ORDER
J.N. Srinivasa Murthy, Member (J)
1. The above appellant has challenged the above captioned impugned order dated 19-5-1994 praying for setting aside the penalty of Rs. 5 lakhs imposed tinder Section 112(b)(i) of the Customs Act by Collector of Customs (Preventive) under the above order.
1. The brief facts of the case are that on 10-5-1991 on a secret and specific information against the appellant and Pankaj Lalji Haria, that they are dealing in foreign marked gold to recover 25 gold biscuits or its sale proceeds, DRI officers of Bombay Zonal unit searched the premises No. 4/6,1st floor, Laxmi Bhawan, Bora Bazar Street, Fort, Bombay and recovered foreign currency in different denomination of different countries. Pankaj Lalji Haria was present during the search of room in the above premises, who has deposed that it is the sale proceeds of contraband gold. Officers seized the foreign currency equivalent to Rs. 10,21,934.00 (LMV) in the reasonable belief that the same is liable to confiscation under the provisions of Customs Act. Statements of Pankaj Lalji Haria and appellant under section 108 of Customs Act was recorded on the same day. Premises of M/s. Janatha Zerox Centre, work place of both the above persons was serched and nothing incriminating was noticed. Abdulla and Sathyanarayan could not be traced, for want of full address. Both Pankaj & Bharat (appellant) sent retraction letter dated 13-5-1991, disowning the statements alleging preparation of the same by DRI Officers and using threat and force took the signatures, and it is not true and voluntary. Pankaj, knew Hindi. He was not asked to write the statement. Panchanama copy was not supplied till 29-5-1991. Department replied it on 20-5-1991 and 29-5-1991. On 14-5-1991 seized currency was deposited in Reserve Bank of India. Foreign currency appear to have been imported into India and Rs. 10,21,934/- worth foreign currency is the sale proceeds of foreign mark gold biscuits, liable to confiscation under Section 111 of Customs Act. Both the above two persons, and other who could not be traced, in relation to the aforesaid currency under seizure appear to have done/or omitted to do certain Acts which have rendered the above seized goods (foreign currency) liable to confiscation under Section’s 111 and 121 of Customs Act read with Section 3(2) Import Export (Control) Act, 1947. They appear to have acquired possession of and/or have been concerned in acquiring, possessing, keeping, purchasing or selling and dealing in foreign currency under seizure in the manner referred to in Customs Act, 1962. They appeared to have rendered themselves liable to penalty under Sections 112(a) & (b) of Customs Act. On 19-8-1991 show cause notice was issued to the above persons calling upon to show cause why foreign currency equivalent of Rs. 10,21,934/- seized should not be confiscated under Section 111 read with 121 of Customs Act, and why penalty should not be imposed under Section 112 of Customs Act. On receipt of reply from appellant, and from Pankaj dated 31-8-1991 through their counsel Shri V.M. Jehani, and after allowing cross-examination of one Panch Jagannath Pal, and DRI officers, as requested, and after hearing the counsel for both, Collector of Customs (P) passed the impugned order, confiscating the seized currency equivalent to Rs. 10,21,934/- under Sections lll(d) and 121 of Customs Act, and imposed penalty of Rs. 5 lakhs on appellant and Rs. 2,50,000/- on Pankaj Lalji Haria under Section 112(b)(i) of Customs Act. Hence this appeal.
2. In support of the appeal, Shri M. Masand, learned Counsel for appellant has argued that appellant has financed Pankaj to buy gold by paying Rs. 3 lakhs on the agreement of sharing 15% of profit. Foreign currency equivalent to Rs. 10,21,434/- was seized as sale proceeds of smuggled gold from Pankaj’s room in his presence on his deposition. Panchanama is not drawn at spot, which was commenced at 1.30 p.m. and ended at 3.00 p.m. It is typed in DRI office. Copy is not given to appellant. Cross-examination of Pancha supports seizure of currency in 1st floor, 4/6, Laxmi Bhawan, Bora Bazar. He has acted as such in another Panchanama, which are produced. He does not know English, a professional Panch. Panchanama is doubtful as per paras 2 & 5.1998 (103) E.L.T. 591 (T) is cited. Appellant is ignorant of Pankaj’s business as per statement. Retracted in 3 days, on a Monday. On 15-5-1991 Deputy Director has acknowledged it. Statement of Pankaj does not mention appellant’s name in the transaction. Rs. 3 lakhs payment is stated. It is returned with Rs. 450/-. He is not the beneficiary by it. Penalty is wrongly imposed as per page 4 para 2. There is no corroboration to Department’s case. Foreign currency is sale proceeds of smuggled gold not shown. Penalty is to be set aside.
