ORDER
Jyoti Balasundaram, Member (J)
1. The appellants are aggrieved by the order of the Addl. Collector of Central Excise, Jaipur confiscating absolutely Indian currency of Rs. 4.5 lakhs seized on 21-2-1989 on Jaipur-Ajmer road near Bhakhrota from Car bearing Registration No. RNH-363 driven by Sh. Ganpat Singh and in which Sh. Tikam Chand Jain, Sh. Rajender Kumar and Sh. Sanjay Jain were sitting, on the ground that the amount represents the sale proceeds of foreign marked smuggled gold.
2. The brief facts of the case are that on 21-2-1989 the Preventive Officers of the Customs Department, conducted a nakabandi on Jaipur-Ajmer road near Bhakhrota and apprehended Car bearing No. RNH-363 which was driven by Sh. Ganpat Singh. The other occupants of the car were Sh. Tikam Chand Jain, Sh. Rajender Kumar and Sh. Sanjay Jain, all residents of Ajmer. Personal search of all the four persons was conducted but did not result in recovery of anything incriminatory. Search of the car revealed three cavities -one cavity on the upper side of the front left tyre and another cavity opposite the driver’s seat near the steering and third cavity was below the rear seat. Polythene bags containing currency notes of Rs. 4,50,000/- were found concealed in one of the cavities and were seized under the reasonable belief that it was liable to confiscation. Sh. Tikam Chand said that the money belonged to Sh. Hukmi Chand Ghewar Chand Saraf of Ajmer and he was one of the partners of the firm. He further stated that his nephew Sh. Bhag Chand had sold foreign marked gold biscuits in Ajmer and had given the sale proceeds to him with the direction to purchase gold biscuits from Sh. Ram Soni of Jaipur. Business premises of M/s. Hukmi Chand Ghewar Chand Saraf were searched on 21-2-1989 but nothing objectionable was found therefrom. Search of residential premises of Sh. Bhag Chand, whose mother was also one of the partners of the firm, was also conducted but nothing objectionable was found therefrom also. No cash book was found either in the business premises or in the residential premises. However, at the time of search of residential premises of Sh. Ashok Kumar on 22-2-1989, Shri Swaroop Chand, father of Sh. Ashok Kumar and partner of the appellants’ firm, produced a cash book with regard to entries of money given to Shri Tikam Chand and Sh. Rajender Kumar. No mention of the source from where this amount was collected by the firm was contained in the cash book.
3. The driver of the car stated that he was employed for the past six months with the appellants’ firm and on 21-2-1989, when he had come to the shop, Sh. Tikam Chand asked him to go to Jaipur alongwith him and Sh. Sanjay Jain and Rajender Kumar and on reaching Jaipur, Sh. Tikam Chand contacted Sh. Ram Soni over the telephone and while he was waiting for him, the Customs Officers intercepted the car and recovered the Indian currency therefrom from a secret cavity therein. The statement of the driver was corroborated by the two other occupants namely Sh. Sanjay Jain and Shri Rajender Kumar.
4. Sh. Ram Soni stated that he only knew Sh. Bhag Chand and not other persons and about 5 days prior to the date of search and seizure, he had fixed up a transaction of 5 kgs of rough silver and had telephonic conversation with Sh. Bhag Chand on 21-2-1989 at 12.00 hours regarding his meeting with Sh. Bhag Chand but nobody contacted him.
5. In his statement recorded on 6-3-1989, Sh. Bhag Chand deposed that he was looking after the work in the appellants’ firm on behalf of his mother who was a partner. Sh. Tikam Chand and Sh. Swaroop Chand were his uncles. The amount of Indian currency recovered from the car belonged to his firm and it had been given to purchase silver from Sh. Ram Soni of Jaipur. Sh. Swaroop Chand Jain stated that cash book and ledger of the firm was written by him and by Sh. Tikam Chand and that he had taken the cash book and ledger to his son Sh. Ashok Kumar on 21-2-1989 and he produced a cash book containing an entry of this amount on 22-2-1989 at the time of search of the residential premises of Sh. Ashok Kumar. He further stated that Rs. 1,75,000/- were given to Sh. Tikam Chand and Rs. 2,75,000/- to Shri Rajender Kumar Jain to purchase silver from Jaipur and Agra. The owner of the car Sh. Sunil Kumar stated that he had got the cavities made in the car for security purpose and on 21-2-1989 he gave his car to Sh. Tikam Chand at the request of Sh. Swaroop Chand.
6. Based on the above investigation, a show cause notice dated 24-8-1989 was issued proposing confiscation of the Indian currency under Section 121 of the Customs Act, 1962 and proposing confiscation of the car used for carrying sale proceeds of contraband gold.
