ORDER
J.N. Srinivasa Murthy, Member (J)
1. This is the appeal of the party Shri Mangilal Berulal Wadalmiya alias Jain, against the impugned order dated 20-1-1994 Order in Appeal No. 10/94 BP in F. No. S/49-126/93 and the Order in Original dated 31-3-1993 of the Addl. Collr. of Customs, praying for setting aside the same and the penalty imposed thereunder and for other relief deemed fit.
2. The facts of the case are that on a specific information the officers of Directorate of Revenue Intelligence, Bombay zonal unit, intercepted the Appellant on 5-8-1991 while he was going on a scooter MMZ-2269 on Fort-Metro road near V.T. Station Traffic signal and inquired him, who replied that he was carrying the foreign currency valued at US $ 33,000/-, the sale proceeds of the contraband gold. On the personal search of the Appellant it resulted in the recovery of a packet of foreign currency in the form of US $ from his right hand pant pocket. On detail examination, it was found to contain 275 notes of 100 denomination and 110 notes of 50 denomination equivalent to Indian Rs. 9,70,000 (MV), which was seized under the provisions of Customs Act and FERA 1973 under the Panchnama dated 5-8-1991. The statements of the Appellant Mangilal Jain and Shantilal Magana Lal Jain was recorded under Section 108 of the Customs Act. Based on the investigation conducted, show cause notice was issued on 28-10-1991 to the Appellant Mangilal Jain, Abdul Khalique and Prabhakar Rao calling upon them to explain as to why this the seized currency and the Bajaj scooter MMZ 2269 should not be confiscated and why personal penalty should not be imposed upon them under the Customs Act. The Appellant submitted his reply on 3-12-1991 and Mangilal Jain replied on 12-12-1991. The personal hearing was held and the parties were heard through their advocate. The Addl. Collr. of Customs (P) R & I Divn. Bombay, after considering the material placed before him passed the order in original on 31-3-1993 ordering of the confiscation of the seized US $ under Section 111(d) and 121 of the Customs Act, and confiscated the scooter under Section 115 of the Customs Act with a redemption fine of Rs. 2500/- to be paid by Mangilal Jain within 30 days from the date of receipt of order and personal penalty was imposed under Section 112B(1) of the Customs Act of Rs. 50,000/- on the Appellant, and the proceedings were kept in abeyance on Abdul Khalique and Prabhakar Rao, since not traced. The appeal preferred by the Appellant was rejected by the Collector of Customs (Appeals) Bombay under the impugned order. Hence this appeal.
3. In support of the appeal, Shri Arun Mehta learned Counsel for the Appellant has argued that the entire case rests on the retracted statements recorded during the night which is involuntary as per 1991 (55) E.L.T. 580 in the case of A.N. Bhatt v. Comm. of Customs. The Panchnama charges the violation of FERA against the appellant apart from the Customs Act, where as the order in original confines only to the Customs Act provisions. The panchnama also contains both the acts and it is typed. The cross examination of the panchas and other officers are denied. There is neither the statement under Section 108 of the Customs Act, nor any charge on Chagansingh N. Rajput, the pillion rider on the scooter, at the time of the apprehension. The panchas are not even able to sign clearly. The Appellant carrying 385 notes in a pant pocket is improbable. The statement of the Appellant was recorded 5th night and produced before the court on 6th. His apprehension was immature as Abdul Khalique was waiting for him near the West End Hotel to receive the sale proceeds. The conversion of the Foreign currency into Indian Rs. has to be done through FERA and not in the Bank. The charge against the Appellant as per para 8 of the show cause notice is under Section 121 of the Customs Act. To prove it, the department has to establish the sale of the smuggled goods by the person knowing it to be the smuggled one, and identity of buyer seller and quantity of the gold, as per 1992 (60) E.L.T. 277 (279). The retraction of the Appellant is not referred anywhere. The Appellant is falsely involved. He was under threat of cofeposa. He was even deprived of water, while recording the statement. The letter of retraction by the Appellant is not at all replied by the department, and so it is accepted. There is no material to show that the goods sold was smuggled one. Shri Prabhakar Rao might have acquired it legally. Confiscation under Section 111(d) and 121 of the Customs Act is not proper. Both cannot apply. The order in appeal goes beyond the show cause notice and the order in original Rajput has signed the panchnama and nobody refers to him. The order in original is not properly considered and dealt with, but is only repeated in order-in-appeal.
