ORDER
P.K. Kapoor, Member (T)
1. These appeals have been filed by the Collector of Central Excise, Chandigarh in pursuance of the order passed under Section 129D(1) by the Board.
2. The facts of the case in brief are that :
On receipt of secret information to the effect that M/s. P.K. Brothers, Chaura Bazar, Ludhiana were indulging in the sale of wrist watches of foreign origin and that a bag consignment of wrist watches of foreign origin was expected to reach the premises of the importers around 9-12-1985, and the premises of M/s. P.K. Brothers were searched by the officers of the department. The search of the premises resulted in recovery of 349 wrist watches and 9 table clocks of foreign origin valued at Rs. 1,67,440/- (market value). As per the recovery memo and the panchnama the wrist watches and table timepieces were recovered from the shelves of the main counter in the shop and they were seized since Shri Amarjit Singh S/o Shri Kartar Singh Prop. of M/s. P.K. Brothers who was present on the spot could not poduce any proof to establish their legal importation. The residential premises of Shri Kartar Singh was also searched but no indiscriminating documents were recovered. In his statement dated 19-12-1985 Shri Kartar Singh, Prop. of M/s. P.K. Brothers, Ludhiana disowned the wrist watches and table timepieces recovered from his shop and claimed that he was told by one of his employees Shri Jatinder Singh that he had brought one cloth bag, the contents of which were not known to him and which was received by him from a person outside the shop. He pointed out that according to Shri Jatinder Singh the person from whom he had received the bag was to come to collect the bag but did not turn up and the same cloth bag when recovered from the main counter of the shop was found to contain wrist watches and timepieces of foreign origin. Shri Jatinder Singh, employee of M/s. P.K. Brothers in his statements dated 19-12-1985 and 20-12-1985 stated that he was an employee of M/s. P.K. Brothers engaged in the repairing of watches on a monthly salary of Rs. 900/- per month. He added that on the date of incident i.e. 19-12-1985 he had reached the shop at 9.00 hrs. as usual and had not brought any cloth bag with him. He confirmed that the seized wrist watches and table timepieces had been recovered from the shelves of the main counter of the shop and he had witnessed the recovery. However, on 21-12-1985 Shri Jatinder Singh employee of M/s. P.K. Brothers filed a sworn affidavit before the Duty Magistrate, Ludhiana, wherein he retracted his statements dated 19-12-1985 and 20-12-1985 and stated that the goods under seizure had been recovered from a cloth bag, found in the shop and that the cloth bag had been handed over to him for safe keeping by one of his customers who was to come back for collecting it within a few minutes but he had failed to turn up. At the back of the affidavit dated 21-12-1985 there was an endorsement to the effect that the affidavit had been handed over by Shri Jatinder Singh, to Shri Kartar Singh on 19-12-1985 at 7.30 P.M. However, the affidavit dated 21-12-1985 affirmed by Shri Jatinder Singh retracting his statements dated 19-12-1985 and 20-12-1985 was produced before the Additional Collector on 19-5-1986.
3. The Additional Collector ordered absolute confiscation of the goods under seizure as there was no claimant of the same but he dropped the proceedings for penal action under Section 112 of the Act against M/s. P.K. Brothers, its proprietor Shri Kartar Singh and his son Shri Amarjit Singh mainly on the ground that the statements dated 19-12-1985 and 20-12-1985 of Shri Jatinder Singh could not be relied upon in view of his affidavit dated 21-12-1985 in which he had retracted his earlier statements. In this regard he also observed that Shri Jatinder Singh was an unreliable witness and apart from the statements dated 19-12-1985 and 20-12-1985 of Shri Jatinder Singh there was no other evidence linking the goods under seizure either with M/s. P.K. Brothers and its proprietor Shri Kartar Singh or his son Shri Amarjit Singh. The Additional Collector further observed that in the recovery/seizure memo the words “from the shelves of the main counter of the shop” appeared to have been inserted at a subsequent stage in a “different and squeezed manner”. In arriving at his findings the Additional Collector also took into consideration the fact that right from the beginning, both Shri Amarjit Singh in whose presence the search of the shop was conducted and Shri Kartar Singh, Proprietor of the shop had taken the stand that they were in no way concerned with the wrist watches and table timepieces under seizure.