7. The adjudicating authority placed heavy reliance on the statement of Sh. Tikam Chand, discarded the defence that the money was accounted for in the cash book of the appellants’ firm holding that the same was made subsequent to the seizure on 21-2-1989 and passed the impugned order of absolute confiscation of seized currency. He however, ordered release of the car. Hence this appeal.
8. Shri G.K. Rana, learned Advocate submits that the statement of Shri Tikam Chand Jain was not a true and voluntary one and was immediately retracted by him in the Court when he was produced before the Judicial Magistrate; the statements of the other occupants of the car and Shri Bhag Chand do not establish that the currency was the sale proceeds of smuggled gold of foreign origin; that the currency belonged to the appellant firm and was duly accounted for in the cash books and had been given to Shri Tikam Chand and Rajender Kumar under the authority of the firm for the purpose of purchase of silver from Jaipur and Agra. He submits that the cavities in the car from where the currency was recovered had been made for the purpose of safety during the course of transport of silver and of large amounts of currency for purchase of silver and this does not lead to the conclusion that the money, which was recovered from the cavities, was tainted money. The learned Counsel also submits that no copy of the panchnama was supplied to Shri Tikam Chand and he challenges the genuineness thereof. He further submits that the right to cross-examine the panch witnesses and seizing officer was never waived by the appellant contrary to para 23 of the impugned order in which the Adjudicating authority has recorded that the Counsel waived cross-examination. He submits that the burden upon the department under Section 121 of the Customs Act has not been discharged as none of the ingredients of the Section have been made out against the appellant, who is therefore, entitled to return of the seized currency.
9. Shri K.N. Gupta, learned SDR draws our attention to the findings of the Adjudicating authority contained in paras 27 to 32 relating to the validity of the Panchnama and the detailed statement of Shri Tikam Chand and the reasoning adopted by the Addl. Collector for discarding the cash book entries and holding that the entries relating to the seized currency were made subsequent to the interception of the car from which the currency was recovered. He therefore, submits that the case against the appellant stands proved.
10. We find that the case of the department rests principally on the statement of Sh. Tikam Chand recorded on 21-2-1989 in which he admitted that the currency represented sale proceeds of foreign marked gold sold by his nephew Sh. Bhag Chand at Ajmer and that the money had been given to him for purchase of gold biscuits from Sh. Ram Soni of Jaipur. We note that this statement has been retracted before the Magistrate on the very next date i.e. 22-2-1989. From the statement of Shri Ganpat Singh, the driver of the car (as corroborated by the other occupants of the car namely Sh. Sanjay Jain and Sh. Rajender Kumar), it is revealed that on the date of seizure, Sh. Tikam Chand Jain asked him to go to Jaipur alongwith him and S/Shri Sanjay Jain and Rajender Kumar and on reaching Jaipur, Sh. Tikam Chand Jain contacted Shri Ram Soni over the telephone and while he was waiting for Sh. Soni, the car was intercepted and the currency was recovered from a secret cavity therein. Sh. Bhag Chand also does not implicate Sh. Tikam Chand in any way as he has only deposed that Sh. Tikam Chand was his Uncle and a partner in the appellant firm and the seized currency belonged to the firm. It was given to Sh. Tikam Chand to purchase silver from Shri Ram Soni of Jaipur. The appellant has also adduced a plausible and probable explanation for the presence of the cash book and ledger of the appellant firm in the residence of the son of one of the partners i.e. Sh. Swaroop Chand Jain namely that Sh. Swaroop Chand Jain had taken the cash book and ledger to his son Sh. Ashok Kumar’s residence on 21-2-1989 which was a Tuesday, which was the weekly holiday for the appellant firm. We are, therefore, of the view that mention of the source of cash and purpose in the entries in the cash book on 21-2-1989 alone (and not on earlier dates) is not sufficient reasoning for doubting the veracity of the cash book.
11. In the facts and circumstances of this case, we hold that the department has not discharged the burden under Section 121 of the Customs Act, 1962 – see (Ramchandra v. Collector of Customs – 1962 (60) E.L.T. 277) in which it has been held that the following ingredients must be satisfied for establishing violation of Section 121 –
(i) there must be a sale
(ii) the sale must be of smuggled goods
(iii) the sale must be by a person having knowledge or reason to believe that the goods were of smuggled origin.
(iv) the seller and purchaser and the quantity of gold must be established by the Customs authorities.
In the result, we extend the benefit of doubt to the appellant and set aside the impugned order and allow the appeal with consequential relief.