4. Shri S.V. Singh, the learned DR has argued that the panchnama establishes the recovery of the currency note from the Appellant. One of the panchas is the watchman and his affidavit is not filed by the Appellant in support of his case. Regarding the retraction, nothing is established by the Appellant. As per para 8 of the show cause notice, the currency is both sale proceeds and imported, as no legal possession is shown by the Appellant. The penalty imposed is quite normal looking to the value of the goods. In the course of the reply, it is submitted that there is no finding on the request of the Appellant for the cross examination of the panchas and other witnesses.
5. The point for consideration is whether there are sufficient and satisfactory grounds to set aside the orders of the lower authorities. My findings thereon is in the affirmative.
6. Perused the panchnama dated 5-8-1991 and the statements of the Appellant Mangilal Jain, show cause notice dated 28-10-1991 and reply dated 3-12-1991 and retraction letter dated 9-8-1991 and the orders of the lower authorities. Also perused Sections 111(d), 112B(1), 115 and 121 of the Customs Act. Also perused the ruling cited 1992 (60) E.L.T. 277 in the case of Ramchandra v. CCE under Section 120 of the Customs Act regarding the confiscation of currency seized from the Appellant, without establishing that it represents the sale proceeds of smuggled goods, and no gold being seized from the Appellant, the confiscation of currency under Section 120 of the Customs Act is not justified. The requisites of Section 120 of the Customs Act about the establishing of the sale, the buyer and the seller. Consequently, currency notes cannot be considered to repeat the sale proceeds of the contravened goods and there is no violation of the Section 120 of the Customs Act vide para 4 and 6. According to Section 121 there must be a sale of smuggled goods by a person having knowledge or reason to believe that the goods were of smuggled origin. The customs authorities must establish the quantity of gold sold and the seller and the purchaser. 1991 (55) E.L.T. 580 in the case of A.N. Bhatt v. Collr. of Customs (SRB), statements recorded late in night or in the early hours of morning to be considered as involuntary and not to be relied upon, especially when it is retracted. There is no decision at all for detaining the Appellant in the Customs House and more so interrogate for into the night and even into the early hours of the morning as evident by the endorsement of the control room dairy. Therefore, they cannot be relied upon. Be that as it may, the fact remains that the Appellant has also retracted the statement on the same day. Moreover, the retracted statement of the appellant does not have any corroboration (para 4) in the light of the above provision and decided case laws, the present case is considered below.