4. Being aggrieved by the order passed by the Additional Collector the ” appellants filed an appeal before the Central Board of Excise and Customs. The Board, on going through the records of the case was of the view that the order passed by the Additional Collector dropping the proceedings under Section 112 of the Act against M/s. P.K. Brothers and its proprietor Shri Kartar Singh and his son Shri Amarjit Singh was not proper and legal. The Board, therefore, under the powers vested in it under Section 129D(1) of the Customs Act, 1962 directed the Additional Collector of Customs and Central Excise, Chandigarh to apply to Customs, Central Excise and Gold (Control) Appellate Tribunal for correct determination of the points raised by the Board and imposition of adequate amount of penalty under Section 112 of the Act on M/s. P.K. Brothers, Ludhiana and S/Shri Kartar Singh and Amarjit Singh.
4A. On behalf of the appellants we heard the learned SDR Shri G.Bhushan. He stated that the Additional Collector had dropped the proceedings against Shri Kartar Singh and Shri Amarjit Singh on the ground that the version of Shri Jatinder Singh in his sworn affidavit dated 21.12-1985 being altogether witness and his testimony could not be relied upon. In this regard he conded that in the statements dated 19-12-1985 recorded immediately after the seizure of the watches and timepieces, Shri Jatinder Singh had stated that the seized goods were recovered from the shelves of the counter of the shop and he had witnessed the recovery. Shri Bhushan added that in his statement dated 20-12-1985 Shri Jatinder Singh had once again confirmed the recovery of the seized watches and time pieces from the counter of the shop. He argued that in the statements dated 19-12-1985 and 20-12-1985, the version of Shri Jatinder Singh being consistent that the seized watches and timepieces were recovered from the shelves of the counter of the shop and no mention having been made by him about the recovery having been made from a bag brought by him into the shop, his affidavit dated 21-12-1985 claiming that the recovery of the seized goods was made from a bag which was given to him outside the shop for safe custody by a man shortly before the seizure ought to have been disregarded as unreliable, especially when it was produced belatedly on 19-5-1986. The learned SDR added that the Additional Collector had erred in accepting the respondents’ stand that the seized watches and timepieces were actually recovered from a bag lying on the counter of the shop and the words “shelves of the main counter in the shop” appeared to have been inserted at some subsequent stage between the contents of serial numbers 2 & 3 of the seizure memo. He contended that whereas the seizure memo does not mention that the recovery was made from a cloth bag found in the shop, the contents of the seizure memo that the seized wrist watches and table timepieces of foreign origin valued at Rs. 1,67,440/- were recovered from the counter of the shop/business premises were corroborated by the panchnama. He added that had the seizure been made from a cloth bag lying on the counter, the bag would have certainly been seized and its recovery would have been recorded in the seizure memo and the panchnama. He stated that in view of the seizure memo and the panchnama, showing the recovery of the seized watches and timepieces from the shelves of the counter of the shop and the contents of the statements of Shri Jatinder Singh recorded on 19-12-1985 and 20-12-1985, the respondents’ version that the seized goods were recovered from a cloth bag lying on the counter and the bag was brought inside the shop by Shri Jatinder Singh after receiving it from some person ought to have been rejected by the Additional Collector as an afterthought. On these grounds he pleaded that the Additional Collector’s order dropping the charges against Shri Kartar Singh, the proprietor of the firm and Shri Amarjit Singh may be set aside and suitable penalties may be imposed on them under Section 112 of the Customs Act, 1962.
