since there is absolutely no evidence on record connecting Sunil Desai with reference to the commission of any offence in regard to the goods under seizure, the penalty imposed on him under the impugned order is liable to be set aside. The learned counsel also urged that even assuming for the purpose of argument that the show cause notice has set out any charge against his client, the entire impugned order fastening a penal liability on Sunil Desai is based on the retracted statement of appellant Ralph D’Couto dated 10.12.1985 and in the absence of any other piece of evidence by way of corroboration it is not legal to base a finding and impose a penalty solely on the basis of the retracted confessional statement.
6. Shri Ganapathy, the learned counsel for appellants Vikramamurthy and Srikant Jha mainly adopted the arguments of Shri Habibullah Badsha and reiterated that the charges against his clients are only in respect of the goods under seizure as set out in paras 35 and 36 of the impugned order and there is absolutely no evidence of any kind in any way connecting his clients with the commission of any offence in relation to the goods under seizure. Shri Ganapathy further submitted that even in regard to the past transactions his clients have not played any role in regard to the same and, therefore, prayed that the penalty imposed on his clients should be set aside.
7. Shri Vibhushanan, the learned counsel for appellant Ralph D’ Couto submitted that he is not contesting the appeal on merits and merely pleaded for reduction in the quantum of penalty. The learned counsel urged that his client Ralph D’Couto was hauled up as a detenu under COFEPOSA on 4.6.1986 and was languishing in jail for about 1 year and 6 months till after he was released in November, 1987. The learned counsel further urged that Ralph D’Couto was one of the partners in a firm under the name Maritime India Services having Custom House Licence and has also been removed from the partnership and is practically without a job. The learned counsel further urged that the only role played by his client was to act as a middleman in receiving the goods from Singapore and facilitating onward transmission of the same to others at Bombay and Delhi for a petty monetary consideration. The learned counsel also submitted that Ralph D’Couto is in abject poverty and is virtually penniless.
8. Shri Sudhakar, the learned counsel for appellant Adrian D’Couto also submitted that he does not want to contest the appeal on merits and merely pleaded that the quantum of penalty of Rs. 5,000 against his client in the facts and circumstances of the case and particularly in regard to the recovery of one air conditioner and one air compressor is very harsh and excessive and would warrant substantial reduction.
9. Heard Shri Bhatia, the learned Senior D.R.
10. We have carefully considered the submissions made before us. Regarding the appeal of appellant Anil Mansaramani, the short question that arises for our consideration is whether the impugned order is violative of the canons of natural justice. On going through the impugned order, we find that reliance in extenso has been placed on the confessional statement recorded from appellant Ralph D’Couto by the authorities on 28.9.1985 and 10.12.1985 for visiting appellant Anil Mansaramani with penal consequences. We also find from the records that appellant Anil Mansaramani has specifically requested for cross-examination of Ralph D’Couto, the officers and others. The adjudicating authority himself in para 50 of the order has observed The counsel requested for cross-examination of the officers who have recorded the statement and persons whose statement are relied upon against their client.” It is also reiterated in para 72 of the impugned order which reads –
“In a letter dated 10.7.1986, S/Shri N.C. Chawla Trilok Kumar & Akshay Anand, counsels for Shri Anil Mansaramani, had requested that Shri Anil Mansaramani, had requested that Shri Ralph D’Couto and other co-notices and also Madras and Delhi officers be made available for cross-examination during the Personal Hearing.”
The adjudicating authority admittedly did not make the witnesses sought for cross-examination available and has observed in para 78 of the impugned order as under :-
“Shri P. Prabhakaran, P.O., could not be made available for the cross examination, as he had gone on leave for his own marriage. Shri Ralph D’Couto who was detained in Central Prison under Cofeposa did not report for the Personal hearing despite intimate intimation sent to the Commissioner of Police to produce him for personal hearing on 25.8.1986 before the Additional Collector of Customs.”