7. As per the Showcause notice the case of the department is that on the specific information against the Appellant that he was dealing in contraband gold and foreign currency in large scale, and he was receiving contra band gold from foreign national passengers staying in different hotels of South and Central Bombay, and was selling the same in exchange of the foreign currency to his different customers, and get back the sale proceedings thereof in foreign exchange to the said foreigners. From the records placed in this case, it is seen that the department has not tried to establish this aspect of the case. The intelligence was also received that on 5-8-1991 between 5 to 5.30 p.m., the Appellant would pass towards Metro Theatre from his shop on his scooter, Registration No. MMZ 2269 with 20 foreign marked gold bars, or it’s sale proceeds in foreign currency. This has resulted with the interception of the Appellant and the seizure of 33000 US $ in 385 notes of the denomination of 50 $ and 100 $ concealed in his right hand side pant pocket. The Appellant, on enquiry, has informed the DRI officers. He was intercepted in a public place, but nothing was done, but taken to the office, 2 panchas were secured and searched and nothing was found in the scooter, and the personal search of the Appellant the above material was found. Nothing incriminating was noticed in the shop premises of the Appellant M/s. Sharda Electronics Stores situated at Vaju Kotak Marg, Fort. It appears that the whole case is based only on the statement of the Appellant under Section 108 of the Customs Act, according to which, Abdul Khalique a Iranian passenger offered the foreign gold marked biscuits brought by him for disposal on condition that the sale proceeds should be returned in foreign currency and commission of Rs. 200 per gold biscuits was offered. So from the above, it is clear that the foreign marked gold biscuits were imported by Abdul Khalique. The case is not clear whether it was a smuggled gold from outside India. No gold as such is found and seized in this case. The statement discloses that one Prabhakar Rao from Andhra Pradesh is the regular customer for such gold brought by Abdul Khalique through the Appellant and the payment is made only in US $ by him. 10 gold bars given by Abdul Khalique in a packet on 30-7-1991 was taken by the said Prabhakar Rao for 16,800/- US $ between 7 and 7.30 p.m. on the same day and it was paid to Abdul Khalique at about 8 p.m. near West End Hotel on the same day after receiving commission of Rs. 2000/-. It appears this is the beginning of the deal in gold amongst the 3 persons. For this material there is no supporting evidence by the department. Now the present instance of 5-8-1991 relates to 20 foreign marked gold biscuits in 1 packet which is sold for 33,000 US $ to the same person. The Appellant was accompanied by his servant while carrying the said amount in his pocket in the scooter at the time of apprehension. As contended by the Appellant he has signed the panchnama along with the Appellant and received the copy of the panchnama of the seizure of the currency. But the statement is not recorded in this case, nor any show cause notice was issued to him. This omission is not explained by the department. As contended by the Appellant this was the available supporting direct evidence to the case of the department. The failure to collect this evidence for whatever it is worth, clearly goes against the case of the department regarding the preponderance of the probability of their case. Except the statement of the Appellant that 33000 US $ found with him is the sale proceeds of the 20 foreign marked gold biscuits, there is no other supporting evidence to strengthen the case of the department. The supplier Abdul Khalique and the purchaser Prabhakar Rao are the parties to the proceeds and they are not traced and the proceedings are kept in abeyance against them. This confines only against the Appellant. So it is found by the department that 33,000 $ are the sale proceeds of the foreign marked gold. There is nowhere alleged that the said gold was smuggled into India even by Abdul Khalique. No presumption as such can arise in a case of this nature when the gold is not seized. The appellant was running an Electronics stores at the relevant point of time. It is not the case of the department that he is either a goldsmith or a gold dealer. To substantiate the allegation against the Appellant about the specific information received to charge in an offense of dealing in foreign marked gold biscuits and foreign currency on a large scale by the Appellant there are no instances of the Appellant doing the same with any other customers. The specific information so received is not substantiated. How reasonable belief was entertained on such information is also not made clear.