4B. On behalf of M/s. P.K. Brothers and Shri Kartar Singh, Shri Amarjit Singh, learned advocate Shri N.C. Chawla appeared before us. He referred to the cross-objection filed on behalf of the respondents and contended that M/s. P.K. Brothers, cannot be proceeded against in terms of the order passed by the Board under Section 129D(1) of the Customs Act, 1962 since neither they were served with the show cause notice nor was any order passed against them by the Additional Collector. He added that there was no scope for examining the legality or propriety of the order passed by the Additional Collector in terms of the directions given by the Board in exercise of the powers under Section 129D(1) since the Additional Collector’s order was passed on a proper appreciation of the evidence available on record and not merely on the basis of the Panchnama, the Recovery/Seizure Memo and the statement of Shri Jatinder Singh. He added that the Additional Collector had taken into account the fact that Shri Jatinder Singh on whose testimony the department’s case mainly vested had retracted his statement and had also not made himself available for cross-examination. Shri Chawla further contended that the fact that the words “the shelves of the main counter in the shop” appeared to have been interpolated in the Recovery Memo was also taken into account by the Additional Collector while arriving at his findings. He stated that having regard to the statements of S/Shri Kartar Singh, Amarjit Singh and Upender Singh and the two panch witnesses S/Shri Sant Singh and Ajinder Pal Singh and the retraction of his statements by Shri Jatinder Singh, the findings of the Additional Collector could not be held to be illegal or improper and there can be no case for imposition of any penalty on S/Shri Kartar Singh and Amarjit Singh, who had been consistent in their stand that the seized goods were recovered from a bag lying on the counter of the shop and which was received by Shri Jatinder Singh from some person outside the shop shortly before the arrival of the Customs officers. He added that even though Shri Jatinder Singh was interrogated on 19-12-1985 and 20-12-1985, he was not questioned with reference to the statement of Shri Amarjit Singh who had stated that Shri Upender Singh had informed him that Shri Jatinder Singh had brought the bag to shop from which the seized goods were recovered. On these grounds the learned counsel reiterated his stand that the Additional Collector’s findings arrived at on the basis of his appreciation of the evidence on record could not be held as illegal or improper.
5. Replying to the points raised on behalf of the respondents, the learned SDR Shri G. Bhushan, stated that there is no substance at all in the respondent’s contention that the words “the shelves of the main counter in the shop” were interpolated at a later stage between Serial Nos. 2 and 3 in the Recovery /Seizure memo. He contended that the words “were recovered from the counter of the shop/business premises”, in the Panchnama cannot be held to convey that the seized goods were found on the top of the counter in the shop and not in the shelves of the counter as recorded in the Recovery Memo. He stated that the claim made by Shri Amarjit Singh and certain other witnesses that the seized goods were recovered from a bag which was brought into the shop by Shri Jatinder Singh had to be rejected as an afterthought since as seen from the Panchnama and the Recovery Memo no bag was found in the premises. He added that it was unlikely that a large number of expensive foreign wrist watches would have been given by some unknown person to Shri Jatinder Singh. He contended that the respondents having failed to discharge the burden cast on them under Section 123 of the Customs Act, 1962 on account of recovery of watches of large value from their premises were liable for penalty.
6. We have examined the records of the case and considered the sub-missions made on behalf of both sides. It is seen that as a preliminary point the respondents have contended that the appeal has been filed against M/s. P.K. Brothers whereas M/s. P.K. Brothers were not a party to the proceedings before the Additional Collector. In this regard on perusal of the impugned order we find that the proceedings were initiated only against S/Shri Kartar Singh and Amarjit Singh. Hence we accept the respondents’ contention that in terms of the order passed by the Board under Section 129D(1) of the Customs Act, 1962 proceedings cannot be initiated against M/s. P.K. Brothers. We, therefore, hold that even though in the title of the appeal filed by the Additional Collector M/s. P.K. Brothers have been shown as the respondents, the actual respondents in the proceedings before us are the persons whose names occur in column 5 of the form CA 5.
7. Coming to the points arising out of the application filed by the Collector in pursuance of the Board’s orders under Section 129D(1) of the Customs Act, 1962 we find that in the impugned order the Additional Collector held that Shri Kartar Singh and Shri Amarjit Singh were entitled to the benefit of doubt as the charges against them had not been conclusively proved. It is seen that the main consideration which weighed with the Collector while arriving at this finding was that Shri Jatinder Singh was an unreliable witness since he had retracted his statements dated 19-12-1985 and 20-12-1985 wherein he had deposed that it had been the recovery of the seized 358 wrist watches and 9 table clocks from the shelves of the main counter of the shop and he had no connection with the seized goods. In arriving at his findings the Additional Collector had also taken note of the point raised by the respondents that the seized goods were recovered from the counter of the shop as indicated in the Panchnama and not from the shelves of the counter since the words “from the shelves of the main counter of the shop” appeared to have been inserted at some subsequent stage between the contents of serial numbers 2 & 3 of the Recovery Memo.