The learned Senior D.R. urged that even though under law appellant Anil Mansaramani would be entitled to ask for cross-examination of Ralph D’Couto on whose statement reliance has been placed against the appellant under the impugned order as also the officers who recorded the statement of Ralph D’Couto, if after repeated attempts Ralph D’Couto could not be procured, the Department cannot be blamed. The learned Senior D.R. in this context submitted that Ralph D’Couto was languishing as a detenu in jail and repeatedly wrote to say that he was not in a fit condition to appear for personal hearing to defend his case nor to stand the cross-examination. The learned Senior D.R. further urged that Preventive Officer, Prabhakaran could not be made available as he had gone on leave for his marriage. However, the learned Senior D.R. urged, that the appeal cannot be disposed of ignoring the statements of appellant Ralph D’Couto. It is a fundamental proposition of law that when reliance is placed in penal proceedings against a person on third party statements and the person concerned seeks to avail himself of an opportunity to cross-examine the person who has given statements against him, an opportunity should be given in regard to the same. In the present case the mere circumstance that Ralph D’Couto was languishing in jail as a detenu is not a circumstance on the basis of which the Department can deny appellant Anil Mansaramani an effective opportunity to cross-examine Ralph D’Couto. The mere fact that Ralph D’Couto wrote letters that he was not in a mental state to appear for personal hearing or face cross-examination is neither here nor there. We have come across many an instance where the adjudicating authorities in similar situations permitted cross-examination by holding the adjudication enquiry in the jail itself as per law with the permission of the concerned authorities. If such an opportunity had been given to appellant Anil Mansaramani that would have satisfied the basic requirements of law in regard to observance of the principles of natural justice. Likewise, we do not think it acceptable, that Prabhakaran, one of the officers who has recorded the statement of Ralph D’Couto on 28.9.85, could not be made available, because he had gone on leave for his marraige. The adjudication enquiry could have been very well postponed and the officer after his return from leave could have been made available for cross-examination. The purpose for which evidently appellant Anil Mansaramani wanted to cross-examine the officers who recorded the statements or attested the statements was only with a view to show that the statements were not voluntary and were extracted from Ralph D’Couto under coercion. It is also a well-settled proposition of law that before a confessional statement could be acted upon it should be proved to be voluntary and true and if the first condition viz. the voluntary nature of the statement is not established, the whole statement will have to be rejected brevi manu even if it is true. Therefore, having regard to these legal propositions, on consideration of the entire evidence on record we are of the view that the impugned order suffers from the infirmity in being violative of the principles of natural justice for the reasons stated above. Therefore, without going into the merits of the issue, we set aside the impugned order so far as appellant Anil Mansaramani is concerned and remand the matter for re-enquiry after affording the appellant Anil Mansaramani an opportunity to cross-examine Ralph D’Couto and other officers he has specifically asked for cross-examination.
11. We shall now take up the appeal of Sunil Desai. The substance of the accusation against appellant Sunil Desai has been set out in the show cause notice in para 35 and 36, which for purpose of convenience and better appreciation is hereunder extracted verbatim :-
“By Clause 3 of Imports (Control) Order, 1955, (as amended) issued in pursuance of Section 3(2) of Imports and Exports Act, 1947 read with Section 11 (2)(u) of Customs Act, 1962, the import of the Integrated Circuits, Transistors, Car Air Conditioners and compressors and the Video Camera of foreign origin totally valued at Rs. 6,68,600/- (CIF) as detailed in the annexures to the Mahazars, without a valid import Trade Control Licence is prohibited. Under Section 123 of Customs Act, 1962 the onus of proving that the goods viz. Transistors are not smuggled is cast on the party from whose possession they were seized and also on the person who claim ownership thereof. In the absence of any such licence issued by the Import Trade Control Authorities the import of the above mentioned Integrated Cir- cuits, Transistors, Air Conditioners and compressors and the Video camera of foreign origin totally valued at Rs. 6,68,600/- (cif) by Shri Ralph De’Couto and his brother Adrian D’Couto, is unauthorised and therefore and therefore appeared prima facie liable to confiscation – the transistors under Section 111 (d) and (p) of Customs Act, 1962. By importing and knowingly concerned in fradulant evasion of Customs duty leviable thereon, and acquiring possession of concerned in carrying, removing, depositing, harbouring, keeping and dealing with the aforesaid goods, in the manner detailed above, which they knew were liable to confiscation, under Customs Act, S/Shri Ralph Decouto and Adrian Decouto appeared to have committed the offence under Section 135 of Customs Act, 1962 also rendered themselves liable for penal action under Section 112 of Customs Act, 1962. Shri Ralph Decouto also appear punishable under Section 132 of Customs Act, 1962 for falsification of Customs Documents and false declaration.