3. Shri Dahiya learned JDR for department has argued that the spot is within Vfc km. to construction house (office). Pancha has withstood cross-examination – supports Panchanama – not a professional – no infirmity in his evidence. He is a nearby person – working there. Appellant is a partner in the deal. Seizure is natural. There is no complaint to magistrate for ill treatment. Retraction is on legal advise only. Para 10 of show cause notice is clear about import. Statements are substantive evidence as per Supreme Court Judgment in Naresh J. Sukhwane, clearly applies to make out the case. In the reply, it is contended that, if foreign currency is involved, it is a violation of FERA; For Import, there is no bar under Customs Act. Section lll(d) of it does not apply. There is no duty liability.
4. Perused the show cause notice, reply, retraction letter, cross-examination of Pancha and preventive officers, spot panchanama, impugned order, and appeal memorandum. Also perused the case laws cited. The main noticee Pankaj Lalji Haria’s appeal is not before us. In the present appeal only penalty imposed on the appellant on the charge mentioned in show cause notice and intelligence collected by DRI office preventive officers. It pertains only to 25 gold biscuits with foreign mark and its sale proceeds of Rs. 10,21,934/- is seized. The department mainly relies on the statements of appellant and Pankaj Lalji Haria to impose penalty on appellant. In this case gold biscuits are not seized. Foreign currency notes are seized under the spot panchanama. The Department has to make out a specific case on the appellant to sustain the charge, which is quite general and reproduction of provisions of Sections 112(a) and (b) of Customs Act. The impugned order reflects only the experience and personal knowledge in general, prevailing in similar types of cases. The discussion is not confined to specific evidence.
5. Ignoring the entire case of the appellant, and accepting the case of department in total, the statements of both appellant and Pankaj Lalji Haria, do not make out any case against the appellant, about his financing in the transaction of 25 gold biscuits with foreign mark, and its resultant sale proceeds recovered in this case. Whole case rests on the earlier transaction of 25-2-1991 for 10 gold biscuits only, which is not the charge in the show cause notice. Section 108 of Customs Act, statements of appellant and Pankaj Lalji .Haria is specific and clear that appellant paid Rs. 3 lakhs only once, and it was returned within 2 days. It is also clear that appellant was not at all concerned with the disposal of smuggled gold biscuits by Pankaj Lalji Haria for foreign currency sales proceeds, in the room rented by him only.
6. The benefit accrued to appellant in financing 3 lakhs to Pankaj Lalji Haria is only 15% profit as agreed by both, which is Rs. 2,550/- even as per department’s case, but actually it should be only Rs. 450/- as per the understanding, as clarified by appellant in his reply to show cause notice. There is a clear misconception in that regard in the Impugned order for 85% profit which has resulted in the imposition of Rs. 5 lakhs penalty. The department has not shown that the appellant has also dealt with 25 gold biscuits with foreign mark, and possessed the recovered foreign currency along with Pankaj Lalji Haria, which was its burden of proof. Section 123 of Customs Act is not applicable to the case on hand. The whole case is presumptive in nature. The appellant and recovery of foreign currency are not linked in any manner. It is also not made clear that appellant was also the beneficiary. The specific secret information involving appellant in the deal is not specifically connected with any material. As already observed above, appellant is linked to this case unnecessarily, when it is concerned only with 25 gold biscuits and its sale proceeds, for which Pankaj Lalji Haria is the only concerned person, even as per the department case. In view of this clear position Impugned order cannot be maintained. Hence the following order:
ORDER
For the reasons discussed above the impugned order is set aside against the appellant, allowing his appeal, with consequential relief as per law.