8. It is seen that the Department’s case against the respondents is based mainly on the statement dated 19-12-1985 given by Shri Jatinder Singh wherein he had deposed that he had been working as a watch repairer in the shop of M/s. P.K. Brothers for over one year and on 19-12-1985 after he had reached the shop as usual at 0900 hrs. the Customs Officers had recovered 358 wrist watches and few table clocks of foreign origin from the drawers of the wooden counter of the shop. He had also stated that in the morning when he had arrived at the shop he was not carrying any bag. In his statement dated 20-12-1985 also Shri Jatinder Singh had confirmed that while sitting near the counter he had seen the recovery of 358 wrist watches and a few table clocks from the shelves of the counter. He had also stated that he had no connection with the seized watches since wrist watches were being brought by the owners of the shop and they were being kept and sold by the owners themselves. It has also been the Department’s case that the Panchnama and the seizure memo when read together clearly confirm that Shri Jatinder Singh’s version that the seized watches and timepieces of foreign origin were recovered from the shelves of the main counter in the premises of M/s. P.K. Brothers and the respondents’ contention that the seized goods were seized from a bag which was brought from outside the shop and placed on the counter by Shri Jatinder Singh was an afterthought.
9. On the other hand the respondents’ case is that the seized wrist watches and timepieces were seized from a bag which was placed on the counter of the shop by Shri Jatinder Singh after having received it from some person who had met him outside the shop. It has been contended that the entry in the seizure memo to show the place of recovery as the shelves of the main counter in the shop was clearly an interpolation which was visible to the naked eye. It has been argued that the testimony of Shri Jatinder Singh has to be disregarded since he had retracted his statements and also for the reason that he was not made available for cross-examination. The respondents have also contended that Shri Kartar Singh who was lying sick at his home when Shri Amarjit Singh was looking after the shop cannot be penalised since he cannot be deemed to have been in constructive possession of the seized wrist watches and timepieces.
10. In order to appreciate the rival contentions, it would be desirable to recapitulate the main facts of the case. It is seen that on the basis of secret information that M/s. P.K. Brothers were likely to receive a big consignment of wrist watches of foreign origin on 19-12-1985, the premises of M/s. P.K. Brothers was searched by the Customs Officers and as a result of the search 348 wrist watches and 9 table clocks of foreign origin, collectively valued at Rs. 1,67,440/- were recovered. The Panchnama which was signed by two independent witnesses S/Shri Ajinder Pal Singh and Sant Singh and also Shri Amarjit Singh, the son of the proprietor of M/s. P.K. Brothers showed that the seized 358 watches and table timepieces of foreign origin were recovered from the counter of the shop/business premises. In the recovery/seizure memo which was referred to in the Panchnama, the place of seizure was indicated as “the business premises of M/s. P.K. Brothers, Chaura Bazar, Lud-hiana, the shelves of the main counter of the shop.” Immediately after the seizure of the goods in question on 19-12-1985, the statement of Shri Jatinder Singh who was working as a watch repairer in M/s. P.K. Brothers for a period of over one year was recorded. Shri Amarjit Singh stated that on 19-12-1985 as usual he had arrived at the shop at about 9 A.M. and when he entered the shop he was carrying only his lunch box with him. He added that on that day, the Customs officers had after searching of the premises of M/s. P.K. Brothers recovered 358 watches and time pieces of foreign origin from the shelves of the main counter. He stated that he had nothing to do with the seized watches since he was only employed for carrying out repairs of watches and was drawing a salary of Rs. 900/- per month. He also stated that when he entered the shop at about 9 A.M. he did not have any bag in his hand. Shri Jatinder Singh was again questioned on the next day and in his statement dated 20-12-1985 he stated that he was present in the shop when the Customs Officers carried out the search in the presence of the witnesses and Shri Amarjit Singh was incharge of the shop at that time in the absence of his father Shri Kartar Singh, the proprietor of the shop. He pointed out that he was sitting near the main counter in the shop and he had witnessed the recovery of watches and timepieces of foreign origin by the Customs Officers from the shelves of the main counter of the shop. He stated that he was only a mechanic in the firm and he was not entrusted with any task connected with the acquisition or sale of watches of foreign origin. It is seen that both the statements of Shri Jatinder Singh are in his own hand-writing and on both occasions on being questioned he had confirmed that the seized watches and timepieces of foreign origin were recovered from the shelves of the main counter in the shop of M/s. P.K. Brothers. Shri Jatinder Singh had also stated that on 19-12-1985 he had arrived at the shop as usual at about 9 A.M. and he had not carried any bag when he had entered the shop. It is seen that Shri Jatinder Singh’s version that the seized watches and timepieces is also confirmed by the Panchnama and seizure/Recovery memo. In the Panchnama, it has been clearly recorded that the seized watches and timepieces were recovered from “the