“36. Apart from the goods under seizure the evidence as discussed above could also indicate the clandestine import of such goods earlier. As there is reason to believe, that S/Shri Ralph Decouto, Adrian Decouto, Anil Mansaramani, Sunil Desai, Shirkant Jha, Vikramanurthy, Dilip Kumar, and M/s. Maritime (India) Services, Vadhyar Offshore and Vadhyar Marines appear to have conspired together in the clandestine import and sales of the above goods of foreign origin in contravention of the restriction under the Import Trade Control Order and the provisions of the Customs Act, 1962, they also appeared to be persons knowingly concerned in the offence.”
12. Appellant Sunil Desai has specifically urged the plea that the goods mentioned in para 37 of the show cause notice did not belong to him nor did he have any interest, proprietory or otherwise therein. The adjudicating authority has also observed that the plea of appellant Sunil Desai is one of total denial in regard to any business relationship with Ralph D’Couto and that there is no nexus between the goods seized by the Department and the goods alleged to have been sent to appellant Sunil Desai in the year 1984. Appellant Sunil Desai has also specifically taken the plea that no documentary evidence has been produced in respect of the goods alleged to have been sent to him in the year 1984. The adjudicating authority has also observed that “even though there is no connection between Sunil Desai and the goods under seizure, the investigation has revealed that Sunil Desai in collusion with Sri Ralph D’Couto had imported these car air-conditioners in the manner explained above. There is no bar in initiating penal proceedings once the complicity comes to light.” We are not able to appreciate this observation of the learned adjudicating authority. The charges set out in the show cause notice and extracted above clearly proceed on the basis of the goods under seizure concerned in the case. In such a situation, when the adjudicating authority himself has clearly found that there is no connection between appellant Sunil Desai and the goods under seizure, it would not be proper or legal to fasten him with penalty on the ground that Sunil Desai was concerned in or connected with earlier transactions in the year 1984 in regard to which admittedly there is no specific charge in the show cause notice. Show cause notice in adjudication proceedings serves a very solitary purpose and the charge which a person is called upon to meet must be precise and specific. In the present case though in the show cause notice an incidental reference is made to the past antecedence and practice of Ralph D’Couto in regard to receiving air-conditioners and similar goods of foreign origin in the year 1984, appellant Sunil Desai was not specifically called upon to meet any case of that kind in the show cause notice out of which the impugned order follows. Apart from it, we also find considerable force in the submission of the learned counsel that the transactions of 1984 cannot be clubbed with the transactions of 1985 unless the show cause notice specifically alleges that the two transactions are a continuous and integrated one forming part of a whole. In the entire records it cannot be disputed that there is no evidence to connect appellant Sunil Desai with reference to the commission of any offence in relation to the goods under seizure. Indeed the case of the Department is that the goods under seizure viz. Integrated Circuits and transistors were meant for appellant Anil Mansaramani and Sunil Desai does not come into the picture in regard to these goods nor in anyway connected with them. Sunil Desai is sought to be proceeded against merely in respect of the alleged past transactions in the year 1984 in regard to air conditioners. In the present case, excepting the one air conditioner, which was seized from the residential out house of appellant Adrian D’Couto, no air-conditioners were seized and, therefore, the question of appellant Sunil Desai being privy in any way to such illegal receipt or smuggling of air conditioners does not arise. As we have found above, appellant Sunil Desai has taken a specific plea that he has nothing to do with the goods under seizure concerned in this case. We should also like to note in this context that even in regard to the previous transactions in the year 1984 the confessional statement of appellant Ralph D’Couto is the main piece of evidence, which also has been retracted by him in reply to the show cause notice as those of Vikramamurthy and Srikant Jha. Therefore, on consideration of the entire evidence on record, we do not find any legal evidence to connect appellant Sunil Desai as one concerned in the commission of any offence in relation to the goods under seizure concerned in this case. We would like to observe in this context that we have grave suspicion in our minds that appellant Sunil Desai has been actively privy in illegal transactions in the company of Ralph D’Couto and others in the year 1984, but unfortunately, since there is no clear investigation in regard to the same and since the materials that could have been unearthed by proper investigation have not been done by the authorities and since accusations by way of a specific charge in regard to the same with clear details have not been made in the show cause notice, we have no other alternative except to exonerate him by giving him the benefit of doubt in the facts and circumstances of this case.