8. Panchnama dated 5-8-1991 drawn at 6.30 p.m. is in English. It has come in the evidence that one of the panchas is the watchman of the building. On perusal of the panchnama as it is seen that except the IO Shri Shaikh and IO D.K. Savekar the panchas and the Appellant and the servant Rajput have signed in Hindi/Gujarati. As pointed out by the Appellant the signatures of Ramsurat Singh does not look to be the signature of an educated person. The contents of the panchnama discloses that the panchas are hearsay witnesses for the interception of the Appellant in the public place, and the enquiry of the Appellant in this regard. So, except the version of the officers, the say of the Appellant before them is not supported by any other independent witness. The Appellant has questioned whether it was possible to conceal 385 $ notes in a packet in the right side pant pocket of the Appellant. For this, the department has not replied in the affirmative. The Appellant has challenged the whole case of the department under the show cause notice alleged against him. He has denied the using of the scooter for carrying foreign currency notes to give it to the supplier of the foreign marked gold biscuit. So the confiscation of scooter does not arise, and he has no objection for the confiscation of the US $ found, as he has denied the whole case that it was the sale proceeds carried by him as alleged. Further, he has stated the owner Mangilal Jain will deal with the allegation of confiscation of scooter. Seizure of 30,000 US $ from him is also denied, and he has contended that he is falsely involved in the matter by recording the statement. He has replied that it is not in his hand-writing, but under the threat of COFEPOSA, pressure and assault, which was got signed and endorsed by him by the officers, and he has immediately retracted the same in the court, when he was produced before the court for bail on 9-8-1991. He has sought for the cross examination of panch witnesses and the officers who have recorded the statement, and seized the currency, and investigating officer. In a separate letter, the Asst. Director DRI zonal unit, he has stated that the statement was not voluntary and true, and he told that he does not know anything about the foreign currency, but he was pressurized and forced to admit the possession of the same which he denied. Since no foreign currency was found with him there is no question of stating that the said foreign currency are the sale proceeds of the smuggled gold. Since he did not agree to endorse the false statement he was kept without food and water under the threat of cofeposa. He had to endorse and sign the said statement. He disowns the same, and retracts it, and he has sought for copy of the statement said to have been recorded. From the argument, it is seen that the said letter of the Appellant is not replied by the department. So from the above, it is clear that the effect of the statement of the Appellant under Section 108 of the Customs Act is diluted by this retraction of the Appellant, which is made, when he was in the custody of the court. As contended by the Appellant there is no reason to reject this conduct of the Appellant in the light of the discussion made above. The department has not tried to make out the case of smuggled gold coming to the hands of the Appellant. The peculiarity in the sale proceeds of the said deal in the huge quantity of the foreign currency does not look to be normal transaction. It is not explained by the department how such a thing could happen. The alternative stand of the department under the FERA as per the panchnama is given up in the course of the adjudication proceedings under the order in original. It is discussed in para 4 of Collector’s order in page 2. According to it, currency was not allowed to be imported, and only certain dollar the passenger can have that too, he has to get converted in specific time. In instant case, the Appellant had such a huge currency with him and there was no reason for the Appellant to possess such currency. What are the facts and circumstances which corroborates the admission of the Appellant that it is the sale proceeds of the smuggled goods, which he was carrying, is not made clear by the department. Under these circumstances, the case of the department that the foreign marked gold were sold for US $ in such large quantities appears to be quite improbable, in the absence of the grounds on which the reasonable belief is entertained by the department, on the specific information received against the Appellant.
9. The Additional Collector of Customs has observed in page 4 of his order that smuggling is an activity which is done in secrecy and getting corroborative evidence is very difficult. This applies not to the Appellant, but to the supplier namely Abdul Khalique. The Appellant is not at all concerned regarding the smuggling of the gold as per the case of the department. When the Appellant has denied the possession of the foreign currency and has objected to the nature of the statement and retracted it, the question of his explaining how he came into possession does not arise. Even otherwise he has come into possession of the same from Prabhakar Rao as per the case of the department which remains only an allegation regarding the import of foreign currency. The Appellant cannot be held responsible, as it is Prabhakar Rao who has paid the amount seized. As discussed above, there is no case against the Appellant that he has dealt in the smuggled gold, and he was found in possession of the foreign currency as alleged. So under these circumstances, ruling cited in 1992 (60) E.L.T. 277 at 279 under which the ingredients of Section 121 of Customs Act is considered helps in this case, as no gold is seized, and the smuggling of the gold is not established. It is also not established that the Appellant had the knowledge or reason to believe that the goods were of smuggled origin. So under these circumstances, the contention of the Appellant gains weight and it is accepted. The point raised is answered in the affirmative. Hence, I pass the following order :
For the reasons indicated above, the appeal is allowed with the consequential relief, if any, according to law, after setting aside the orders of the lower authorities against the appellant.