counter of the shop” and in the Recovery/Seizure Memo which was prepared along with the Panchnama, the place of recovery has been indicated as “the business premises of M/s. P.K. Brothers, Chaura Bazar, Ludhiana the shelves of the main counter of the shop”. In our view neither the contents of the Panchnama nor the Recovery/Seizure Memo can be interpreted so as to infer that the recovery of the seized watches and timepieces was made from a bag kept on the counter of the shop. On a careful inspection of the Recovery/Seizure Memo we are also not convinced that the words “the shelves of the main counter of the shop” have been interpolated or inserted later on in a constructed manner. Under these circumstances, we arc inclined to agree that the respondents’ story that Shri Jatinder Singh after receiving a bag containing the seized watches and timepieces from some person who had met him outside the shop had placed it on the counter of the shop and the Customs Officers had recovered the seized goods from it, is an afterthought. Had the recovery of the seized watches and timepieces been made from a bag lying on the counter of the shop, the Panchnama and Recovery Memo which have been signed by independent witnesses and also by Shri Amarjit Singh who was incharge of the shop at the relevant time, would have been differently worded. Since the Panchnama and the Recovery Memo clearly state that the recovery was made from the counter and no bag was seized, the respondents’ contention that the watches and the timepieces in question were brought into the shop in a bag by Shri Jatinder Singh is not at all convincing and has to be rejected. It is seen that it was Shri Upender Singh who had claimed that soon after he had reached the shop, his brother Shri Amarjit Singh, went out of the shop for some time and during that period he saw Shri Jatinder Singh bringing the bag into the shop and seized watches and timepieces were recovered from the same bag which was lying on the main counter of the shop. Shri Upender Singh’s version of the events is not worthy of credence since as observed by us earlier the Panchnama and the Recovery Memo do not give the slightest indication that the seized watches and timepieces were recovered from a bag which was lying on the counter of the shop. As observed by us earlier, had the seized watches been recovered from a bag, the Panchnama and the seizure memo would have certainly recorded the recovery of the bag. Shri Jatinder Singh in his statement dated 19-12-1985 has clearly denied having brought any bag inside the shop.
11. It has been argued on behalf of the respondents that the testimony of Shri Jatinder Singh is not worthy of credence since he had retracted his statement and also for the reason that he did not make himself available for cross-examination. In this regard we find that in his statement recorded immediately after the seizure of the watches and timepieces from the premises of M/s. P.K. Brothers on 19-12-1985 Shri Jatinder Singh had denied any connection with the seized watches and timepieces, and had confirmed that they were recovered from the shelves of the main counter in the shop. In his statement recorded on 20th December, 1985 he once again confirmed the recovery of the seized goods from the shelves of the main counter in the shop of M/s. P.K. Brothers and denied having ever handled the seized goods or the purchase and sale of imported watches at any time. It was only on 25-5-1986 that the respondents’ counsel informed the Collector that after receiving the summons for appearance for the purpose of cross-examination during the proceedings before the adjudicating authority Shri Jatinder Singh had met Shri Kartar Singh, the sole proprietor of M/s. P.K. Brothers and had left within him an affidavit sworn by him before the Duty Magistrate, Ludhiana on 21-12-1985 wherein he had supported the version of Shri Amarjit Singh and Kartar Singh that the seized wrist watches were recovered from a bag lying on the counter and which was given to Shri jatinder Singh by one of his customers for safe keeping. In this regard we find that Shri Jatinder Singh’s statements dated 19-12-1985 and 20-12-1985 were recorded immediately after the seizure of the watches from the premises of M/s. P.K. Brothers in which he had consistently maintained that the seized watches were recovered from the shelves of the counter of the shop and not from a bag lying on the counter and he had nothing to do with the seized goods. It is also seen that prior to filing of a copy of the affidavit claimed to have been affirmed on 21-12-1985 by Shri Jatinder Singh at the stage of personal hearing before the Additional Collector there was no indication of any claim having been made by Shri Jatinder Singh that his statements dated 19-12-1985 and 20-12-1985 were obtained through force or coercion. It also does not stand to reason that some unknown person would go to the extent of arranging the planting of a large number of watches in the respondents’ shop with the help of Shri Jatinder Singh. Under these circumstances we do not find any force in the respondents’ claim that Shri Jatinder Singh’s testimony does not inspire confidence and has to be rejected. For this reason and having regard to the observations of the Madras High Court in the case of K. Balan v. Govt. of India, reported in 1982 (10) E.L.T. 386 that the right to cross-examine is not necessarily a part of reasonable opportunity and depends upon the facts and circumstances of each case, we also do not find any force in the respondents’ contention that Shri Jatinder Singh’s statements cannot be relied upon on account of his failure to make himself available for cross-examination.