13. So far as appellants Vikramamurthy and Srikant Jha are concerned the circumstances we have set out and the reasons we have given in giving the benefit of doubt in exonerating appellant Sunil Desai would equally apply to these appellants as well and adopting the same by giving them the benefit of doubt we exonerate them from the charges and allow their appeals.
14. So far as appellant Ralph D’Couto is concerned we find that he was a COFEPOSA detenu languishing in jail for about 1 year and 6 months. His appeal is not contested on merits. The circumstances of this case clearly indicate that he was only playing the role of a middleman in arranging the onward transmission of goods received by him by illegal means for monetary consideration. He is also said to be in abject poverty. We are further informed that he is a young person of 28 years of age with no source of income. Taking all these factors into consideration we are inclined to hold that interests of justice would be met if the penalty imposed on him is reduced from Rs. 2,00,000 to Rs. 50,000/- (Rs. Fifty thousand), and we order accordingly.
15. So far as appellant Adrian D’Couto is concerned the appeal is not contested on merits and he has been proceeded against only in connection with the seizure of one air conditioner and compressor of foreign origin from his residential out house and imposed a penalty of Rs. 5,000/-. We also find from records that immediately on seizure of these two items, he has come forward with a statement on 28.9.1985 that he purchased the goods from appellant Sunil Desai, who was a dealer in air conditioners and has been supplying him car air conditioners. Taking all these factors into consideration, we reduce the penalty from Rs. 5,000 to Rs. 1,000/- (Rs. One thousand).
16. Before parting with the case we would like to observe that even according to the Department since the year 1984 sensitive electronic goods such as Integrated Circuits, transistors, transformers, etc. and air conditioners have been in a systematic way smuggled into the country and cleared from the Air Cargo complex under the guise of ship stores, spares, etc. to Oil and Natural Gas Commission’s vessel ‘Sagar Prabhat’ under Transhipment Application. We are informed that under the existing regulations, when non-duty paid imported cargo is cleared under Transhipment Application as ship stores to Oil and Natural Gas Commission’s vessel, each consignment should be accompanied by an officer of the Customs Department. It is indeed surprising how all these years no officer accompanied any such consignment and how in consequence such inaction whether deliberate or accidental by the officer concerned, has paved the way for smuggling goods of a considerable magnitude systematically. It is time that the higher authorities take note of the serious lapse on the part of the Customs officers concerned and initiate necessary disciplinary and remedial action to see atleast in future such things do not happen. In this view we direct a copy of this order be marked to the Central Board of Customs & Excise for necessary investigative and remedial action.
17. In the result Customs Appeal in 50/1987 by appellant Anil Mansramani is remanded, Customs Appeals in 75/1987, 476/1987 and 477/1987 by appellants Vikramamurthy, Srikant Jha and Sunil desai are allowed and Customs Appeals in 78/1987 and 479/1987 are dismissed with modifications.