12. The Panch witnesses who are literate persons had affixed their signatures to the Panchnama and the seizure Memo wherein the seized watches and timepieces were shown to have been recovered from the shelves of the counter in the premises of M/s. P.K. Brothers. Under these circumstances, in our view their evidence during the course of proceedings before the Collector is not worthy of credence and has to be rejected. As far as the statement of Shri Gurmeet Singh is concerned, we find that he had stated that when he came down from the first floor, he saw some watches and clocks were on the counter which were later seized by the Customs Officers. Shri Gurmeet Singh was not present when the Customs Officers recovered the seized watches and timepieces from the shelves of the counter in the respondents’ shop. After recovery of the watches and timepieces they must have been placed on the counter for making an inventory. Evidently Shri Gurmeet Singh had come down into the shop at this stage and had described what he had actually seen. Under these circumstances, his statement can be of no assistance to the respondents. Shri Kartar Singh was not present in his shop during the search. He was later brought from his residence and in his statement he had narrated what he had heard from his sons. Under these circumstances, his statement cannot also help the respondents.
13. In view of the above discussion, we are of the view that the seized wrist watches of foreign origin valued at nearly Rs. 1,67,440/- were kept in the shelves of the counter of the respondents’ shop from where they were seized by the Customs Officers, after they had received information from a secret source that the respondents were dealing in smuggled watches and even on 19-12-1985 they had received a large consignment of such wrist watches. Wrist watches being notified under Section 123 of the Customs Act, 1962 the burden of proving that they were not smuggled was on the respondents. Even though the respondents chose to disclaim the seized wrist watches, we are of the view that the watches in question having been recovered from the counter in the respondents’ shop they were concerned in keeping, concealing and otherwise dealing in the seized goods and for the reasons, it has to be held that even though Shri Kartar Singh was not present in the shop, being the sole proprietor he was liable for penalty under Section 112(b) of the Customs Act, 1962. Since Shri Amarjit Singh was incharge of the shop when the watches in question were seized, he has also to be held as being concerned in keeping, concealing or otherwise dealing in the seized watches.
13A. For the reasons outlined above, we are of the view that the impugned order passed by the Additional Collector dropping the proceedings against the respondents under Section 112(b) of the Customs Act, 1962 was not proper. We, therefore, set aside the order appealed against and impose a penalty of Rs. 15,000/- (Rupees Fifteen thousand only) on Shri Kartar Singh, the sole proprietor of M/s. P.K. Brothers. As far as Shri Amarjit is concerned, since he was present in the shop on that day when the seized goods were recovered only because of the illness of his father Shri Kartar Singh we take a lenient view and refrain from imposing any penalty on him. Since M/s. P.K. Brothers were neither served with the show cause notice nor was any order passed against them by the Additional Collector, we hold that they could not be proceeded against in terms of the order passed by the Board under Section 129D(1) of the Customs Act, 1962.
14. The appeal is disposed of in the above terms and the cross-objection is rejected.